Filing summary
Entity and period: The supplied filing is Western Acquisition Ventures Corp.’s Form 10-K for the fiscal year ended December 31, 2022, not a Cycurion, Inc. Form 10-K. Western was a shell SPAC with no operating business or revenue. The filing describes a proposed merger with Cycurion; it does not provide Cycurion’s operating results.
Financial results and liquidity
| Metric | FY 2022 |
|---|---|
| Revenue | None; Western had not commenced operations. |
| Net loss | $700,925, including $1,853,300 in professional and other expenses, $163,296 in franchise tax expense, and $250,739 in income tax expense, partly offset by $1,566,410 of trust-account investment income. |
| Cash from operations | $(1,318,432). |
| Cash from investing activities | $(115,625,000), principally reflecting funds placed in the trust account, net of withdrawals. |
| Cash from financing activities | $117,749,000, principally IPO and private-placement proceeds. |
| Year-end cash and working capital | $809,481 cash outside the trust account; $248,249 working-capital surplus. |
| Trust investments and redeemable shares | $117,191,410 in trust investments and $117,299,975 in redeemable common stock at December 31, 2022. |
| Debt and margins | No working-capital loans were outstanding at year-end. Revenue-based margins are not applicable. |
For the period from inception in 2021 through December 31, 2021, Western reported an $11,371 net loss. The FY 2022 loss primarily reflects public-company and transaction-search costs, alongside trust investment income; a directly comparable full-year operating period was not available.
Material developments after year-end
- On January 6, 2023, stockholders approved a charter amendment and elected to redeem 10,729,779 of 11,500,000 public shares for approximately $109.4 million, about $10.20 per share. The filing reports approximately $7.9 million remaining in the trust account after redemptions.
- The redemption substantially reduced transaction funding and left 770,221 public shares outstanding. As of March 27, 2023, 4,021,221 total common shares were outstanding, including shares held outside the IPO.
- Western and Cycurion signed a merger agreement on November 21, 2022. The transaction remained proposed, was subject to closing conditions, and was not guaranteed. The agreement described a May 31, 2023 termination date in certain circumstances; the amended SPAC deadline could be extended through July 11, 2023.
- The filing says A.G.P.’s contemplated $5.175 million cash marketing fee was amended to 250,000 shares of the combined company if the merger closes.
Outlook, risks and unusual matters
- The independent auditor’s report includes a going-concern explanatory paragraph: failure to complete a business combination by July 11, 2023 would require liquidation, raising substantial doubt about Western’s ability to continue as a going concern.
- Western reported only about $386,306 available outside the trust account as of March 27, 2023 and said sponsor or other financing was not committed. It may need additional funding; failure to obtain it could prevent completion.
- The large redemptions may weaken Western’s negotiating position and ability to fund the merger. If the combination fails by the deadline, public shares are subject to redemption from remaining trust funds, while warrants may expire worthless.
- Potential conflicts include sponsor and insider incentives to complete a deal, A.G.P.’s transaction-contingent compensation, and a sponsor member’s prior financial relationship with Cycurion. The filing says the board obtained an independent fairness opinion in evaluating the proposed merger.
- The filing identifies possible creditor claims against trust funds, dilution from additional securities or financing, and potential U.S. federal excise tax on certain post-2022 share repurchases. No material litigation was reported.
- Management concluded disclosure controls and internal control over financial reporting were effective as of year-end. The auditor did not provide an internal-control attestation.
Investor verification priorities
- Confirm the correct issuer and filing: this 10-K reports Western Acquisition Ventures Corp., not Cycurion’s standalone financial statements.
- Review the merger’s final terms, closing conditions, subsequent status, and any extension or termination filings; the filing’s dates and deadlines are stated in different contexts.
- Verify post-redemption trust cash, transaction financing, minimum-cash requirements, and any forward purchase or other funding arrangements.
- Assess the final share count, dilution, A.G.P.’s 250,000-share compensation, and other securities issued in connection with the merger.
- Review the going-concern disclosure, remaining working capital, and any subsequent financing, creditor claims, or changes in the liquidation deadline.