Business Context and Reporting Period
Western Acquisition Ventures Corp. (WAVS), which entered into a proposed business combination with Cycurion, Inc., filed this Form 8-K regarding a material agreement dated January 10, 2023. The report was signed and filed on January 17, 2023. WAVS was a Nasdaq-listed special purpose acquisition company with securities trading under WAVSU, WAVS, and WAVSW.
Material Agreement and Key Terms
- WAVS, Cycurion, and Alpha Capital Anstalt entered into a Forward Share Purchase Agreement.
- Alpha had acquired 300,000 shares from a holder that had exercised redemption rights in connection with an extension of WAVS’s business-combination deadline. Alpha agreed to waive redemption rights for those shares in connection with the proposed Cycurion transaction.
- Subject to specified conditions, Alpha may sell to WAVS up to 300,000 shares on or after the 12-month anniversary of the business-combination closing. Alpha may accelerate the date to six or nine months after closing.
- The purchase price per share will equal the applicable redemption price under WAVS’s charter.
- WAVS must fund an escrow account at the business-combination closing with the purchase price multiplied by the number of shares then held by Alpha.
- The initial Reset Price is $8.00 per share. It may be periodically reduced based on the trading price, subject to a stated floor of $2.00, and may also be reduced if WAVS issues securities at a lower effective price.
- WAVS must reimburse certain brokerage commissions, subject to limits of $0.05 per share for acquisitions and $0.02 per share for dispositions.
Financial Metrics and Liquidity
The filing does not provide revenue, profit, cash flow, margins, debt, liquidity balances, or other operating financial metrics. It also does not state the ultimate escrow amount because the applicable redemption price and Alpha’s share holdings at closing were not provided.
Changes, Outlook, and Risks
- The redemption waiver could reduce the number of shares redeemed in the business combination and may affect market perceptions of the transaction’s strength.
- Alpha may accelerate the put date if the shares are delisted, the agreement is terminated after redemption requests are due, or the stock’s VWAP is below $3.00 for 20 trading days during a 30-trading-day period after closing.
- The arrangement could require WAVS to make a substantial cash payment after closing and to maintain funds in escrow.
- Reset-price provisions may increase WAVS’s potential economic exposure if the stock price declines or if WAVS issues securities at lower prices.
- The agreement is contingent on the business-combination closing and other conditions. The filing does not provide an updated closing date, transaction status, or Cycurion operating guidance.
Important Facts to Verify
- Whether the proposed WAVS-Cycurion business combination closed and the actual closing date.
- The redemption price, number of shares ultimately held by Alpha, and amount deposited into escrow.
- Whether Alpha exercised its put rights and the resulting cash payments by WAVS.
- Subsequent share issuances or other events that reduced the Reset Price.
- Any delisting, termination, or stock-price events that triggered acceleration rights.
- The full Forward Share Purchase Agreement filed as Exhibit 10.1.