UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 8-K
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CURRENT REPORT
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Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): March 19, 2013
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InterCloud Systems, Inc.
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(Exact name of registrant as specified in its charter)
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Delaware
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000-32037
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65-0108171 | ||
(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.)
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2500 N. Military Trail, Suite 275
Boca Raton, Florida 33431
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33431
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code: 561-988-1988
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Genesis Group Holdings, Inc.
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(Former name or former address, if changed since last report.)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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o
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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o
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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o
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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o
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13a-4(c))
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Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
On March 19, 2013, the board of directors of InterCloud Systems, Inc. (the “Company”), upon the recommendation of the Company’s management, determined the Company’s audited consolidated financial statements for the years ended December 31, 2011 and 2010 and the related reports of its independent public accounting firm, and the Company’s unaudited consolidated financial statements for the quarters ended March 31, 2012, June 30, 2012 and September 30, 2012, should no longer be relied upon and must be restated due to the errors described herein. The proper application of the relevant accounting provisions requires reclassifications and adjustments to the Company’s previously-issued consolidated balance sheets and consolidated statement of operations and Stockholders' Deficit.
1)
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The Company has performed an assessment of stock-based compensation issued to employees during the periods 2010 to 2012 to determine if the accounting previously applied was within the scope of Accounting Standards Codification Topic 718 (ASC 718), which was effective as of January 1, 2006. Under the fair value recognition provisions of ASC 718, stock-based compensation is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, based on the terms of the awards. The Company concluded that the issuances of stock-based compensation are within the scope of ASC 718, although the provisions of ASC 718 were not properly applied. In January 2010, the Company issued 4,000,000 shares of common stock to one of its officers with a fair value of $2,400,000 for services rendered for the years 2010 to 2012. The compensation expense of $2,400,000 was previously recognized over the related employment contract, over a three-year service period, ($800,000 per year during each of 2011 and 2010, $150,000 in the interim period ended March 31, 2012, and $200,000 in each of the interim periods ended June 30, 2012 and September 30, 2012). The Company has determined that because the award did not contain any explicit or implicit performance or service condition, the fair value of the award should have been expensed upon its grant, which was in January 2010. As a result, salaries and wages were understated by $1,600,000 for the annual period ended December 31, 2010, overstated by $800,000 for the annual period ended December 31, 2011, overstated $150,000 for the interim period ending March 31, 2012 and overstated by $200,000 for each of the interim periods ended June 30, 2012 and September 30, 2012.
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2)
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In August 2010, the Company entered into a Note and Warrant Purchase Agreement pursuant to which it sold warrants for the right to purchase up to 167,619 shares of the Company’s common stock at $18.75 per share. The warrants were treated as detachable warrants under ASC 815, Broad Transactions – Derivatives and Hedging, in error and accounted for as a reduction in stockholders’ equity in an amount equal to the fair value of the warrants. The Company has determined that the warrants should have been treated as a debt discount (reduction in notes payable balance instead of shareholder equity) and amortized over the term of the Note using the effective interest method. As a result, notes payable was overstated by $381,145 and additional paid in capital was understated by $381,145. The warrant included a derivative feature, which was not an equity contract, and its full value upon issuance should have been allocated to the loan proceeds as a debt discount. Additionally, the understatement of debt discount resulting from this misstatement should have been amortized over the term of the loan.
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As a result, notes payable was overstated by $381,145 at December 31, 2010 and $228,465 at December 31, 2011. Additional paid-in-capital was understated by $381,145 as of September 30, 2012, June 30, 2012, March 31, 2012 and December 31, 2011 and 2010. Interest expense was understated by $158,810 for the year ended December 31, 2010, and by $162,810 for the year ended December 31, 2011.
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2
3)
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In December 2011, the Company entered into a Third Loan Modification Agreement with its lender UTA Capital LLC (“UTA”). As a result of this amendments the Company recorded an increase to its additional paid-in capital for a debt discount of $301,876 resulting from perceived amendments to the terms of the warrants issued to UTA when the Company entered into the modification of the loan agreement. However, the terms of the warrants were not amended, and the modification of the loan agreement only confirmed that the number of warrants outstanding should have increased pursuant to the anti-dilution provisions included in the initial terms of the warrants, as granted. The error also resulted in an overstatement of interest expense due to the amortization of debt of the discount during 2012 for $261,876 and $40,000 in 2011. The Company noted that it incorrectly calculated the fair value of the additional warrants issued and noted the impact of such miscalculation to the profit and loss statement was immaterial in 2012 and 2011.
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4)
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On August 6, 2010, the Company issued warrants to purchase 167,619 shares of the Company’s common stock at $18.75 per share to a lender. The warrants qualified as a derivative instrument and are therefore required to be recorded as a liability at fair value when issued and adjusted to current fair value on a quarterly basis in accordance with ASC Topic 820, Fair Value Measurements and Disclosures. As, a result, the change in fair value of the derivative and the corresponding derivative liability were understated by $37,414 at December 31, 2011, $37,414 at March 31, 2012 and $37,414 at June 30, 2012.
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5)
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The Company recorded certain consideration provided to lenders as deferred loan costs, which amounted to $53,848 at December 31, 2011. The Company reclassified the carrying value of the unamortized consideration to debt discount at December 31, 2011.
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6)
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The Company properly recorded the compensation in 2011 to a former officer for $200,000 but incorrectly recorded the liability as additional paid in capital. |
7)
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The Company did not properly allocate an amount to intangible assets for the acquisitions of Tropical Communications, Inc. (“Tropical”) and Rives-Montiero Engineering LLC (“RM Engineering”), as of December 31, 2011, and on T N S, Inc. (“TNS”) and ADEX Corporation (“ADEX”), as of September 17, 2012, until it had an independent party prepare a valuation report in 2013. Based on the results of the report, the Company corrected its original allocations and increased additional paid in capital, for the value of the stock issued by $69,226, increased acquisition notes payable by $141,607, decreased the impairment of goodwill by $437,000 and increased the carrying value of goodwill and other intangible assets by $509,381. The Company amortized the intangible assets with a useful life of two to ten years and recorded amortization expense of $39,314 in the third quarter of 2012, $15,922 in the second quarter of 2012, and $15,922 in the first quarter of 2012. Based on the results of the report, the Company recorded goodwill and intangible assets of $458,331 for Tropical, $51,050 for RM Engineering, $505,631 for TNS and $2,200,791 for ADEX. The Company also recorded the contingent consideration to be paid, which was $15,320 for Tropical, $127,385 for RM Engineering, $2,123,210 for ADEX and $259,550 for TNS.
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8)
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On September 13, 2012, the Company sold 60% of the outstanding shares of common stock of Digital Comm, Inc. (“Digital”) to the Company’s former president and a former director. As consideration for the purchase, the former president issued to the Company a non-recourse promissory note in the principal amount of $125,000. The note is secured by the purchased shares.
At the date of disposition, the Company had a receivable from Digital of approximately $880,000. In the quarter ended September 30, 2012, the Company recorded a loss of $880,393 on the write-off of the receivable. The Company also recorded a note receivable from the former president in the amount of $125,000 and recorded its remaining investment in Digital in the amount of $83,333. The Company also recorded a contribution to additional paid in capital in the amount of $1,586,919 based on the disposition.
The Company subsequently reviewed the accounting for the transaction and concluded that it should write off the $125,000 promissory note from its former president, as it deemed it unlikely that he could repay the note. The Company also adjusted the negative investment carrying amount at the time of deconsolidation to zero, which resulted in a net gain of approximately $528,000. The Company does not attribute any value to its equity investment in Digital at December 31, 2012 based on Digital's historical recurring losses and expected future losses and Digital's liabilities far exceeding the value of their tangible and intangible assets at such date.
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3
9)
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In September 2012, the Company entered into a Loan and Security Agreement with a lender to provide the Company term loans in the aggregate amount of $13,000,000. As part of the agreement, the Company issued to the lender warrants to purchase up to 3% of the Company’s common stock on a fully-diluted basis. The Company has determined that the warrants should have been treated as a debt discount (reduction in notes payable balance instead of shareholder equity) and amortized over the term of the related note. The Company recorded the derivative value of the warrants issued to the lender on September 17, 2012 as a derivative liability in the amount of $360,738 and expensed the amount as a change in fair value of derivative instruments. The Company recomputed the amount of the derivative liability as $193,944 and recorded the amount as a debt discount.
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10)
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In September 2012, the Company issued its former president 400 shares of Series D Preferred Stock with a fair value of $352,344 for services rendered during the quarter ended September 30, 2012, but did not record compensation expense for that amount in the quarter ended September 30, 2012. As a result, salaries and wages were understated $352,344 in the quarter ended September 30, 2012. No other periods were impacted by the error.
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11)
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During the quarter ended September 30, 2012, the Company issued Series E Preferred Stock. The Company recorded the amount of subscriptions received as subscriptions for shares of Series E Preferred Stock, but subsequently, it was determined that some of the shares of Series E Preferred Stock should have been classified as Series B Preferred Stock. The Company also classified the Series E Preferred Stock as equity, and subsequently determined that, based on the redeemable feature of the Series E Preferred Stock, it should have been temporary equity.
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12)
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The Company classified its Series D Preferred Stock as permanent equity and subsequently determined that based on the redeemable feature of the stock, that it should be classified as temporary equity. The Series D Preferred Stock was listed as $566 in the equity section of the balance sheet, but should have been recorded at the redemption value of $605,872 in the temporary equity section of the balance sheet at March 31, 2012, June 30, 2012 and September 30, 2012, and at $605,872 at December 31, 2011.
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13)
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The Company recorded the Series A Preferred Stock as temporary equity with a value of $200,000. The Company evaluated the Series A Preferred Stock and determined that based on the par value of such stock, along with its low probability of being redeemed that it should be classified as permanent equity, with the amount listed at par value. This resulted in a change of $199,800 to the Series A Preferred Stock value.
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14)
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During the quarters ended March 31, 2012 and June 30, 2012, the Company classified Series C Preferred Stock as permanent equity. Upon reviewing the redeemable features of such stock, the Company classified the value of the outstanding shares as temporary equity.
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15)
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On February 14, 2011, the Company and UTA entered into a First Loan Extension and Modification Agreement (the “Modification Agreement”) in connection with the Company’s existing note payable, which had a balance of $775,000 at December 31, 2010. The Modification Agreement provided for an extension of the original maturity date of the note from August 6, 2011 to September 30, 2011. In exchange for consenting to the Modification Agreement, UTA was granted 10,257 shares of the Company’s common stock, which had a fair value of $153,850 and was recorded as a debt discount. Additionally, as additional consideration for the Company’s failure to satisfy a certain covenant in the loan agreement, UTA was granted 4,000 shares of the Company’s common stock, which was recorded as a penalty paid to the lender and recorded as an expense. As of December 31, 2011, these two additional grants of shares had not been physically issued. However, such shares are reflected on the accompanying financial statements as if issued. This amendment was accounted for as an extinguishment and therefor the unamortized deferred loan costs of $53,848, debt discount from the original agreement of $504,648 and debt discount from this amendment of $153,850 were expensed.
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The following are the previously-reported and as adjusted balances on the Company’s consolidated balance sheet at September 30, 2012, June 30, 2012, March 31, 2012, and December 31, 2011 and 2010 and consolidated statements of operations for the periods ended September 30, 2012, June 30, 2012 and March 31,2012 and for the years ended December 31, 2011 and 2010, and the corresponding over/understatement on each appropriate financial caption for each error.
4
For The Three Months Ended
March 31, 2012 |
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As Previously
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Consolidated Statement of Operations
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Reported
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Adjustments
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As Restated
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(Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
Operating expenses
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Depreciation and amortization
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$ | 14,208 | $ | 15,522 | 7 | $ | 29,730 | |||||||||
Salaries and wages
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180,000 | (150,000 | ) | 1 | 30,000 | |||||||||||
Total operating expenses
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1,072,245 | (134,478 | ) | 937,767 | ||||||||||||
Other income (expenses)
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Interest expense
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(306,945 | ) | 227,893 | 5 | (79,052 | ) | ||||||||||
Total other income (expense)
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(279,296 | ) | 227,893 | (51,403 | ) | |||||||||||
Net loss
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$ | (696,186 | ) | $ | 362,371 | $ | (333,815 | ) |
As of March 31, 2012 | ||||||||||||||||
As Previously
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Consolidated Balance Sheet
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Reported
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Adjustments
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As Restated
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(Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
Current assets
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Deferred loan costs
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$ | 54,420 | $ | (54,420 | ) | 5 | $ | - | ||||||||
Total current assets
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801,923 | (54,420 | ) | 747,503 | ||||||||||||
Intangible assets, net
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717,236 | 493,859 | 7 | 1,211,095 | ||||||||||||
Total assets
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2,139,980 | 439,439 | 2,579,419 | |||||||||||||
Current liabilities
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Accounts payable
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447,724 | 200,000 | 6 | 647,724 | ||||||||||||
Notes payable, acquisitions
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- | 141,607 | 7 | 141,614 | ||||||||||||
Total current liabilities
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1,401,136 | 341,607 | 1,742,743 | |||||||||||||
Derivative liabilities
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1,923 | 37,414 | 4 | 39,337 | ||||||||||||
Total other liabilities
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1,842,009 | 37,414 | 1,879,423 | |||||||||||||
Series C Preferred stock
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- | 800,000 | 14 | 800,000 | ||||||||||||
Series D Preferred stock
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- | 605,872 | 12 | 605,872 | ||||||||||||
Total temporary equity
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318,839 | 1,405,872 | 1,724,711 | |||||||||||||
Stockholders' equity (deficit)
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Series C Preferred stock
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1 | (1 | ) | 14 | - | |||||||||||
Series D Preferred Stock
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566 | (566 | ) | 12 | - | |||||||||||
Additional paid-in capital
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8,768,447 | (985,224 | ) | 1,10 | 7,783,223 | |||||||||||
Accumulated deficit
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(10,317,112 | ) | (359,663 | ) | 1,4,5,6,7,8 | (10,676,775 | ) | |||||||||
Total stockholders' deficit
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(1,421,554 | ) | (1,345,454 | ) |
(2,767,008
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) | ||||||||||
Total liabilities non-controlling interest and stockholders' deficit
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$ | 2,139,980 | $ | 439,439 | $ | 2,579,419 |
5
For The Three Months Ended
June 30, 2012
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As Previously
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Consolidated Statement of Operations
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Reported
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Adjustment
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As Restated
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(Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
Operating expenses
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Depreciation and amortization
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$ | 25,002 | $ | 15,522 | 7 | $ | 40,524 | |||||||||
Stock compensation
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200,000 | (200,000 | ) | 1 | - | |||||||||||
Total operating expenses
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882,462 | (184,478 | ) | 697,984 | ||||||||||||
Other income (expenses)
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Interest expense
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(287,120 | ) | 24,191 | 5 | (262,929 | ) | ||||||||||
Total other income (expense)
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(287,607 | ) | 24,191 | (263,416 | ) | |||||||||||
Net loss
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$ | (743,082 | ) | $ | 208,669 | $ | (534,413 | ) |
For The Six Months Ended
June 30, 2012
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As Previously
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Consolidated Statement of Operations
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Reported
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Adjustment
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As Restated
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(Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
Operating expenses
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Depreciation and amortization
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$ | 39,210 | $ | 31,044 | 7 | $ | 70,254 | |||||||||
Stock compensation
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380,000 | (350,000 | ) | 1 | 30,000 | |||||||||||
Total operating expenses
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1,954,708 | (318,956 | ) | 1,635,752 | ||||||||||||
Other income (expenses)
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Interest expense
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(594,064 | ) | 252,084 | 5 | (341,980 | ) | ||||||||||
Total other income (expense)
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(571,953 | ) | 252,084 | (319,869 | ) | |||||||||||
Net loss
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$ | (1,439,268 | ) | $ | 571,040 | $ | (868,228 | ) |
As of June 30, 2012 | ||||||||||||||||
Consolidated Balance Sheet
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As Previously
Reported |
Adjustment
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As Restated
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(Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
Current assets
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Deferred loan costs
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$ | 30,229 | $ | (30,229 | ) | 5 | $ | - | ||||||||
Total current assets
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703,343 | (30,229 | ) | 673,114 | ||||||||||||
Intangible assets, net
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717,236 | 478,337 | 7 | 1,195,573 | ||||||||||||
Total assets
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2,122,107 | 448,108 | 2,570,215 | |||||||||||||
Current liabilities
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Accounts payable
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653,687 | 200,000 | 6 | 853,687 | ||||||||||||
Notes payable, acquisitions
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- | 141,607 | 7 |
141,607
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Total current liabilities
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2,877,016 | 341,607 | 3,218,623 | |||||||||||||
Derivative liabilities
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1,013 | 37,414 | 4 | 38,427 | ||||||||||||
Total other liabilities
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512,766 | 37,414 | 550,180 | |||||||||||||
Series C Preferred stock
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1,150,000 | 14 | 1,150,000 | |||||||||||||
Series D Preferred stock
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605,872 | 12 | 605,872 | |||||||||||||
Total temporary equity
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326,750 | 1,755,872 | 2,082,622 | |||||||||||||
Stockholders' equity (deficit)
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Series C Preferred stock
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1 | (1 | ) | 14 | - | |||||||||||
Series D Preferred Stock
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566 | (566 | ) | 12 | - | |||||||||||
Additional paid-in capital
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9,355,272 | (1,535,224 | ) | 2,12 | 7,820,048 | |||||||||||
Accumulated deficit
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(11,082,070 | ) | (150,994 | ) | 1,4,5,6,7 | (11,233,064 | ) | |||||||||
Total stockholders' deficit
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(1,594,425 | ) | (1,686,785 | ) |
(3,281,210
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) | ||||||||||
Total liabilities non-controlling interest and stockholders' deficit
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$ | 2,122,107 | $ | 448,108 | $ | 2,570,215 |
6
For The Three Months Ended
September 30, 2012
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As Previously
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||||||||||||||||
Consolidated Statement of Operations
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Reported
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Adjustment
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As Restated
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|||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
Operating expenses
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Depreciation and amortization
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$ | 41,434 | $ | 39,314 | 7 | $ | 80,748 | |||||||||
Stock compensation
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223,998 | 152,344 | 1 | 376,342 | ||||||||||||
Total operating expenses
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882,462 | 191,658 | 1,074,120 | |||||||||||||
Other income (expenses)
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||||||||||||||||
unrealized loss on fair value of derivative
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(360,868 | ) | 360,738 | 9 | (130 | ) | ||||||||||
Gain (loss) from deconsolidation of Digital
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(880,393 | ) | 1,462,429 | 8 | 582,036 | |||||||||||
Total other income (expense)
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(2,017,975 | ) | 1,823,167 | (194,808 | ) | |||||||||||
Net loss
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$ | (2,479,246 | ) | $ | 1,631,509 | $ | (847,737 | ) |
For The Nine Months Ended
September 30, 2012
|
||||||||||||||||
As Previously
|
||||||||||||||||
Consolidated Statement of Operations
|
Reported
|
Adjustment
|
As Restated
|
|||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
Operating expenses
|
||||||||||||||||
Depreciation and amortization
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$ | 80,644 | $ | 70,358 | 7 | $ | 151,002 | |||||||||
Stock compensation
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603,998 | (197,656 | ) | 1 | 406,342 | |||||||||||
Total operating expenses
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3,653,187 | (127,298 | ) | 3,525,889 | ||||||||||||
Other income (expenses)
|
||||||||||||||||
unrealized loss on fair value of derivative
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(360,738 | ) | 360,738 | 9 | - | |||||||||||
Gain (loss) from deconsolidation of Digital
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(880,393 | ) | 1,462,429 | 8 | 582,036 | |||||||||||
Interest expense
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(1,370,738 | ) | 252,084 | 5 | (1,118,654 | ) | ||||||||||
Total other income (expense)
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(2,589,888 | ) | 2,075,251 | (514,637 | ) | |||||||||||
Net loss
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$ | (3,918,474 | ) | $ | 2,202,549 | $ | (1,715,925 | ) |
As of September 30, 2012
|
||||||||||||||||
As Previously
|
||||||||||||||||
Consolidated Balance Sheet
|
Reported
|
Adjustment
|
As Restated
|
|||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
Current assets
|
||||||||||||||||
Deferred loan costs
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$ | 1,823,465 | $ | (1,529,830 | ) | 5 | $ | 293,635 | ||||||||
Total current assets
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9,779,553 | (1,529,830 | ) | 8,249,723 | ||||||||||||
Goodwill and Intangible assets, net
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15,731,611 | 3,013,825 | 7 | 18,745,436 | ||||||||||||
Note receivable - related party
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125,000 | (125,000 | ) | - | ||||||||||||
Investment in Digital
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83,333 | (83,333 | ) | - | ||||||||||||
Deferred loan costs, net of current portion
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- | 1,499,601 | 7 | 1,499,601 | ||||||||||||
Total assets
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26,177,676 | 2,775,263 | 28,952,939 | |||||||||||||
Current liabilities
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||||||||||||||||
Accounts payable
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1,250,170 | 200,000 | 6 | 1,450,170 | ||||||||||||
Notes payable, acquisitions
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- | 2,522,465 | 7 | 2,522,465 | ||||||||||||
Total current liabilities
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6,322,473 | 2,722,465 | 9,044,938 | |||||||||||||
Term loan, net of current portion, net of debt discount
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12,350,000 | (193,944 | ) | 12,156,056 | ||||||||||||
Derivative liabilities
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361,881 | (129,380 | ) | 4 | 232,501 | |||||||||||
Total other liabilities
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12,962,324 | (129,380 | ) | 12,832,944 | ||||||||||||
Series A Preferred Stock
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200,000 | (200,000 | ) | 13 | - | |||||||||||
Series B Preferred Stock
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384,063 | 958,216 | 11 | 1,342,279 | ||||||||||||
Series D Preferred stock
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1,491,690 | 12 | 1,491,690 | |||||||||||||
Series E Preferred stock
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2,225,000 | 11 | 2,225,000 | |||||||||||||
Series F Preferred stock
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4,150,000 | - | 4,150,000 | |||||||||||||
Total temporary equity
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6,734,063 | 4,474,906 | 11,208,969 | |||||||||||||
Stockholders' equity (deficit)
|
||||||||||||||||
Series A Preferred Stock
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- | 200 | 13 | 200 | ||||||||||||
Series D Preferred Stock
|
566 | (566 | ) | 12 | - | |||||||||||
Series E Preferred stock
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4 | (4 | ) | 11 | - | |||||||||||
Additional paid-in capital
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13,664,000 | (7,151,459 | ) | 1,8,10,11 | 6,512,541 | |||||||||||
Accumulated deficit
|
(13,599,948 | ) | 2,859,101 | 1,4,5,6,7,8 | (10,740,847 | ) | ||||||||||
Total stockholders' deficit
|
158,816 | (4,292,728 | ) |
(4,133,912
|
) | |||||||||||
Total liabilities, non-controlling interest and stockholders' equity (deficit)
|
$ | 26,177,676 | $ | 2,775,263 | $ | 28,952,939 |
7
As of December 31, 2010
|
||||||||||||||||
As Previously
|
||||||||||||||||
Consolidated Balance Sheet
|
Reported
|
Adjustment
|
As Restated
|
|||||||||||||
Current liabilities
|
||||||||||||||||
Term loans, current portion
|
$ | 509,268 | $ | (222,335 | ) | 2 | $ | 286,933 | ||||||||
Total current liabilities
|
1,368,030 | (222,335 | ) | 1,145,695 | ||||||||||||
Stockholders' equity (deficit)
|
||||||||||||||||
Additional paid-in capital
|
581,800 | 1,991,657 | 1,2 | 2,573,457 | ||||||||||||
Accumulated deficit
|
(2,219,483 | ) | (1,758,810 | ) | 1,2 | (3,978,293 | ) | |||||||||
Total Intercloud Systems, Inc. stockholders' deficit
|
(1,627,086 | ) | 222,335 | (1,404,751 | ) | |||||||||||
Total stockholders' deficit
|
(1,627,086 | ) | 222,335 | (1,404,751 | ) | |||||||||||
Total liabilities and stockholders' deficit
|
$ | 430,383 | $ | - | $ | 430,383 |
For The Year Ended
December 31, 2010
|
||||||||||||||||
As Previously
|
||||||||||||||||
Consolidated Statement of Operations
|
Reported
|
Adjustment
|
As Restated
|
|||||||||||||
Operating expenses
|
||||||||||||||||
Salaries and wages
|
$ | 1,574,374 | $ | 1,600,000 | 1 | $ | 3,174,374 | |||||||||
Total operating expenses
|
3,203,855 | 597,219 | 3,801,074 | |||||||||||||
Other income (expenses)
|
||||||||||||||||
Interest expense
|
(267,368 | ) | (158,810 | ) | 2 | (426,178 | ) | |||||||||
Total other income (expense)
|
109,420 | (158,810 | ) | (49,390 | ) | |||||||||||
Net loss
|
$ | (2,141,596 | ) | $ | (1,758,810 | ) | $ | (3,900,406 | ) |
For The Year Ended
December 31, 2011
|
||||||||||||||||
As Previously
|
||||||||||||||||
Consolidated Statement of Operations
|
Reported
|
Adjustment
|
As Restated
|
|||||||||||||
Operating expenses
|
||||||||||||||||
Salaries and wages
|
$ |
5,853,600
|
$ |
(800,000
|
)
|
1
|
$ |
5,053,600
|
||||||||
Total operating expenses
|
8,994,949
|
(2,651,018
|
)
|
6,343,931
|
||||||||||||
Other income (expenses)
|
||||||||||||||||
Unrealized gain (loss) on fair value of derivative
|
458,754
|
(37,414
|
)
|
2,4
|
421,340
|
|||||||||||
Goodwill impairment
|
(437,000
|
)
|
437,000
|
7
|
-
|
|||||||||||
Interest expense
|
(1,240,457
|
)
|
(202,772
|
)
|
2,3
|
(1,443,229
|
)
|
|||||||||
Total other income (expense)
|
(1,218,703
|
)
|
196,814
|
(1,021,889
|
)
|
|||||||||||
Net loss
|
$ |
(7,401,442
|
)
|
$ |
996,814
|
$ |
(6,404,628
|
)
|
As of December 31, 2011
|
||||||||||||||||
As Previously
|
||||||||||||||||
Consolidated Balance Sheet
|
Reported
|
Adjustment |
As Restated
|
|||||||||||||
Current Assets
|
||||||||||||||||
Deferred loan costs
|
$ |
53,848
|
$ |
(53,848
|
)
|
5
|
$ |
-
|
||||||||
Total current assets
|
510,433
|
(53,848
|
)
|
456,585
|
||||||||||||
Goodwill
|
636,736
|
(292,750
|
) | 343,986 | ||||||||||||
Intangible assets
|
-
|
802,131
|
802,131 | |||||||||||||
Total assets
|
1,790,012
|
455,533
|
2,245,545
|
|||||||||||||
Current liabilities
|
||||||||||||||||
Accounts payable and accrued expenses
|
791,302
|
200,000
|
6
|
991,302
|
||||||||||||
Notes payable for earnouts
|
-
|
141,607
|
7
|
141,607
|
||||||||||||
Term loans, current portion
|
876,522
|
228,465
|
|
2,5
|
1,104,987
|
|||||||||||
Total current liabilities
|
1,787,547
|
570,071
|
2,357,618
|
|||||||||||||
Other liabilities
|
||||||||||||||||
Derivative liability
|
1,143
|
37,414
|
4
|
38,557
|
||||||||||||
Total other liabilities
|
1,635,486
|
37,414
|
1,672,900
|
|||||||||||||
Series D Preferred Stock
|
-
|
605,872
|
605,872
|
|||||||||||||
Total Temporary Equity
|
15,000
|
605,872
|
620,872
|
|||||||||||||
Stockholders' Equity (Deficit)
|
||||||||||||||||
Additional paid-in capital
|
7,850,944
|
20,102
|
1,2,3,6,10
|
7,871,046
|
||||||||||||
Accumulated deficit
|
(9,620,926
|
)
|
(761,995
|
)
|
1,2,3,4,10
|
(10,382,921
|
)
|
|||||||||
Total Intercloud Systems, Inc. stockholders' deficit
|
(1,648,021
|
)
|
(757,824
|
)
|
(2,405,845
|
)
|
||||||||||
Total liabilities, non-controlling interest and Stockholders' deficit
|
$ |
1,790,012
|
$ |
455,533
|
|
|
$ |
2,245,545
|
The Company’s Chief Financial Officer and board of directors has discussed the matters set forth herein with BDO USA, LLP, the Company’s current independent registered public accounting firm and Sherb and Co. LLP, the Company's independent registered public accounting firm for the years ended December 31, 2011 and for the period ended September 30, 2012.
8
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: March 22, 2013
|
InterCloud Systems, Inc.
|
|
By:
|
/s/ Mark E. Munro
|
|
Name:
|
Mark E. Munro
|
|
Title:
|
Chief Executive Officer
|
9