This is primarily a closing confirmation, not a new operating beat. The acquisition had been publicly announced and its roughly $5 million revenue contribution was already central to the transaction case. The filing confirms completion and repeats a contribution of more than $5 million in annual revenue; it does not raise that target or provide realized post-close results. The current figure is broadly consistent with the prior public target of about $5.1 million, so the completion removes closing risk but does not create a clear upside surprise.
| Measure | What the filing says | Expectation / comparison |
|---|---|---|
| Acquired business revenue contribution | More than $5.0M annual revenue | Broadly in line with the prior public target of about $5.1M (Press Release) |
| Acquired business EBITDA claim | More than $1.2M | The detailed FY2026 pro forma instead shows $938K; these are not directly comparable because the headline appears to be a run-rate claim while the table includes first-half actuals and a second-half forecast (Press Release; Pro Forma Income Statement) |
| FY2026 revenue forecast for acquired business | $5.50M | Includes $2.25M of first-half actual revenue and $3.25M forecast for the second half (Pro Forma Income Statement) |
| FY2026 EBITDA forecast | $938K, or 17.1% margin | Before listed one-time inventory and credit-loss charges (Pro Forma Income Statement) |
| Consideration at closing | $1.25M cash, $4.25M secured note, $600K preferred stock | Plus up to $1.0M contingent earnout; $6.1M of stated up-front consideration before the earnout (Item 1.01) |
| Acquired net operating assets | $21K | $7.15M of operating assets are substantially offset by $7.13M of assumed operating liabilities, notably $6.62M of deferred revenue (Pro Forma Operating Assets and Liabilities) |
The profitability headline needs more qualification than the release gives it. The company highlights over $1.2 million of EBITDA, while its detailed FY2026 schedule forecasts $938,132 of EBITDA and only $101,658 of net income after $737,095 of inventory-reserve and credit-loss charges, depreciation, and patent amortization. The difference may reflect a run-rate framing, but the filing does not reconcile it explicitly. More importantly, reaching the $5.5 million revenue target requires second-half revenue of about $3.25 million versus $2.25 million in the first half, with service revenue dependent on the Q4 renewal cycle and deferred-revenue rebuild. (Pro Forma Income Statement; Pro Forma Operating Cash Flow)
The deal adds scale, but it is financed with meaningful claims on that acquired business. Cycurion paid $1.25 million in cash and issued a $4.25 million note bearing 7% interest, secured by the acquired assets and their proceeds. It also issued $600,000 of Series H preferred stock paying a 12% annual dividend and convertible at $1.45 per common share, creating potential future common-stock issuance once registered. The security is limited to the acquired assets rather than the wider company, but a default could still put the newly acquired operation, its receivables, inventory, contracts, and intellectual property at risk. (Item 1.01; Secured Promissory Note; Security Agreement; Registration Rights Agreement)
Some transition work remains unfinished despite the close. A side letter allows key employment agreements, essential-employee and contractor arrangements, a shared-services agreement, and certain pro forma information to be finalized after closing. That does not undo the transaction, but it means continuity of personnel and support arrangements is not fully documented at day one—an execution risk that tempers the otherwise routine closing confirmation. (Item 1.01; Side Letter Agreement)
The earnout gives Cycurion some protection, but only after a sizable miss. The seller can receive up to $1 million if revenue exceeds the $5.5 million 2026 and $5.8 million 2027 targets; conversely, Cycurion can claw back consideration only if annual revenue falls more than 20% below target. That aligns part of the price with delivery, but it does not protect against ordinary underperformance within that 20% grace range. (Earnout and Clawback Agreement)
Read the original 8-K on SEC EDGAR ↗