Filing Summary: Western Acquisition Ventures Corp. (Q1 2024)
Entity note: Although the request identifies Cycurion, Inc., this filing is Western Acquisition Ventures Corp.’s Form 10-Q. Western Acquisition Ventures is a SPAC pursuing a merger with Cycurion; the filing does not report Cycurion’s operating results.
Business context and reporting period
The unaudited report covers the three months ended March 31, 2024, and was signed July 30, 2024. Western Acquisition Ventures had not begun operations and was searching for a business combination. Its proposed merger with Cycurion was not assured of completion.
Key financial metrics
| Metric | Q1 2024 / March 31, 2024 | Comparable period / prior year-end |
|---|---|---|
| Operating revenue | None | None |
| Net income (loss) | $408,380 | $(171,611) in Q1 2023 |
| Operating expenses | $256,736 | $366,469 in Q1 2023 |
| Operating cash flow | $(107,643) | $(393,175) in Q1 2023 |
| Trust Account investments | $2,966,591 | $3,293,966 at Dec. 31, 2023 |
| Restricted cash | $1,008 | $8,651 at Dec. 31, 2023 |
| Working capital | $(2,782,776) | — |
| Loan payable | $307,972 | $204,222 at Dec. 31, 2023 |
| Total liabilities | $2,891,245 | $3,305,832 at Dec. 31, 2023 |
| Excise tax payable | $1,146,570 | $1,143,296 at Dec. 31, 2023 |
There are no meaningful operating margins because the company had no revenue. Q1 net income was primarily due to a $665,116 gain from the change in fair value of the Forward Purchase Agreement (FPA), which was terminated in January 2024; it does not represent operating performance. The filing reports no clear interest income for Q1 2024.
Changes versus prior comparable period
- Net income improved from a $171,611 loss to $408,380 income, largely due to the FPA fair-value gain. Operating expenses declined from $366,469 to $256,736.
- Operating cash use decreased from $393,175 to $107,643. The Trust Account balance fell by about $327,000, including a $327,375 redemption payment following the January extension vote.
- Redeemable shares declined to 274,267 from 305,410 at year-end 2023.
Outlook, risks, contingencies and unusual items
- Management says the company’s ability to continue as a going concern is substantially in doubt if it cannot complete a business combination. It had only $1,008 of restricted cash and depends on potential funding from its Sponsor, related parties or other sources; such funding is not assured.
- The merger agreement with Cycurion was amended and restated on April 26, 2024, including revised economic terms and a stated termination date of December 31, 2024. Later charter extensions described in the filing extended the SPAC deadline to October 11, 2024. The filing says failure to complete a business combination by that deadline would lead to liquidation and redemption of public shares.
- After quarter-end, Cycurion and private investors arranged a Series B capital raise; the filing says $254,269 was received by the SPAC for working capital and tax obligations. The Cycurion promissory note was subsequently amended, with principal increased to $554,269 by May 3, 2024 and maturity extended to October 11, 2024.
- The company disclosed an erroneous $108,611 excess withdrawal from the Trust Account used for operating expenses. At March 31, it recorded $107,461 due from the Sponsor and payable to the Trust Account; it intended to restore the funds or use them for tax obligations until repayment.
- Nasdaq had notified the company of deficiencies involving publicly held shares and board, audit committee and compensation committee composition. A later notice also cited the overdue 10-Q as a potential delisting basis. Management said it was pursuing compliance.
- Disclosure controls were ineffective as of March 31. The company reported material weaknesses involving Trust Account withdrawals and accrued expenses, and identified an additional weakness related to late filing. It also disclosed that it dismissed its prior auditor and engaged a new auditor on July 10, 2024.
- No financial guidance or operating forecast is provided. The filing notes risks from financing constraints, redemptions, market and geopolitical uncertainty, and the possibility the merger will not close.
Important facts for investors to verify
- Confirm the intended issuer: this is Western Acquisition Ventures’ SPAC filing, not Cycurion’s operating-company quarterly report.
- Check the current status, terms, approvals and closing conditions of the Cycurion merger, including applicable deadlines and any subsequent amendments.
- Verify funding availability, repayment terms and status of the Cycurion note, Series B capital raise, Sponsor receivable and Trust Account reimbursement.
- Review Nasdaq listing status, board and committee composition, and remediation of the disclosed control weaknesses and late filing.
- Reconcile cash flow descriptions: the cash flow statement reports $327,375 of investing inflow and $(227,375) of financing cash flow, while MD&A describes those categories with different amounts.