UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): August 21, 2022
American Virtual Cloud Technologies, Inc.
(Exact Name of registrant as Specified in Charter)
| Delaware (State or other jurisdiction of incorporation) |
001-38167 (Commission File Number) |
81-2402421 (IRS Employer Identification No.) | |||
|
1720 Peachtree Street, Suite 629 (Address of principal executive offices) |
30309 (Zip code) | ||||
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(404) 239-2863
Not Applicable |
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Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered or to be registered pursuant to Section 12(b) of the Act.
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The Stock Market LLC | ||||
| The Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Effective as of August 22, 2022, Kevin Keough, who has served as the Company’s Chief Transformation Officer since April 2022, and prior to that served as the Company’s President since July 2021, was appointed to serve as the Company’s Chief Executive Officer and ceased serving as Chief Transformation Officer. Mr. Keough replaces Darrell Mays, who resigned as Chief Executive Officer as of that date. Also, effective September 1, 2022, Adrian Foltz, who previously served as Chief Financial Officer of the Company’s Kandy Communications business, was appointed as Chief Financial Officer, and Onex Evans, who previously served as the Company’s Vice President, Corporate Controller & Reporting, was appointed as Chief Accounting Officer. Thomas King, who had served as Chief Financial Officer, will serve as Chief of Staff on an interim basis. Also, effective as of August 22, 2022, Michael Tessler resigned as a member of the Company’s board of directors (the “Board”), and Larry Mock was appointed to replace Mr. Tessler as Chairman of the Board. In addition, Mr. Mays was appointed to serve as Executive Vice Chairman of the Board.
Also as of August 22, 2022, the compensation committee of the Board (the “Compensation Committee”) approved new compensation arrangements for Mr. Keough, Mr. Foltz, and Ms. Evans. The Compensation Committee approved an increased annual base salary of $350,000 for Mr. Keough and an increased annual base salary of $250,000 for Ms. Evans and Mr. Foltz. The Compensation Committee also approved a target bonus for 2022 for Ms. Evans and Mr. Foltz equal to 67% of base salary, subject to the achievement of criteria to be determined by the Compensation Committee. Also on that date, the Compensation Committee approved the grant, under the Company’s 2020 Equity Incentive Plan of restricted stock units to Mr. Foltz and Ms. Evans that increases their current restricted stock units grants to 150,000 units each and that will vest over a four-year period, with 50% of such vesting to be time-based and 50% to be performance-based.
Kevin Keough has served as Managing Director, Operations, for Navigation Capital Partners, Inc. (“Navigation”), an Atlanta-based private equity firm, since March 2021. Prior to joining Navigation, from October 2020 to March 2021, Mr. Keough was an independent management consultant, serving clients on a range of consulting engagements. From October 2017 to September 2020, he was the Managing Director and Head of Post-Acquisition for Investcorp’s North American Private Equity Group. Prior to joining Investcorp, from 2006 to September 2017 he had been with Arcapita Investment Management and its predecessor firm, Arcapita Inc., ultimately serving in the role of Managing Director and Global Head of Portfolio Management. Before his move into private equity, Mr. Keough spent seven years as a senior executive with FirstEnergy Corporation, a public energy company headquartered in Akron, Ohio. During this period, he held several corporate strategic planning and shared services roles, and served as President of the Ohio Edison Company. He had been a Management Consultant for ten years in the Cleveland Office of McKinsey & Company, Inc., serving as a partner and leader in the Firm’s North American Energy Practice. Mr. Keough holds an MBA from Stanford Graduate School of Business and a BS in Engineering Mechanics, with honors, from the United States Military Academy at West Point.
Adrian Foltz has served as Chief Financial Officer of the Company’s Kandy Communications business since April 2021. From September 2020 to March 2021, Mr. Foltz served as Interim Controller for Education Networks of America, later acquired by Zayo Group Holdings, Inc. (“ENA,”), and from November 2019 to September 2020, Mr. Foltz was ENA’s Finance Leader and ERP Project Manager. Mr. Foltz was a consultant for Envision Healthcare (Addison Group) from November 2018 to November 2019. Prior to that, Mr. Foltz was a consultant for ENA from August 2018 to November 2018. From June 2016 to May 2018, Mr. Foltz served as Director of Accounting at Correct Care Solutions (“CCS”), later acquired by Wellpath. From March 2015 to May 2016, Mr. Foltz was a consultant at CCS. Mr. Foltz is a licensed CPA, and holds a BS in Accounting from Missouri State University and an MBA from the University of Florida.
Onex Evans has served as the Company’s Director, SEC & Financial Reporting, from June 2020 to March 2021, and has since served as the Company’s VP, Corporate Controller & Reporting. Prior to joining the Company, Ms. Evans was a financial reporting consultant for Inspire Brands from July 2019 to June 2020. From June 2018 to June 2019, Ms. Evans served as SEC Financial Reporting Manager for Manhattan Associates, Inc. Ms. Evans was an SEC reporting consultant for The Home Depot, Inc. from December 2017 to June 2018. Prior to joining The Home Depot, Inc., Ms. Evans was an SEC Financial Reporting Manager at Advance Pierre Foods Holdings, Inc from November 2016 to November 2017. Ms. Evans is a licensed CPA, and holds a BS and MS in Accounting from the University of the West Indies.
| Item 8.01 | Other Events. |
On August 25, 2022, the Company issued a press release regarding the management changes described in Item 5.02 of this Current Report on Form 8-K. The Company also announced in that press release that the Company had retained Northland Capital Markets to advise the Company in connection with a comprehensive strategic review process that could lead to the sale of the Company or selected assets. Northland Capital Markets is the trade name for certain capital markets and investment banking services of Northland Securities, Inc., Member FINRA/SIPC. The Board has not set a timetable for this process nor has it made any decisions related to strategic alternatives at this time. No assurance can be given that the Company’s exploration of strategic alternatives will result in any discussions regarding one or more transactions or one or more transactions being entered into or consummated, or if any transaction is undertaken, as to its terms, structure or timing. The Company does not expect to make further public comment regarding these matters unless and until the Board has approved a specific transaction or alternative or otherwise concludes its review of strategic alternatives.
A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit No. | Exhibit | |
| 99.1 | Press release, dated August 25, 2022 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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: August 25, 2022
Exhibit 99.1
AVCT ANNOUNCES BOARD AND MANAGEMENT CHANGES ALONG WITH REVIEW OF STRATEGIC ALTERNATIVES
ATLANTA, August 25, 2022 -- American Virtual Cloud Technologies, Inc. (Nasdaq: AVCT) (the “Company”) today announces changes to its board of directors and management team, along with the launch of a review to explore the sale of the entire business or selected assets. As part of this shift, the Company announced that Kevin Keough has been named as Chief Executive Officer. Tom King will shift from the role of Chief Financial Officer to Chief of Staff, on an interim basis, reporting to Mr. Keough. Effective September 1, 2022, Adrian Foltz and Onex Evans have been promoted to the roles of Chief Financial Officer and Chief Accounting Officer, respectively, both reporting to Mr. Keough. Michael Tessler has stepped down from the board of directors and Larry Mock has been appointed to his previous role as chairman of the board. Former CEO Darrell Mays will continue to serve the Company as Executive Vice Chairman of the Board.
In conjunction with these changes, the Company also announced that it had retained Northland Capital Markets to advise the Company in connection with a comprehensive strategic review process that could lead to the sale of the Company or selected assets. Northland Capital Markets is the trade name for certain capital markets and investment banking services of Northland Securities, Inc., Member FINRA/SIPC.
The Company’s departing chairman, Michael Tessler, commented that “I have enjoyed working with the AVCT board and management team. I wish the new management team well as it works with the board to consider the range of possible strategic alternatives to optimize the value of the entity.”
Mr. Keough has served as AVCT’s Chief Transformation Officer since April. Early in his career, while serving as a partner with McKinsey & Company, Inc. and as a senior executive with FirstEnergy Corp., he gained extensive public company experience. From 2006 to 2022, Mr. Keough served in senior operating roles with three private equity firms, including Arcapita, Investcorp, and Navigation Capital Partners. Mr. Keough holds an MBA from Stanford Graduate School of Business and began his career as an officer in the US Army, after graduating with honors from the United States Military Academy at West Point.
The newly realigned AVCT management team – including recent hires Jay Patel (Chief Product Officer) and Chris Koeneman (Chief Revenue Officer) -- will be working with Northland on the review of strategic alternatives.
About American Virtual Cloud Technologies, Inc.
American Virtual Cloud Technologies, Inc., via its Kandy business unit, offers a cloud-based, real-time communications platform offering proprietary UCaaS, CPaaS, Microsoft Teams Direct Routing as a Service, and SIP Trunking as a Service capabilities. Kandy enables service providers, enterprises, software vendors, systems integrators, partners, and developers to enrich their applications and services with real-time contextual communications, providing a more engaging user experience. With Kandy, companies of all sizes and types can quickly embed real-time communications capabilities into their existing applications and business processes. For more information, visit https://www.avctechnologies.com and www.kandy.io.
About Northland Securities, Inc.
Northland Securities, Inc., Member FINRA/SIPC and registered with SEC and MSRB, is a diversified financial services firm, including investment banking and full-service broker dealer divisions, offering investment and finance services for government entities, financial institutions, nonprofit organizations, and individual investors. The firm is a leading underwriter of tax-exempt bonds in the Midwest and is recognized for its equity markets research and specialization in finance and capital market access for corporate, government, and non-profit clients. Headquartered in Minneapolis, Minnesota, Northland Securities has branch offices in California, Colorado, Iowa, Michigan, New York, and Wisconsin.
Cautionary Note Regarding Forward-Looking Statements
This press release includes certain statements that are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding the Company’s future prospects and the Board’s review of potential strategic alternatives, including a potential sale of the Company’s business or selected assets, the timing of such review, and the possible outcomes of such review. The Company’s actual results or outcomes and the timing of certain events may differ significantly from those discussed in any forward-looking statements, including as a result of the uncertainty associated with being able to identify, evaluate and complete any strategic transaction or alternative, the impact of the announcement of the Board’s review of strategic alternatives, as well as any strategic transaction or alternative that may be pursued, on the Company’s business, including its financial and operating results and its employees and clients. These statements are based on various assumptions and on the current expectations of the Company’s management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability.
Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of the Company. These forward-looking statements are subject to a number of risks and uncertainties, including the Company’s need for additional funding to continue as a going concern; the possibility that Nasdaq may delist the Company’s securities; changes in the Company’s clients’ preferences, prospects and the competitive conditions prevailing in the industries in which the Company operates; the Company’s substantial indebtedness; risks associated with the potential effects of COVID-19 on the Company’s business; risks that the recently-acquired Kandy Communications business will not be integrated successfully; ability to retain key personnel; and those factors discussed in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2022 and quarterly report on Form 10-Q filed with the SEC on August 16, 2022, in each case under the heading “Risk Factors,” and other documents of the Company filed, or to be filed, with the SEC. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that the Company presently does not know or that the Company currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect the Company’s expectations, plans or forecasts of future events and views as of the date of this document. The Company anticipates that subsequent events and developments will cause its assessments to change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Company’s assessments as of any date subsequent to the date of this document. Accordingly, undue reliance should not be placed upon the forward-looking statements.
American Virtual Cloud Technologies, Inc.
info@avctechnologies.com
+1 (404) 239-2863