425: Western Acquisition Ventures Corp. Enters into Promissory Notes for Cycurion Inc. Business Combination

Western Acquisition Ventures Corp. has entered into promissory notes with its sponsor and Cycurion Inc. to fund transaction expenses related to their business combination.

Summary

• Western Acquisition Ventures Corp. (the Company) entered into a promissory note with Western Acquisition Ventures Sponsor LLC (the Sponsor) on January 24, 2025, for $555,555.56, allowing the Company to borrow up to $500,000.00 for transaction expenses related to the business combination with Cycurion Inc.
• The Company also entered into a promissory note with Cycurion Inc. on January 24, 2025, for $327,777.78, enabling Cycurion to borrow up to $295,000.00 from the Company for transaction expenses related to the business combination.
• Both promissory notes include a 10% per annum interest rate and a lending fee, payable on the termination date, which is six months from the date of the agreement.
• The loans mature on the Termination Date, at which point the principal and accrued interest become immediately due and payable.
• The borrower can prepay the loan at any time without penalty by paying the principal amount, accrued interest, and the lending fee.
• Events of default include failure to pay principal or interest on the Termination Date, breach of any covenant, or bankruptcy-related events.
• The loan agreements are governed by the laws of the State of Nevada.

Sentiment

Score: 6

Explanation: The sentiment is neutral. The document outlines financial agreements, but doesn't express strong positive or negative views. The high interest rate is a slight negative, but the financing itself is a positive for facilitating the business combination.

Positives

• The promissory notes provide Western Acquisition Ventures Corp. and Cycurion Inc. with access to capital to cover transaction expenses related to their business combination.
• The borrower has the option to prepay the loan without penalty.

Negatives

• The 10% interest rate on both promissory notes could be considered high.
• Failure to repay the loans on the Termination Date or the occurrence of an event of default could have significant financial consequences for the borrowers.

Risks

• The ability of Western Acquisition Ventures Corp. and Cycurion Inc. to repay the loans depends on the successful completion of the business combination and their subsequent financial performance.
• Events of default, such as bankruptcy-related events, could trigger immediate repayment obligations.
• Changes in law could require withholding or deduction of taxes, duties, assessments or governmental charges.

Future Outlook

The promissory notes are intended to facilitate the business combination between Western Acquisition Ventures Corp. and Cycurion Inc., but the future financial performance of the combined entity is not discussed.

Industry Context

SPACs (Special Purpose Acquisition Companies) often use promissory notes to fund operations and acquisitions, especially during the initial stages of a business combination. This is a fairly standard practice to bridge financing gaps.

Comparison to Industry Standards

• The 10% interest rate is relatively high compared to traditional bank loans but is not uncommon for short-term financing arrangements in SPAC transactions, reflecting the higher risk profile.
• Comparable companies in similar situations might use a combination of debt and equity financing, with the specific terms varying based on the company's creditworthiness and the overall market conditions.

Related Party Transactions

• The promissory note between Western Acquisition Ventures Corp. and Western Acquisition Ventures Sponsor LLC constitutes a related party transaction.

Stakeholder Impact

• Shareholders of Western Acquisition Ventures Corp. are impacted by the financing arrangements and the potential success of the business combination.
• Cycurion Inc. benefits from the access to capital to facilitate the transaction.

Next Steps

• Western Acquisition Ventures Corp. and Cycurion Inc. will likely proceed with the business combination.
• The companies will need to manage their debt obligations and ensure timely repayment of the promissory notes.

Key Dates