Business context and reporting period
This is Western Acquisition Ventures Corp.’s unaudited Form 10-Q for the quarter ended March 31, 2023—not a quarterly report for Cycurion, Inc. Western Acquisition Ventures is a SPAC that had not begun operations and was seeking a business combination. It had signed a merger agreement with Cycurion, an Ontario corporation, on November 21, 2022; the filing states that closing was not assured.
Financial performance and position
- Revenue: No operating revenue; the company expected none before a business combination. Income was primarily trust-account interest and investment gains.
- Net loss: $171,611, versus $590,409 in Q1 2022. Basic and diluted loss per share was $0.03, compared with $0.05.
- Expenses and other items: Operating expenses were $366,469, versus $530,687. Q1 2023 other income included a $189,160 trust-investment gain and a $43,101 gain from a decrease in the forward purchase agreement’s fair-value liability; income tax expense was $37,403.
- Cash flow: Operating activities used $393,175. Investing activities provided $109.4 million, largely reflecting trust withdrawals for redemptions; financing activities used $109.4 million for those redemptions. Cash outside the trust ended at $386,306, down from $809,481 at year-end.
- Liquidity: Current assets were $658,749 and current liabilities $2,721,729, implying a $2,062,980 working-capital deficit. The notes separately cite $1,763,838, an inconsistency to verify. Trust-account assets fell to $7,973,984 from $117,191,410 after redemptions.
- Debt and equity: No working-capital loans were outstanding and no conventional borrowing balance is reported. Total liabilities were $2,721,729; stockholders’ deficit was $2,123,046. Redeemable shares were recorded as temporary equity at $8,034,050.
- Margins: Not meaningful because the company had no operating revenue.
Material changes versus prior comparable period
The quarterly net loss narrowed by $418,798, reflecting lower expenses and a shift from a trust-investment loss in 2022 to a gain in 2023. On January 6, 2023, shareholders redeemed 10,729,779 shares for $109,436,586; the remaining trust balance and redeemable-share count declined substantially. The company also recorded a $1,094,366 excise-tax liability related to those redemptions and a $386,920 forward purchase agreement liability.
Outlook, risks, contingencies, and unusual items
- The company had until May 31, 2023 under the merger agreement to complete the Cycurion transaction, subject to termination provisions. Its SPAC charter allowed extensions through July 11, 2023, with $10,000 deposited into the trust for each one-month extension. Failure to complete a business combination by the applicable deadline would require liquidation.
- Management said additional financing might be needed; the Sponsor and insiders could lend funds but were not obligated to do so. Management disclosed substantial doubt about the company’s ability to continue as a going concern if it failed to complete a business combination.
- The forward purchase agreement with Alpha Capital Anstalt could require the company to purchase up to 300,000 shares after the merger, with terms including price resets and early-exercise conditions.
- After quarter-end, Nasdaq notified the company that its market value of listed securities had been below the $50 million minimum for 30 consecutive business days. It had until October 2, 2023 to regain compliance or risk delisting; the filing gave no assurance it would do so.
- The filing cited uncertainty from COVID-19 and the Russia-Ukraine conflict, and noted that the merger might not close. It reported no material litigation and no material changes in market-risk disclosures.
Important facts for investors to verify
- Confirm the filing entity and period: this is Western Acquisition Ventures’ Q1 2023 report, not Cycurion’s operating-company financial statements.
- Reconcile the working-capital deficit: the balance sheet and MD&A indicate $2,062,980, while a note states $1,763,838.
- Check the subsequent status and final terms of the Cycurion merger, including any extensions, termination, financing, redemptions, or closing.
- Verify the company’s liquidity, remaining trust funds, excise-tax treatment, and ability to fund transaction costs.
- Check Nasdaq listing compliance and the status and potential cash impact of the Alpha forward purchase agreement.