Western Acquisition Ventures(WAVS) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents Cycurion, Inc.'s unaudited consolidated financial statements, including balance sheets, operations, cash flows, and equity changes, with detailed notes Consolidated Balance Sheets This section provides a comparative overview of Cycurion, Inc.'s consolidated balance sheets as of June 30, 2025, and December 31, 2024 Consolidated Balance Sheets (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Assets: | | | | Cash and cash equivalents | $1,013,836 | $38,742 | | Accounts receivable, net | $4,118,888 | $10,353,708 | | Total current assets | $5,587,055 | $10,928,352 | | Software development costs | $4,325,981 | $4,151,981 | | Goodwill | $20,788,299 | $6,592,304 | | Total Assets | $30,736,435 | $25,562,849 | | Liabilities & Equity: | | | | Total current liabilities | $19,992,286 | $18,736,867 | | Total liabilities | $20,287,582 | $20,177,782 | | Total stockholders' equity | $10,448,853 | $3,467,758 | - Total Assets increased by approximately $5.17 million from December 31, 2024, to June 30, 2025, primarily driven by a significant increase in Goodwill[5] - Cash and cash equivalents saw a substantial increase from $38,742 to $1,013,836, while Accounts receivable, net, decreased from $10,353,708 to $4,118,888[5] Consolidated Statements of Operations and Comprehensive (Loss)/Income This section presents Cycurion, Inc.'s consolidated statements of operations and comprehensive (loss)/income for the three and six months ended June 30, 2025, and 2024 Consolidated Statements of Operations (Three and Six Months Ended June 30) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net revenues | $3,887,915 | $5,001,312 | $7,757,965 | $9,244,167 | | Gross profit | $235,937 | $1,024,162 | $913,700 | $1,370,876 | | Selling, general and administrative expenses | $4,002,014 | $294,790 | $14,777,281 | $673,767 | | Operating (loss)/income | $(3,766,077) | $729,372 | $(13,863,581) | $697,109 | | Net (loss)/income attributable to Cycurion | $(5,188,755) | $306,094 | $(15,437,241) | $(6,381) | | Basic EPS | $(0.15) | $0.02 | $(0.58) | $(0.00) | | Diluted EPS | $(0.15) | $0.01 | $(0.57) | $(0.00) | - Net revenues decreased by 22% for the three months ended June 30, 2025, and by 16% for the six months ended June 30, 2025, compared to the same periods in 2024[7] - The company reported a significant net loss attributable to Cycurion of $(5,188,755) for the three months and $(15,437,241) for the six months ended June 30, 2025, a substantial decline from net income in the prior year periods[7] Consolidated Statements of Cash Flows This section details Cycurion, Inc.'s consolidated statements of cash flows for the six months ended June 30, 2025, and 2024 Consolidated Statements of Cash Flows (Six Months Ended June 30) | Cash Flow Activity | June 30, 2025 | June 30, 2024 | | :--------------------------------------- | :------------ | :------------ | | Net cash used in operating activities | $(6,303,122) | $(850,413) | | Net cash provided by/(used in) investing activities | $1,695,523 | $(592,000) | | Net cash provided by financing activities | $5,580,645 | $1,032,678 | | Net increase/(decrease) in cash and cash equivalents | $973,046 | $(409,735) | | Cash and cash equivalents, end of period | $1,013,836 | $198,134 | - Net cash used in operating activities significantly increased to $(6,303,122) for the six months ended June 30, 2025, from $(850,413) in the prior year, primarily due to increased merger expenses[9][283] - Net cash provided by financing activities increased to $5,580,645, driven by proceeds from warrant exercises ($3,664,671), convertible notes payable ($2,376,500), and notes payable ($513,200)[9][285] Consolidated Statements of Changes in Stockholders' Equity This section outlines the changes in Cycurion, Inc.'s consolidated stockholders' equity from December 31, 2024, to June 30, 2025 Changes in Stockholders' Equity (December 31, 2024 to June 30, 2025) | Metric | December 31, 2024 | June 30, 2025 | | :------------------------------------------ | :---------------- | :---------------- | | Common stock subject to possible redemption | $1,917,309 | $0 | | Common Stock (shares) | 10,592,607 | 40,353,983 | | Common Stock (amount) | $1,059 | $4,036 | | Additional paid in capital | $6,670,060 | $32,661,282 | | Accumulated deficit | $(3,203,361) | $(18,650,614) | | Total stockholders' equity attributable to Cycurion | $3,467,758 | $14,014,730 | | Equity attributable to noncontrolling interests | $0 | $(3,565,877) | | Total stockholders' equity | $3,467,758 | $10,448,853 | - Total stockholders' equity increased significantly from $3,467,758 at December 31, 2024, to $10,448,853 at June 30, 2025, primarily due to increases in additional paid-in capital and common stock issuances[11] - The accumulated deficit widened substantially from $(3,203,361) to $(18,650,614) during the six-month period, reflecting the net losses incurred[11] Notes to the Unaudited Consolidated Financial Statements This section provides detailed notes to Cycurion, Inc.'s unaudited consolidated financial statements, explaining the company's organization, significant accounting policies, and specific financial accounts 1. Organization and Description of Business Cycurion, Inc. provides information technology security solutions through its subsidiaries and completed a reverse recapitalization business combination with Western Acquisition Ventures Corp. on February 14, 2025, facing going concern doubts and Nasdaq non-compliance notices - Cycurion, Inc. (formerly KAE Holdings, Inc. and Cyber Secure Solutions, Inc.) was incorporated in Delaware on October 12, 2017, and provides premier information technology security solutions through its subsidiaries[13] - On February 14, 2025, Cycurion completed a business combination with Western Acquisition Ventures Corp., accounted for as a reverse recapitalization where Cycurion is the accounting acquirer