8-K: Western Acquisition Ventures Corp. Secures Bridge Loans for Cycurion Merger

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

Summary

• Western Acquisition Ventures Corp. has secured a $111,111.11 promissory note from its Sponsor, with a potential draw of up to $100,000, to cover expenses related to the Cycurion merger.
• Additionally, Western Acquisition Ventures Corp. has provided a $55,555.56 promissory note to Cycurion, allowing them to borrow up to $50,000 for their transaction expenses.
• Both promissory notes have a 10% interest rate and a lending fee, with a maturity date six months from the agreement date.
• The loans are intended to facilitate the business combination between Western Acquisition Ventures Corp. and Cycurion Inc.

Sentiment

Score: 7

Explanation: The document outlines a standard financial arrangement for a SPAC merger, which is generally positive as it indicates progress towards the business combination. However, the interest rate and fees are a cost to the company.

Positives

• The promissory notes provide necessary funding for transaction expenses related to the business combination.
• The structure of the loans allows for flexibility in drawing down funds as needed.
• The agreements include standard terms and conditions, such as interest rates and maturity dates.

Negatives

• The loans accrue interest at a rate of 10% per annum, which could increase the overall cost of the transaction.
• Both loans have a lending fee, adding to the total cost of borrowing.
• The loans must be repaid within six months, which could put pressure on the companies' cash flow.

Risks

• Failure to repay the loans on the termination date will trigger an event of default.
• The business combination may not be completed, leaving the companies with debt obligations.
• The loans are subject to standard default clauses, including bankruptcy and insolvency.

Future Outlook

The promissory notes are intended to provide short-term funding for transaction expenses related to the business combination with Cycurion Inc., with the expectation that the merger will be completed.

Management Comments

• James P. McCormick, President and CEO of Western Acquisition Ventures Corp., signed the 8-K report on behalf of the company.
• Bill Lischak, Managing Member of Western Ventures Acquisition Sponsor LLC, signed the promissory note on behalf of the Sponsor.
• Alvin McCoy III, Chief Financial Officer of Cycurion, Inc., signed the promissory note on behalf of Cycurion.
• Tom Higgins, Managing Director of A.G.P./Alliance Global Partners, accepted and acknowledged the promissory note on behalf of the Lender.

Industry Context

This type of bridge financing is common in SPAC transactions to cover immediate expenses while the merger is being finalized. It is a standard practice to secure short-term loans to facilitate the closing of a business combination.

Comparison to Industry Standards

• The 10% interest rate is within the typical range for short-term bridge loans in similar transactions.
• The six-month maturity is a common timeframe for such loans, aligning with the expected timeline for completing a business combination.
• The use of promissory notes is a standard method for providing short-term financing in these types of deals.
• Similar SPAC transactions often involve bridge loans from sponsors or other related parties to cover transaction costs.

Related Party Transactions

• The promissory note from Western Acquisition Ventures Sponsor LLC to Western Acquisition Ventures Corp. is a related party transaction.

Stakeholder Impact

• Shareholders of Western Acquisition Ventures Corp. will be impacted by the debt obligations and the potential success of the business combination.
• Employees of both companies may be affected by the merger.
• Creditors of both companies will be impacted by the new debt obligations.

Next Steps

• The companies will likely proceed with the business combination process.
• The loans will need to be repaid within six months.
• The companies will need to manage their cash flow to meet the repayment obligations.

Key Dates

Keywords

promissory note, business combination, merger, loan, transaction expenses, Cycurion, Western Acquisition Ventures Corp, Sponsor