Cycurion (CYCU) risk factors, FY2024 10-K

Risks Related to Our Business Generally

1. 01Cycurion has a limited operating history upon which you can evaluate our future business and prospects
2. 02Cycurion’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
3. 03As of December 31, 2024, Cycurion had approximately $20.2 million of indebtedness and other liabilities outstanding
4. 04Cycurion’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
5. 05We 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
6. 06We may issue additional shares of common stock or preferred stock under an employee incentive plan, which would dilute the interest of our stockholders
7. 07Cycurion’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
8. 08If 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
9. 09Cycurion 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
10. 10Cycurion 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
11. 11If Cycurion is unable to hire, retain, train, and motivate qualified personnel and senior management, its business could suffer
12. 12Cycurion 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 will suffer
13. 13Cycurion faces intense competition in the cybersecurity industry, especially from larger, well-established companies
14. 14If 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
15. 15We 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
16. 16Our business strategy may impose limitations in our ability to accurately forecast future revenue and operating results
17. 17As a cybersecurity provider, we are a target of cyber-attacks and other cyber risks that could adversely impact our reputation and operating results
18. 18The loss of, or a significant reduction, in purchases by any of our larger clients could adversely affect our business and financial results
19. 19Substantially all of our revenue is generated from contracts with Federal governmental entities
20. 20Our 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
21. 21Future acquisitions could disrupt our business and harm our financial condition and operating results
22. 22Our 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
23. 23We 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
24. 24Accusations 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
25. 25We depend on unaffiliated third-party software in order to provide our solutions and professional services and support our operations
26. 26Any material weakness in our internal controls could adversely affect our business
27. 27We 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
28. 28We 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
29. 29If we are unable continually to add new customer offerings, innovate, and increase efficiencies, our ability to attract new customers may be adversely affected

Risks Related to the SLG Assignment Agreement

1. 30We may fail to consummate some, or all of the assumptions contemplated by the SLG Assignment Agreement
2. 31Due Diligence may not reveal all issues with respect to SLG
3. 32We 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
4. 33There 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
5. 34There 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
6. 35There 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
7. 36Our insurance policies are expensive and protect us only from some business risks, which will leave us exposed to significant uninsured liabilities

Risks Related to Securities Markets and Investment in Our Common Stock

1. 37Cycurion has no current plans to pay dividends on its shares of common stock
2. 38If 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
3. 39We are an emerging growth company, and the reduced reporting requirements applicable to emerging growth companies may make our common stock less attractive to investors
4. 40Our common stock price may be volatile and as a result you could lose all or part of your investment
5. 41Potential 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
6. 42We face risks related to compliance with corporate governance laws and financial reporting standards
7. 43There can be no assurance that our common stock will continue to trade on The Nasdaq Global Market or another national securities exchange
8. 44The 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
9. 45Nasdaq may delist our securities from trading on its exchange
10. 46The 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
11. 47A “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
12. 48Increases 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 price
13. 49If 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
14. 50Volatility in the price of our common stock may subject us to securities litigation
15. 51Because the Company does not anticipate paying any cash dividends in the foreseeable future, capital appreciation, if any, would be your sole source of gain
16. 52The Company’s share price may fluctuate
17. 53Future 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
18. 54Anti-takeover provisions contained in our charter and bylaws, as well as provisions of Delaware law, could impair a takeover attempt
19. 55Cycurion’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

Risks Related to Operating as a Public Company

1. 56The Company’s management team has limited skills related to experience managing a public company
2. 57Cycurion may incur significantly increased costs and devote substantial management time as a result of operating as a public company
3. 58As 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