Business context and reporting period
Entity mismatch: The request identifies Cycurion, Inc., but the supplied Form 10-Q is for Western Acquisition Ventures Corp. (a SPAC), for the quarter ended September 30, 2022. This summary reflects the filing provided, not Cycurion.
Western Acquisition Ventures had not begun operations or generated operating revenue. Its activity was formation, its January 2022 IPO, and searching for a business combination. The filing is unaudited and compares Q3 2022 with Q3 2021 and the nine months ended September 30, 2022 with the corresponding inception-period presentation for 2021.
Financial performance and position
- Revenue: No operating revenue; the company expected none before a business combination.
- Net result: Q3 2022 net income was $237,150, compared with a $545 loss in Q3 2021. Nine-month 2022 net loss was $1,075,657; the comparable 2021 inception-period loss was $3,038.
- Drivers: Nine-month operating expenses, franchise tax, and income tax expense totaled $1,691,594, offset by a $615,937 unrealized gain on trust-account investments. Q3 included a $516,298 unrealized trust-investment gain.
- Cash flow: The cash-flow statement reports $1,127,104 net cash used in operating activities for the first nine months, $116,150,000 used in investing activities to fund the trust account, and $117,749,000 provided by financing activities. Ending cash outside the trust was $475,809. MD&A separately states operating cash use of $1,075,657, so the filing contains a discrepancy to reconcile.
- Liquidity and assets: Working-capital surplus was $56,014. Total assets were $117.61 million, including $116.77 million in trust investments. Current liabilities were $941,446.
- Debt and equity: No related-party note or working-capital loans were outstanding at quarter-end. Stockholders’ equity was $141,484; $116.53 million of redeemable public shares was classified as temporary equity.
- Margins: Not meaningful because the company had no operating revenue.
Changes, outlook, and risks
The company raised IPO and private-placement proceeds in January 2022, placing $116.15 million into the trust account. Q3 profitability contrasts with the nine-month loss and was driven by unrealized investment gains, not operating activity. The trust balance was marked to fair value.
The company had until January 13, 2023 to complete a business combination, with up to two three-month extensions requiring sponsor deposits of $1.15 million each and board approval. If no combination was completed within the permitted period, the company faced liquidation and redemption of public shares. Management said this raised substantial doubt about the company’s ability to continue as a going concern. It also stated that operating cash might be insufficient and that additional financing might not be available.
Other disclosed risks include uncertainty in finding and completing a transaction; possible effects of COVID-19 and the Russia-Ukraine conflict; and a potential 1% federal excise tax on certain repurchases after 2022, which could reduce funds available for a combination. A $5.175 million marketing fee to A.G.P. would be payable if a business combination closed. Management reported disclosure controls were effective and no material litigation was pending. No specific transaction guidance was provided.
Important facts for investors to verify
- Confirm that Western Acquisition Ventures, rather than Cycurion, is the intended filing and issuer.
- Reconcile the cash-flow statement’s $1,127,104 operating cash use with MD&A’s $1,075,657 figure.
- Verify whether a business combination was completed or an extension obtained before the January 13, 2023 deadline.
- Assess available operating cash and any subsequent financing, sponsor support, redemptions, or liquidation developments.
- Review the trust balance, redemption terms, and potential transaction-related fees and excise-tax exposure.