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Item 1A. Risk Factors

2026-03-31 compared with 2025-04-17 · 304 added, 1095 removed, 4 unchanged (100% of the section changed)

You should carefully consider the risks described

below with respect to an investment in our shares.

If any of the following risks actually occur, our business, financial condition, operating

results or cash provided by operations could be materially harmed.

As a result, the trading price of our common stock could decline,

and you might lose all or part of your investment.

When evaluating an investment in our common stock, you should also refer to the other

information in this Annual Report, including our consolidated financial statements and related notes.

Risks Related to Our Business Generally

Cycurion has a limited operating history upon

which you can evaluate our future business and prospects.

Cycurion has a limited operating history.

incorporated in 2017.

Since its incorporation, Cycurion has acquired two operating subsidiaries:

Axxum in 2017 and Cloudburst in 2019.

It also acquired certain technology assets of Sabres in September 2021.

Accordingly, Cycurion and its subsidiaries have varying operating

histories and, together as a consolidated company, has a limited operating history, which can make it difficult for investors to evaluate

Cycurion’s operations and prospects and may increase the risks associated with an investment.

There can be no assurance that Cycurion’s

business plan can be realized in the manner contemplated, that it will ever realize any significant operating revenues, or that its operations

will ever be profitable and, therefore, its stockholders may lose all or a substantial part of their investment.

Cycurion has incurred net losses and cannot

assure you that it will achieve or maintain profitable operations.

Cycurion’s net income was $1,229,601 for the year ended December 31, 2024 and net loss

was $(2,097,013) December 31, 2023.

Cycurion may continue to incur significant losses in the future for a number of reasons, including

unforeseen expenses, difficulties, complications, and delays and other unknown events.

Cycurion intends to increase its brand awareness,

expand the customer base, and expect to continue to invest heavily in its businesses in the foreseeable future as management continues

to attempt to expand and grow the core businesses.

In addition, Cycurion’s net revenues could be impacted by various factors, including

the competitive landscape, customer preferences, and the success of our service offerings.

Accordingly, management cannot assure you that Cycurion

will achieve sustainable operating profits as it continues to attempt to expand its product and professional service offerings and otherwise

implement its growth initiatives.

Any failure to achieve and maintain profitability would have a materially adverse effect on Cycurion’s

ability to implement its business plan, its results and operations, and its financial condition, and could cause the value of its common

stock to decline, resulting in a significant or complete loss of your investment.

Cycurion’s level of indebtedness and

debt service obligations could adversely affect its financial condition and make it more difficult for management to fund its operations.

As of December 31, 2024, Cycurion had approximately

$20.2 million of indebtedness and other liabilities outstanding.

will need to use a substantial portion of available cash flow to pay interest and principal

on existing debt, which will reduce the amount of money available to finance its operations

and other business activities;

debt level increases its vulnerability to general economic downturns and adverse industry

debt level could limit its flexibility in planning for, or reacting to, changes in its business

and in its industry in general;

leverage could place Cycurion at a competitive disadvantage compared to its competitors that

have less debt;

failure to comply with the financial and other restrictive covenants in our debt instruments

which, among other things, may require us to maintain specified financial ratios and will

limit its ability to incur debt and sell assets, could result in an event of default that,

if not cured or waived, could have a material adverse effect on its business or prospects.

Despite the existing level of indebtedness, Cycurion

and its subsidiaries may incur additional indebtedness, which could further exacerbate the risks described above.

Cycurion’s recurring losses, net working

capital, and accumulated deficit resulting from substantial operating losses have raised substantial doubt regarding its ability to continue

as a going concern.

Cycurion had a net working capital deficit of $7.8

million and an accumulated deficit of $3.2 million resulting from net income incurred during the year ended December 31, 2024 and from

substantial losses during prior periods.

In addition, it had a net cash outflow of $2.0 million from operating activities during the

year ended December 31, 2023 and $1.4 million during the year ended December 31, 2024, all of which raise substantial doubt about its

ability to continue as a going concern.

Although Cycurion was nominally profitable during the 2024 fiscal year, there is no assurance

that it will not continue to generate operating losses and consume significant cash resources for the foreseeable future.

Without additional

financing, these conditions raise substantial doubt about Cycurion’s ability to continue as a going concern, meaning that it may

be unable to continue operations for the foreseeable future or realize assets and discharge liabilities in the ordinary course of operations.

If Cycurion seeks additional financing to fund its business and potential acquisition activities in the future and there remains doubt

about its ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding

on commercially reasonable terms or at all.

If Cycurion is unable to obtain sufficient funding, its business, prospects, financial condition,

and results of operations will be materially and adversely affected, and it may be unable to continue as a going concern.

If it is unable

to continue as a going concern, it may have to liquidate its assets and may receive less than the value at which those assets are carried

on its financial statements;

You should carefully consider the risks and uncertainties described below, together with all of the other information included in this Annual Report on Form 10-K and other documents we file with the SEC.

The risks and uncertainties described below are those that we have identified as material to our business, but they are not the only risks and uncertainties facing us.

Additional risks and uncertainties not currently known to us or that we currently believe are immaterial also may adversely affect our business, financial condition, results of operations and prospects.

If any of the following risks actually occur, our business, financial condition, results of operations and prospects could be materially and adversely affected, in which case the trading price of our common stock could decline and you could lose all or part of your investment.

Risks Related to Our Business and Operations

We derive a substantial portion of our revenue from a limited number of contracts and clients, and the loss of any significant contract or client relationship could materially reduce our revenue and profitability.

A significant portion of our revenue is concentrated among a small number of contracts and clients, primarily state and local government agencies including higher education institutions, law enforcement agencies, and municipal transportation authorities.

If any significant client were to terminate, reduce the scope of, or fail to renew their contracts with us, or if we were unable to replace expiring contracts with new engagements of comparable scope and value, our revenue could decline significantly.

The conclusion of certain key government contracts contributed to a decline in revenue during fiscal year 2025.

Our reliance on a concentrated client base means that adverse developments affecting even a single major client—such as a change in that client's leadership, budget priorities, procurement policies, or political environment—could have a disproportionate impact on our financial results.

Our contracts with state and local government agencies are subject to funding risks, including dependence on federal funding that flows through those agencies, which creates uncertainty in our revenue.

While the majority of our contracts are with state and local government entities, many of these clients fund their IT and cybersecurity programs in whole or in part with grants, appropriations, or pass-through funding from the federal government.

Federal funding for state and local cybersecurity and IT modernization programs is subject to annual congressional appropriations, continuing resolutions, government shutdowns, executive orders, and shifting policy priorities.

Reductions or delays in federal funding—whether resulting from budget cuts, sequestration, the activities of cost-reduction initiatives such as the Department of Government Efficiency ("DOGE"), or changes in the political environment—can cause our state and local government clients to delay procurements, reduce contract scope, or cancel projects entirely.

We have experienced, and may continue to experience, delays in contract awards and revenue recognition attributable to disruptions in federal funding flows.

Additionally, state and local governments face their own budgetary pressures, including rising pension obligations, infrastructure costs, and competing spending priorities.

Many operate under balanced-budget requirements and may lack the flexibility to sustain IT and cybersecurity spending during periods of fiscal stress.

Budget compromises that may be needed for future fiscal years may continue to be extraordinarily difficult given the complicated grassroots political environment, a closely divided Congress, an increasing federal deficit and debt load, and a challenged economy.

Recent and ongoing federal and state government cost-reduction initiatives may reduce demand for our services and disrupt our contracting pipeline.

The current federal administration has undertaken significant cost-reduction initiatives, including through DOGE, that have resulted in broad-based cuts to federal contracts, grants, and agency budgets.

These initiatives have directly impacted federal cybersecurity and IT spending, including the termination of contracts at the Cybersecurity and Infrastructure Security Agency ("CISA"), reductions in Federal Risk and Authorization Management Program ("FedRAMP") staffing, and disruptions to interagency cybersecurity coordination.

Although our contracts are primarily with state and local governments rather than directly with federal agencies, these federal cost-reduction efforts have had, and may continue to have, cascading effects on our business because many of our state and local clients rely on federal pass-through funding.

Federal grant programs that historically supported state and local cybersecurity investments have been reduced or placed under review, creating uncertainty for our clients and slowing their procurement timelines.

Additionally, approximately half of U.S.

states have created or proposed their own state-level efficiency initiatives modeled on the federal DOGE program.

These state-level cost-reduction efforts could directly impact our existing contracts and our ability to win new engagements at the state and local level.

We have experienced, and expect we may continue to experience, delays in our contracting backlog attributable to these budget disruptions, and we can provide no assurance that these delayed contracts will ultimately convert to revenue.

There is also the risk that government clients at any level may choose to perform cybersecurity and IT services in-house rather than contracting with outside providers like us, which would further reduce demand for our services.

The competitive landscape for cybersecurity and IT services is intense, and if we do not continue to innovate we may not remain competitive and our revenue and operating results could suffer.

The market for cybersecurity and IT services provided to government clients is highly competitive and fragmented.

We compete with large, well-established defense and IT contractors, each of which has significantly greater financial, technical, and marketing resources, broader name recognition, and larger installed bases of government contracts and clearances.

We also compete with specialized cybersecurity firms, cloud service providers, managed security service providers, and smaller niche contractors.

Many of our competitors can offer broader service portfolios, more favorable pricing, and greater capacity to absorb the costs of competitive bidding and contract protests.

The cybersecurity landscape is constantly changing with increasing scale, frequency, and organization of attacks, requiring constant improvement and timely innovation.

We face the risk that our service offerings may not adequately target our clients’ most-needed solutions, may not be cost-effective, or may not be easy to adopt and use.

If our competitors introduce new technologies or services that make our product and service offerings less attractive, or if we are unable to anticipate and respond to changes in the threat landscape and client requirements in a timely manner, our competitive position, revenue, and operating results could be materially adversely affected.

The government contracting process is lengthy, complex, and subject to protest and delay, which makes our revenue difficult to predict.

The process for obtaining new government contracts and task orders is frequently protracted, involving competitive solicitations, multi-step evaluations, and best-value determinations.

Contract award decisions may be delayed by funding uncertainties, changes in agency leadership or priorities, or procurement policy changes.

Protests by unsuccessful bidders can delay the start of work by months or result in re-competition of the contract entirely.

We may spend considerable cost and management time preparing bids and proposals for contracts that we do not win.

Government contracts are also frequently structured as indefinite delivery/indefinite quantity ("IDIQ") contracts, General Services Administration Schedule ("GSA") contracts, or blanket purchase agreements, under which the government is not obligated to order any minimum amount of services.

We believe our position as a prime contractor under GSA Schedule contracts and other IDIQ contracts is important to our ability to sell our services, but these vehicles require us to compete for each individual task order rather than having a predictable stream of activity.

As a result, our contracted backlog may not be a reliable indicator of future revenue.

We also experience seasonality in our revenue, as government procurement cycles tend to accelerate near the end of fiscal years, which can cause quarter-to-quarter fluctuations.

Our government contracts are subject to audit, investigation, modification, and termination by the government, which could result in adverse findings, reduced revenue, or other penalties.

Government contracts are subject to oversight, including audits by government auditors and investigators.

Government agencies have the unilateral right to modify, curtail, or terminate our contracts, either for convenience or for cause.

If a contract is terminated for convenience, we generally can recover only costs incurred and a reasonable profit on work already performed, but may not recover anticipated profits on unperformed work.

If a contract is terminated for cause, we may be required to pay the government for the cost of re-procuring the services, and a termination for cause could harm our reputation and ability to win future contracts.

As a government contractor, we are subject to various laws and regulations governing the formation, administration, and performance of government contracts, including the Federal Acquisition Regulation and its state and local equivalents.

Violations of these requirements, including the False Claims Act, could result in civil or criminal penalties, treble damages, contract suspension or debarment, or other remedies that would materially harm our business and reputation.

The Department of Justice's Civil Cyber-Fraud Initiative has increased the risk that government contractors may face False Claims Act liability related to cybersecurity compliance, which is particularly relevant given that cybersecurity compliance is itself a core component of our service offerings.

Our business strategy may impose limitations in our ability to accurately forecast future revenue and operating results.

Our operating results are dependent on a variety of factors, including purchasing patterns of our clients, competitive pricing, debt servicing, and general economic trends.

Our revenue and operating results may fluctuate if our sales targets are not met, new service offerings receive poor client response, or client acquisition costs increase due to competition.

In addition, our acquisition strategy may impose additional risks to the predictability of our operating results, as revenue streams may be volatile due to the uncertainty in identifying attractive acquisition candidates and our ability to consummate new acquisitions.

Risks Related to Cybersecurity and Technology

A cybersecurity breach or incident affecting our systems, our clients' systems, or our AI-enhanced ARx platform could damage our reputation, expose us to liability, and undermine the market confidence that is fundamental to our business.

As a cybersecurity provider, our reputation depends on the market’s confidence in the security and reliability of our services and technology.

A successful cyberattack against our own systems, the systems we manage for clients, or our AI-enhanced ARx cybersecurity platform could compromise sensitive government data, disrupt client operations, expose us to regulatory penalties and litigation, and cause lasting reputational harm.

Because we are in the business of protecting our clients against cyber threats, a security failure affecting our own operations would be particularly damaging to our credibility and competitive position.

Cyberattacks are becoming more frequent, more sophisticated, and more difficult to detect.

Threat actors—including nation-state actors, organized criminal groups, and insiders—continue to develop new methods of attack, and there can be no assurance that our defensive measures will be sufficient to prevent all breaches.

Additionally, our products may contain undetected errors or defects, may falsely detect vulnerabilities or threats that do not actually exist, or may fail to detect vulnerabilities in our customers’ infrastructure, including due to the constantly evolving techniques used by attackers to access or sabotage data.

If we fail to update our solutions in a timely or effective manner to respond to these threats, our customers could experience security breaches.

We cannot be certain that our insurance coverage will be adequate for data security liabilities actually incurred, or that insurance will continue to be available on economically reasonable terms.

The cybersecurity regulatory environment is rapidly evolving, and our failure to comply with new and changing requirements could result in penalties, loss of contracts, and competitive disadvantage.

Our business is subject to a complex and rapidly changing set of cybersecurity regulations and standards at the federal, state, and local levels.

Federal requirements include compliance with NIST (defined below) SP 800-171 for protecting Controlled Unclassified Information, the Cybersecurity Maturity Model Certification ("CMMC") program, FedRAMP authorization requirements for cloud-based solutions, and various agency-specific security requirements.

State and local governments are also increasingly adopting their own cybersecurity compliance mandates and vendor security assessment programs.

Both as a cybersecurity provider and as a government contractor, we bear a dual compliance burden:

we must maintain our own compliance and must also deliver solutions that enable our clients to achieve and maintain theirs.

Changes to regulatory requirements require us to invest in updating our internal systems, processes, and solution offerings.

These costs can be substantial and may not be fully recoverable under existing contracts.

The SEC's cybersecurity disclosure rules, adopted in 2023, require us to disclose material cybersecurity incidents within four business days, and as a cybersecurity company, any such disclosure would be particularly damaging to our market position.

Our AI-enhanced ARx platform and other technology solutions are at an early stage of market adoption, and there is no assurance that these products will achieve broad commercial acceptance.

We are investing in the development and deployment of our AI-enhanced ARx cybersecurity platform and our Cyber Shield Managed Security Services Platform ("MSSP").

These platforms represent a strategic shift toward higher-margin, technology-driven recurring revenue, but they are at an early stage of market adoption.

There is no guarantee that government or commercial clients will adopt these platforms at the scale or pace we anticipate, that the platforms will perform as expected in production environments, or that competitors will not introduce superior alternatives.

The development and enhancement of these technology platforms require substantial ongoing investment, and if they fail to achieve meaningful market traction, we may not recover our development costs.

The integration of artificial intelligence into our products and services introduces new categories of risk, including adversarial manipulation of AI models, AI-generated false positives or negatives in threat detection, and the evolving federal and state regulatory landscape governing AI in government operations.

Regulatory requirements for AI transparency, bias testing, and explainability are still developing, and future regulations could constrain our product development or require costly modifications to our AI-driven solutions.

We depend on unaffiliated third-party software in order to provide our solutions and professional services and support our operations.

Significant portions of our services and operations rely on software that is licensed from third-party vendors.

The fees associated with these license agreements could increase in future periods, resulting in increased operating expenses.

If there are significant changes to the terms and conditions of our license agreements, or if we are unable to renew these license agreements, we may be required to make changes to our vendors or information technology systems that could impact the solutions and services we provide to our clients or the processes we have in place to support our operations.

Risks Related to Our Financial Condition and Capital Structure

Our recurring losses, net working capital deficit, and accumulated deficit have raised substantial doubt regarding our ability to continue as a going concern.

We have had a net working capital deficit and an accumulated deficit resulting from net income incurred during certain periods and from substantial losses during prior periods.

In addition, we have had net cash outflows from operating activities, all of which raise substantial doubt about our ability to continue as a going concern.

Although we were nominally profitable during certain recent fiscal years, there is no assurance that we will not continue to generate operating losses and consume significant cash resources for the foreseeable future.

Without additional financing, these conditions raise substantial doubt about our ability to continue as a going concern, meaning that we may be unable to continue operations for the foreseeable future or realize assets and discharge liabilities in the ordinary course of operations.

If we seek additional financing to fund our business and potential acquisition activities in the future and there remains doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding on commercially reasonable terms or at all.

If we are unable to obtain sufficient funding, our business, prospects, financial condition, and results of operations will be materially and adversely affected, and we may be unable to continue as a going concern.

If we are unable to continue as a going concern, we may have to liquidate our assets and may receive less than the value at which those assets are carried on our financial statements;

accordingly, it is likely that stockholders will lose all or a part of their investment.

We will require substantial additional funding

in the future, which may not be available to us on acceptable terms, or at all, and, if not so available, may require us to delay, limit,

reduce, or cease our operations.

Our operations have consumed substantial amounts

of cash since our inception.

As of December 31, 2024, we had an accumulated deficit of $3.2 million.

We expect to continue to incur significant

expenses and increasing operating losses for the foreseeable future.

Our business will require substantial additional capital for implementation

of our long-term business plan and development of cybersecurity technology.

Our ability to raise additional funds may be adversely impacted

by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets

As we require additional funds, we may seek to fund our operations through the sale of additional equity securities, debt

financing, and/or strategic collaboration agreements.

We cannot be sure that additional financing from any of these sources will be available

when needed or that, if available, the additional financing will be obtained on favorable terms.

If we raise additional funds by selling shares of

our common stock or other equity-linked securities, the ownership interest of our current stockholders will be diluted.

We may seek to

access the public or private capital markets whenever conditions are favorable, even if we do not have an immediate need for additional

capital at that time.

If we raise additional funds through collaborations, strategic alliances or marketing, distribution, or licensing

arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, or assets or

to grant licenses on terms that may not be acceptable to us.

If we raise additional funds through debt financing, we may have to grant

a security interest on our assets to the future lenders, our debt service costs may be substantial, and the lenders may have a preferential

position in connection with any future bankruptcy or liquidation involving the Company.

We may issue additional shares of common stock

or preferred stock under an employee incentive plan, which would dilute the interest of our stockholders.

We may issue a substantial number of additional shares

of common or preferred stock under an employee incentive plan.

The issuance of additional shares of common or preferred stock:

significantly dilute the equity interest of investors;

subordinate the rights of holders of common stock if preferred stock is issued with rights

senior to those afforded our common stock;

cause a change of control if a substantial number of shares of our common stock are issued,

which may affect, among other things, our ability to use our net operating loss carry forwards,

if any, and could result in the resignation or removal of our present officers and directors;

adversely affect prevailing market prices for the common stock.

Cycurion’s ability to grow and compete

in the future will be adversely affected if adequate capital is not available to it or not available on favorable terms.

Cycurion has limited capital resources.

it has financed its operations through a mix of equity investments by unaffiliated third parties and bank debt financing and, except

in connection with this Offering, it expects to continue to do so in the foreseeable future.

Cycurion’s ability to continue its

normal and planned operations, to grow its business, and to compete in the cybersecurity industry will depend on the availability of

adequate capital.

Management cannot assure you that Cycurion will be

able to obtain additional financing from those or other sources when or in the amounts needed, on acceptable terms, or at all.

raises capital through the sale of equity, or securities convertible into equity, that would result in dilution to its then-existing

stockholders, which could be significant depending on the price at which it may be able to sell its securities.

If Cycurion raises additional

capital through the incurrence of additional indebtedness, it would likely become subject to further covenants restricting its business

activities, and holders of debt instruments would have rights and privileges senior to those of its then-existing stockholders.

servicing the interest and principal repayment obligations under debt facilities could divert funds that would otherwise be available

to support development of new programs and marketing to current and potential new clients.

If Cycurion is unable to raise capital when

needed or on acceptable terms, it could be forced to delay, reduce, or eliminate certain products or professional service offerings or

future marketing efforts, or reduce or discontinue its operations.

Any of these events could significantly harm Cycurion’s business,

financial condition, and prospects and could cause the value of its common stock to decline, resulting in a significant or complete loss

of your investment.

If Cycurion does not continue to innovate and

offer solutions and professional services that address the dynamic threat landscape, it may not remain competitive and its revenue and

operating results could suffer.

Cycurion’s success will depend, in part, on

its ability to develop and implement innovative customer solutions and professional services that anticipate and keep pace with rapid

and continuing changes in technology, industry standards, and client preferences, as well as continue to attract top talent and expertise

in order to develop innovative solution offerings and professional services that are required to keep up with dynamic industry landscapes.

Cycurion may not be successful in anticipating or responding to these developments in a timely basis, and its offerings may not be successful

in the marketplace.

In addition, services, solutions, and technologies developed by its competitors may make its service or solution

offerings uncompetitive or obsolete.

Any of these circumstances could have a material adverse effect on its ability to obtain and successfully

complete important client engagements, which in return would negatively affect revenue and operating results.

Cycurion relies on personnel with extensive

information security expertise and the loss of, or its inability to attract and retain, qualified personnel in the highly competitive

labor market for such expertise could harm its business.

Cycurion’s future performance depends upon

its ability to attract and retain qualified cybersecurity personnel.

The information technology consulting and cybersecurity industries

have highly competitive labor markets, which depend on technical expertise and experience.

In the future, it may be unable to continue

to recruit and retain talent.

If it is unable to recruit and/or retain talent, it may not be able to expand.

Finally, its competitors

may offer more competitive compensation packages than it could afford to offer.

Cycurion regularly attempts to benchmark its employee

and contractor compensation against compensation paid within our industry and, if possible, make annual adjustments to the compensation

it pays in order to remain competitive in the market.

In order to attract and retain the number of employees

Cycurion needs to grow our business, it may need to increase its compensation levels in the future.

This could adversely affect its operating

margins, which, in turn, could negatively affect its financial condition and operating results.

If Cycurion is unable to hire, retain, train,

and motivate qualified personnel and senior management, its business could suffer.

Cycurion’s future success largely depends upon

the continued contribution, attraction, and retention of its senior management and other qualified personnel.

If one or more of Cycurion’s

executive officers are unable or unwilling to continue in their present positions, it may not be able to replace them readily, if at

Additionally, it may incur additional expenses to recruit and retain new executive officers.

If any of its executive officers joins

a competitor or forms a competing company, it may lose some or all of its customers.

Finally, it does not maintain “key person”

life insurance on any of its executive officers.

Because of these factors, the loss of the services of any of these key persons could

adversely affect Cycurion’s business, financial condition, and results of operations, and thereby an investment in its common stock.

Cycurion must continually enhance its training,

existing solutions and technology tools and develop or acquire new solutions and tools, or it will lose clients and its competitive position

The cybersecurity landscape is constantly changing

with increasing scale, frequency, and organization of attacks.

Thus, there is a high need for constant improvement and updates in Cycurion’s

existing solutions and technologies.

Cycurion faces the risks of its services offerings not being adequately competitive, including not

being able to:

(i) accurately targeting its clients’ and prospective clients’ most-needed solutions (ii) being cost-effective

for its clients and prospective clients, and (iii) being easy to use.

If Cycurion does not meet its clients’ and

prospective clients’ expectations, or adequately mitigate these risks, it risks losing its competitive position and clients, which,

in turn, will decrease its operating profits, revenue, and net income.

Cycurion faces intense competition in the cybersecurity

industry, especially from larger, well-established companies.

Cycurion faces significant competition from other

cybersecurity companies, especially those companies who are considered the larger and more established entities.

Relative to Cycurion,

many of these companies have significantly greater financial, technical, marketing, and other resources, longer operating histories,

more well-established brand names and business user recognition, larger customer bases, larger and more mature intellectual property

portfolios, and more diverse strategic plans and service offerings.

Intense competition from these traditional and new cybersecurity

companies has led to declining prices and margins for many cybersecurity services, and Cycurion expects this trend to continue as competition

intensifies in the future.

Any decrease in Cycurion’s pricing or margins, could significantly harm its business, financial condition,

and results of operations, resulting in a significant or complete loss of your investment.

Further, decreasing prices for such professional

services due to high number of entrants has somewhat diminished the competitive advantage that Cycurion has enjoyed as a result of its

service pricing.

If its competitors implement a similar business model, then Cycurion’s competitive position in the market might

Should this happen, its ability to acquire and keep customers would be impaired.

Cycurion’s competitors may also introduce

new technologies or services that could make Cycurion’s product offerings and professional services less attractive to its customers

or potential customers.

The inability to maintain or improve its competitive standing within the cybersecurity industry could materially

adversely affect its business, prospects, financial condition, and results of operations.

For all of these reasons, Cycurion may not be able

to compete successfully against its current or future competitors or may be required to expend significant resources in order to remain

If Cycurion’s competitors are more successful than Cycurion in developing new product and service offerings or in

attracting and retaining customers, Cycurion’s business, financial condition, and results of operations could be adversely affected.

If our products or professional services fail

to detect vulnerabilities or identify and respond to cybersecurity incidents, or if our products contain undetected errors or defects,

our brand and reputation could be harmed, which could have an adverse effect on our business and results of operations.

If our products or professional services fail to

detect vulnerabilities in our customers’ cybersecurity infrastructure, or if our products or professional services fail to identify

and respond to new and increasingly complex methods of cyber-attacks, our business and reputation may suffer.

There is no guarantee that

our products or professional services will detect all vulnerabilities, especially in light of the rapidly changing security landscape

to which we must respond.

Additionally, our products may falsely detect vulnerabilities or threats that do not actually exist.

Our products may also contain undetected errors or

Any errors, defects, disruptions in service, or other performance problems with our products may damage our customers’

businesses and could hurt our reputation.

If our products or professional services fail to detect vulnerabilities for any reason, we

may incur significant costs, the attention of our key personnel could be diverted, our customers may delay or withhold payment to us

or elect not to renew or other significant customer relations problems may arise.

We may also be subject to liability claims for damages

related to errors or defects in our products.

A material liability claim or other occurrence that harms our reputation or decreases market

acceptance of our products may harm our business and operating results.

Many federal, state, and foreign governments have

enacted laws requiring companies to notify individuals of data security breaches involving their personal data.

These mandatory disclosures

regarding a security breach often lead to widespread negative publicity, and any association of us with such publicity may cause our

customers to lose confidence in the effectiveness of our security solutions.

An actual or perceived security breach or theft of the sensitive

data of one of our customers, regardless of whether the breach is attributable to the failure of our products or professional services,

could adversely affect the market’s perception of our offerings and subject us to legal claims.

have recently acquired multiple businesses.

Our growth strategy is driven by successful acquisitions and integration of additional businesses

that provide comparable or complementary services.

Our ability to grow is limited if we fail to identify and consummate acquisitions.

have completed the acquisition of certain complementary businesses, and we intend to consider additional potential strategic transactions,

which could involve acquisitions of businesses or assets, joint ventures, or investments in businesses or technologies that expand, complement,

or otherwise relate to our business.

We may also consider, from time to time, opportunities to engage in joint ventures or other business

collaborations with third parties.

Should our relationships fail to materialize into significant agreements, or should we fail to work

efficiently with these companies, we may lose sales and marketing opportunities and our business, results of operations, and financial

condition could be adversely affected.

business acquisition creates risks such as, among others:

(i) the need to integrate and manage the businesses acquired with our own business;

(ii) additional demands on our resources, systems, procedures, and controls; (iii) disruption of our ongoing business;

diversion of management’s attention from other business concerns.

Moreover, these transactions could involve:

(a) substantial investment

of funds or financings by issuance of debt or equity securities;

(b) substantial investment with respect to technology transfers and

operational integration;

and (c) the acquisition or disposition of lines of businesses.

Also, such activities could result in one-time

charges and expenses and have the potential to either dilute the interests of our existing stockholders or result in the issuance of,

or assumption of debt.

Such acquisitions, investments, joint ventures, or other business collaborations may involve significant commitments

of financial and other resources.

Any such activities may not be successful in generating revenue, income, or other returns, and any

resources we committed to such activities will not be available to us for other purposes.

Moreover, if we are unable to access the capital

markets on acceptable terms or at all, we may not be able to consummate acquisitions, or may have to do so on the basis of a less than

optimal capital structure.

Our inability to take advantage of growth opportunities or address risks associated with acquisitions or investments

in businesses may negatively affect our operating results.

Additionally,

any impairment of goodwill or other intangible assets acquired in an acquisition or in an investment, or charges to earnings associated

with any acquisition or investment activity, may materially reduce our earnings.

Future acquisitions or joint ventures may not result

in their anticipated benefits and we may not be able to properly integrate acquired technologies or businesses with our existing operations

or successfully combine personnel and cultures.

Failure to do so could deprive us of the intended benefits of those acquisitions.

intend to grow our client base significantly through acquisitions of other service providers.

If we fail to retain existing clients and

attract new clients through acquisitions, we may never achieve profitability.

acquisition of other service providers, we will inherit an increasingly larger client base, which creates cross-selling and up-selling

opportunities.

We need high-quality service and exemplary client management to retain and grow our client base.

We also plan to launch

sales and marketing efforts, and if our marketing efforts do not materialize, we may lose existing clients or fail to obtain new clients.

Our inability to grow sales as we expand in operations may result in continuing losses, and we may not be profitable for an extended

period of time.

In addition, even if we are able to make future acquisitions, we will incur additional costs to consummate them, which

may result in a shortage in our capital resources.

We may also incur difficulties in integrating new businesses with our current operations.

business strategy may impose limitations in our ability to accurately forecast future revenue and operating results.

operating results are dependent on a variety of factors, including purchasing patterns of our clients, competitive pricing, debt servicing,

and general economic trends.

Our revenue and operating results may fluctuate if our sales targets are not met, new service offerings

receive poor client response, or client acquisition costs increase due to competition.

In addition to these factors, our acquisition

strategy may impose additional risks to the predictability of our operating results.

Revenue streams may be volatile due to the uncertainty

in identifying attractive acquisition candidates and our ability to consummate new acquisitions.

Unexpected expenses may be incurred

during due diligence and post-acquisition.

Management intends to manage risk carefully with the acquisitions; however, there can

be no assurance that we will be able to identity and consummate acquisitions that improve our results of operations.

As a cybersecurity provider, we are a target

of cyber-attacks and other cyber risks that could adversely impact our reputation and operating results.

As a cybersecurity provider, we have been and will

likely be a target of cyber-attacks designed to impede the performance of our products, penetrate our network security, or that of our

customers, misappropriate proprietary information and/or cause interruptions to our services.

If our systems are breached as a result

of third-party action, employee error or misconduct, attackers could learn critical information about how our products operate to help

protect our customers’ infrastructures from cyber risk, thereby making our customers more vulnerable to cyber-attacks.

if actual or perceived breaches of our network security occur, they could adversely affect the market perception of our products, negatively

affecting our reputation, and may expose us to the loss of our proprietary information or information belonging to our customers, investigations

or litigation and possible liability, including injunctive relief and monetary damages.

Such security breaches could also divert the

efforts of our key personnel.

In addition, such security breaches could impair our ability to operate our business and provide products

and services to our customers.

If this happens, our reputation could be harmed, our revenue could decline and our business could suffer.

Additionally, we cannot be certain that our insurance

coverage will be adequate for data security liabilities actually incurred, will cover any indemnification claims against us relating

to any incident, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer

will not deny coverage as to any future claim.

The successful assertion of one or more large claims against us that exceed available

insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible

or co-insurance requirements, could have a material adverse effect on our business, including our financial condition, operating results,

and reputation.

The loss of, or a significant reduction, in

purchases by any of our larger clients could adversely affect our business and financial results.

Currently, we are dependent on a few clients for

a large portion of our revenue.

If we fail to provide professional services to these clients on a timely basis or fail to meet their

performance expectations, including the failure to enhance, maintain, upgrade, or improve our products and professional services, we

may lose some of our clients that generate a significant amount of our revenue.

If this were to happen, we would need to acquire several

smaller clients or another large client to replace the lost revenue, as to which acquisitions there can be no assurance.

Any loss of a significant customer could increase

our per-client costs, decrease our operating efficiencies, and have a material adverse effect on our business, results of operations,

and financial condition.

There can be no assurance that we can easily mitigate the potential loss of any of our larger clients, if at

The failure of Congress to approve appropriations

bills in a timely manner for the Federal government agencies and departments we support, or the failure of the Administration and Congress

to reach an agreement on fiscal issues, could delay and reduce spending, cause us to lose revenue and profit, and affect our cash flow.

On an annual basis, Congress is required to approve

appropriations bills that govern spending by each of the Federal government agencies and departments we support.

When Congress is, or

Congress and the Administration are, unable to agree on budget priorities and, thus, unable to pass annual appropriations bills on a

timely basis, Congress typically enacts a continuing resolution.

Continuing resolutions generally allow Federal government agencies and

departments to operate at spending levels based on the previous fiscal year.

When agencies and departments operate on the basis of a

continuing resolution, funding we expect to receive from clients for work we are already performing and for new initiatives may be delayed

or cancelled.

Congress and the Administration have from time to time failed to agree on a continuing resolution, resulting in temporary

shutdowns of non-essential Federal government functions and our work on such functions.

Such shutdowns may result in delayed payments

to us and/or the delay of certain programs and projects for which we were engaged.

Thus, the failure by Congress and the Administration

to enact appropriations bills in a timely manner can result in the loss of revenue and profit when Federal government agencies and departments

are required to cancel or change existing or new initiatives or the deferral of revenue and profit to later periods due to shutdowns

or delays in implementing existing or new initiatives.

There is also the possibility that Congress will fail to raise the U.S.

debt ceiling,

when necessary.

This can also result in Federal government shutdowns.

The delayed funding or shutdown of many parts of the Federal government,

including agencies, departments, programs, and projects we support, could have a substantial negative affect on our revenue, profits,

and cash flow.

Substantially all of our revenue is generated

from contracts with Federal governmental entities.

We derived substantially all of our revenue in each

of 2024 and 2023 from contracts with Federal government clients.

Selling to government entities can be highly competitive, expensive

and time consuming, and often requires significant upfront time and expense without any assurance that we will win a sale.

Further expenditures

by our Federal government clients may be restricted or reduced by Administration or congressional actions, by action of the Office of

Management and Budget, by action of individual agencies or departments, or by other actions.

Accordingly, we expect that, due to changing

government budgeting and spending priorities and related disputes among Congress and the Administration, some of our government clients

in the future may delay payments due to us, may eventually fail to pay what they owe us, and/or may delay certain programs and projects.

For some government clients, we may face a difficult choice:

turn down (or stop) work due to budget uncertainty with the risk of damaging

a valuable client relationship or perform work with the risk of not being paid in a timely fashion or perhaps at all.

Congressional elections

could also affect spending priorities and budgets at all levels of government.

In addition, increased deficits and debt at all levels

of government, may lead to reduced spending by agencies and departments on projects or programs we support.

Government entities also have heightened sensitivity

surrounding the purchase of cybersecurity solutions due to the critical importance of their IT infrastructures, the nature of the information

contained within those infrastructures and the fact that they are highly visible targets for cyber-attacks.

Accordingly, increasing sales

of our products and professional services to government entities may be challenging.

Further, in the course of providing our products

and professional services to government entities, our employees and those of our channel partners may be exposed to sensitive government

Any failure by us or our channel partners to safeguard and maintain the confidentiality of such information could subject

us to liability and reputational harm, which could materially and adversely affect our results of operations and financial performance.

Our reliance on U.S.

General Services Administration

Multiple Award Schedule (“GSA Schedule”) contracts and other Indefinite Delivery/Indefinite Quantity (“IDIQ”)

contracts creates the risk of volatility in our revenue and profit levels.

We believe that one of the elements of our success

is our position as a prime contractor under GSA Schedule contracts and other IDIQ contracts, and we believe this position is important

to our ability to sell our services to Federal government clients.

However, these contract vehicles require us to compete for each delivery

order and task order, rather than having a more predictable stream of activity during the term of a multi-year contract.

we may spend considerable cost and management time and effort to prepare bids and proposals for contracts, delivery orders, or task orders

that we may not win.

There can be no assurance that we will continue to obtain revenue from such contracts at current levels, or in any

amount, in the future.

To the extent that Federal government agencies and departments choose to employ GSA Schedule contracts and other

IDIQ contracts encompassing activities for which we are not able to compete or provide services, we could lose business, which would

negatively affect our revenue and profitability.

Future acquisitions could disrupt our business

and harm our financial condition and operating results.

To remain competitive, we have in the past and may

in the future seek to acquire additional businesses, products, or technologies.

The environment for acquisitions in our industry is very

competitive and acquisition candidate purchase prices will likely exceed what we would prefer to pay.

We also may not find suitable acquisition

candidates, and acquisitions we complete may be unsuccessful.

Achieving the anticipated benefits of future acquisitions

will depend in part upon whether we can integrate acquired operations, products and technology in a timely and cost-effective manner

and successfully market and sell these as new product offerings, or as new features within our existing offerings.

The acquisition and

integration processes are complex, expensive, and time consuming, and may cause an interruption of, or loss of momentum in, product development,

sales activities, and operations.

If we are unable to effectively execute or integrate acquisitions, our business, financial condition,

and operating results could be adversely affected.

In addition, we may only be able to conduct limited

due diligence on an acquired company’s operations or may discover that the products or technology acquired were not as capable

as we thought based upon the initial or limited due diligence.

Following an acquisition, we may be subject to unforeseen liabilities

arising from an acquired company’s past or present operations and these liabilities may be greater than the warranty and indemnity

limitations that we negotiate.

Any unforeseen liability that is greater than these warranty and indemnity limitations could have a negative

impact on our financial condition.

Our strategic partnerships expose us to a range

of business risks and uncertainties that could have a material adverse impact on our business and financial results.

We and our subsidiaries have entered, and intend

to continue to enter, into strategic partnerships with third parties to support our future growth plans.

We cannot provide any assurance

that we will be able to continue to enter into additional strategic partnerships.

Strategic partnerships require significant coordination

between the parties involved, particularly if a partner requires that we integrate its products with our products.

Further, we have invested

and will continue to invest significant time, money, and resources to establish and maintain relationships with our strategic partners,

but we have no assurance that any particular relationship will continue for any specific period of time, result in new offerings that

we can effectively commercialize, or result in enhancements to our existing offerings.

We are dependent on the continued services

and performance of our senior management and other key employees, the loss of any of whom could adversely affect our business, operating

results, and financial condition.

Our future performance depends on the continued services

and contributions of our senior management, particularly Emmit McHenry, and other key employees to execute on our business plan and to

identify and pursue new opportunities and product innovations.

From time to time, there may be changes in our senior management team

resulting from the termination or departure of our executive officers and key employees.

The loss of the services of our senior management,

particularly Emmit McHenry, or other key employees for any reason could significantly delay or prevent the achievement of our development

and strategic objectives and harm our business, financial condition, and results of operations.

Accusations against us by third parties of

infringement or other violations of their intellectual property rights, regardless of the accuracy of these assertions, could result

in significant costs and harm our business and operating results.

We cannot ensure that our professional services and

solutions, or the third-party solutions that we offer to our clients, do not infringe on the intellectual property rights of third parties

and, in the future, we may have infringement claims asserted against us or against our clients.

These claims could harm our reputation,

require us to incur significant expenses and monetary liability, and prevent us from offering some of our current professional services

or solutions.

Legal challenges to our intellectual property rights and claims of intellectual property infringement by third parties

could require that we enter into royalty or licensing agreements on less-than-favorable terms.

Even if we believe any such challenges

or claims are without merit, they can be time-consuming and costly to defend, injure our reputation, and divert management’s attention

and resources away from our business.

We may need to change our business practices if any of these events were to occur, which may limit

our ability to compete effectively and could have an adverse effect on our results of operations.

We depend on unaffiliated third-party software

in order to provide our solutions and professional services and support our operations.

Significant portions of our services and operations

rely on software that is licensed from third-party vendors.

The fees associated with these license agreements could increase in future

periods, resulting in increased operating expenses.

If there are significant changes to the terms and conditions of our license agreements,

or if we are unable to renew these license agreements, we may be required to make changes to our vendors or information technology systems.

These changes could impact the solutions and services we provide to our clients or the processes we have in place to support our operations,

which could have an adverse effect on our business.

Any material weakness in our internal controls

could adversely affect our business.

In the future, under Section 404 of the Sarbanes-Oxley

Act of 2002 (the “SOX Act”), we will be required to furnish a report by our management on internal control over financial

This report must contain, among other matters, an assessment of the effectiveness of our internal control over financial reporting,

including a statement as to whether or not our internal control over financial reporting is effective.

This assessment must include disclosure

of any material weaknesses in our internal control over financial reporting identified by our management.

We identify material weakness in our internal controls, which could affect

our ability to provide reliable financial statements and our business decision-making process, could harm our business and operating results,

cause investors to lose confidence in our reported financial information, cause the market price of our securities to decrease and harm

our ability to obtain additional financing, especially additional financing on favorable terms, could be adversely affected.

failure to maintain effective internal control over financial reporting could result in investigations or sanctions by regulatory authorities.

For a description of our material weaknesses, please see “Item 9A.

Controls and Procedures.”

We may not be able to manage our growth effectively

or improve our operational, financial, and management information systems, which would impair our results of operations.

In the near term, we intend to expand the scope of

our operational activities significantly.

If we are successful in executing our business plan, we will experience growth in our business

that could place a significant strain on our business operations, finances, management, and other resources.

The factors that may place

strain on our resources include, but are not limited to, the following:

need for continued development of our financial and information management systems;

need to manage strategic relationships and agreements with manufacturers, customers, and

● Difficulties

in hiring and retaining skilled management, technical, and other personnel necessary to support

and manage our business.

Additionally, our strategy envisions a period of

rapid growth that may impose a significant burden on our administrative and operational resources.

Our ability to manage growth effectively

will require us to expand the capabilities of our administrative and operational resources substantially and to attract, train, manage,

and retain qualified management and other personnel.

There can be no assurance that we will be successful in recruiting and retaining

new employees or retaining existing employees.

We cannot provide assurances that our management

will be able to manage this growth effectively.

Our failure to manage growth successfully could result in our sales not increasing commensurately

with capital investments, if at all, or otherwise materially adversely affecting our business, financial condition, or results of operations.

We may issue additional shares of Cycurion

common stock or other equity securities without your approval, which would dilute your ownership interests and may depress the market

price of your shares.

We may issue additional shares of Cycurion common

stock or other equity securities of equal or senior rank in the future in connection with, among other things, future acquisitions, repayment

of outstanding indebtedness or under the Equity Incentive Plan, without stockholder approval, in a number of circumstances.

Our issuance of additional shares of Cycurion common

stock or other equity securities of equal or senior rank could have the following effects:

proportionate ownership interest in the combined company decrease;

relative voting strength of each previously outstanding share of the combined company may

be diminished;

market price of our shares of the combined company stock may decline.

If we are unable continually to add new customer

offerings, innovate, and increase efficiencies, our ability to attract new customers may be adversely affected.

In the area of innovation, we must be able to add

new solutions and professional service offerings and adopt sales incentives and policies that appeal to our customers and prospective

This depends, in part, on the creative and marketing skills of our personnel and on our ability to appeal to both customers

and manufacturers.

We may not be successful in the development, introduction, marketing and sourcing of new products or sales policies

that satisfy customer needs, achieve market acceptance, or generate satisfactory financial returns, any of which could adversely affect

our business, financial condition, or results of operations.

Risks Related to the SLG Assignment Agreement

We may fail to consummate some, or all of the

assumptions contemplated by the SLG Assignment Agreement.

There is no guarantee that our possible assumption

of any or all of the to-be-assigned SLG agreements, which, if assumed by us, would result in our becoming the prime contractor thereunder,

will be approved by the counterparties.

Mitigating factors that may hinder its acquisition include:

or regulatory challenges related to our possible assumptions of the to-be-assigned SLG agreements,

which will result in our becoming the prime contractor thereunder;

of material incompatibilities or challenges from our due diligence of the to-be-assigned

SLG agreements, which, if assumed by us, would result in our becoming the prime contractor

● Misrepresentation

by SLG in respect of any of the to-be-assigned SLG agreements, which, if assumed by us, would

result in our becoming the prime contractor thereunder;

counterparty to one or more of the to-be-assigned SLG agreements, which, if assumed by us,

would result in our becoming the prime contractor thereunder, does not approve the relevant

assignment to us.

Due Diligence may not reveal all issues with

respect to SLG.

There is no assurance that our due diligence will

reveal all relevant information regarding the to-be- assigned SLG agreements, which, if assumed by us, would result in our becoming the

prime contractor thereunder.

We rely on our working relationship with SLG, the counterparties to the to-be-assigned SLG agreements, which,

if assumed by us, would result in our becoming the prime contractor thereunder, as well as the information provided to us by SLG, its

management, counsel, and auditors.

There is no assurance that we will receive all relevant information or identify any current or historical

factor that might otherwise prevent us from consummating any or all of the assumptions of the to-be-assigned SLG agreements, which, if

assumed by us, would result in our becoming the prime contractor thereunder, or cause significant financial costs thereafter.

We may incur significant unforeseen costs related

to our possible assumption of the to-be-assigned SLG agreements, which, if assumed by us, would result in our becoming the prime contractor

thereunder, that are the subject of the SLG Assignment Agreement.

We recognize that there may be significant additional

costs related to the assumption of the to-be- assigned SLG agreements, which, if assumed by us, would result in our becoming the prime

contractor thereunder, that are the subject of the SLG Assignment Agreement, including costs related to legal and due diligence, integration

and consolidation of the to-be-assigned SLG agreements themselves, which, if assumed by us, would result in our becoming the prime contractor

thereunder, as distinguished from our operating as a subcontractor for those agreements, and other unexpected or unforeseen costs.

consummating the transactions contemplated by the SLG Assignment Agreement may cause us to:

common stock that will dilute our current stockholders’ ownership;

a substantial portion of our cash resources;

our interest expense, leverage, and debt service requirements if we incur additional debt

to in connection with the obligations that we will assume under the to-be-assigned SLG agreements,

which, if assumed by us, would result in our becoming the prime contractor thereunder;

unexpected liabilities for which SLG has not agreed to indemnify us sufficiently or for which

SLG does not have the resources to indemnify us;

goodwill and non-amortizable intangible assets that are subject to impairment testing and

potential impairment charges.

There is no assurance that we will be able

to integrate becoming the prime contractor under the to-be-assigned SLG agreements into our business model, which could then result in

significant disruption to our business.

Our inability to integrate the to-be-assigned SLG

agreements, which, if assumed by us, would result in our becoming the prime contractor thereunder, could impede us from realizing all

the benefits of the possible assignments.

The integration process of the to-be-assigned SLG agreements, which, if assumed by us, would

result in our becoming the prime contractor thereunder, may disrupt our current business model of being a significant subcontractor on

many projects rather than the prime contractor itself.

The role of prime contractor has certain significant benefits regarding bidding

for future contracts, but carries with it a significant administrative burden that currently we may not be able to fulfill successfully.

There is no assurance that any or all the counterparties

to the to-be-assigned SLG agreements, which, if we are able to assume, would result in our becoming the prime contractor thereunder,

will permit such assignment by SLG and assumption by us.

We have no reason to believe that any of the counterparties

will not approve the prospective assignments of the SLG agreements;

however, because the terms of each of the agreements that SLG has

agreed to assign to us has a provision that provides the counterparty to such agreement with a right to approve an assignment prior to

its effectiveness (even though we are known to each applicable counterparty as the prime subcontractor), we cannot provide any assurance

that any or all of the counterparties will provide approval of the proposed assignments.

Nevertheless, without those approvals, we would

continue as the prime subcontractor under each of the agreements and, pursuant to the provisions of the SLG Assignment Agreement, SLG

and we would reduce the consideration that we would otherwise tender to SLG.

There is no assurance that the to-be-assigned

SLG agreements, which, if assumed by us, would result in our becoming the prime contractor thereunder, will perform as expected.

There is no assurance that the to-be-assigned SLG

agreements, which, if assumed by us, would result in our becoming the prime contractor thereunder, will continue to operate at current

or historic levels.

Although we have no reason to believe otherwise, that is the same risk that we face as the prime subcontractor for

such agreements;

however, as the prime contractor under such agreements, our costs would be higher than they currently are.

Our insurance policies are expensive and protect

us only from some business risks, which will leave us exposed to significant uninsured liabilities.

We carry insurance for most categories of risk that

our business may encounter;

Our level of indebtedness and debt service obligations could adversely affect our financial condition and make it more difficult to fund our operations.

We have significant indebtedness and other liabilities outstanding.

This level of indebtedness means that we will need to use a substantial portion of available cash flow to pay interest and principal on existing debt, reducing the amount of money available to finance our operations and other business activities.

Our debt level increases our vulnerability to general economic downturns and adverse industry conditions, could limit our flexibility in planning for or reacting to changes in our business, could place us at a competitive disadvantage compared to our competitors that have less debt, and our failure to comply with financial and other restrictive covenants in our debt instruments could result in an event of default that, if not cured or waived, could have a material adverse effect on our business or prospects.

Despite the existing level of indebtedness, we and our subsidiaries may incur additional indebtedness, which could further exacerbate these risks.

We will require substantial additional funding in the future, which may not be available to us on acceptable terms, or at all, and, if not so available, may require us to delay, limit, reduce, or cease our operations.

Our operations have consumed substantial amounts of cash since our inception.

Our business will require substantial additional capital for implementation of our long-term business plan and development of cybersecurity technology.

Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and disruptions to the credit and financial markets.

We may seek to fund our operations through the sale of additional equity securities, debt financing, and/or strategic collaboration agreements.

We cannot be sure that additional financing from any of these sources will be available when needed or that, if available, it will be obtained on favorable terms.

If we raise additional funds by selling shares of our common stock or other equity-linked securities, the ownership interest of our current stockholders will be diluted.

We may issue additional shares of Cycurion common stock or other equity securities without stockholder approval in connection with future acquisitions, repayment of outstanding indebtedness, or under the 2025 Equity Incentive Plan.

The issuance of additional shares could decrease your proportionate ownership interest, subordinate the rights of holders of common stock if preferred stock is issued with senior rights, or adversely affect the market price of our shares.

If we raise additional funds through debt financing, we may have to grant a security interest on our assets, and servicing the interest and principal repayment obligations could divert funds that would otherwise be available to support development of new programs and marketing.

If we are unable to raise capital when needed or on acceptable terms, we could be forced to delay, reduce, or eliminate certain service offerings or future marketing efforts, or reduce or discontinue our operations.

Our allocation of capital to cryptocurrency investments involves speculative risk and may not align with the expectations of our shareholders or clients .

Through our subsidiary, Cycurion Crypto, we have allocated capital from our equity line of credit to acquire Bitcoin and Ethereum as long-term holdings.

Cryptocurrency markets are extremely volatile and subject to regulatory uncertainty, technological risks, and market manipulation.

The value of our cryptocurrency holdings could decline substantially, and such declines would adversely affect our financial condition and results of operations.

Our decision to allocate capital to cryptocurrency rather than to our core cybersecurity operations or working capital needs may be viewed unfavorably by investors, analysts, and government clients.

There is no assurance that our cryptocurrency strategy will enhance shareholder value.

Risks Related to Our Growth Strategy and Acquisitions

Our growth strategy depends in part on acquisitions, which involve integration risks, potential liabilities, and the diversion of management's attention, and if we fail to retain existing clients and attract new clients through acquisitions, we may not achieve profitability.

We have completed the acquisition of certain complementary businesses, and we intend to consider additional potential strategic transactions that expand, complement, or otherwise relate to our business.

Any business acquisition creates risks such as the need to integrate and manage the acquired business, additional demands on our resources and controls, disruption of our ongoing business, and diversion of management’s attention.

The environment for acquisitions in our industry is very competitive and acquisition candidate purchase prices will likely exceed what we would prefer to pay.

We may only be able to conduct limited due diligence on an acquired company’s operations or may discover that products or technology acquired were not as capable as we initially assessed.

Following an acquisition, we may be subject to unforeseen liabilities arising from the acquired company’s past or present operations that may exceed negotiated warranty and indemnity limitations.

Through acquisition of other service providers, we will also inherit an increasingly larger client base, which creates cross-selling and up-selling opportunities but also requires high-quality service and exemplary client management to retain and grow that base.

If our marketing and integration efforts do not materialize, we may lose existing clients or fail to obtain new clients.

Integration challenges are particularly acute for a company of our size, as we have limited management bandwidth and financial resources to absorb the complexity of multiple simultaneous integration efforts.

Any impairment of goodwill or other intangible assets acquired in an acquisition may materially reduce our earnings.

Our strategic partnerships and international expansion expose us to a range of business risks and uncertainties.

We have entered, and intend to continue to enter, into strategic partnerships with third parties to support our future growth plans, including our partnership with LSV-TECH International Consortium to launch our MSSP Cyber Shield platform in Latin America and our collaboration with NACCHO for public health cybersecurity.

Strategic partnerships require significant coordination, and we have invested and will continue to invest significant time, money, and resources to establish and maintain these relationships.

There is no assurance that any particular relationship will continue, result in new offerings that we can effectively commercialize, or generate meaningful revenue.

International expansion exposes us to risks including unfamiliar regulatory environments, foreign exchange fluctuations, geopolitical instability, and the challenges of establishing brand recognition in new geographies.

Risks Related to Our Human Capital

We rely on personnel with extensive information security expertise, including security-cleared professionals, and the loss of, or our inability to attract and retain, qualified personnel could harm our business.

Our future performance depends upon our ability to attract and retain qualified cybersecurity personnel and the continued contribution of our senior management and other qualified personnel.

The information technology consulting and cybersecurity industries have highly competitive labor markets, and there is a well-documented nationwide shortage of qualified cybersecurity professionals.

This shortage is particularly acute for personnel who hold government security clearances, as the clearance process is lengthy, expensive, and outside of our control, which constrains our ability to staff contracts and scale our operations rapidly in response to new contract awards.

We compete for talent with larger, better-capitalized firms that can offer higher compensation, more extensive benefits, and broader career advancement opportunities.

In order to attract and retain the employees we need, we may need to increase compensation levels, which could adversely affect our operating margins.

The loss of the services of our senior management or other key employees for any reason could significantly delay or prevent the achievement of our development and strategic objectives.

If any of our executive officers joins a competitor or forms a competing company, we may lose some or all of our customers.

We do not maintain key-person life insurance on any of our executive officers.

Risks Related to Our Securities and Nasdaq Listing

There can be no assurance that our securities will continue to be listed on Nasdaq in the future.

Our common stock is listed on The Nasdaq Global Market and our warrants are listed on The Nasdaq Capital Market.

We have received, and may continue to receive, deficiency notices from Nasdaq related to our failure to timely file periodic reports with the SEC and to meet minimum bid price, market value of listed securities, and market value of publicly held shares requirements.

Although we are working to regain compliance with all applicable Nasdaq listing rules, there is no guarantee that we will be able to do so within the required time periods or at all.

If our common stock were to be delisted from Nasdaq and become quoted on the over-the-counter market, and if the trading price were below $5.00 per share at the time of delisting, trading in our common stock would be subject to certain rules promulgated under the Exchange Act that require additional disclosure by broker-dealers in connection with trades involving “penny stocks” and impose various sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited investors.

These additional requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit the market price and liquidity of our common stock.

Delisting could also impair our reputation with government clients and partners, who may view our continued listing status as an indicator of financial stability and corporate governance quality, and could trigger defaults or other adverse consequences under our financing agreements.

If we fail to comply with the continued minimum closing bid requirements of the Nasdaq Global Market or other requirements for continued listing, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.

Our common stock is listed for trading on the Nasdaq Global Market.

We must satisfy Nasdaq continued listing requirements, including, among other things, a minimum closing bid price requirement of $1.00 per share for 30 consecutive business days.

If a company’s common stock trades for 30 consecutive business days below the $1.00 minimum closing bid price requirement, Nasdaq will send a deficiency notice to it, advising that it has been afforded a "compliance period" of 180 calendar days to regain compliance with the applicable requirements.

Thereafter, if such a company does not regain compliance with the bid price requirement, a second 180-day compliance period may be available.

On October 14, 2025, we received written notice from the Nasdaq Staff that it had determined to commence proceedings to delist our common stock from the Nasdaq Global Market.

As previously announced in a Current Report filed with the SEC, on April 15, 2025, the Staff notified us 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) ("Bid Price Rule").

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

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

Unless we request an appeal of the Staff's determination by October 21, 2025, trading of our common stock will be scheduled for delisting at the opening of business on October 23, 2025, and Nasdaq intends to file a Form 25-NSE with the SEC, removing the common stock from listing and registration on The Nasdaq Stock Market.

On October 20, 2025, the we requested a hearing to appeal the Staff's determination to the Nasdaq Hearings Panel pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 Series.

The hearing request will stay the suspension of our securities and the filing of the Form 25-NSE pending the Panel's decision.

We received written notice from Nasdaq that the hearing with the Panel was scheduled for November 20, 2025.

On October 27, 2025, we effected the one-for-thirty Reverse Stock Split (as defined below) at the commencement of business.

We 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 on October 24, 2025.

Our 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 our issued shares of common stock were 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.

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 yours 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 our shares on The Nasdaq Global Market on the trading day immediately preceding the effective date of the Reverse Stock Split.

On November 11, 2025, we received a letter from Nasdaq stating that Nasdaq has determined that we regained compliance with Nasdaq’s minimum bid price requirement under Listing Rule 5450(a)(1) and that we are now in compliance with The Nasdaq Global Market’s listing requirements.

Nasdaq also determined that the previously scheduled hearing with the Panel on November 20, 2025 has been canceled and that our securities will continue to be listed and traded on The Nasdaq Stock Market without interruption.

Despite the implementation of the Reverse Stock Split, and the regained compliance with the Bid Price Rule, there is a risk that our shares of common stock may trade below $1.00 in the future and we could be delisted from Nasdaq, which would adversely impact liquidity of our shares of common stock, potentially result in even lower bid prices for our shares of common stock, and make it more difficult for us to obtain financing through the sale of our shares of common stock.

Following the Reverse Stock Split, the resulting market price of our common stock may not attract new investors, including institutional investors, and may not satisfy the investing requirements of those investors.

Consequently, the trading liquidity of our common stock may not improve.

Although we believe that a higher market price of our common stock may help generate greater or broader investor interest, there can be no assurance that the Reverse Stock Split will result in a share price that will attract new investors, including institutional investors.

In addition, there can be no assurance that the market price of our common stock will satisfy the investing requirements of those investors.

As a result, the trading liquidity of our common stock may not necessarily improve.

A "short squeeze" due to a sudden increase in demand for shares of our common stock that largely exceeds supply and/or focused investor trading in anticipation of a potential short squeeze have led to, and may lead to, extreme price volatility in the price of our common stock.

Investors may purchase shares of our common stock to hedge existing exposure or to speculate on the price of our common stock.

Speculation on the price of our common stock may involve long and short exposures.

To the extent aggregate short exposure exceeds the number of shares of our common stock available for purchase on the open market, investors with short exposure may have to pay a premium to repurchase shares of our common stock for delivery to lenders of our common stock.

Those repurchases may, in turn, dramatically increase the price of shares of our common stock until additional shares of our common stock are available for trading or borrowing.

This is often referred to as a "short squeeze." With the recent substantial increase in volume of our shares being traded and trading price, the proportion of our common stock that may be traded in the future by short sellers may increase the likelihood that our common stock will be the target of a short squeeze.

A short squeeze and/or focused investor trading in anticipation of a short squeeze have led to, may be currently leading to, and could again lead to volatile price movements in shares of our common stock that may be unrelated or disproportionate to our financial performance or prospects and, once investors purchase the shares of our common stock necessary to cover their short positions, or if investors no longer believe a short squeeze is viable, the price of our common stock may rapidly decline.

Investors that purchase shares of our common stock during a short squeeze may lose a significant portion of their investment.

Under the circumstances, we caution you against investing in our common stock, unless you are prepared to incur the risk of losing all or a substantial portion of your investment.

Our common stock price may be volatile and as a result you could lose all or part of your investment.

Since our common stock began trading on Nasdaq following our de-SPAC transaction with Western, our stock price has experienced substantial volatility and significant decline.

Our stock price may continue to fluctuate significantly in response to a variety of factors, many of which are beyond our control, including:

the inability to maintain the listing of our securities on Nasdaq;

the inability to recognize the anticipated benefits of the de-SPAC transaction;

decline in demand for, or the sale of a substantial number of, our shares of common stock;

risks relating to the uncertainty of our projected financial information and downward revisions in analysts' estimates;

technological innovations by competitors;

changes in applicable laws or regulations;

general economic trends;

and broad market and industry factors unrelated or disproportionate to our operating performance.

The thin trading volume in our shares may exacerbate price volatility and limit investors' ability to buy or sell shares at desired prices.

Volatility in the price of our common stock may subject us to securities litigation, which could cause us to incur significant expense, hinder execution of business and growth strategy and impact our stock price.

In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities.

Stockholder activism, which could take many forms or arise in a variety of situations, has been increasing recently.

We may in the future be the target of similar litigation or activism.

Securities litigation could result in substantial costs and liabilities and could divert management's attention and resources regardless of the outcome.

Additionally, such securities litigation and stockholder activism could adversely affect our relationships with service providers and make it more difficult to attract and retain qualified personnel.

Potential future sales pursuant to registration rights and under Rule 144 may depress the market price for our shares of common stock.

We have granted a number of our stockholders registration rights with respect to their shares of common stock.

Such future sales by our existing stockholders pursuant to any registration statement, as well as sales by stockholders eligible to sell under Rule 144 under the Securities Act, may have a depressive effect on the market price of our shares.

A significant number of our currently outstanding shares held by existing stockholders, including officers, directors, and principal stockholders, are currently or will become eligible for resale, and the possible sale of these shares could further depress the price of our shares in the applicable trading marketplace.

Future offerings of debt or preferred equity securities could adversely affect the market price of our common stock.

In the future, we may attempt to increase our capital resources by making additional offerings of debt or preferred equity securities.

Upon liquidation, holders of our debt securities and shares of preferred stock and lenders with respect to other borrowings would receive distributions of our available assets prior to the holders of our common stock.

Any preferred stock we may issue could have a preference on liquidating distributions or distribution payments that could limit our ability to make distributions to common stockholders.

Since our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict the amount, timing or nature of our future offerings, and our stockholders bear the risk that future offerings may reduce the market price of our common stock.

You may experience immediate and substantial dilution as a result of an offering by us and any future offering and may experience additional dilution in the future.

In the future, your percentage ownership in our company may be diluted because of equity issuances for warrant exercises, conversion of promissory notes, acquisitions, strategic investments, capital market transactions, or otherwise, including equity compensation awards that we grant to our directors, officers and employees.

The issuance and resale of additional shares of common stock or other securities in any future registration statement may cause substantial dilution of your ownership interest in our securities.

The future issuance of any such additional shares of common stock may create downward pressure on the trading price of our common stock.

There can be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction with any capital raising efforts, including at a price (or exercise prices) below the price at which shares of our common stock are currently traded at such time.

Risks Related to Legal, Regulatory, and Compliance Matters

If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired, which could harm our operating results, investors' views of us, and the value of our common stock.

Pursuant to Section 404 of the Sarbanes-Oxley Act, our management is required to report upon the effectiveness of our internal control over financial reporting.

When and if we are a "large accelerated filer" or an "accelerated filer" and are no longer an "emerging growth company" or "smaller reporting company," our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting.

However, for so long as we remain an emerging growth company or smaller reporting company, we intend to take advantage of an exemption from these auditor attestation requirements.

The rules governing management’s assessment of internal control over financial reporting are complex and require significant expenses, documentation, testing, and possible remediation.

If we or, if required, our auditors are unable to conclude that our internal control over financial reporting is effective, investors may lose confidence in our financial reporting, the trading price of our common stock may decline, and our ability to obtain additional financing, especially on favorable terms, could be adversely affected.

Any identified material weakness in our internal controls could affect our ability to provide reliable financial statements and our business decision-making process, and could result in investigations or sanctions by regulatory authorities.

As a provider of cybersecurity services to government clients, we are subject to heightened data protection obligations, and any compliance failure could result in significant penalties and loss of client trust.

We handle sensitive government data in the course of providing cybersecurity and IT services to our government clients.

We are subject to numerous federal, state, and local laws and regulations governing the collection, use, storage, transmission, and protection of such data.

Many federal, state, and foreign governments have enacted laws requiring companies to notify individuals of data security breaches involving their personal data, and any association of us with such breaches may cause our customers to lose confidence in the effectiveness of our security solutions.

Our failure to comply with these requirements could result in regulatory penalties, contract termination, litigation, and severe reputational damage.

The Financial Industry Regulatory Authority, Inc.

("FINRA") has adopted sales practice requirements that may also limit a stockholder's ability to buy and sell our common stock.

FINRA has adopted rules that require that, in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer.

Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information.

Under interpretations of these rules, FINRA believes that there is a high probability that speculative, low-priced securities will not be suitable for at least some customers.

FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our shares of common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares of common stock.

Changes in government contracting regulations, procurement preferences, or small business set-aside policies could reduce our contract opportunities.

The government contracting environment is subject to frequent legislative and regulatory changes.

Changes to Federal Acqusition Regulation provisions, state procurement codes, small business set-aside programs, and best-value evaluation criteria could alter the competitive dynamics of our markets in ways that are difficult to predict.

The current administration’s initiative to overhaul the Federal Acquisition Regulation (described as "FAR 2.0") represents the first major restructuring of federal procurement rules in approximately forty years and could introduce new requirements or change evaluation standards that affect our competitiveness.

At the state and local level, procurement reforms, vendor consolidation initiatives, and changes to cooperative purchasing arrangements could similarly affect our contract pipeline.

Accusations of intellectual property infringement by third parties, regardless of accuracy, could result in significant costs and harm our business.

We cannot ensure that our professional services and solutions, or the third-party solutions that we offer to our clients, do not infringe on the intellectual property rights of third parties.

Infringement claims, even if without merit, can be time-consuming and costly to defend, injure our reputation, and divert management’s attention and resources away from our business.

If we are required to enter into royalty or licensing agreements on less-than-favorable terms or to modify our offerings, our ability to compete effectively could be impaired.

Our insurance policies may not adequately protect us from all business risks, leaving us exposed to significant uninsured liabilities.

We carry insurance for most categories of risk that our business may encounter;

however, we may not have adequate levels of coverage.

We currently maintain general liability, property,

workers’ compensation, clinical study, products liability and directors’ and officers’ insurance, along with an umbrella

We may not be able to maintain existing insurance at current or adequate levels of coverage.

Any significant uninsured liability

may require us to pay substantial amounts, which would adversely affect our cash position and results of operations.

Risks Related to Securities Markets and Investment

in Our Common Stock

Cycurion has no current plans to pay dividends

on its shares of common stock.

Cycurion does not anticipate paying any cash dividends

in the foreseeable future.

If Cycurion incurs indebtedness in the future to fund its future growth, its ability to pay dividends may

be further restricted by the terms of such indebtedness.

If we fail to maintain proper and effective

internal control over financial reporting in the future, our ability to produce accurate and timely financial statements could be impaired,

which could harm our operating results, investors’ views of us, and, as a result, the value of our common stock.

Pursuant to Section 404 of the Sarbanes-Oxley Act,

our management will be required to report upon the effectiveness of our internal control over financial reporting beginning with the

annual report for our fiscal year ending December 31, 2024.

When and if we are a “large accelerated filer” or an “accelerated

filer” and are no longer an “emerging growth company” or “smaller reporting company,” each as defined in

the Exchange Act, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control

over financial reporting.

However, for so long as we remain an emerging growth company or smaller reporting company, we intend to take

advantage of an exemption available to emerging growth companies and smaller reporting companies from these auditor attestation requirements.

The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex

and require significant documentation, testing, and possible remediation.

To comply with the requirements of being a reporting company

under the Exchange Act, we will need to upgrade our systems including information technology;

implement additional financial and management

controls, reporting systems, and procedures;

and hire additional accounting and finance staff.

If we or, if required, our auditors are

unable to conclude that our internal control over financial reporting is effective, investors may lose confidence in our financial reporting,

and the trading price of our common stock may decline.

We are an emerging growth company, and the

reduced reporting requirements applicable to emerging growth companies may make our common stock less attractive to investors.

We are an emerging growth company and are eligible

to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not

emerging growth companies, including, but not limited to, only two years of audited financial statements in addition to any required

unaudited interim financial statements with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition

and Results of Operations” disclosure, not being required to comply with the auditor attestation requirements of Section 404 of

the Sarbanes-Oxley Act of 2002 reduced disclosure obligations regarding executive compensation in this Annual Report and our periodic

reports and proxy statements, exemptions from the requirements of holding non-binding advisory votes on executive compensation and seeking

stockholder approval of any golden parachute payments not previously approved and not being required to adopt certain accounting standards

until those standards would otherwise apply to private companies.

We could be an emerging growth company until the last day of the fiscal

year following the fifth anniversary of this offering, although circumstances could cause us to lose that status earlier, including if

we become a large accelerated filer (in which case we will cease to be an emerging company as of the date we become a large accelerated

filer, which, generally, would occur if, at the end of a fiscal year, among other things, the market value of our common stock that is

held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter), if we

have total annual gross revenue of $1.235 billion or more during any fiscal year (in which cases we would no longer be an emerging growth

company as of March 31 of such fiscal year), or if we issue more than $1.0 billion in non-convertible debt during any three year period

before that time (in which case we would cease to be an emerging growth company immediately).

Even after we no longer qualify as an emerging

growth company, we may still qualify as a “smaller reporting company,” which would allow us to take advantage of many of

the same exemptions from disclosure requirements including not being required to comply with the auditor attestation requirements of

Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in this Annual Report and our

periodic reports and proxy statements.

We cannot predict if investors will find our common stock less attractive because we may rely

on these exemptions.

If some investors find our common stock less attractive as a result, there may be a less active trading market for

our common stock and our stock price may be more volatile.

Cycurion will qualify as an “emerging

growth company” within the meaning of the Securities Act, and if it takes advantage of certain exemptions from disclosure requirements

available to emerging growth companies, it could make Cycurion’s securities less attractive to investors and may make it more difficult

to compare Cycurion’s performance to the performance of other public companies.

Cycurion will qualify as an “emerging growth

company” as defined in Section 2(a)(19) of the Securities Act, as modified by the JOBS Act.

As such, Cycurion will be eligible

for and intends to take advantage of certain exemptions from various reporting requirements applicable to other public companies that

are not emerging growth companies for as long as it continues to be an emerging growth company, including (a) the exemption from the

auditor attestation requirements with respect to internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley

Act, (b) the exemptions from say-on-pay, say-on-frequency, and say-on-golden parachute voting requirements, and (c) reduced disclosure

obligations regarding executive compensation in its periodic reports and proxy statements.

Cycurion will remain an emerging growth company

until the earliest of (i) the last day of the fiscal year in which the market value of common stock that is held by non-affiliates exceeds

$700 million as of June 30 of that fiscal year, (ii) the last day of the fiscal year in which it has total annual gross revenue of $1.235

billion or more during such fiscal year (as indexed for inflation), (iii) the date on which it has issued more than $1 billion in non-convertible

debt in the prior three-year period, or (iv) the last day of the fiscal year following the fifth anniversary of the date of the first

sale of its predecessor’s IPO.

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take

advantage of the exemption from complying with new or revised accounting standards provided in Section 7(a)(2)(B) of the Securities Act

as long as Cycurion is an emerging growth company.

An emerging growth company can therefore delay the adoption of certain accounting

standards until those standards would otherwise apply to private companies.

We have elected not to opt out of such extended transition

period and, therefore, Cycurion may not be subject to the same new or revised accounting standards as other public companies that are

not emerging growth companies.

Investors may find our common stock less attractive because Cycurion will rely on these exemptions, which

may result in a less active trading market for our common stock and its price may be more volatile.

Our common stock price may be volatile and

as a result you could lose all or part of your investment.

In addition to volatility associated with equity

securities in general, the value of your investment could decline due to the impact of any of the following factors upon the market price

of our shares of common stock:

● disappointing

results from our development efforts;

in demand for our shares of common stock;

revisions in securities analysts’ estimates or changes in general market conditions;

● technological

innovations by competitors or in competing products;

perception of our industry or our prospects;

economic trends.

Stock markets in general have experienced extreme

price and volume fluctuations, and the market prices of securities have been highly volatile.

These fluctuations are often unrelated

to operating performance and may adversely affect the market price of our shares of common stock.

Potential future sales pursuant to registration

rights granted by the Company and under Rule 144 may depress the market price for our shares of common stock.

The Company has granted a number of its stockholders’

registration rights with respect to their shares of common stock.

See the section titled “Registration Rights.” Such future

sales of our shares of common stock by our existing stockholders, pursuant to and in accordance with the provisions of any registration

statement, may have a depressive effect on the market price of our shares of common stock.

Further, in general, under Rule 144 under

the Securities Act, a person who has satisfied a minimum holding period of between six months and one-year and any other applicable requirements

of Rule 144, may thereafter sell such shares publicly.

A significant number of our currently issued and outstanding shares of common

stock held by existing stockholders, including officers and directors and other principal stockholders are currently eligible for resale

pursuant to and in accordance with the provisions of Rule 144.

The possible future sale of our shares by our existing stockholders, pursuant

to and in accordance with the provisions of Rule 144, may have a depressive effect on the price of our Shares of common stock in the

applicable trading marketplace.

We face risks related to compliance with corporate

governance laws and financial reporting standards.

The Sarbanes-Oxley Act, as well as related rules

and regulations implemented by the SEC and the Public Company Accounting Oversight Board (“PCAOB”), require changes in the

corporate governance practices and financial reporting standards for public companies.

These laws, rules and regulations, including compliance

with Section 404 of the Sarbanes-Oxley Act relating to internal control over financial reporting, referred to as Section 404, materially

increased our legal and financial compliance costs and made some activities more time-consuming and more burdensome.

can be no assurance that our common stock will continue to trade on The Nasdaq Global Market or another national securities exchange.

can be no assurance that we will be able to continue to meet The Nasdaq Global Market listing standards.

If we are unable to maintain

compliance with all applicable listing standards, our common stock may no longer be listed on The Nasdaq Global Market or another national

securities exchange and the liquidity and market price of our common stock may be adversely affected.

Company currently is (and from time to time in the recent past, the Company has been) out of compliance with the standards and requirements

for continued listing on Nasdaq.

April 9, 2025, Cycurion received written notice received from the Listing Qualifications Department of Nasdaq stating that, for the prior 30

consecutive business days, the closing bid price of our common stock had been below the minimum of $1.00 per share required for continued

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

The notification letter stated that we would be afforded 180

calendar days (until October 6, 2025) to regain compliance.

In order to regain compliance, the closing bid price of our common stock

must be at least $1.00 for a minimum of ten consecutive business days.

The notification letter also stated that, in the event

that we do not regain compliance within the initial 180-day period, we may be eligible for an additional 180-day period.

If we are not

eligible for the additional 180-day period, or if it appears to the Nasdaq staff that we 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 our securities will be

subject to delisting.

Failure to regain compliance within that 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.

The Nasdaq notification has no effect at this

time on the listing of our common stock.

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

of ours under the Nasdaq Listing Rules.

The first letter notified us of our deficiency with regard to 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 caused by our

MVLS having been below the minimum level for the prior 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 at least $50,000,000 or more for a minimum of 10 consecutive business days.

Failure to regain compliance within

that 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.

The Nasdaq notification has no effect at this time on the listing of our common stock.

second letter notified us of our deficiency with regard to 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 been below the minimum level for the prior 30 consecutive business

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 our MVPHS is at least $15,000,000 for a minimum of 10 consecutive business days.

Failure to regain compliance within that

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.

The Nasdaq notification has no effect at this time on the listing of our common stock.

remedy any deficit in funds or stockholder equity in order to satisfy Nasdaq’s continuing listing standards or other minimum bid

price requirements, if any, we may have to raise additional funding through dilutive equity investments or other external sources;

there is no certainty such external funding will be available or on acceptable terms, or we may have to conduct reverse stock splits

to consolidate our shares of common stock.

If we fail to meet Nasdaq’s continued listing requirements and Nasdaq delists our common

stock from trading on its exchange and we are not able to list our securities on another national securities exchange, we could face

significant material adverse consequences, including without limitation a substantial reduction in the liquidity of our common stock,

which could further limit our access to capital markets for fundraising.

Nasdaq may delist our securities from trading

on its exchange.

Our common stock is listed on The Nasdaq Global Market

and our warrants are listed on The Nasdaq Capital Market.

Although we met the minimum initial listing standards of Nasdaq for each of

our securities, which generally only requires that we meet certain requirements relating to stockholders’ equity, market capitalization,

aggregate market value of publicly held shares, and distribution requirements, we cannot assure you that each of our securities will

continue to be listed on Nasdaq in the future.

The inability to comply with Nasdaq’s continued requirements or standards could

result in the delisting of either or both classes of our securities, which could have a material adverse effect on our financial condition

and could cause the value of the common stock, or our warrants, to decline.

If our common stock were to be delisted from trading

on The Nasdaq Global Market and become quoted on the over-the-counter market and, under certain circumstances, if the trading price of

our common stock were below $5.00 per share on the date the common stock is delisted, trading in our common stock would also be subject

to the requirements of certain rules promulgated under the Exchange Act.

These rules require additional disclosure by broker-dealers

in connection with any trades involving a stock defined as a “penny stock” and impose various sales practice requirements

on broker-dealers who sell penny stocks to persons other than established customers and accredited investors, generally institutions.

These additional requirements may discourage broker-dealers from effecting transactions in securities that are classified as penny stocks,

which could severely limit the market price and liquidity of such securities and the ability of purchasers to sell such securities in

the secondary market.

A penny stock is defined generally as any non-exchange listed equity security that has a market price of less than

$5.00 per share, subject to certain exceptions.

The market price of the Company’s shares

of common stock is likely to be highly volatile, and you may lose some or all of your investment.

The market price of the Company’s shares of

common stock is likely to be highly volatile and may be subject to wide fluctuations in response to a variety of factors, including the

inability to obtain or maintain the listing of the Company’s shares of common stock

inability to recognize the anticipated benefits of the recently closed de-SPAC transaction,

which may be affected by, among other things, competition, Cycurion’s ability to grow

and manage growth profitably, and retain its key employees;

in applicable laws or regulations;

relating to the uncertainty of Cycurion’s projected financial information;

In addition, the equity markets have experienced

extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies.

These fluctuations have often been unrelated or disproportionate to the operating performance of those companies.

Broad market and industry

factors, as well as general economic, political, regulatory and market conditions, may negatively affect the market price of the Company’s

shares of common stock, regardless of the Company’s actual operating performance.

Volatility in the Company’s share price

could subject the Company to securities class action litigation.

In the past, securities class action litigation has

often been brought against a company following a decline in the market price of its securities.

If the Company faces such litigation,

it could result in substantial costs and a diversion of management’s attention and resources, which could harm its business.

A “short squeeze” due to a sudden

increase in demand for shares of our common stock that largely exceeds supply and/or focused investor trading in anticipation of a potential

short squeeze have led to, may be currently leading to, and could again lead to, extreme price volatility in shares of our common stock.

Investors may purchase shares of our common stock

to hedge existing exposure or to speculate on the price of our common stock.

Speculation on the price of our common stock may involve

long and short exposures.

To the extent aggregate short exposure exceeds the number of shares of our common stock available for purchase

on the open market, investors with short exposure may have to pay a premium to repurchase shares of our common stock for delivery to

lenders of our common stock.

Those repurchases may, in turn, dramatically increase the price of shares of our common stock until additional

shares of our common stock are available for trading or borrowing.

This is often referred to as a “short squeeze.” With the

recent substantial increase in volume of our shares being traded and trading price, the proportion of our common stock that may be traded

in the future by short sellers may increase the likelihood that our common stock will be the target of a short squeeze.

A short squeeze

and/or focused investor trading in anticipation of a short squeeze have led to, may be currently leading to, and could again lead to

volatile price movements in shares of our common stock that may be unrelated or disproportionate to our financial performance or prospects

and, once investors purchase the shares of our common stock necessary to cover their short positions, or if investors no longer believe

a short squeeze is viable, the price of our common stock may rapidly decline.

Investors that purchase shares of our common stock during

a short squeeze may lose a significant portion of their investment.

Under the circumstances, we caution you against investing in our

common stock, unless you are prepared to incur the risk of losing all or a substantial portion of your investment.

Increases in market interest rates may cause

potential investors to seek higher returns and therefore reduce demand for our common stock, which could result in a decline in our stock

One of the factors that may influence the price of

our common stock is the return on our common stock ( i.e.

, the amount of distributions as a percentage of the price of our common

stock) relative to market interest rates.

An increase in market interest rates, which are currently at low levels relative to historical

rates, may lead prospective purchasers of our common stock to expect a return, which we may be unable or choose not to provide as we

have never paid a dividend and have no current intention to pay any dividends.

Further, higher interest rates would likely increase our

borrowing costs and potentially decrease the cash available.

Thus, higher market interest rates could cause the market price of our common

stock to decline.

If securities or industry analysts do not publish

research or reports about the Company, or publish negative reports, the Company’s share price and trading volume could decline.

The trading market for the Company’s shares

of common stock will depend, in part, on the research and reports that securities or industry analysts publish about the Company.

Company does not have any control over these analysts.

If the Company’s financial performance fails to meet analyst estimates or

one or more of the analysts who cover the Company downgrade its shares of common stock or change their opinion, the Company’s share

price would likely decline.

If one or more of these analysts cease coverage of the Company or fail to regularly publish reports on the

Company, it could lose visibility in the financial markets, which could cause the Company’s share price or trading volume to decline.

Volatility in the price of our common stock

may subject us to securities litigation.

As discussed above, the market for our common stock

has been characterized recently by significant price volatility when compared to seasoned issuers, and we expect that our share price

will continue to be more volatile than a seasoned issuer for the indefinite future.

In the past, plaintiffs have often initiated securities

class action litigation against a company following periods of volatility in the market price of its securities.

We may in the future

be the target of similar litigation.

Securities litigation could result in substantial costs and liabilities and could divert management’s

attention and resources.

Because the Company does not anticipate paying

any cash dividends in the foreseeable future, capital appreciation, if any, would be your sole source of gain.

The Company currently anticipates that it will retain

future earnings for the development, operation and expansion of its business and does not anticipate declaring or paying any cash dividends

for the foreseeable future.

As a result, capital appreciation, if any, of the Company’s shares of common stock would be your sole

source of gain on an investment in such shares for the foreseeable future.

The Company’s share price may fluctuate.

The Company’s share price can be volatile.

Among the factors that may affect the volatility of the Company’s stock price are the following:

● Speculation

in the investment community or the press about, or actual changes in, the Company’s

competitive position, organizational structure, executive team, operations, financial condition,

financial reporting and results, expense discipline, strategic transactions, or progress

on achieving expected benefits;

announcement of new products, services, acquisitions, or dispositions by the Company or its

or decreases in revenue or earnings, changes in earnings estimates by the investment community,

and variations between estimated financial results and actual financial results;

of a substantial number of shares of the Company’s shares of common stock by large

shareholders.

Future offerings of debt, which would be senior

to our common stock upon liquidation, and/or preferred equity securities, which may be senior to our common stock for purposes of distributions

or upon liquidation, could adversely affect the market price of our common stock.

In the future, we may attempt to increase our capital

resources by making additional offerings of debt or preferred equity securities, including convertible or non-convertible senior or subordinated

notes, convertible or non-convertible preferred stock, medium-term notes and trust preferred securities.

Upon liquidation, holders of

our debt securities and shares of preferred stock and lenders with respect to other borrowings will receive distributions of our available

assets prior to the holders of our common stock.

In addition, any preferred stock we may issue could have a preference on liquidating

distributions or a preference on distribution payments that could limit our ability to make a distribution to the holders of our common

Since our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control,

we cannot predict or estimate the amount, timing or nature of our future offerings.

Thus, our stockholders bear the risk of our future

offerings reducing the market price of our common stock.

Anti-takeover provisions contained in our charter

and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

Our charter contains provisions that may discourage

unsolicited takeover proposals that stockholders may consider to be in their best interests.

We are also subject to anti-takeover provisions

under Delaware law, which could delay or prevent a change of control.

Together, these provisions may make more difficult the removal

of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our

These provisions will include:

cumulative voting in the election of directors, which limits the ability of minority stockholders

to elect director candidates;

right of our Board to elect a director to fill a vacancy created by the expansion of our

Board or the resignation, death, or removal of a director in certain circumstances, which

prevents stockholders from being able to fill vacancies on our Board;

prohibition on stockholder action by written consent, which forces stockholder action to

be taken at an annual or special meeting of our stockholders.

Our charter provides that the Court of Chancery

of the State of Delaware and the federal district courts of the United States of America will be the exclusive forums for substantially

all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum

for disputes with us or our directors, officers, or employees.

Our charter provides that, subject to limited exceptions,

any (i) derivative action or proceeding brought on our behalf of under Delaware law, (ii) any action asserting a claim of breach of a

fiduciary duty owed by any current or former director, officer or other employee of Cycurion’s stockholders, (iii) any action asserting

a claim against Cycurion or any of its directors, officers or other employees arising pursuant to any provision of the DGCL, the charter

or the bylaws of Cycurion (in each case, as may be amended from time to time), (iv) any action asserting a claim against Cycurion or

any of its directors, officers or other employees governed by the internal affairs doctrine of the State of Delaware or (v) any other

action asserting an “internal corporate claim,” as defined in Section 115 of the DGCL, in all cases subject to the court’s

having personal jurisdiction over all indispensable parties named as defendants shall, to the fullest extent permitted by law, be exclusively

brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, another

state or federal court located within the State of Delaware.

The charter also provides that unless a majority of the Board of Cycurion,

acting on behalf of Cycurion, consents in writing to the selection of an alternative forum (which consent may be given at any time, including

during the pendency of litigation), the federal district courts of the United States of America, to the fullest extent permitted by law,

will be the sole and exclusive forum for the resolution of any action asserting a cause of action arising under the Securities Act.

person or entity purchasing or otherwise acquiring any interest in shares of Cycurion’s capital stock shall be deemed to have notice

of and to have consented to the provisions of Cycurion’s certificate of incorporation described above.

Section 27 of the Exchange

Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the

rules and regulations thereunder.

As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability

created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.

Section 22 of the Securities

Act creates concurrent jurisdiction for state and federal courts over all suits brought to enforce any duty or liability created by the

Securities Act or the rules and regulations thereunder.

This choice of forum provision may limit a stockholder’s

ability to bring a claim in a judicial forum that it finds favorable for disputes with Cycurion or its directors, officers, or other

employees, which, along with potential increased costs of litigating the courts provided by the choice of forum provision, may discourage

such lawsuits against Cycurion and its directors, officers, and employees.

Alternatively, if a court were to find these provisions of

Cycurion’s amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the

specified types of actions or proceedings, Cycurion may incur additional costs associated with resolving such matters in other jurisdictions,

which could adversely affect Cycurion’s business and financial condition.

Cycurion’s business and operations could

be negatively affected if it becomes subject to any securities litigation or stockholder activism, which could cause Cycurion to incur

significant expense, hinder execution of business and growth strategy and impact its stock price.

In the past, following periods of volatility in the

market price of a company’s securities, securities class action litigation has often been brought against that company.

activism, which could take many forms or arise in a variety of situations, has been increasing recently.

Volatility in the stock price

of our common stock or other reasons may in the future cause it to become the target of securities litigation or stockholder activism.

Securities litigation and stockholder activism, including potential proxy contests, could result in substantial costs and divert management’s

and the board of directors’ attention and resources from the Cycurion’s business.

Additionally, such securities litigation

and stockholder activism could give adversely affect our relationships with service providers and make it more difficult to attract and

retain qualified personnel.

Also, Cycurion may be required to incur significant legal fees and other expenses related to any securities

litigation and activist stockholder matters.

Further, its stock price could be subject to significant fluctuation or otherwise be adversely

affected by the events, risks and uncertainties of any securities litigation and stockholder activism.

Any significant uninsured liability may require us to pay substantial amounts, which would adversely affect our cash position and results of operations.

Anti-takeover provisions contained in our charter and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

Our charter contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests.

We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control.

Together, these provisions may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices.

These provisions include no cumulative voting in the election of directors, the right of our board of directors (the "Board") to fill vacancies, and a prohibition on stockholder action by written consent.

Our charter also provides that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders (subject to limited exceptions), and that the federal district courts of the United States will be the sole forum for Securities Act claims.

This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable, which may discourage certain lawsuits and increase the costs of litigating claims.

Risks Related to Operating as a Public Company

The Company’s management team has limited

skills related to experience managing a public company.

Most members of the Company’s management team

have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly

complex laws, rules and regulations that govern public companies.

As a public company, the Company is subject to significant obligations

relating to reporting, procedures and internal controls, and its management team may not successfully or efficiently manage such obligations.

These obligations and scrutiny will require significant attention from the Company’s management and could divert their attention

away from the day-to-day management of its business, which could adversely affect its business, financial condition, and results of operations.

Cycurion may incur significantly increased

costs and devote substantial management time as a result of operating as a public company.

As a public company, Cycurion will incur significant

costs related to legal, accounting, listing, hiring of external consultants and advisors, and other expenses.

For example, it will be

subject to the reporting requirements of the Exchange Act and will be required to comply with the applicable requirements of the Sarbanes-Oxley

Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules and regulations subsequently implemented by the

SEC and Nasdaq, including the establishment and maintenance of effective disclosure and financial controls, changes in corporate governance

practices and required filing of annual, quarterly and current reports with respect to its business and results of operations.

expects that compliance with these requirements will increase its legal and financial compliance costs and will make some activities

more time-consuming and costly.

In addition, Cycurion expects that management and other personnel will need to divert attention from

operational and other business matters to devote substantial time to these public company requirements.

In particular, the Company expects

to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404

of the Sarbanes-Oxley Act, which will increase when Cycurion is no longer an emerging growth company.

EUDA may also need to hire additional

accounting and financial staff with appropriate public company experience and technical accounting knowledge and establish an internal

audit function.

Cycurion also expects that operating as a public

company will make it more expensive to obtain director and officer liability insurance and the Company may be required to accept reduced

coverage or incur substantially higher costs to obtain coverage.

This could also make it more difficult for Cycurion to attract and retain

qualified people to serve on its board of directors, its board committees or as executive officers.

As Cycurion continues to expand via opportunities

for acquisitions, investments or strategic alliances as a public company, we expect that management and other personnel will need to

divert attention from operational and other business matters to ensure the success of these opportunities.

Certain recent public offerings of companies

with public floats comparable to the public float of Cycurion have experienced extreme volatility that was seemingly unrelated to the

underlying performance of the respective company.

The Company may experience similar volatility, which may make it difficult for prospective

investors to assess the value of its shares of common stock.

The Company’s shares of common stock may be

subject to extreme volatility that is seemingly unrelated to the underlying performance of its business.

Recently, companies with comparable

public floats and public offering sizes have experienced instances of extreme stock price run-ups followed by rapid price declines, and

such stock price volatility was seemingly unrelated to the respective company’s underlying performance.

Although the specific cause

of such volatility is unclear, the Company’s public float may amplify the impact of the actions taken by a few shareholders on

the price of its shares of common stock, which may cause its share price to deviate, potentially significantly, from a price that better

reflects the underlying performance of its business.

Should the Company’s shares of common stock experience run-ups and declines

that are seemingly unrelated to the Company’s actual or expected operating performance and financial condition or prospects, prospective

investors may have difficulty assessing the rapidly changing value of the Company’s shares of common stock.

In addition, investors

in the Company’s shares of common stock may experience losses, which may be material, if the price of the Company’s shares

of common stock declines after this offering or if such investors purchase shares of common stock prior to any price decline.

Our historical management team has limited experience managing a public company, and we may incur significantly increased costs as a result of operating as a public company.

Our historical management team members have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws, rules and regulations that govern public companies.

As a public company, we are subject to significant obligations relating to reporting, procedures and internal controls, and our management team may not successfully or efficiently manage such obligations, which could divert attention from the day-to-day management of our business.

We incur significant costs related to legal, accounting, listing, hiring of external consultants and advisors, and other expenses of being a public company.

We are subject to the reporting requirements of the Exchange Act and must comply with the applicable requirements of the Sarbanes-Oxley Act, the Dodd-Frank Act, and SEC and Nasdaq rules, including the establishment and maintenance of effective disclosure and financial controls.

We expect that compliance with these requirements will continue to increase our legal and financial compliance costs.

Additionally, operating as a public company makes it more expensive to obtain director and officer liability insurance, which could also make it more difficult to attract and retain qualified people to serve on our Board or as executive officers.

We qualify as an "emerging growth company" and a "smaller reporting company," and if we take advantage of certain exemptions from disclosure requirements, it could make our securities less attractive to investors.

We qualify as an "emerging growth company" as defined in the Securities Act, as modified by the JOBS Act, and are eligible to take advantage of certain exemptions from various reporting requirements, including the auditor attestation requirements under Section 404(b) of the Sarbanes-Oxley Act, say-on-pay voting requirements, and reduced executive compensation disclosure obligations.

Even after we no longer qualify as an emerging growth company, we may still qualify as a "smaller reporting company," which would allow many of the same exemptions.

We have elected not to opt out of the extended transition period for complying with new or revised accounting standards.

Investors may find our common stock less attractive because we rely on these exemptions, which may result in a less active trading market and more volatile stock price.

Risks Related to Taxation

Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our results of operations and financial condition.

We may be subject to taxes by the U.S.

and foreign tax authorities.

Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including allocation of expenses to and among different jurisdictions, changes in the valuation of our deferred tax assets and liabilities, the expected timing and amount of the release of any tax valuation allowances, tax effects of stock-based compensation, costs related to intercompany restructurings, changes in tax laws, treaties, regulations, or interpretations thereof, and lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates.

In addition, we may be subject to audits of our income, sales and other taxes by taxing authorities, and outcomes from these audits could have an adverse effect on our operating results and financial condition.

Changes in tax laws or regulations that are applied adversely to us or our customers may materially adversely affect our business, prospects, financial condition and operating results.

New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, or interpreted, changed, modified or applied adversely to us or our customers.

For example, the One Big Beautiful Bill Act ("OBBBA"), enacted on July 4, 2025, significantly changed the U.S.

tax landscape by implementing revisions to key business tax provisions, including the reinstatement of bonus depreciation deductions, the restoration of earnings before interest, tax, depreciation and amortization ("EBITDA")-based business interest expense limitations, expanded rules related to deductibility of executive compensation, and changes relating to the computation of certain taxes in respect of non-U.S.

The long-term effects of OBBBA on our results of operations and cash flows remain uncertain and could be significant.

Additionally, the Organization for Economic Cooperation and Development has announced the "Pillar Two" accord to set a minimum global corporate tax rate, which is being or may be implemented in many jurisdictions.

If countries amend their tax laws to adopt all or part of the OECD guidelines, this may increase tax uncertainty and increase our tax obligations.

To the extent that any changes in tax laws have a negative impact on us, our suppliers, or our customers, these changes may materially and adversely affect our business.

Our ability to use certain tax attributes may be or become subject to limitation.

Generally, U.S.

federal net operating losses may be carried forward indefinitely and may offset up to 80% of taxable income in each year.

However, our ability to use federal NOL carryforwards and certain other tax attributes to offset future taxable income may be limited.

Our ability to use these tax attributes depends on many factors, including future taxable income, the timing of which is uncertain.

In addition, our ability to use NOL carryforwards and other tax attributes may be subject to significant limitations under Section 382 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state tax law.

General Risk Factors

Macroeconomic conditions, including inflation, rising interest rates, and economic uncertainty, could adversely affect our business, our clients’ budgets, and our cost structure.

Our business and operating results are sensitive to general macroeconomic conditions.

Periods of economic slowdown, recession, or heightened uncertainty may cause government customers to reduce, delay, or reprioritize spending on IT and cybersecurity services, which could result in the reduced demand for our solutions, longer sales cycles, or delays in contract awards and renewals.

In addition, inflation has increased, and may continue to increase, our operating costs, particularly labor costs, which represent the largest component of our cost of revenue.

Our ability to offset such increases through price adjustments may be limited under existing contracts or competitive market conditions.

Rising interest rates may also increase our borrowing costs, reduce access to capital, or place additional pressure on our liquidity.

These macroeconomic factors, individually or collectively, could materially adversely affect our revenue, margins, cash flows, and overall financial performance.

If securities or industry analysts do not publish research or reports about us, or publish negative reports, our share price and trading volume could decline.

The trading market for our common stock depends in part on the research reports and opinions published by securities or industry analysts.

We do not have any control over whether analysts initiate, maintain, or discontinue coverage of our Company, nor over the content of any reports they publish.

If analysts do not publish research about us, the market price and trading volume of our common stock could decline.

In addition, if our financial or operating performance fails to meet analysts' expectations or published estimates, our stock price could experience increased volatility or a sustained decline, and our visibility in the public markets could be reduced.

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-K

Item 1A. Risk Factors