Filing identity and business context
The supplied filing is Western Acquisition Ventures Corp.’s Form 10-Q for the quarter ended June 30, 2022, filed August 11, 2022. It does not identify Cycurion, Inc. as the registrant. Western Acquisition Ventures was a blank-check company searching for a business combination and had not begun operating activities; it reported no operating revenue.
Financial results and liquidity
- Net loss: $722,400 for the three months ended June 30, 2022 and $1,312,809 for the six months ended June 30, 2022. Basic and diluted loss per share were $0.05 and $0.09, respectively.
- Expenses and other income: Six-month operating expenses were $1,412,448, including professional fees and other expenses of $1,316,609 and franchise tax of $95,839. A $99,639 unrealized gain on Trust Account investments partly offset expenses.
- Cash flow: Six-month operating cash use was $984,354; investing cash use was $116.15 million, reflecting Trust Account funding; financing cash provided was $117.749 million, primarily from the IPO and private placement. Period-end cash was $618,559 on the balance sheet.
- Balance sheet and liquidity: Total assets were $117.309 million, including $116.250 million in Trust Account investments. Total liabilities were $877,527; working capital surplus was reported as $38,990. Redeemable shares of $116.15 million were classified outside permanent equity. No debt was outstanding at quarter-end.
- Margins: Not meaningful because the company had no operating revenue.
Changes and notable items
The six-month comparison is against the period from inception on April 28, 2021 through June 30, 2021, rather than a comparable prior-year six-month period. In January 2022, the company completed its IPO, selling 11.5 million units at $10 each, and raised $3.76 million through private-placement units. It placed $116.15 million in the Trust Account. At December 31, 2021, cash was $3,913 and total assets were $327,029.
The filing reports a $5.175 million business-combination marketing fee payable to A.G.P. only if a business combination is completed. The filing also reports no material litigation, no defaults on senior securities, and no subsequent events requiring adjustment or disclosure.
Outlook, risks, and controls
- The company expected to continue incurring costs while pursuing a transaction and said it might need additional financing. Sponsor, officer, and director loans were possible but not committed.
- Management stated that failure to complete a business combination by January 13, 2023 would require liquidation and dissolution, and concluded this raised substantial doubt about the company’s ability to continue as a going concern. Up to two three-month extensions were permitted, each requiring a $1.15 million Trust Account deposit by the sponsor or its affiliates or designees and Board approval.
- Management said COVID-19 could adversely affect target identification, but the specific impact was not determinable. It also said the effects of the Russia-Ukraine conflict and related sanctions were not determinable.
- Management concluded disclosure controls were effective as of June 30, 2022 and reported no material changes in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Confirm the intended company: the supplied filing is for Western Acquisition Ventures Corp., not Cycurion, Inc.
- Reconcile the filing’s cash figures: the balance sheet and cash-flow statement show $618,559, while MD&A states $618,599 in one passage and $618,599 in another passage uses $618,599? The filing text contains inconsistent reported cash amounts; the clear balance-sheet value is $618,559.
- Verify whether a business combination was completed or an extension was funded before the January 13, 2023 deadline; this filing provides no later outcome.
- Assess the sufficiency and availability of financing outside the Trust Account, given the limited operating cash and lack of committed working-capital loans.
- Consider redemption exposure and the contingent $5.175 million A.G.P. fee when evaluating funds available for a transaction.