The $2.93M convertible note issuance with full ratchet anti-dilution creates severe dilution risk if CYCUW common stock trades below $1.05. The notes are secured and senior, meaning noteholders have priority claims. Monitor for any conversion notices or stock price action below the conversion price. The CFO departure two days prior amplifies governance concerns.
Price Chart
Executive Summary
Cycurion issued three senior secured convertible promissory notes totaling $2,927,356.12 to M2B Funding Corp., Obsidian Associates, LLC, and IQ Financial, LLC, convertible into common stock at $1.05 per share, due March 1, 2027. The notes carry 12% annual interest, are secured by company assets, and contain standard convertible note terms including full ratchet anti-dilution and mandatory default provisions. This debt financing comes just two days after the CFO departure, suggesting the company is raising capital under financial pressure.
Key Financial Metrics
Key Facts
- Issued $2,927,356.12 in aggregate principal amount of senior secured convertible promissory notes on June 1, 2026
- Notes issued to three holders: M2B Funding Corp. ($1,326,748.31), Obsidian Associates, LLC ($1,083,003.41), IQ Financial, LLC ($517,604.40)
- Conversion price set at $1.05 per share of common stock
- Notes mature on March 1, 2027, with 12% annual interest compounded monthly
- Notes are secured by company assets and rank pari passu with other notes in the series
- Full ratchet anti-dilution protection: conversion price adjusts to any lower future issuance price
- Mandatory Default Amount includes 120% of principal or a formula based on VWAP, whichever is greater
- Filing follows CFO departure (June 2, 2026 8-K) by 2 days, suggesting capital raise under management transition
- Negative covenants restrict additional indebtedness, liens, dividends, share repurchases, and affiliate transactions without noteholder consent
Financial Impact
Total debt of $2.93M at 12% interest, convertible at $1.05/share, with full ratchet anti-dilution creating potential for massive dilution if stock trades below $1.05
Risk Factors
- Full ratchet anti-dilution could force massive share issuance if company raises equity at lower prices
- 12% interest rate and secured status increase financial burden and reduce flexibility
- Negative covenants restrict company's ability to raise additional capital or conduct normal operations
- CFO departure days before filing suggests potential internal turmoil or forced management change
- Mandatory Default Amount (120% of principal or VWAP formula) creates punitive acceleration terms
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 3 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 8-K Filing (Primary) | 0001868419-26-000041 |
| Exhibit: ex_10x6xconvertiblexprom.htm | 0001868419-26-000041 |
| Exhibit: ex_10x2xconvertiblexprom.htm | 0001868419-26-000041 |
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Jun 9, 2026 16w ago | 8-K | $0.0212 $0.0220 | ▲ +3.77% | ▲ +0.15% | — |
Jun 8, 2026 16w ago | 10-K/A | $0.0239 $0.0220 | ▼ −7.95% | ▼ −9.40% | — |
Jun 4, 2026 17w ago | 8-K | $0.0212 $0.0221 | ▼ −4.25% | ▼ −2.38% | — |
Jun 2, 2026 17w ago | 8-K | $0.0212 $0.0208 | ▼ −1.89% | ▼ −0.89% | — |
May 29, 2026 18w ago | 8-K | $0.0212 $0.0190 | ▼ −10.38% | ▼ −8.58% | — |
May 26, 2026 18w ago | 8-K | $0.0212 $0.0209 | ▼ −1.42% | ▲ +0.49% | — |
May 14, 2026 20w ago | 8-K | $0.0212 $0.0212 | · 0.00% | ▲ +0.86% | — |
May 8, 2026 21w ago | 8-K | $0.0212 $0.0212 | · 0.00% | ▼ −0.02% | — |
Apr 14, 2026 24w ago | 8-K | $0.0212 $0.0212 | · 0.00% | ▲ +6.30% | — |
Apr 8, 2026 25w ago | 8-K | $0.0212 $0.0212 | · 0.00% | ▼ −8.54% | — |
US Market Status
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