Cycurion, Inc.

Hello, and welcome to the Second Quarter 2025 Results Conference Call. At this time, all participants are in a listen-only mode. I would now like to turn the conference over to Jules Abraham of CoreIR. Sir, you may begin.

Thank you, Tawanda. Good evening, everyone, and welcome to Sycurian's inaugural investor conference call, where the company will be discussing its first half 2025 financial results and business activities, as well as providing additional details on its outlook for the rest of the year, along with an early look into 2026. Leading today's discussion are Kevin Kelly, Chairman and CEO, CFO Alvin McCoy, and President of Business Development, Ed Burns. The company previously reported its second quarter and first half 2025 financial results and issued an earnings release on those results on Thursday, August 14th, as well as a follow-up press release on Friday, August 15th that provided clarity on operating performance, calling out non-recurring, non-cash expenses in the quarter, along with emphasizing a lot of the positive contract wins that have been secured. The earnings release, follow-up release, and SEC filings can each be found on the company's investor relations website. Today's discussion will include statements that constitute forward-looking information or forward-looking statements, and these statements reflect management's current beliefs and expectations and are subject to a number of factors that may cause actual results to differ materially from those statements. These factors include, but are not limited to, those discussed in Sycurean's SEC filings. These statements do not guarantee future performance and therefore undue reliance should not be placed upon them. We do not intend to update these forward-looking statements as a result of new information or future developments except as required by law. Additionally, today's discussion will include both GAAP and non-GAAP financial measures. These non-GAAP financial measures should be viewed in addition to and not as a substitute for Sycurian's reported results prepared in accordance with U.S. GAAP. All non-GAAP financial measures referenced in today's call are reconciled in the earnings release from August 14th and the follow-up release from the 15th. For more information regarding financial performance, please see the company's end quarter and year reports on Form 10-K for the fiscal year ending December 31st, 2024. Form 10-Q for the first and second quarters of 2025, along with corresponding earnings releases, all available on the investor relations section of Sycurian's website at www.sycurian.com and on the SEC's website at www.sec.gov. Finally, as a reminder, today's conference call is being recorded and the replay will be available on the company's investor relations website. At this time, I'd like to turn the call over to Sycurian Chairman and CEO, Kevin Kelly. Kevin.

Hey, thanks a lot, Jules. I really appreciate it. Good evening, everybody, and thank you very much for getting on this call tonight. We're excited about having the opportunity to walk you all through what's transpired for the last five months since DVD backed and became a public company. And so how the call is going to flow or the flow of the call tonight will be, I'll give a A brief introduction, I will hand it over to Alvin McCoy, the CFO. He's going to walk through his firm and how we ended up where we are today. I will walk through strategically what our plans are for the next 18 to 24 months at Sycurium. Ed Burns, who is the President of Business Development, will walk through some slides that you all have on this call tonight about some of the contracts we have, how these contracts work, and why we're excited about what's going on. So that will be the flow. Just a brief background, as you know, Kevin Kelly, the Chairman and CEO I've been with Psycarian roughly about two, two and a half years, first and foremost, on the board of directors, and officially took over CEO and chairman on February 14th of this year. Part of that, I had a history that entailed a tour overseas, both in Asia, living in Tokyo, and briefly in Hong Kong, and then London after that with a company called Hydric & Struggles. where I was CEO for nine years from 2006 to roughly the end of 2013, 14, another NASDAQ listed company. Subsequent to that, I created a cybersecurity company called Halo Privacy that focuses on locking down and securing communications. It was at this point through my endeavors with Halo Privacy, that I met Alvin McCoy. We both happen to be alumni from Fuqua, the School of Business at Duke. We met through some other alumni there, and we were talking about what each one of us was doing in the cybersecurity space. So I hit it off at that point in time. We were trying to do some work together between Halo and Cycurian. One thing led to another, and when I heard about all the exciting things that Cycurian was doing, had the opportunity to take over the helm. I was very excited about it, excited to work with Alvin and Ed, and we have a great team here. So with that, I'll hand it over to Alvin briefly, and he can cover a little bit about the background of the firm himself, and then we'll keep going.

Good afternoon. Thanks, Kevin. Again, Alvin McCoy, Chief Financial Officer of Psycarian. A little on my background. I actually grew up In the finance business, it's structuring and trading commercial mortgage-backed securities for Merrill Lynch in the mid-90s. And we really have spent the last 25 years really advising and working with businesses under $100 million in revenue, primarily on the private side around the capital raising and M&A activity. We started Cykerion back in 2017 as a holding company specifically to start acquiring assets in the cybersecurity space. We made the first acquisition in November of 2017. Axiom Technologies was that first acquisition. The firm primarily operated in the DHS space. And in April 2019, we made our second acquisition Cloudburst Security, which was a firm operating in the cybersecurity space with customers primarily in the DoD marketplace. And 2020, we began to transition and diversify away from some of the concentration we had in the federal government space and started looking at the state and local space. We acquired some assets from SLG innovations, which subsequently we have control of via a VIE structure since we've gone public in February. And then in September of 2021, we began to diversify our services business and began to transition into a tech-enabled services firm, and we acquired a firm out of Tel Aviv, Israel, Sabres, which is the core of our Sycarian ARCS platform. And Sycarian ARCS is a web application firewall with bot mitigation technology and geo-gating tools. And we're really excited about integrating that product into our services base and services customers. And with that, we'll transition into talking a little more about the strategic focus of the firm.

Thanks a lot, Alvin. So it's like theory. And currently, as you know, we're about a $16, $17 million organization with aspirations to grow profitably over the next 12 to 18 months. And we're excited about that opportunity, particularly when it comes on building of the great foundation that we have in place today. Our strategy is one of growth, profitable growth, which will be 30% organic, about 70% inorganic. And if I specifically focus on the organic growth, 98% of our revenue comes from the state and local government. And in that space today in which we operate, we have a tremendous amount of green space. And so we're looking at systematically going out currently and either hiring in that space or acquiring talent. and organizations that are going to help us grow and fill in some of the gaps. Just an example on that is a few months ago, we released a press release on Central Square, which is a Bain-owned company. Now, the Central Square handles all of the 911 calls of all 50 states, all the police departments, the fire departments, the EMTs. Ed and his team, we're partnering with them now to bring the Cycurian suite of services and wrap our technology and make sure that they're secure in those departments in each state. And currently what's exciting for us is we're only working in two states. So when I talk specifically about hiring, it's hiring account managers or professionals that can go in and help us develop and grow businesses like that. And that's one specific example. On the government side, we also have a tremendous amount of opportunity in the state and local governments. We're working in three or four states now. As you know, we have tremendous upside in the state and local part of the equation, and also the federal side. We just hired a great federal salesperson, Tim Herb, who came on board with a wealth breadth of experience that brings a lot to Sycuri and the great team that we have in place today. The second is the inorganic growth side. So we really want to focus additionally on getting into the corporates, the corporate side of the equation or what they call in the government the commercial side. Why do we want to do that? Well, specifically because as we've seen happen over the last six to 12 months, there's sometimes uncertainty in our government and whether it's the doge knock-on effect of contracts being delayed, et cetera, which Ed will touch upon in a minute, there's always risk when you're focused heavily or heavily skewed towards one industry sector. So we want to grow the corporate side because the decision-making is faster. We have a wealth of experience to bring to them, particularly the SMEs, and the margins are much higher in this business. One perfect example of this, is NACCHO. You've seen a couple of press releases. For those of you who have seen the press releases over the last couple of weeks on NACCHO, they had a great conference in Anaheim, California about three weeks ago that was well attended by their 3,500 members. And at that point in time, they announced their diamond relationship or diamond partnership with Sicarius. What does that mean? It means that not only the association itself will focus on, excuse me, will use the Sicurian products, but because we're a diamond partner, we're the only cybersecurity firm that has access to these 3,500 clients. Now, what was remarkable about that conference is the fact that when asked by our colleagues there, Michael Phillips and Eric Singleton, they specifically said that over 50% of those organizations or those organizations in the association had been breached at some point in time. Another 25% had paid some sort of ransomware between $100,000 and a million dollars over the last year and a half. Now, why is that important? Because for us as an organization and the way we're going to grow is we really have to focus on building these relationships with the associations and the corporate side because they're underserved today. And our service offering, the ARCS platform that Alvin mentioned, and the clients that we serve today, they like our product because it's more cost-effective and it's not a, it's more of a one-off situation where they get the entire suite of web application firewalls, geo-gating, bot mitigation, manage the terms, endpoint solutions, et cetera, And also, coupled with our CyberShield product, they have the potential to have 24-7 service from PsychTarian as well as interim CISOs. So it's very fragmented. They would have to go out and buy these products and services piecemeal. But through our services, they're able to wrap that around. So that's a perfect example there. And we'll keep you posted on that because that's an exciting one for us. We're already in with... Four of the association's clients right now are partners, and so we'll keep you posted as we grow that, because that's huge white space for us right there. Additionally, the colleges and universities is another segment we've been focusing on. We announced a big contract with the Florida private universities and colleges, and so we've kicked that off as well, and we're starting to see some clients from that. The third piece of the equation is the geographic expansion we plan on eventually pursuing. When I talk about geographic expansion, it's not necessarily just opening an office in London or another city just for the heck of it. It's really building on the relationships you have, we have, excuse me. Going back to another couple of press releases and contracts that we've put in place, one is with LSD in Latin America. And for those of you who don't know, LSD is a a large technology firm that's serving all of Latin America. And our partnership with them will involve wrapping the Cyber Shield product that we have around their technology services in the colleges and universities in Latin America. They also have a partnership with IQST, as you've seen in the press as well. We have a great relationship with IQST, where we're doing a number of things. In Latin America, we'll also work closely with IQST as well as LSB because they're working in conjunction with the colleges and universities down there. And our partnership with IQST is great in numerous ways, but one in particular is they have some great AI driven products. We do as well with the ARCS platform. And we're working together in their R&D lab to create new and effective ways to enhance our cybersecurity platform and products that serve our clients. So those are the three areas of focus for us. It's really the organic growth that we see in the federal government and the state government space, the corporate side, and then the geographies that I mentioned earlier. And if you look across all of that, where we are looking to head over the next 12 to 18 months as well is acquiring accretive acquisitions, if I will, if I may, accretive acquisitions in the product space. We see margins in our ARCS platform upwards of 70% and the CyberShield platform upwards of 70%. So we're excited about really drawing and driving that. And we're partnering now and looking at numerous ways to develop a further suite of products and services for our clients. So that's a quick backdrop on what we're doing. And we thought it would be great if Ed could walk you through some of the things we're doing with the current clients and how the contracts work. So with that, I'll hand it over to Ed Burns, who is the president of our business development.

Hey, thank you so much. Kevin, I really appreciate the opportunity to present to you guys tonight. I'll talk a little bit about myself. I'm the founder of SOG Innovation. We founded it about 15 years ago. We joined in with, actually been working with Zykerion since about 2020, 2019, I believe is when we started our partnership with them. And now we're part of the family. Prior to joining or creating SOG Innovation, I worked for a company called Cyber. We were a publicly traded company on the New York Stock Exchange. We got it up to about $1.2 billion. I was president of our government division. My division was about a $400 million division that we ran. I left corporate America, decided to start my own shop, and we grew SOG to about $14 million prior to joining Cyber. So very excited to be here. I want to bring some light to one of our recent press releases. You may have seen we had a press release that said we had secured $69 million in contract backlog. So I'm not sure if you guys can see the slides, but one slide said business development. And the next slide, if you go to it, has a list of contracts that we've secured. We kept the names for confidentiality off and just named them like federal government, large municipality, things like that. So I'm going to walk through, bring some clarity to our pipeline. I'm sorry, not pipeline, contract backlog. First of all, it's a diverse contract backlog. It's diverse in clients, in locations. It consists of commercial, federal, state, and local, and university backgrounds. customers. It consists of over 15 different engagements leveraging ARCS, our ARCS platform, our CyberShield platform, and some of our other key CIO audit security-type services. These engagements span from one to five years, so a lot of them have a long shelf life, which is very good for our growth and stability in the marketplace. Doge has impacted most systems integrators in the market today. It has slowed us down, but one thing that we're very proud of is that, and we've actually talked about it with our clients, that our services are Doge in line with Doge, and that's cutting costs, increasing security, and ensuring that over the long term, our clients get the best investment for their computing dollars. So from that perspective, it has slowed down a few things, but that's picking up. And we actually see gaps that is created that we're working to fill those gaps. So we anticipate kicking off a lot of our pipeline in the fourth quarter of 2025. So I'm going to walk through a couple of them. Hopefully everyone sees the slides, but go to the slides it has. I think it starts with NACCHO. And I'll just put a little bit more light on NACCHO because we are very excited about this engagement. As Kevin talked about, there's 3,500 health entities in this organization. We are exclusive as the cybersecurity firm partner, diamond partner with the association. We are jointly marketing. To the association members. We are currently working for the association itself providing them cyber security arts and cyber shield type services most of the members do not have the Do not have the staff and expertise And the high-level funding required to to meet the needs of cyber security so our offering of is really offers not just to NACCHO, but to all of our client bases, a full service, as Kevin mentioned, 24 by seven offering. So we rolling this out to all of our members and we've sat down with the association and put together the contract backlog of 19, nearly $20 million over three years. So that backlog was created jointly with the association with participation of their various members. And they actually felt like that was a conservative contract backlog, but that's the backlog that we signed up for. We mentioned universities, Kevin did. We're very proud of a number of the universities that we're working with. In that marketplace, there is one instance where there was a small university in Illinois that got hacked. They were asked for so many dollars that the university decided it was better to close than to pay the ransom because they couldn't afford it and continue operations. It's that type of issues out there that are facing universities as well as government. And it doesn't matter what size it is anymore. Whether you're big or small, the bad actors are going after them. In fact, I should have stated that When you look at government, they had a survey of all government CIOs, not all participated, but a number of them participated. And their number one issue out of that survey, which was in 2025, it was completed, was cybersecurity. Number two was AI. So we're focused on both of those areas. Another opportunity, another contract backlog, that we're working on is with the federal government. We have a strong federal government practice. We're working with FEMA and a couple of other large integrators to support their infrastructure network as well as their cybersecurity needs. For a major municipality, we're rolling out what we call vendor management. Vendor management is a is a program that was developed by us, owned by us, owned by Securian, where we've integrated not only our Cyber Shield and ARCS platform, but we also put together a portal for governments to manage their vendors. So one large municipality signed up, we're signing up another municipality, actually another state, large state government to leverage that product. We're working with a number of the integrators large integrators that I'll talk a little bit, a little later, but one of them is KPMG, another is Deloitte, and Accenture as well. So they come to us for various reasons, primarily for our expertise in our product offerings and the cybersecurity, cyber shield arts space. But I will also say they come to us because we have a very good understanding of government. So we combine that understanding of government with along with our technology to offer superior services, if you will, to these strategic partners. So they reach out to us on a number of these deals. So we partner with them. We're working with a large county government now. They've actually brought us in to do an IT assessment, a cybersecurity assessment. So that's taking a step back. That's when they bring us in as a trusted advisor to lay out their cybersecurity strategy, as well as their IT infrastructure strategy and the application strategy. So we have that expertise to lay all of that out. And the end goal is to secure them but also to give them a three- to five-year pathway to increasing productivity through technology. We're working with another large transportation agency where we're doing their managed services today, and now we've taken over their cybersecurity area, 24 by 7 by 365, offering CyberShield and ARC. So those are a number of initiatives that we're working on for our various clients through our contract backlog. And once again, some of it has started this quarter, but the majority are kicking off in the fourth quarter. So we're very excited about the growth opportunities that these deals present. I should say that it's right out of the hopper, and we should Hopefully we'll get a press release out in the next quarter that we were just selected with one of our partners for a $3 million annual spend with a large government. So we're going through contract negotiations now. So for confidentiality, once again, I won't announce it. And it's not a part of this contract backlog, but we continue to pursue these opportunities. And we're very excited about the growth opportunities just in our contract backlog. I am not talking sales pipeline. I'm talking contract backlog. So I want to talk a little bit about our strategic partners as well, because I think that that's key. So there's a slide for those who can control their slides. This shows our strategic partners. One of our growth strategies is teaming with strategic partners. And I mentioned before, due to our unique cyber technology offerings with CyberShield and ARCS, coupled with our understanding of government operations, and when I say government operations, that actually we not only understand the technology, but we understand the programmatic goals of government in a number of key areas like health and human services, health care, FEMA, and the dark agencies, and the federal government. So coupled with our technology and with that understanding makes us a very, I'm going to say, very strategic partner to these large organizations. So I'll point out one that we've teamed up with Accenture. So we teamed up with Accenture going after a major engagement for state government. It was a billion-dollar-plus program over 10 years, and our piece was $10 million a year. We actually won the engagement. Unfortunately, the incumbent protested, and now we have to revit it, but we feel very confident we're going to win it again. And that we're working on that initiative now. Why is it since you're working with us? One, we have a great understanding of the client. Two, we have great cybersecurity offerings. And three, we have relationships with these governments that are valuable because not only do we understand their technology needs, but we understand how they operate and what their goals are and the approaches that work for them. So we've teamed up. We're going after it one more time. So we're very excited about that. We're very disappointed, though, that the government upheld that protest. We thought it was frivolous, but indeed they upheld it, which is very, very unusual in government, by the way. Another large integrator we're working with, we're working with IBM. We work with them on a national basis. They're one of our strong partners. they we we we we were highlighted uh two years ago as one of their small partners of the year and um currently they're working with us they're saying hey if our relationship has has gotten uh has gone so well in the government area we'd like to introduce you to our counterparts in the commercial space as kevin mentioned that is one of our targets is to continue to grow the commercial space so now we are working with their commercial guys as well with the referral from from the government guys said hey these guys have great products they're great to work with good partnerships they try to understand the customers not only their technology needs but their business needs as well another partnership that we working with is Kevin talked about Central Square we had a press release out about Central Square and We continue to expand that relationship in a number of areas. We're now working with them in two clients. But our goal is to work with them, as Kevin mentioned, in all 50 states. So we work directly with the partners and presidents of these organizations to expand our relationships, to add value. But it doesn't stop us also from going after deals ourselves. We prime a lot of the deals ourselves. and through looking at strategic partnerships. So at this point, I don't think we're taking questions, so I will say, let me turn it over to Alvin, but thank you again for listening, and hopefully you were able to see the slides as I went through them.

Thank you, Ed. I'd just like to wrap up with A few concepts I want to make sure everybody understands. As you think about where we are and where we're going, right now there's a few key points I want to leave you guys with. We're looking to expand our business, our managed services business. Number two, we're looking to enhance profitability with the integration of our technology within our existing customer base as we look to transition from a services-based organization to a tech-enabled services organization. Number three, we're repositioning our balance sheet Again, we just de-SPACed in February, so we'll be repositioning the balance sheet as we work through the public company expenses. Fourth, most importantly, our real target is to scale our business. With that, I'll turn it back to Kevin, but thank you guys for being on the call today. Kevin, I'll turn it back to you.

Thanks, Alvin. There's a couple of thoughts I'd like to leave you with. Number one is for a company, we're excited, very excited. We've been around, as Alvin mentioned, for a number of years. But we have between the people that we have in place, 74, 75 people today, between the current client base that we have, between the opportunity to grow within our current client base, as well as expand through acquisition into the corporate side of the equation, the geographic side of the equation, all along being driven by the products and services that we offer. We're really excited. We're spending a lot of time now, as you heard from Ed. We're getting known out in the marketplace. You'll see more of that. Our clients right now are referring us to others, which is a This is a great way to show you the fantastic work within the current client base. So the introductions from those clients have meant a lot. As I mentioned before, within our current client base, we have a tremendous opportunity as well as expanding the business as well. So I get a question a lot. Why Cycurian? Well, I mentioned the people. I mentioned the foundation, but We have a very unique opportunity, particularly what we've seen in the place that we're really working hard right now, and that's with the SMEs, where they're underserved when it comes to cybersecurity, and with colleges and universities, There's a tremendous opportunity there. Why the ARCS platform? Again, why the CyberShield platform that they like to wrap around their technology, these SMEs and universities? It's because we're very different in terms of our AI-driven model. We're a first mover, if you will, in the AI space. Our two gentlemen that worked hard in Israel for us who developed these products and services are constantly working on upgrading and working and interacting with clients to meet their needs. So the technology is definitely a differentiator. And we see that organizations today are looking at new and more creative ways to protect their organizations and their people rather than the firms that have been around for 10 and 11 years. through our products, we have a one fell swoop type of service offering versus going out in a very highly, highly fragmented cybersecurity market and actually picking out different products. We can help them cost effectively in one fell swoop. So we're excited about that. We're excited about the other opportunities we have to grow the organization. And we're looking forward to your help and support as we go forward. And with that, I think we're good for the call today. Thank you very much.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.