What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-21 compared with 2023-05-22 · 32 added, 18 removed, 103 unchanged (33% of the section changed)

16 unchanged sentences

Business Combination Agreement

On November 21, 2022, the Company., a Delaware corporation (“the Company” or “Registrant”), WAV Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Registrant (“Merger Sub”), which will be formed at, or prior to, closing, Cycurion, Inc., a corporation organized under the laws of Ontario (“Cycurion”), and Emmit McHenry as Cycurion stockholders’ representation (the “Stockholders’ Representative”), entered into an Agreement and Plan of Merger (“Merger Agreement”) pursuant to which, among other things, Cycurion will be merged with the Merger Sub (the “Merger,” and together with the other transactions related thereto, the “Proposed Transactions”), with Cycurion surviving the Merger as a wholly-owned subsidiary of Registrant (the “Surviving Corporation”).

On November 21, 2022, the Company., WAV Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Registrant (“Merger Sub”), which will be formed at, or prior to, closing, Cycurion, Inc., a corporation organized under the laws of Ontario (“Cycurion”), and Emmit McHenry as Cycurion stockholders’ representation (the “Stockholders’ Representative”), entered into an Agreement and Plan of Merger (“Merger Agreement”) pursuant to which, among other things, Cycurion will be merged with the Merger Sub (the “Merger,” and together with the other transactions related thereto, the “Proposed Transactions”), with Cycurion surviving the Merger as a wholly-owned subsidiary of Registrant (the “Surviving Corporation”).

There is no guarantee that a merger will take place.

Sponsor Support Agreement

Contemporaneously with the execution of the Merger Agreement, Western Acquisition Ventures Sponsor LLC (the “Sponsor”), a Delaware limited liability company, delivered the Support Agreement, pursuant to which, among other things, Sponsor agreed to vote in favor of the Merger and the transactions contemplated by the Merger Agreement.

Contemporaneously with the execution of the Merger Agreement, the Sponsor, a Delaware limited liability company, delivered the Support Agreement, pursuant to which, among other things, Sponsor agreed to vote in favor of the Merger and the transactions contemplated by the Merger Agreement.

Stockholder Support Agreement

4 unchanged sentences

Pursuant to the Registration Rights Agreement, the Combined Company will be required to file a registration statement covering the resale of registrable securities held by the stockholder’s party thereto.

The Merger Agreement may be terminated at any time prior to the consummation of the Merger by mutual written consent of Cycurion, as applicable, and Company and in certain other limited circumstances, including if the Merger has not been consummated by May 31, 2023.

Either the Company or Cycurion may also terminate the Merger Agreement if certain Proposals fail to receive the requisite vote for approval and other conditions, as defined in the Merger Agreement are not met.

2 unchanged sentences

We have neither engaged in any operations nor generated any operating revenues to date.

Our only activities for the three months ended March 31, 2023 were organizational activities and those necessary to prepare for the IPO, described below, and since the IPO, the search for a prospective Business Combination.

Our only activities for the three months ended June 30, 2023 were organizational activities and the search for a prospective Business Combination.

We do not expect to generate any operating revenues until after the completion of our Business Combination at the earliest.

1 unchanged sentence

We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with searching for, and completing, a Business Combination.

For the three months ended March 31, 2023, we had a net loss of $171,611.

This consisted of $403,872 in professional fees, general and administrative expenses, income tax expense and franchise taxes and $189,160 of net gain on marketable securities in the Trust Account and $43,101 of change in fair value of the forward purchase agreement.

For the three months ended March 31, 2022, we had a net loss of $590,409.

This consisted of $530,687 in professional fees, general and administrative expenses, and franchise taxes and $59,722 of loss on marketable securities in the Trust Account.

For the three months ended June 30, 2023, we had a net loss of $332,537.

This consisted of $216,126 in professional fees, general and administrative expenses, income tax expense and franchise taxes and $93,954 of interest income on marketable securities in the Trust Account and $210,365 of change in fair value of the forward purchase agreement.

For the three months ended June 30, 2022, we had a net loss of $722,400.

This consisted of $881,761 in professional fees, general and administrative expenses, and franchise taxes and $159,361 of interest income on marketable securities in the Trust Account.

For the six months ended June 30, 2023, we had a net loss of $504,148.

This consisted of $619,998 in professional fees, general and administrative expenses, income tax expense and franchise taxes and $283,114 of interest income on marketable securities in the Trust Account and $167,264 of change in fair value of the forward purchase agreement.

For the six months ended June 30, 2022, we had a net loss of $1,312,809.

This consisted of $1,412,448 in professional fees, general and administrative expenses, and franchise taxes and $99,639 of net gain on marketable securities in the Trust Account.

Liquidity and Capital Resources

As of March 31, 2023, we had $386,306 in cash held outside of the Trust Account.

As of March 31, 2023, we had a working capital deficit of $2,062,980.

As of June 30, 2023, we had $258,551 in cash held outside of the Trust Account.

As of June 30, 2023, we had a working capital deficit of $2,191,908.

The Company’s liquidity needs may need to be satisfied through the proceeds from loans or additional investments from its Sponsor, shareholders, officers, directors, or third parties held outside of the Trust Account.

1 unchanged sentence

Accordingly, the Company may not be able to obtain additional financing.

For the three months ended March 31, 2023, net cash used in operating activities was $393,175, which is primarily due to a net loss of $171,611, change in fair value of derivative liabilities of $43,101, gain on marketable securities of $189,160, and changes in operating assets and liabilities of $10,697.

For the six months ended June 30, 2023, net cash used in operating activities was $490,930, which is primarily due to a net loss of $504,148, change in fair value of forward purchase agreement of $167,264, interest income on marketable securities of $283,114, and changes in operating assets and liabilities of $129,068.

Net cash provided by investing activities was $109,376,586, which was due to the withdrawal from the Trust Account to pay redeeming shareholders of $109,436,586 offset by $60,000 deposited into the Trust Account.

Net cash used in financing activities was $109,436,586 which was primarily due to the payment made for the redemption of shares.

For the three months ended March 31, 2022, net cash used in operating activities was $802,186, which is primarily due to a net loss of $590,409 and changes in operating assets and liabilities of $271,499.

Net cash used in investing activities was $116,150,000, which was due to the proceeds of the IPO deposited into the trust account.

Net cash provided by financing activities was $117,749,000, which was due to the IPO proceeds.

Net cash used in financing activities was $109,436,586 which was due to the payment made for the redemption of shares.

For the six months ended June 30, 2022, net cash used in operating activities was $984,354, which is primarily due to a net loss of $1,312,809, changes in working capital of $428,094 and interest income on marketable securities of $99,639.

Net cash used in investing

activities was $116,150,000, which was due to the proceeds of the IPO deposited into the Trust Account.

Net cash provided by financing activities was $117,749,000 which was primarily due to the IPO proceeds and the proceeds from private placement.

We have incurred, and expect to continue to incur, significant costs in pursuit of our acquisition plans.

2 unchanged sentences

Going Concern

In connection with the Company’s assessment of going concern considerations in accordance with the authoritative guidance in Financial Accounting Standard Board (“FASB”) Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that the mandatory liquidation and subsequent dissolution described in Note 1 to the unaudited condensed financial statements included in this quarterly report on Form 10-Q, should the Company be unable to complete a Business Combination, raises substantial doubt about the Company’s ability to continue as a going concern.

The Jumpstart Our Business Startup Act (the “JOBS Act”) contains provisions that, among other things, relax certain reporting requirements for qualifying public companies.

25 unchanged sentences

In connection with the Business Combination contemplated with Cycurion, A.G.P., and the Company amended the fee arrangement whereby rather than the cash fee described above, the Company will distribute 250,000 shares of common stock.

Forward Purchase Agreement

On January 10, 2023, the Company, Cycurion, and Alpha, entered into a Forward Share Purchase Agreement (the “FPA”).

Prior to effecting the FPA, Alpha had purchased shares from an unaffiliated party which had elected to redeem 300,000 shares of Common Stock, par value $0.0001 per share (such purchased Shares, the “Recycled Shares”.) Under the terms of the FPA, once the proposed Business Combination is effective, and twelve months (or six to nine months if submitted in writing to the Company) have elapsed, Alpha may elect to sell and transfer to the Company up to that number of shares that are then held by Alpha, and the Company shall purchase from Alpha, up to that number of shares that are then held by Alpha, but not to exceed 300,000 shares in the aggregate unless otherwise agreed to in writing by all parties, at a price per share equal to the Redemption Price (as defined in the charter.)

The FPA provides that subject to conditions under the FPA on the date that is 12 months after the closing of the Business Combination (the “BC Closing”);

provided that, Alpha, at Alpha’s sole discretion, may accelerate such date to any of six (6) months after the BC Closing and nine (9) months after the BC Closing by providing notice to WAVS of its election to so accelerate at least two (2) calendar days prior to such date (any such date, the “Put Date”), Alpha may elect to sell and transfer to WAVS up to that number of Shares that are then held by Alpha, but not to exceed 300,000 Shares in the aggregate at a price per Recycled Share equal to the Redemption Price (as defined in Section 9.2(a) of the Current Charter) (the “Shares Purchase Price”).

The Put Date may be accelerated by Alpha if (i) the Shares are delisted from the New York Stock Exchange of NASDAQ, (ii) the Agreement is terminated for any reason after the date redemption requests are due in connection with the stockholder vote to approve the Business Combination, or (iii) during any 30 consecutive trading day period following the closing of the Business Combination, the VWAP Price (as defined below) for 20 trading days during such period shall be less than $3.00 per Share.

For purposes of this Agreement, the “VWAP Price” per Share shall be determined for any trading day or any specified trading period using the Rule 10b-18 volume weighted average price per share of Common Stock as reported via a Bloomberg Terminal.

The FPA also provides that WAV shall reimburse Alpha for all reasonable and necessary brokerage commissions incurred in connection with the Alpha’s acquisition of Shares, in an amount not to exceed $0.05 per Share and $0.02 per disposition of each Share (see Note 6).

Critical Accounting Policies

3 unchanged sentences

Net loss per share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding during the period, excluding shares of common stock subject to forfeiture by the Sponsor.

The 11,876,000 potential shares of common stock for outstanding Public Warrants and Private Placement Warrants to purchase the Company’s stock were excluded from diluted earnings per share for the periods ended March 31, 2023 and 2022 because they are contingently exercisable, and the contingencies have not yet been met.

Therefore, as of March 31, 2023 and 2022, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into shares of common stock and then share in the earnings of the Company.

The 11,876,000 potential shares of common stock for outstanding Public Warrants and Private Placement Warrants to purchase the Company’s stock were excluded from diluted earnings per share for the periods ended June 30, 2023 and 2022 because they are contingently exercisable, and the contingencies have not yet been met.

Therefore, as of June 30, 2023 and 2022, the Company did not have any dilutive securities or other contracts that

could, potentially, be exercised or converted into shares of common stock and then share in the earnings of the Company.

As a result, diluted income or loss per share is the same as basic loss per share for the periods presented.

29 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis