v3.26.1
BUSINESS COMBINATION
 6 Months Ended
Jun. 30, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
BUSINESS COMBINATION BUSINESS COMBINATIONS
Secuvant, LLC.
On June 3, 2026, the Company acquired Secuvant, LLC ("Secuvant") through the consummation of a merger pursuant to that certain Merger Agreement dated May 21, 2026, among the Company, Cycurion Merger Sub, LLC and Secuvant, pursuant to which Cycurion Merger Sub, LLC merged with and into Secuvant, with Secuvant surviving as a wholly owned subsidiary of the Company. The total purchase consideration included cash of $875,000 and 888,888 shares of Series I convertible preferred stock, valued at $2.0 million based on the estimated fair value at the acquisition date. The merger agreement includes a contingent earn-out to be paid upon reaching certain revenue and gross margin hurdles over a three year period. As of June 30, 2026, the total estimated contingent payout is $3.1 million, comprised of $0.6 million cash and $2.5 million to be settled with common stock.
The transaction was accounted for as a business combination under ASC 805. Upon closing the merger, all outstanding equity interests of Secuvant were cancelled and converted into the right to receive the merger consideration specified in the Merger Agreement. As of the transaction date, the preliminary fair value of assets acquired totaled $47,353, excluding cash of $558,014 that was netted against cash consideration paid. Liabilities assumed amounted to $1.0 million, including accounts payable, deferred revenue, loans payable and contingent liability related to earn-out provisions of the transaction. The net assets acquired were negative $0.9 million. The total consideration transferred exceeded the net assets acquired, resulting in the recognition of goodwill amounting to $6,378,948. This goodwill reflects the strategic value of Secuvant's operations, expected synergies, and future growth potential.
The Company recorded preliminary goodwill and intangibles of approximately $6.4 million related to the Secuvant acquisition, subject to adjustments through June 30, 2027 as the company engages outside valuation consultants to value the stand-alone intangibles acquired.
Table 6.1: Secuvant Valuation
Preliminary Allocation of Assets and Liabilities
Cash consideration:
Cash consideration$875,000 
Estimated additional cash payments - contingent earn-out623,970 
Less: cash acquired(558,014)
Estimated cash consideration, net of cash acquired940,956 
Noncash consideration:
Series I Convertible Preferred Stock2,000,000 
Estimated common stock consideration - contingent earn-out2,495,881 
Noncash consideration4,495,881 
Total consideration$5,436,837 
Assets acquired:
Accounts receivable$23,458 
Prepaid expenses23,895 
Total identified assets acquired47,353 
Liabilities assumed:
Accounts payable265,294 
Deferred revenue392,471 
Loans payable - current portion4,689 
Loans payable - non-current portion327,010 
Total identified liabilities assumed989,464 
Net identifiable liabilities assumed(942,111)
Goodwill6,378,948 
Net assets acquired$5,436,837 
SLG Innovation, Inc.
SLG is a technology services firm with operations and client contracts that management believes are strategically complementary to the Company's existing business and long-term growth objectives. As of December 31, 2020, the Company had initiated discussions regarding the potential acquisition of SLG and had advanced a non-refundable deposit of $1,401,923 for cash advances, loans, capitalized transaction costs and accounts receivable arising from prior business dealings with SLG. On May 13, 2021, the Company entered into an agreement to acquire substantially all of SLG's assets and certain liabilities, which included a termination right exercisable at the Company's sole discretion prior to December 31, 2021. This agreement was subsequently amended to limit the acquisition to certain specified assets, primarily identifiable sales contracts.
As of December 31, 2024, the non-refundable deposit balance had increased to $2,000,000, comprising $561,808 in cash advances and loans, $20,000 in due diligence costs, and $1,418,192 in accounts receivable.
On April 29, 2023, the Company and SLG executed a unidirectional letter of intent ("SLG LOI"), which bound SLG to the transaction but did not obligate the Company. The SLG LOI provided that, unless terminated by the Company on or before April 30, 2024, the Company would proceed to acquire SLG or substantially all of its assets and liabilities through a structure to be finalized. The agreed-upon valuation included the $2,000,000 receivable, $2,136,445 in SLG payables to RCR Technology Corporation (excluding payables incurred within 90 days prior to closing), and 33,212 shares of the Company's capital stock.
In connection with the potential SLG transaction, the Company entered into a separate unidirectional letter of intent with RCR ("RCR LOI") on April 29, 2023, under which the Company would acquire SLG's payables owed to RCR, subject to the closing of the potential SLG transaction. Consideration for the RCR transaction was to be settled in the form of shares of common stock of the Company, as specified in the RCR LOI.
The transaction contemplated by the SLG LOI did not close and the Company does not expect that it will close under the terms of the SLG LOI. In lieu of such transaction, and consistent with the economic and business relationship between SLG and the Company for more than the past two years, on March 31, 2025, the Company and SLG entered into a Management Services Agreement (the "MSA"), pursuant to which SLG memorialized its formal engagement of the Company to provide the Management Services (as defined in the MSA) on the terms and subject to the conditions set forth therein. The parties agreed that the Company would continue to retain sole and absolute discretion to select its employees and/or independent contractors who would perform and support the Management Services; provided that the compensation paid to any such persons shall not exceed the compensation that would have been paid to a comparable, unaffiliated third party on a commercial, arms-length basis. SLG agreed to cooperate in good faith with the Company in furtherance of its continued performance of the Management Services.

In connection with the Management Services to be provided by the Company, SLG agreed to pay a fee equal to SLG's "operational cash flow" (whether or not the inbound funds included were recognized as revenue under U.S. GAAP and whether or not the outbound funds were recognized as expenses under U.S. GAAP during the relevant reporting period). For purposes of the MSA, "operational cash flow" means (i) all cash and cash-equivalents received by, or on behalf of, SLG from any source for any reason during any reporting period minus (ii) all payments made by, or on behalf of, SLG, all in connection with SLG's business as historically operated and as managed by the Company in accordance with the provisions of the MSA. If SLG's operational cash flow during any reporting period is negative, then the Company reserves the right (in its sole and absolute discretion) to advance funds to SLG in an amount not to exceed such negative cash flow during such period with an interest rate to be determined on a case-by-case basis.

In connection with the execution and delivery of the MSA, the Company and Ed Burns entered into a Release Agreement (the "Burns Release Agreement"), pursuant to which the Company acknowledged that it has provided and will continue to provide certain services to SLG as a subcontractor and Mr. Burns agreed to release certain claims that he had, has, or may have against the Company or SLG in relation to the terms and conditions of the MSA, the transactions contemplated thereby, or the manner in which the Company and SLG became parties to the MSA, as well as the relationship between the Company and SLG prior to the date of the MSA and the Company issued to Mr. Burns 33,609 shares of common stock and 51 shares of Series E Convertible Preferred Stock with a face value of $10,000 and conversion price of $1.00. The Company offered a substantially equivalent release agreement to the owner of 49% of the equity of SLG with a percentage-equivalent contingent issuance of common stock and Series E Convertible Preferred Stock. As of the date of this quarterly report, such other release has not been accepted or executed and delivered.
On March 31, 2025, the company entered into a Management Services Agreement and a Release agreement (the "Agreement") to gain control of SLG as a VIE. The total purchase consideration for the VIE contractual relationship of SLG consisted primarily of:
(a)a prepaid deposit of $2,000,000;
(b)33,609 shares of common stock having par value of $0.0001 per share;
(c)51 shares of Series E Convertible Preferred Stock with a stated value of $10,000 and a conversion price of $1.00; and
(d)$10,814,147 of accounts receivable owed to Cycurion by SLG.
The Company has determined that the SLG transaction constitutes a business combination as defined by ASC 805, Business Combinations ("ASC 805"). ASC 805 establishes principles and requirements as to how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. The assets acquired and liabilities assumed were recognized provisionally in the accompanying consolidated balance sheets at their estimated fair values as of March 31, 2025, and subsequently adjusted through March 31, 2026. Under U.S. GAAP, the measurement period shall not exceed one year from the acquisition date and the Company has finalized these amounts as of March 31, 2026. The results of operations for SLG are included in the consolidated results of Cycurion, Inc. starting April 1, 2025.
Table 6: SLG Valuation
Initial Allocation of Assets and Liabilities AdjustmentsFinal Allocation of Assets and Liabilities as of March 31, 2026
Cash consideration:
Cash consideration$2,000,000 $- $2,000,000 
Less: cash acquired(34,983)- (34,983)
Cash consideration, net of cash acquired1,965,017 - 1,965,017 
Noncash consideration:
Common stock (1)
254,071 250,071 504,142 
Series E Convertible Preferred Stock (2)
255,000 - 255,000 
Accounts receivable in Cycurion owing from SLG (3)
10,814,147 - 10,814,147 
Noncash consideration11,323,218 250,071 11,573,289 
Total consideration$13,288,235 $250,071 $13,538,306 
Assets acquired:
Accounts receivable$3,066,581 $- $3,066,581 
Total identified assets acquired3,066,581 - 3,066,581 
Liabilities assumed:
Accounts payable4,317,052 222,313 4,539,365 
Accrued liabilities10,650 54,209 64,859 
Payroll liability40,642 173,629 214,271 
Factoring liability2,176,922 - 2,176,922 
Due to related parties18,000 - 18,000 
Loans payable625,222 - 625,222 
Liabilities to Cycurion2,982,908 - 2,982,908 
Total identified liabilities assumed10,171,396 450,151 10,621,547 
Net identifiable liabilities assumed(7,104,815)(450,151)(7,554,966)
Elimination of inter-company balances2,982,908 - 2,982,908 
Non-controlling interest(3,464,218)- (3,464,218)
Goodwill13,945,924 700,222 14,646,146 
Net assets acquired$13,288,235 $250,071 $13,538,306 
(1)Represents the fair value of 33,609 shares of common stock issued in the SLG transaction based on the quoted stock price on the date of issuance.
(2)Represents the fair value of the Series E Convertible Preferred Stock on an as converted to common stock basis using the quoted price of the Company's common stock on the date of issuance.
(3)Represents the fair value of the accounts receivable owed to Cycurion by SLG.
(4)Fair value of the noncontrolling interest based on NCI’s 49% interest in the net assets acquired.
(5)Goodwill is calculated as total consideration paid less net assets acquired.