What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-31 compared with 2025-04-17 · 195 added, 474 removed, 5 unchanged (99% of the section changed)

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Throughout this

section, unless otherwise noted, “we,” “our,” “us,” “Cycurion” and the “Company”

refer to Cycurion, Inc.

should read the following discussion of our financial condition and results of operations in conjunction with our financial statements

and the notes included elsewhere in this annual report.

The following discussion contains forward-looking statements that involve certain

risks and uncertainties.

Our actual results could differ materially from those discussed in these statements.

Factors that could cause

or contribute to these differences include those discussed below and elsewhere in this annual report, particularly under the “Risk

Factors” and “Disclosure Regarding Forward-Looking Statements” sections.

plans and basis of presentation:

were incorporated in Delaware in 2017 as KAE Holdings, Inc, with the purpose of acquiring operating entities in the cybersecurity industry.

July 14, 2020, we changed our corporate name from KAE Holdings, Inc.

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

On February 14, 2025, the date of closing of our de-SPAC transaction, we merged into Western Acquisition Ventures

and changed that company’s name to Cycurion, Inc.

deliver high-quality, cybersecurity solutions to federal government civilian, defense, and judiciary agencies in addition to commercial

clients across a variety of industries.

We, through our operating subsidiaries and strategic partnerships, have numerous prime and subcontracts

with key government agencies.

Our growth engine is driven by organic business solutions and strategic acquisitions of cyber/ infrastructure

service providers.

For a description of our Business, please see “Item 1.

Our operating subsidiaries are wholly owned by Cycurion Sub., Inc., a Delaware

corporation that, until the closing date of the de-SPAC, was known as “Cycurion, Inc.” We continue to conduct our business

through the three below-described entities, which are now indirectly wholly-owned second-tier subsidiaries by virtue of the recent closing

of the de-SPAC transaction.

Technologies LLC

Organized in the Commonwealth of Virginia on December 29, 2006, Axxum is

a cybersecurity provider with successful assignments within the multiple sub-agencies of the Department of Homeland Security.

Axxum in November 2017.

Following the acquisition, we continued Axxum’s core operations of providing contractor services to its

existing federal government customer base while leveraging our existing processes and tools to expand its commercial footprint.

information security focus produces several key benefits:

Client Focus:

Axxum’s projects are overseen directly by its program managers, all

of whom have information security backgrounds and are fully authorized to promptly implement

client requirements throughout the performance life cycle.

● Streamlined

and Process Focused:

Axxum’s streamlined infrastructure leverages ISO quality standards

integrated with emerging and established technologies, allowing it to engineer innovative

solutions without building in excessive overhead.

● Outstanding

Axxum has a reputation of employing cybersecurity experts.

is a cybersecurity provider with successful assignments within highly sensitive government agencies and other commercial organizations.

Management's Discussion and Analysis of Financial Condition and Results of Operations

This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read together with our audited consolidated financial statements and the related notes thereto for the fiscal years ended December 31, 2025 and 2024, included in Item 8.

Financial Statements and Supplementary Data.

The discussion below contains management's comments on our business strategy and outlook, and such discussions contain forward-looking statements.

These forward-looking statements reflect the expectations, beliefs, plans, and objectives of management about future financial performance and assumptions underlying management's judgment concerning the matters discussed, and accordingly involve estimates, assumptions, judgments, and uncertainties.

Our actual results could differ materially from those discussed in the forward-looking statements, and the discussion below is not necessarily indicative of future results.

Factors that could cause or contribute to any differences include, but are not limited to, those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in "Item 1A.

Risk Factors" and in "Special Note Regarding Forward-Looking Statements" at the beginning of this Form 10-K.

General and Business Overview

We were originally incorporated as KAE Holdings, Inc., under the laws of the State of Delaware in 2017, with the purpose of acquiring and holding operating entities in the cybersecurity industry.

On July 14, 2020, we changed our corporate name from KAE Holdings, Inc.

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

We have two first-tier wholly-owned subsidiaries, Cycurion Sub, Inc.

(formerly Cycurion, Inc., until February 14, 2025) and Cycurion Crypto, a Delaware corporation formed in July 2025, and three indirectly wholly-owned second-tier subsidiaries:

(i) Axxum, a Virginia limited liability company formed in December 2006, (ii) Cloudburst, a Virginia limited liability company formed in January 2007, and (iii) Cycurion Innovation, Inc., a Delaware corporation formed in September 2021, in connection with our acquisition of assets from Sabres, a leading Israeli-based cybersecurity provider.

We deliver high-quality, cybersecurity solutions to federal government civilian, defense, and judiciary agencies in addition to commercial clients across a variety of industries.

We, through our operating subsidiaries and strategic partnerships, have numerous prime and subcontracts with key government agencies.

Our growth engine is driven by organic business solutions and strategic acquisitions of cyber/ infrastructure service providers.

Our Subsidiaries

Cycurion Sub, Inc.

We own our operating subsidiaries through Cycurion Sub., Inc., a Delaware corporation that, until the closing date of the de-SPAC, was known as "Cycurion, Inc." We continue to conduct our business through the three below-described entities, which are now indirectly wholly-owned second-tier subsidiaries by virtue of the recent closing of the de-SPAC transaction.

Cycurion Crypto Inc.

Our direct wholly-owned subsidiary, Cycurion Crypto, a Delaware corporation, was formed in July 2025 as part of our strategic initiative to position the Company within the expanding digital asset ecosystem and will manage a crypto treasury.

Axxum Technologies LLC

Organized in the Commonwealth of Virginia on December 29, 2006, Axxum is a cybersecurity provider with successful assignments within the multiple sub-agencies of the Department of Homeland Security.

We acquired Axxum in November 2017.

Following the acquisition, we continued Axxum's core operations of providing contractor services to its existing federal government customer base while leveraging our existing processes and tools to expand its commercial footprint.

Cloudburst Security LLC

Cloudburst is a cybersecurity provider with successful assignments within highly sensitive government agencies and other commercial organizations.

We acquired Cloudburst in April 2019.

Following the acquisition, we continued Cloudburst’s core operations of providing mission-critical

and highly sensitive government agencies and other commercial organizations with high-quality, innovative cybersecurity services.

focuses on providing tailored solutions that leverage the industry’s best minds and technologies to predict, protect, detect, respond,

and sustain our clients from the latest evolving cyber threats.

Innovation, Inc.

was formed in connection with our acquisition of assets

from Sabres, a leading Israeli-based cyber security provider.

It operates our Cycurion Security Platform’s line of products allows

our customers to improve their cyber posture with its MDP SaaS platform.

This platform efficiently bundles and easily implements the external

protection of a Web Application Firewall (WAF) and the internal protection of Bot Mitigation.

Bot Mitigation is the reduction of risk

to applications, Application Program Interfaces (APIs), and backend services from malicious bot traffic that fuels common automated attacks,

such as Distributed Denial of Service (DDoS) campaigns and vulnerability probing.

The costs of single-layer security can be measured in

terms of money, time, and risk, as well as the damage wrought by a data breach, which millions of businesses experience each year.

this interaction of the WAF and Bot Mitigation, the MDP is able to reinforce these layers of security and generate new security layers

in real time in response to emerging threats.

This process is directed by our Cycurion Security Platform’s proprietary, cloud-based

artificial intelligence (“AI”) algorithm.

Crucially, the AI underpinning the MDP platform is constantly evolving to counter

Through a crowdsourcing process, the cloud-based MDP learns from every threat to any protected application and uses that

newly acquired knowledge to protect all MDP clients better.

Subcontractor

— Prime contractor relationship

Innovation, Inc.

are currently a subcontractor for several keystone contracts held by SLG.

The SLG team has an average of over 25 years of experience

in the development, planning, implementation, and management of information systems.

SLG’s leadership team offers years of combined

success in answering the needs of government agencies and healthcare organizations across the country.

SLG team has worked nationally, as it has served over 25 Department of Health and Human Services agencies, all 50 state governments,

and over 250 local governments.

Following the acquisition, we continued Cloudburst’s core operations of providing mission-critical and highly sensitive government agencies and other commercial organizations with high-quality, innovative cybersecurity services.

Cloudburst focuses on providing tailored solutions that leverage the industry's best minds and technologies to predict, protect, detect, respond, and sustain our clients from the latest evolving cyber threats.

Cycurion Innovation, Inc.

was formed in connection with our acquisition of assets from Sabres, a leading Israeli-based cybersecurity provider.

It operates our Cycurion Security Platform’s line of products allows our customers to improve their cyber posture with its MDP SaaS platform.

This platform efficiently bundles and easily implements the external protection of a WAF and the internal protection of Bot Mitigation.

Bot Mitigation is the reduction of risk to applications, Application Program Interfaces ("APIs"), and backend services from malicious bot traffic that fuels common automated attacks, such as DoS campaigns and vulnerability probing.

The costs of single-layer security can be measured in terms of money, time, and risk, as well as the damage wrought by a data breach, which millions of businesses experience each year.

Through this interaction of the WAF and Bot Mitigation, the MDP is able to reinforce these layers of security and generate new security layers in real time in response to emerging threats.

This process is directed by our Cycurion Security Platform's proprietary, cloud-based AI algorithm.

Crucially, the AI underpinning the MDP platform is constantly evolving to counter new threats.

Through a crowdsourcing process, the cloud-based MDP learns from every threat to any protected application and uses that newly acquired knowledge to protect all MDP clients better.

Master Service Agreement with SLG Innovation, Inc.

The SLG team has an average of over 25 years of experience in the development, planning, implementation, and management of information systems.

SLG's leadership team offers years of combined success in answering the needs of government agencies and healthcare organizations across the country.

The SLG team has worked nationally, as it has served over 25 Department of Health and Human Services agencies, all 50 state governments, and over 250 local governments.

Since SLG's inception, it has primarily focused on customers in the middle of the country.

team of professionals has successfully delivered Information Technology, Project Management, and Subject Matter Services to key health

and human service projects, including, but not limited to, state Medicaid programs in Illinois, Indiana, Nebraska, and Tennessee, the

Indiana Division of Aging, Illinois Early Intervention, the University of Illinois Division of Specialized Care for Children, the Multiple

Myeloma Research Foundation, and many more.

established a subcontractor — prime contractor relationship with SLG in the fall of 2019, where we serviced several government

agencies and commercial customers, State of New Mexico, Cognizant, KPMG, and the University of Illinois in support of SLG.

Axxum Technologies

and SLG Innovation that relationship in 2020.

The team of professionals has successfully delivered information technology, project management, and subject matter services to key health and human service projects, including, but not limited to, state Medicaid programs in Illinois, Indiana, Nebraska, and Tennessee, the Indiana Division of Aging, Illinois Early Intervention, the University of Illinois Division of Specialized Care for Children, the Multiple Myeloma Research Foundation, and many more.

We established a subcontractor — prime contractor relationship with SLG in the fall of 2019, where we serviced several government agencies and commercial customers, State of New Mexico, Cognizant, KPMG, and the University of Illinois in support of SLG.

Axxum Technologies and SLG Innovation that relationship in 2020.

A subcontractor offers its specialized services to a prime contractor.

Unlike prime contractors,

who focus on the managerial side of the government contract, subcontractors tend to dedicate their efforts to lending subject matter

expertise and delivery of service to the project.

Technically strong subcontractors, along with a strong subcontractor plan are essential

to boost the success of a project.

a result of the strong technical skills and experience of the cyber teams at Cycurion and its subsidiaries, SLG Innovation entered into

a Master Services Agreement (MSA) with Axxum Technologies to provide services to SLG customers.

The MSA is task order driven and the

number of task orders is modified periodically depending on actual customer requirements for IT and Cybersecurity services.

last three years, Axxum Technologies has assisted SLG Innovation in growing its revenue and customer base.

As a result, SLG Innovation

now represents a majority of Cycurion revenues.

Acquisition Agreement

revenues from SLG in our 2024 and 2023 fiscal years were $14,703,887 and $13,837,042, respectively.

The types of agreements to which

SLG is a party are discussed under the heading “Our Business — Key Clients and Historical Performance .” From

our perspective, a major benefit to us of the potential transaction contemplated by the SLG Term Sheet, as described below, would be

that we could “piggyback” on SLG’s historical relationships with the various contracting governmental agencies in our

bidding on future potential agreements.

It is axiomatic in the governmental contracting arena in which we are involved that past performance

on customer assignments as the prime contractor is one of the more important qualifications in competing for new opportunities within

the federal government.

We believe that our acquisition of SLG, if that transaction is closed by us, would yield such “past performance”

qualifications.

April 25, 2023, Cycurion Sub executed a Term Sheet with SLG (the “SLG Term

Sheet”), pursuant to which SLG agreed to be acquired by Cycurion Sub.

The Term Sheet contained all of the material terms and conditions

of two proposed interrelated transactions to be memorialized by the SLG Acquisition Agreeement.

To effectuate the two transactions contemplated

by the SLG Term Sheet, Cycurion Sub will form two subsidiaries, which, upon formation, will initially be wholly owned by Cycurion Sub.

If, when, and as the transactions contemplated by the SLG Term Sheet are consummated, SLG would merge with and into one of the subsidiaries

and survive, thereby becoming a wholly-owned subsidiary of Cycurion Sub.

Because certain of the agreements to which SLG is the prime contractor

require that the majority owner of the prime contractor be a resident of the City of Chicago or of Cook County (depending on the contract),

contemporaneously with the consummation of the first of the two transactions, (i) SLG will divest itself of those agreements with the

residency requirements, (ii) the second newly formed subsidiary will assume those agreements, (iii) Mr.

Ed Burns will become the owner

of a 51% interest in that newly formed subsidiary, and (iv) we will enter into a Management Agreement with that subsidiary, the economic

terms and management/ control terms of which are intended to be the equivalent of complete ownership of that the 49% owned subsidiary.

Ed Burns is currently the 51% owner of SLG and a resident of the City of Chicago.

The SLG Term Sheet provides that, if, when, and

as the transactions contemplated thereby are consummated, the two current owners of SLG will be issued an aggregate of 996,355 shares

of Cycurion common stock.

SLG is fully bound by the terms and provisions of the SLG Term Sheet and

the related Management Agreement structure, although Cycurion Sub is permitted to terminate the SLG Term Sheet and to abandon the transactions

contemplated thereby any time for any reason or for no reason prior to April 11, 2025, with no further obligations on Cycurion Sub’s

As of the date of this Annual Report, although we reserve the right to modify the terms and provisions of the SLG Acquisition Agreement,

we do not currently expect to terminate it and currently expect to close the transactions contemplated during our current fiscal quarter.

Substantially all of the agreements to which SLG is a party have a provision that provides the counterparty to such agreement with a right

to approve an assignment or change in control of SLG prior to its effectiveness.

If an approval is not forthcoming, then the provisions

of the SLG Acquisition Agreement permit us to excise that specific agreement.

Upon such occurrence, we reserve that right to reduce the

consideration that we would otherwise tender to the equity owners of SLG.

amended by the parties, initially effective as of November 29, 2023 and

subsequently effective as of April 29, 2024, August 16, 2024 and December 31, 2024, the SLG Term Sheet expires on the soonest of (i) closing

of the transactions contemplated thereby, (ii) April 11, 2025, if the transactions contemplated thereby have not closed by then, (iii)

Cycurion Sub’s termination thereof, and (iv) the mutual termination by all of the parties thereto.

Notwithstanding anything to the

contrary contained therein, Cycurion Sub may terminate its obligations under the SLG Term Sheet and the transactions contemplated hereby

for any reason or for no reason without any further obligations and without any liability at any time through and including April 11,

The SLG Term Sheet, as amended, consensually superseded, as noted therein, Cycurion Sub’s previous “unidirectional”

agreements with SLG.

The foregoing brief summary description of certain terms and provisions

of (i) the SLG Term Sheet does not purport to be complete and is qualified in its entirety by reference to the full text of the SLG Term

Sheet, a copy of which is attached to this Annual Report as Exhibit 10.12, (ii) the SLG Term Sheet Amendments, a copy of each of which

is attached to this Annual Report as Exhibit 10.12a, Exhibit 10.12b, Exhibit 10.12c, and Exhibit 10.12d, and (iii) the SLG Management

Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the SLG Term Sheet, a copy

of which is attached to this Annual Report as Exhibit 10.12e.

Readers are encouraged to read those Exhibits in full for a more comprehensive

understanding of the transaction contemplated by the SLG Term Sheet.

Acquisition Agreement

Technology Corporation (“ RCR ”) performs certain services for SLG in its role as an SLG subcontractor and, in that

context, became a creditor of SLG.

In connection with the transactions contemplated by the SLG Term Sheet, on April 25, 2023, Cycurion

and RCR also entered into a term sheet (the “ RCR Term Sheet ”) for a distinct, but related transaction.

Sheet contemplates a transaction, pursuant to which RCR will sell to Cycurion all of the accounts receivable of SLG in favor of RCR (but

for those accounts that are less than 90 days old as of the date of consummation of the contemplated transaction).

The consummation of

the transactions contemplated by the RCR Term Sheet is contingent upon the consummation of the transactions contemplated by the SLG Term

Nevertheless, as a result of our entry into the SLG Management Agreement

with SLG, we still currently intend to consummate the transactions contemplated by the RCR Term Sheet in the first half of our current

The RCR Term Sheet provides that, if, when, and as the transactions contemplated thereby are consummated, RCR will be issued

shares of our common stock.

as amended by the parties, initially effective as of November 29, 2023, and subsequently effective as of April 29, 2024, August 16, 2024

and December 31, 2024, the RCR Term Sheet expires on the soonest of (i) closing of the transactions contemplated thereby, (ii) April

11, 2025, if the transactions contemplated thereby have not closed by then, (iii) Cycurion’s termination thereof, and (iv) the

mutual termination by all of the parties thereto.

Notwithstanding anything to the contrary contained therein, Cycurion may terminate

its obligations under the RCR Term Sheet and the transactions contemplated hereby for any reason or for no reason without any further

obligations and without any liability at any time through and including April 11, 2025.

As of the date of this Annual Report, we do not currently expect to terminate the

transactions contemplated by the RCR Term Sheet, as amended, and currently expect to close the transactions in the first half of our current

The foregoing brief summary description of certain terms and provisions

of the RCR Term Sheet does not purport to be complete and is qualified in its entirety by reference to the full text of the RCR Term Sheet,

a copy of which is attached to this Annual Report as Exhibit 10.13 and the full text of the RCR Term Sheet Amendments, a copy of each

of which are attached to this Annual Report as Exhibit 10.13a, 10.13b and 10.13c.

Readers are encouraged to read those Exhibits in full

for a more comprehensive understanding of the transaction contemplated by the RCR Term Sheet.

of Technology

SaaS Asset Purchase

August 17, 2021, we entered into an asset purchase agreement to acquire

certain technology assets of Sabres, a leading Israeli-based cyber security provider.

As part of the asset purchase agreement, we acquired

Multi-Dimensional Protection, Web Application Firewall and Bot Mitigation SaaS platforms, and their associated intellectual property.

The transaction closed on September 30, 2021, and we have integrated the SaaS platforms into our existing services offerings.

Cycurion Security Platform’s (formerly Sabres’) line of products allows our customers to improve their cyber posture with

its MDP SaaS platform.

This platform efficiently bundles and easily implements the external protection of a Web Application Firewall

(WAF) and the internal protection of Bot Mitigation.

Bot Mitigation is the reduction of risk to applications, Application Program Interfaces

(APIs), and backend services from malicious bot traffic that fuels common automated attacks, such as Distributed Denial of Service (DDoS)

campaigns and vulnerability probing.

The costs of single-layer security can be measured in terms of money, time, and risk, as well as

the damage wrought by a data breach, which millions of businesses experience each year.

Through this interaction of the WAF and Bot Mitigation,

the MDP is able to reinforce these layers of security and generate new security layers in real time in response to emerging threats.

This process is directed by our Cycurion Security Platform’s proprietary, cloud-based AI algorithm.

Crucially, the AI underpinning

the MDP platform is constantly evolving to counter new threats.

Through a crowdsourcing process, the cloud-based MDP learns from every

threat to any protected application and uses that newly acquired knowledge to protect all MDP clients better.

Cycurion Security Platform’s (formerly Sabres’) line of products provides solutions for substantially all web application

security needs.

These products provide solutions, whether a client is in need of a web application firewall to comply with regulations

and ensure it has a first line of defense against the hazards that the internet can present or is in need of enterprise-level products

that empower Security Operations Center (SOC) teams and security management.

Our Cycurion Security Platform’s constantly survey

a client’s data to detect security issues in need of attention, send automatic updates, and provide the client with a complete

database of rules and threats.

Multi-Dimensional Protection (MDP)

On-premises option

Dual-Layered Defense (WAF/Bot Mitigation)

Advanced Security Information and Event Management (SIEM) dashboard

Ongoing reporting and alerts

No delays for the end-user

Can connect to any existing WAF

Easy installation on all platforms

Exceptional penetration testing results

No downtime for updating

No hardware required

Biometric WAF

have integrated the technology assets that we acquired from Sabres (which now constitutes our Cycurion Security Platform) into our Managed

Security Services Practice.

We believe that the platform will enhance our service offerings and assist with the expansion of our commercial

The Sabres platform will be managed by our dedicated support team, and will provide real time reporting, response to security

incidents, and will manage all data privacy needs from a single SIEM SaaS platform dashboard.

of Operations for the years ended December 31, 2024 and 2023

Years Ended December 31,

Cost of revenue

Selling, general and administrative

Interest and other expenses

Net income/loss

$ (2,097,013 )

decreased $1,578,723 (8.16%) to $17,771,485 for the year ended December 31, 2024, as compared to $19,350,208 for the year ended December

decrease in the revenues for the year ended December 31, 2024 is attributed to the conclusion of key contracts with the federal government

and state and local agencies, partially offset by new business segments and contracts.

cost of revenue for the year ended December 31, 2024, was approximately $14,136,742, nearly all of which is related to costs incurred

while delivering services to our customers and expansion of our employee base to address our business growth.

Conversely, the cost of

revenue for the year ended December 31, 2023, was approximately $16,707,148, nearly all of which is related to costs incurred while

servicing our contracts, including contractual and servicing obligations with our employees and contractors.

This $2,570,406 (15.39%)

decrease in the cost of revenues is directly attributable to lower contractor-related expenses.

and Development

did not have any Research and Development expenses for the years ended December 31, 2024 and December 31, 2023.

General and Administrative

general and administrative (“ SG&A ”) expenses decreased by $1,098,019 (47.40%) to $1,218,630 for the year ended

December 31, 2024, compared to $2,316,649 for the year ended December 31, 2023, respectively.

This improvement was primarily due to reduced

legal, administrative, and consulting fees in the 2024 fiscal year.

and Other Expense

and other expense was approximately $(1,186,512) and $(2,419,637) for the years ended December 31, 2024 and 2023, respectively.

expenses for the year ended December 31, 2024 include $1,209,502 in interest-related expenses and losses, related to the payment of our

bank instrument, and other loan obligations.

This $1,233,125 (50.96%) decrease of interest and other expenses is primarily due to reduced

or renegotiated interest expenses in the 2024 fiscal year.

Years Ended December 31,

Cash and cash equivalents at the beginning of the period

Unlike prime contractors, who focus on the managerial side of the government contract, subcontractors tend to dedicate their efforts to lending subject matter expertise and delivery of service to the project.

Technically strong subcontractors, along with a strong subcontractor plan are essential to boost the success of a project.

As a result of the strong technical skills and experience of the cyber teams at Cycurion and its subsidiaries, SLG Innovation entered into a Master Services Agreement ("MSA") with Axxum Technologies to provide services to SLG customers.

The MSA is task order driven and the number of task orders is modified periodically depending on actual customer requirements for IT and cybersecurity services.

Over the last three years, Axxum Technologies has assisted SLG Innovation in growing its revenue and customer base.

As a result, SLG Innovation now represents a majority of Cycurion revenues.

RCR Acquisition Agreement

RCR Technology Corporation ("RCR") performs certain services for SLG in its role as an SLG subcontractor and, in that context, became a creditor of SLG.

In connection with the transactions contemplated by the term sheet with SLG (the "SLG Term Sheet"), on April 25, 2023, Cycurion Sub and RCR also entered into a term sheet (the "RCR Term Sheet") for a distinct, but related transaction.

The RCR Term Sheet contemplates a transaction, pursuant to which RCR will sell to Cycurion all of the accounts receivable of SLG in favor of RCR (but for those accounts that are less than 90 days old as of the date of consummation of the contemplated transaction).

The consummation of the transactions contemplated by the RCR Term Sheet is contingent upon the consummation of the transactions contemplated by the SLG Term Sheet.

We consummated the transactions contemplated by the RCR Term Sheet on September 25, 2025.

Cycurion issued 248,006 shares of common stock to RCR as a result of the consummation of the transaction contemplated by the RCR Term Sheet pursuant to the Securities Purchase Agreement, dated September 25, 2025.

The foregoing brief summary description of certain terms and provisions of the RCR Term Sheet does not purport to be complete and is qualified in its entirety by reference to the full text of the RCR Term Sheet, a copy of which is filed as an exhibit to this Annual Report on Form 10-K as Exhibit 10.13 and the full text of the RCR Term Sheet amendments, a copy of each of which are filed as an exhibit to this Annual Report on Form 10-K as Exhibit 10.13a, 10.13b, 10.13c and 10.13d.

Readers are encouraged to read those Exhibits in full for a more comprehensive understanding of the transaction contemplated by the RCR Term Sheet.

Acquisition of Technology

On September 30, 2021, we acquired certain technology assets of Sabres, a leading Israeli-based cybersecurity provider.

As part of the asset purchase agreement, we acquired Multi-Dimensional Protection ("MDP"), WAF and Bot Mitigation SaaS platforms, and their associated intellectual property.

Our Cycurion Security Platform's (formerly Sabres') line of products allows our customers to improve their cyber posture with its MDP SaaS platform.

This platform efficiently bundles and easily implements the external protection of a WAF and the internal protection of Bot Mitigation.

Bot Mitigation is the reduction of risk to applications, APIs, and backend services from malicious bot traffic that fuels common automated attacks, such as DoS campaigns and vulnerability probing.

The costs of single-layer security can be measured in terms of money, time, and risk, as well as the damage wrought by a data breach, which millions of businesses experience each year.

Through this interaction of the WAF and Bot Mitigation, the MDP is able to reinforce these layers of security and generate new security layers in real time in response to emerging threats.

This process is directed by our Cycurion Security Platform's (formerly Sabres') proprietary, cloud-based AI algorithm.

We do not have AI processing in the production version of the software.

That version is in the testing and evaluation phase.

Crucially, the AI underpinning the MDP platform is constantly evolving to counter new threats.

Through a crowdsourcing process, the cloud-based MDP learns from every threat to any protected application and uses that newly acquired knowledge to protect all MDP clients better.

Our Cycurion Security Platform's (formerly Sabres') line of products provides solutions for substantially all web application security needs.

These products provide solutions, whether a client is in need of a web application firewall to comply with regulations and ensure it has a first line of defense against the hazards that the internet can present or is in need of enterprise-level products that empower SOC teams and security management.

Our Cycurion Security Platform's constantly survey a client's data to detect security issues in need of attention, send automatic updates, and provide the client with a complete database of rules and threats.

We have integrated the technology assets that we acquired from Sabres (which now constitutes our Cycurion Security Platform) into our Managed Security Services Practice.

We believe that the platform will enhance our service offerings and assist with the expansion of our commercial business.

Our dedicated support team will manage the Sabres platform, provide real time reporting, response to security incidents, and will manage all data privacy needs from a single security information and event management SaaS platform dashboard.

Financial Overview

A number of factors have contributed to our fiscal year 2025 results of operations, the most significant of which are described below.

More details on these changes are presented below within our "Results of Operations" section.

• The execution of the SLG Innovation Inc.

• The completion of the business combination with Western Acquisition Ventures Corp.

Results of Operations

Table MD&A 1:

Consolidated Results of Operations

For the Year Ended December 31,

Net revenues $ 15,133,647 $ 17,771,485

Cost of revenues 13,521,329 14,136,742

Gross profit 1,612,318 3,634,743

Gross profit percentage 10.7 % 20.5 %

Operating expenses:

Selling, general and administrative expenses 9,258,199 1,208,630

Stock compensation expenses 3,898,867 10,000

Business combination expenses 11,870,114 —

Total operating expenses 25,027,180 1,218,630

Operating (loss)/income (23,414,862) 2,416,113

Interest income 27,538 20,211

Interest expense (1,763,831) (1,209,502)

Gain on debt settlement, net 1,221,635 —

Other (expense)/income (129,564) 2,779

Other expense, net (644,222) (1,186,512)

(Loss)/income before income taxes (24,059,084) 1,229,601

Provision for income tax — —

Net (loss)/income (24,059,084) 1,229,601

Net loss attributable to non-controlling interest 393,376 —

Net (loss)/income attributable to Cycurion $ (23,665,708) $ 1,229,601

Revenues for the year ended December 31, 2025 decreased $2.6 or 14.8% compared to the year ended December 31, 2024.

We attribute this decrease in the revenues in 2025 compared to 2024 to delayed start dates of new federal, state and local contracts and the company’s focus on more profitable business.

Cost of revenues

The cost of revenue for the year ended December 31, 2025, was approximately $13.5 million, compared to $14.1 million for the year ended December 31, 2024.

The cost of revenue is driven by the costs incurred while delivering services to our customers, therefore the decrease in costs is due to the decrease in revenues.

Selling, general and administrative expenses

Our selling, general and administrative ("SG&A") expenses increased in 2025 compared to 2024 due to additional expenses being recognized in 2025 due to increased costs associated with being a publicly traded company and the addition key individuals for the company's growth strategy.

Stock compensation expenses

Stock compensation expenses increased in 2025 compared to 2024 as a result of new compensation agreements with executives.

Business combination expenses

Business combination expenses in 2025 are a result of the business combination with Western.

Interest income

Interest income was $27,538 and $20,211 for the year ended December 31, 2025 and 2024, respectively.

The change in interest income is a result of the balance of the underlying interesting earning assets.

Interest expense

Interest expense for the year ended December 31, 2025 and 2024, was $1.8 million and $1.2 million, respectively.

The change in interest expense is a result of the underlying debt instruments.

For further information refer to debt footnotes.

Gain on debt settlement, net

The $1.2 million gain on debt settlement, net for the year ended December 31, 2025 is the result of the conversion of debt to various equity instruments at a lower fair market value than the exchanged debt on the books.

Liquidity and Capital Resources

Our primary sources of liquidity are cash on hand, cash from operations, borrowings under our debt financing arrangements and equity raises through our equity line.

As of December 31, 2025, we had $5.3 million in cash and cash equivalents.

We believe that our current cash position, access to the capital markets and cash flow generated from operations should be sufficient for our operating requirements through the next several fiscal years.

Table MD&A 2:

Net Changes in Cash and Cash Equivalents

For the Year Ended December 31,

Net cash used in operating activities $ (12,086,357) $ (1,371,281)

Net cash used in investing activities

Net cash provided by/(used in) investing activities 1,414,523 (885,066)

Net cash provided by financing activities 15,886,279 1,689,268

Cash and cash equivalents at the end of the period

the year ended December 31, 2024, net cash used by operating activities was $1,371,281, which included $1,229,601 in net profits, $3,238,749

increase in accounts receivable, $253,902 decrease in deferred revenue, and $908,854 increase in accounts and other payables.

incurred a marginal $6,566 non-cash adjustment to the amortization of debt discount.

the year ended December 31, 2023, net cash used in operating activities was $1,987,771, which included $2,097,013 in net losses,

$4,636,805 increase in accounts receivable, $242,099 increase in deferred revenue, and $3,105,223 increase in accounts and other payables.

We also incurred a $1,094,131 non-cash adjustment to the amortization of debt discount.

the year ended December 31, 2024, net cash used in investing activities was approximately $885,066.

This was primarily used in the purchase

of equipment, and servicing notes issued by WAVS.

the year ended December 31, 2023, net cash used in investing activities was approximately $706,707.

This was used in the purchase of

the year ended December 31, 2024, net cash provided by financing activities was $1,689,268.

The net cash provided includes $1,000,000

in proceeds from a private placement, $405,000 in proceeds from notes payables and $252,314 in proceeds from our line of credit.

the year ended December 31, 2023, net cash provided by financing activities was $3,206,162.

The net cash provided includes $2,000,000

in proceeds from a private placement and $1,084,000 in proceeds from notes payables, offset by $193,305 used in the repayment of bank

From the date

of the closing of our de-SPAC transaction (February 14, 2025) to April 17, 2025, otherwise unaffiliated persons converted 2,999.3 shares

of the Company’s Series B Preferred Stock into 5,998,653 shares of the Company’s common stock and 6,666,667 shares of the

Company’s Series D Preferred Stock into 6,666,667 shares of the Company’s common stock.

From the date of the closing of our

de-SPAC transaction (February 14, 2025) to April 17, 2025, otherwise unaffiliated persons exercised 694,530 Series A warrants for the

purchase of 694,530 shares of the Company’s common stock;

2,400,000 Series B warrants for the purchase of 4,800,000 shares of the

Company’s common stock;

4,382,033 Series D warrants for the purchase of 8,764,066 shares of the Company’s common stock;

270,137 common stock warrants for the purchase of 270,137 shares of the Company’s common stock for gross proceeds of approximately

$3.5 million.

and Capital Resources

have incurred operating losses since inception through the end of our 2023 fiscal year, having had negative cash flow from operations.

As of December 31, 2024, we had an accumulated deficit of approximately $3,203,361, an improvement compared to our accumulated deficit

of approximately $4,432,962 at December 31, 2023.

The decline was the result of net profits of $1,229,601 incurred during our fiscal

Furthermore, we expect possible, significant operating losses for the next few years.

We also utilized cash in operations

of approximately $1,371,281 in the twelve months ended December 31, 2024.

As of December 31, 2024, we had unrestricted cash of approximately

$40.7 thousand, a decrease of $567 thousand from approximately $607 thousand at December 31, 2023.

As of December 31, 2024, our total

assets increased to approximately $25.7 million from approximately $20.8 million at December 31, 2023, primarily due to a $3.2 million

increase in our accounts receivable and $1.8 million increase in investments held in trust.

Based on our current capital resources as

of December 31, 2024, including our unrestricted cash and accounts receivable (net) of $10.3 million, we expect to be able to continue

our operations for a minimum of 12 months as of the date of these financial statements.

We have added the following table that provides

aging analysis of our accounts receivable.

We provided an analysis of the accounts receivable for the years ending 2023 and 2024.

the company has broadened its business customer base, the nature of the payment and cash receipt cycle has change.

Many of the corporate

customers have longer payment terms.

We expect that this trend to continue as we acquire additional commercial customers.

Receivable Aging Analysis without SLG ($)

Nevertheless,

our continuation as a going concern is dependent on our ability to obtain additional financing until we can generate sufficient, consistent

cash flow from operations to meet the expected growth in our obligations.

We intend to continue to seek additional debt or equity financing

to continue our operations.

consolidated financial statements have been prepared on a going concern basis, which implies we may not continue to meet our obligations

and continue our operations for the next fiscal year.

The continuation of our Company as a going concern is dependent upon our ability

to obtain necessary debt or equity financing to continue operations until we begin generating positive cash flow.

is no assurance that we will ever be consistently profitable or, notwithstanding our recent financing activities, that debt or equity

financing will be available to us in the amounts, on terms, and at times deemed acceptable to us, if at all.

The issuance of additional

equity securities by us would result in a significant dilution in the equity interests of our current stockholders.

Obtaining commercial

loans, assuming those loans would be available, would increase our liabilities and future cash commitments.

If we are unable to obtain

financing in the amounts and on terms deemed acceptable to us, we may be unable to continue our business, as planned, and as a result

may be required to scale back or cease operations for our business, the result of which would be that our stockholders would lose some

or all of their investment.

The consolidated financial statements do not include any adjustments to reflect the possible future effects

on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should we be unable

to continue as a going concern.

sheet arrangements

did not have any off-balance sheet arrangements during the periods presented, and we do not currently have any off-balance sheet arrangements,

as defined in the SEC rules and regulations.

adopted the new revenue standard, ASC 606, on January 1, 2018, using the full retrospective approach.

The adoption did not have an effect

on 2024 or 2023 revenue recognition or a cumulative effect on opening equity, as the timing and measurement of revenue recognition is

materially the same as under ASC 605.

The core principle of the new revenue standard is that a company should recognize revenue to depict

the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to

be entitled in exchange for those goods or services.

The following five steps are applied to achieve that core principle:

Identify the contract with the customer

Identify the performance obligations in the contract

Determine the transaction price

Allocate the transaction price to the performance obligations in the contract

Recognize revenue when the company satisfies a performance obligation

contracts where the period between when we transfer a promised good or service to the customer and when the customer pays is one year

or less, we have elected the practical expedient to not adjust the promised amount of consideration for the effects of a significant

financing component.

measure and recognize compensation expense for all options based on the estimated fair value of the award on the grant date.

Black-Scholes option-pricing model to estimate the fair value of option awards.

The fair value is recognized as expense on a straight-line

basis over the requisite service period.

We account for forfeitures as they occur.

We recognize expense for awards where vesting is subject

to a market or performance condition based on the derived service period.

Expense for awards with performance conditions would be estimated

and adjusted on a quarterly basis based upon our assessment of the probability that the performance condition will be met.

determination of the grant date fair value of options using an option pricing model is affected principally by our estimated fair value

of shares of our Common Stock and requires management to make a number of other assumptions, including the expected life of the option,

the volatility of the underlying shares, the risk-free interest rate and expected dividends.

The assumptions used in our Black-Scholes

option-pricing model represent management’s best estimates at the time of measurement.

These estimates are complex, involve a number

of variables, uncertainties and assumptions and the application of management’s judgment, as they are inherently subjective.

any assumptions change, our stock-based compensation expense could be materially different in the future.

assumptions are estimated as follows:

Value of Common Stock .

As our Common Stock has not historically been publicly traded,

we estimated the fair value of our Common Stock.

See “ Fair Value of Common Stock ”

and “ Common Stock Valuation Methodology ” sections.

The expected term represents the period that our options are expected to be outstanding.

We calculated the expected term using the simplified method for options based on the average

of each option’s vesting term and the contractual period during which the option can

be exercised, which is typically 10 years following the date of grant.

The expected volatility was based on the historical share volatility of several

of our comparable publicly traded companies over a period of time equal to the expected term

of the options, as we do not have any trading history to use the volatility of our Common

Interest Rate .

The risk-free interest rate was based on the yields of U.S.

Treasury securities

with maturities appropriate for the term of the award.

Dividend Yield .

We have not paid dividends on our Common Stock nor do we expect to pay

dividends in the foreseeable future.

Value of Common Stock

Historically,

for all periods prior to this offering, the fair values of the shares of Common Stock underlying our options were estimated on each grant

date by our board of directors.

In order to determine the fair value, our board of directors considered, among other things, contemporaneous

valuations of our Common Stock and Preferred Stock prepared by unrelated third-party valuation firms in accordance with the guidance

provided by the American Institute of Certified Public Accountants 2013 Practice Aid, Valuation of Privately-Held-Company Equity Securities

Issued as Compensation, or the Practice Aid.

Given the absence of a public trading market of our capital stock, our board of directors

exercised reasonable judgment and considered a number of objective and subjective factors to determine the best estimate of the fair

value of our Common Stock, including:

● Contemporaneous

third-party valuations of our Common Stock;

prices, rights, preferences, and privileges of our Preferred Stock relative to our Common

business, financial condition, and results of operations, including related industry trends

affecting our operations;

likelihood of achieving a liquidity event, such as an initial public offering or sale of

our company, given prevailing market conditions;

lack of marketability of our Common Stock;

market performance of comparable publicly traded companies;

and global economic and capital market conditions and outlook.

accounting policies and significant judgments and estimates

financial statements are prepared in accordance with GAAP.

The preparation of our financial statements requires us to make estimates,

assumptions and judgments that affect the reported amounts of assets, liabilities, costs, and expenses.

We base our estimates and assumptions

on historical experience and other factors that we believe to be reasonable under the circumstances.

We evaluate our estimates and assumptions

on an ongoing basis.

Our actual results may differ from these estimates.

Our most critical accounting policies are summarized below.

See Note 2 to our consolidated financial statements for the years ended December 31, 2024 and 2023 for a description of our other significant

accounting policies.

review goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter of each fiscal year or more

frequently if impairment indicators arise.

The review of impairment consists of using a qualitative approach to determine whether it

is more than likely that the fair value of the assets is less than their respective carrying values or a one-step qualitative impairment

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

including an analysis of the firm’s contract backlog and sales pipeline.

While the contract backlog is confirmed contractual wins,

the sales pipeline is evaluated by management to determine the uncertainty of the pipeline.

Each potential contractual win is assigned

a probability of win score to address the potential uncertainty.

Thus, it provides a conservative estimate of any future contractual

If, based on the qualitative assessment results, it is concluded that the fair value of a reporting unit may not exceed its carrying

value, additional quantitative impairment testing is performed.

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

If the carrying

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

carrying value of goodwill).

use a discounted cash flow approach to determine the fair value of a reporting unit.

The determination of discounted cash flows of the

reporting units and assets and liabilities within the reporting units requires significant estimates and assumptions.

These estimates

and assumptions primarily include, but are not limited to, the discount rate being the weighted average cost of capital (WACC) for the

firm, terminal growth rates, earnings before depreciation and amortization, and capital expenditures forecasts.

to the inherent uncertainty involved in making these estimates, actual results could differ from those estimates.

We evaluate the merits

of each significant assumption, both individually and in the aggregate, used to determine the fair value of the reporting units, as well

as the fair values of the corresponding assets and liabilities within the reporting units.

that we operated at a net profit in 2024, we performed quantitative impairment testing as second step to validate our qualitative testing.

Based on our quantitative impairment testing, the fair value of goodwill substantially exceeds the carrying value.

Axxum Technologies

Cloudburst Security

Total Cycurion Goodwill

accounting pronouncements

Note 2 to our consolidated financial statements for the years ended December 31, 2024 and 2023 for a description of recent accounting

pronouncements applicable to our financial statements.

QUANTITATIVE AND

QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by

Rule 12b-2 of the Exchange Act and are not required to provide information require under this item.

Net increase/(decrease) in cash and cash equivalents $ 5,214,445 $ (567,079)

Net Cash Used In Operating Activities

For the year ended December 31, 2025, net cash used by operating activities was $12.1 million, compared to $1.4 million for the year ended December 31, 2024.

The main drivers of this increase are the additional merger expenses incurred in 2025 and the additional corporate level costs to build out a management team and brand for organic growth and acquisitions.

Net Cash Provided By/(Used In) Investing Activities

For the year ended December 31, 2025, net cash provided in investing activities was approximately $1.4 million, compared to a $0.9 million use of cash for the year ended December 31, 2024.

The cash inflow in 2025 was a result of the Trust Account (as defined below) for redemption and cash released from the Trust Account to the Company.

Net Cash Provided by Financing Activities

For the year ended December 31, 2025, net cash provided by financing activities was $15.9 million.

The net cash provided includes $7.0 million in proceeds from the equity line of credit, $4.8 million of proceeds from the private placement capital raise in December 2025, $3.7 million proceeds provided from the exercise of warrants, $2.4 million in proceeds from convertible notes payable, $0.5 million in proceeds provided from notes payable, partially offset by a cash outflow of $1.0 million cash used in redemption of common stock.

For the year ended December 31, 2024, net cash provided by financing activities was $1.7 million.

The Company received $1.0 million from a private placement.

Going Concern

We have incurred operating losses since inception through the period ended December 31, 2025, having had negative cash flow from operations.

As of December 31, 2025, we had an accumulated deficit of approximately $26.9 million, as compared to our accumulated deficit of approximately $3.2 million as of December 31, 2024.

The increase of our accumulated deficit was a result of our net losses for 2025.

Furthermore, we expect continued, significant operating losses for the next few years.

We also utilized cash in operations of approximately $12.1 million for the year ended December 31, 2025.

As of December 31, 2025, we had unrestricted cash of approximately $5.3 million, an increase of $5.2 million from approximately $38,742 as of December 31, 2024.

As of December 31, 2025, our total assets increased to approximately $33.5 million from approximately $25.6 million as of December 31, 2024, primarily due to increases in goodwill.

Based on our current capital resources as of December 31, 2025, including our unrestricted cash and accounts receivable, net of $7.9 million, we expect to be able to continue our operations for a minimum of 12 months as of the date of this annual report.

Nevertheless, our continuation as a going concern is dependent on our ability to obtain additional financing until we can generate sufficient, consistent cash flow from operations to meet the expected growth in our obligations.

We intend to continue to seek additional debt or equity financing to continue our operations.

Our consolidated financial statements have been prepared on a going concern basis, which implies we may not continue to meet our obligations and continue our operations for the next fiscal year.

The continuation of our Company as a going concern is dependent upon our ability to obtain necessary debt or equity financing to continue operations until we begin generating positive cash flow.

There is no assurance that we will ever be consistently profitable or, notwithstanding our recent financing activities, that debt or equity financing will be available to us in the amounts, on terms, and at times deemed acceptable to us, if at all.

The issuance of additional equity securities by us would result in a significant dilution in the equity interests of our current stockholders.

Obtaining commercial loans, assuming those loans would be available, would increase our liabilities and future cash commitments.

If we are unable to obtain financing in the amounts and on terms deemed acceptable to us, we may be unable to continue our business, as planned, and as a result may be required to scale back or cease operations for our business, the result of which would be that our stockholders would lose some or all of their investment.

The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should we be unable to continue as a going concern.

Off-balance sheet arrangements

We did not have any off-balance sheet arrangements during the periods presented, and we do not currently have any off-balance sheet arrangements, as defined in the SEC rules and regulations.

Critical Accounting Policies and Estimates

Goodwill and Other Long-Lived Assets

We evaluate the impairment of goodwill and other long-lived assets in accordance with Accounting Standards Codification ("ASC") 350, "Intangibles Goodwill and Other." Management annually reviews goodwill and other long-lived assets for impairment or whenever events or changes in circumstances indicate the carrying amount may not be recoverable.

If we determine that the carrying value of the goodwill and other long-lived assets may not be recoverable, we will record an impairment charge for the amount by which the carrying value of the goodwill and other long-lived assets exceeds its fair value.

Goodwill is not amortized, but rather tested for potential impairment as of December 31 each year.

The goodwill impairment test is performed at the reporting unit level, which is only one for our company.

Accounting requirements provide that a reporting entity may perform an optional qualitative assessment on an annual basis to determine whether events occurred or circumstances changed that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

If an initial qualitative assessment identifies that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or the optional qualitative assessment is not performed, a quantitative analysis is performed.

In testing goodwill for impairment, we first assess the qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying value.

If, after the assessment, we determine that an impairment indicator exists, we perform the quantitative goodwill impairment test.

The Company performs the quantitative goodwill impairment test by calculating the fair value of the reporting unit and comparing it to its respective carrying value including goodwill.

If the fair value is less than the carrying value, the amount of impairment expense is equal to the difference between the reporting unit's fair value and the reporting unit's carrying value.

Determining the fair value of a reporting unit requires management's judgment and involves the use of significant estimates and assumptions, including forecasted revenue, operating margins, capital expenditures, and selection and use of an appropriate discount rate commensurate with the risk inherent in each of our reporting units' current business models.

We utilize the weighted average cost of capital as derived by certain assumptions specific to our facts and circumstances as the discount rate.

Our estimate of cash flows and discount rate are subject to change due to the economic environment.

A relatively small change in the underlying assumptions, including if the financial performance of the reporting unit does not meet expectations in future years, may cause a change in the results of the impairment assessment in future periods and, as such, could result in goodwill impairment.

We use a discounted cash flow approach to determine the fair value of a reporting unit.

The determination of discounted cash flows of the reporting units and assets and liabilities within the reporting units requires significant estimates and assumptions.

These estimates and assumptions primarily include, but are not limited to, the discount rate being the weighted average cost of capital ("WACC") for the firm, terminal growth rates, earnings before depreciation and amortization, and capital expenditures forecasts.

Given the fact we are operating in a net loss position, for the year ended December 31, 2025, management performed a quantitative assessment of our one reporting unit and determined that the fair value of goodwill exceeds the carrying value.

Due to the nature of our business and other factors described in Item 1A, "Risk Factors," of this Annual Report on Form 10-K, the profitability of our individual reporting units may periodically be affected by downturns in customer demand, operational challenges, and other factors.

If material adverse conditions occur that impact one or all of our reporting units, our determination of future fair value might not support the carrying amount of our reporting units, and the related goodwill may be impaired.

We will continue to monitor any changes to our assumptions and will evaluate goodwill as deemed warranted during future periods.

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 7. Management’s Discussion and Analysis