Thursday, July 7, 2022

InterCloud Systems Inc (OTCMKTS:ICLD) Continues to Unravel in a Sea of Debt

InterCloud Systems Inc (OTCMKTS:ICLD) has been a lesson in the trials and tribulations of why it’s so incredibly important for OTC traders to monitor balance sheets and understand various forms of liabilities. That’s the key factor for so many of these companies. The reason is simple: debt is a dilution risk. This is especially true for companies that have thick and busy operational expenses. ICLD is a great textbook example of this principle in action. The company just reported financial results for the second quarter of 2017. We will point to some numbers below.
Mark Munro, Chairman and CEO of InterCloud, stated, “As I mentioned a few weeks ago, we have greatly reduced our liabilities and strengthened our balance sheet over the last twelve months. Our debt and expense reductions will enable us to achieve profitability and enable this Company to realize its potential through new products and services. We believe the steps we’ve taken over the past year have positioned the Company to capitalize on the immense opportunities in front of us and creates the necessary foundation for ongoing financial performance.”
InterCloud Systems Inc (OTCMKTS:ICLD) offers cloud data and network management and security to telecommunications companies. That’s the gist here.
As the company tells the story, it provides “end-to-end IT and network solutions to the telecommunications service provider and corporate enterprise markets through cloud platforms and professional services in the United States and internationally.”
InterCloud operates through four segments: Applications and Infrastructure, Professional Services, Managed Services, and Cloud Services.
ICLD offers various services, including platform as a service, infrastructure as a service, database as a service, and software as a service; and network management, 24x7x365 monitoring, security monitoring, and storage and backup services.
It also provides software-defined networking (SDN) training, SDN software development, and integration, virtualized network functions validation in a multi-vendor environment, unified communications, interactive voice response, and session initiation protocol based call centers, as well as structured cabling and other field installations.
According to company materials, “InterCloud Systems, Inc. is a leading provider of cloud networking orchestration and automation, for  Software Defined Networking (SDN) and Network Function Virtualization (NFV) cloud environments to the telecommunications service provider (carrier) and corporate enterprise markets through cloud solutions and professional services. InterCloud’s cloud solutions offer enterprise and service-provider customers the opportunity to adopt an operational expense model by outsourcing cloud deployment and management to InterCloud rather than the capital expense model that has dominated in recent decades in IT infrastructure management.”
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According to the company’s most recent release, revenue for the second quarter ended June 30, 2017 decreased $14.5 million, or 64%, to $8.1 million, as compared to $22.6 million for the second quarter of 2016. This was the result of the reduction in revenue from subsidiaries disposed of during 2017. Gross profit percentage was 20% for the second quarter ended June 30, 2017, compared to 23% for the same period in 2016. The overall decrease in gross profit percentage was due to reduced margins within the Company’s professional services segment offset by increased margins in the application and infrastructure segment.
The Company had a net loss attributable to common stockholders of $(12.0) million in the second quarter of 2017 compared to net loss of $(13.4) million for the comparable period of 2016. The decrease in net loss was primarily due to a decrease in the loss on extinguishment of debt of $7.1 million. Additionally, there were decreases in salaries and wages and SG&A expenses of $4.5 million and a decrease in interest expense of $2.1 million. These decreases were offset by a decrease in gross profit of $3.6 million and a loss of disposal of subsidiaries of $5.9 million.
Traders will note about -20% stripped out of share values of the stock over the past week of action. That continues the tortuous action for this stock, which has been typified by massive weakness for 11 out of every 12 months for the last several years. That said, for that twelfth month, the action can be explosive, so the situation may still be worth watching. In other words, ICLD has a track record that includes a number of dramatic bounces. Furthermore, the name has seen interest climb, with an increase in recent trading volume of just under 190% over the long run average.
Currently trading at a market capitalization of $4.75M, ICLD has a chunk ($816K) of cash on the books, which compares with a whopping $34.7M in total current liabilities, as we discussed above. One should also note that debt has been growing over recent quarters. ICLD is pulling in trailing 12-month revenues of $74.3M. However, the company is seeing declines on the top line on a quarterly y/y basis, with revenues falling at -21.6%. This may be a very interesting story and we will look forward to updating it again soon. For continuing coverage on shares of $ICLD stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!
Disclosure: we hold no position in $ICLD, either long or short, and we have not been compensated for this article.

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