UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Securities Exchange Act of 1934
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Item 1.01. Entry into a Material Definitive Agreement.
On December 13, 2021, American Virtual Cloud Technologies, Inc. (the “Company”) entered into a securities purchase agreement (“Purchase Agreement”) with Hudson Bay Master Fund Ltd. (the “Buyer”) for the purchase and sale of (i) a warrant (the “Series D Warrant”) to purchase up to 15,625,000 shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), in a private placement (the “Private Placement”); and (ii) an aggregate of 7,840,000 shares of Common Stock (the “Common Shares”), and 12,456 shares (the “Preferred Shares”) of the Company’s newly-designated Series A convertible preferred stock (the “Series A Preferred”) with a stated value of $1,000 per share, initially convertible into 7,785,000 shares of Common Stock at a conversion price of $1.60 per share, in a registered direct offering (the “Public Offering”). The aggregate purchase price for the Common Shares, the Preferred Shares and the Warrants is $25,000,000. The consummation of the transactions contemplated by the Purchase Agreement is subject to customary closing conditions. A copy of the Purchase Agreement is attached to this Form 8-K as Exhibit 10.1.
The terms of the Series A Preferred to be issued in the Private Placement shall be as set forth in the form of Certificate of Designation of the Series A Preferred attached as Exhibit 4.2 to this Current Report on Form 8-K. The Series A Preferred will be convertible into Common Stock at the election of the holder at any time at an initial conversion price of $1.60 (the “Conversion Price”). The Conversion Price is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment, on a “full ratchet” basis, in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for, Common Stock at a price below the then-applicable Conversion Price (subject to certain exceptions). No dividends will be payable on the Series A Preferred, except that holders of Series A Preferred would be entitled to receive any dividends paid on account of the Common Stock, on an as-converted basis. The holders of Series A Preferred have no voting rights on account of the Series A Preferred, other than with respect to certain matters affecting the rights of the Series A Preferred.
The terms of the Series D Warrant to be issued in the Private Placement shall be as set forth in the form of Series A Warrants attached as Exhibit 4.2 to this Current Report on Form 8-K. The Series D Warrant has an exercise price of $2.00 per share, subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment, on a “full ratchet” basis, in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for, Common Stock at a price below the then-applicable exercise price (subject to certain exceptions). The Series D Warrant will be exercisable commencing on the date of issuance, and will expire five years from the date of issuance. The Company will have the right to force the Buyer to exercise the Series D Warrant in the event the volume weighted average closing price of the Common Stock is at or above $5.00 per share for a period of three consecutive trading days, subject to certain conditions.
Pursuant to the terms of the Purchase Agreement, at the closing of the Private Placement and the Public Offering, the Company will enter into a registration rights agreement (the "Registration Rights Agreement") with the Buyer to register the shares of Common Stock underlying the Series D Warrants. The form of the Registration Rights Agreement is attached to this Form 8-K as Exhibit 10.2.
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The Series D Warrant and underlying shares (the “Series D Securities”), each to be issued by the Company pursuant to the Purchase Agreement, have not been registered under the Securities Act, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The Company is relying on the private placement exemption from registration provided by Section 4(a)(2) of the Securities Act and by Rule 506 of Regulation D, and in reliance on similar exemptions under applicable state laws. No form of general solicitation or general advertising was conducted in connection with the issuance. The Series D Securities contain (or will contain, where applicable) restrictive legends preventing the sale, transfer, or other disposition of such securities, unless registered under the Securities Act, or pursuant to an exemption therefrom. The disclosure contained in this Current Report on Form 8-K does not constitute an offer to sell or a solicitation of an offer to buy any securities of the Company, and is made only as required under applicable rules for filing current reports with the Commission.
The Common Shares and Preferred Shares (and underlying shares of Common Stock) were offered, and will be issued, pursuant to the Prospectus Supplement, dated December 13, 2021, to the Prospectus included in the Company’s Registration Statement on Form S-3 (Registration No. 333- 258136), originally filed with the Securities and Exchange Commission on July 23, 2021, as amended, which became effective on August 27, 2021. This Current Report on Form 8-K shall not constitute an offer to sell or the solicitation to buy nor shall there be any sale of the shares in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
Pursuant to an engagement letter dated October 16, 2021 between the Company and Northland Securities, Inc. (the “Placement Agent”), the Company engaged the Placement Agent to act as the Company’s placement agent in connection with the offering and agreed to pay the Placement Agent’s fees of 7% of the aggregate gross proceeds the Company receives in the Private Placement and the Public Offering.
Greenberg Traurig, LLP, counsel to the Company, has issued an opinion to the Company regarding the validity of the securities to be issued in the offering. A copy of the opinion is filed as Exhibit 5.1 to this Current Report on Form 8-K.
The foregoing summaries of the terms of the Purchase Agreement, the Series A Preferred, the Series D Warrant and the Registration Rights Agreement are subject to, and qualified in their entirety by, such documents, which are incorporated herein by reference.
Item 3.02. Unregistered Sales of Equity Securities
The information disclosed in Item 1.01 of this Current Report on Form 8-K regarding the unregistered sale of the Series D Warrant and underlying warrant shares are incorporated herein by reference.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.
| AMERICAN VIRTUAL CLOUD TECHNOLOGIES, INC. | |||
| By: | /s/ Thomas H. King | ||
| Name: | Thomas H. King | ||
| Title: | Chief Financial Officer | ||
Date: December 13, 2021
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