Item 1.01. Entry into a Material Definitive Agreement.
As previously disclosed, on
January 11, 2023, American Virtual Cloud Technologies, Inc. (the “Company”) and two of its subsidiaries (collectively, the
“Debtors”) filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”)
in the United States Bankruptcy Court for the District of Delaware (such court, the “Court”, and such cases, the “Cases”).
On February 14, 2023, the Company and certain of its subsidiaries (collectively, the “Sellers”) entered into a “stalking horse” Asset Purchase
Agreement (the “Purchase Agreement”) with Skyvera, LLC (the “Purchaser”).
Pursuant to the Purchase Agreement,
the Purchaser agreed to purchase substantially all of the assets of the Sellers (such assets, the “Purchased Assets,” and
such transaction, the “Asset Sale”). The Purchased Assets include, among other things, all rights of the Sellers under the
Assumed Contracts and Assumed Leases (as such terms are defined in the Purchase Agreement), tangible personal property, intellectual property
rights, books and records and goodwill, but excludes all Excluded Assets (as such term is defined in the Purchase Agreement), including
all cash. Under the Purchase Agreement, Purchaser would acquire the Purchased Assets for a purchase price (the “Purchase Price”)
consisting of (i) cash in the amount of $3,250,000, subject to reduction by the amount, if any, by which the deferred revenues of the
Sellers as of the date of the closing of the Purchase Agreement exceeds the deferred revenues of the Sellers as of the date of the Purchase
Agreement, and (ii) the Purchaser’s assumption of certain liabilities of the Sellers.
The Purchase Agreement was
filed with the Court on February 15, 2023 and is subject to the Debtors’ solicitation of higher and better offers pursuant to bidding
procedures and an auction process that will be conducted under the supervision of the Court in accordance with Section 363 of the Bankruptcy
Code. The Purchaser entered into the Purchase Agreement as the “stalking horse” bidder for the Purchased Assets.
As the stalking horse bidder, the Purchaser’s offer to purchase the Purchased Assets, as set forth in the Purchase Agreement, would
be the standard by which any other bids to purchase the Purchased Assets would be evaluated. Other interested bidders who submit qualifying
offers would be permitted to participate in the auction of the Purchased Assets.
The potential auction for
the Purchased Assets and the final sale hearing is expected to be held in March 2023. The completion of the transaction is subject to
a number of conditions, which, among others, include the entry of a sale order by the Court, the performance by each party of its obligations
under the Purchase Agreement and the material accuracy of each party’s representations.
The foregoing summary
description of the material terms of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference
to the full text of the Purchase Agreement, a copy of which is filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated
by reference in this Item 1.01.
Cautionary Information Regarding Trading in
the Company’s Securities
The Company continues to face
certain risks and uncertainties that have been affecting its business and operations, and these risks and uncertainties may affect the
Company’s ability to consummate the transactions contemplated by the Purchase Agreement or any alternative sale transaction and
could impact the outcome of the Cases. Holders of the Company’s equity securities will likely be entitled to little or no recovery
on their investment following the Cases, and recoveries to other stakeholders cannot be determined at this time. The Company cautions
that trading in the Company’s securities given the pendency of the Cases is highly speculative and poses substantial risks. Trading
prices for the Company’s securities may bear little or no relationship to the actual value realized, if any, by holders of the Company’s
securities in the Cases. Accordingly, the Company urges extreme caution with respect to existing and future investments in its securities.