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The amendments in ASU 2016-11 rescinds the certain SEC Staff Observer comments that are codified in Topic 605, Revenue Recognition, and Topic 932, Extractive Activities&#8212;Oil and Gas, effective upon adoption of Topic 606. Specifically, registrants should not rely on the following SEC Staff Observer comments upon adoption of Topic 606: (a) Revenue and Expense Recognition for Freight Services in Process (b) Accounting for Shipping and Handling Fees and Costs, (c) Accounting for Consideration Given by a Vendor to a Customer (including Reseller of the Vendor&#8217;s Products) (d) Accounting for Gas-Balancing Arrangements (that is, use of the &#8220;entitlements method&#8221;). In addition, as a result of the amendments in Update 2014-16, the SEC staff is rescinding its SEC Staff Announcement, &#8220;Determining the Nature of a Host Contract Related to a Hybrid Instrument Issued in the Form of a Share under Topic 815,&#8221; effective concurrently with Updates 2014-09 and 2014-16. 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text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">On July 20, 2017, the Board of Directors designated 1,000 shares of the Company&#8217;s authorized preferred stock, with a par value of $0.0001 per share, as Series J preferred stock. The Series J preferred stock has a stated value of $4,916 per share, is not redeemable and, except as otherwise required by law, shall be voted together with the Company&#8217;s common stock and any other series of preferred stock then outstanding, and not as a separate class, at any meeting of the stockholders of the Company upon any matter upon which the holders of common stock have the right to vote, except that the aggregate voting power of the Series J preferred stock shall be equal to 51% of the total voting power of the Company. The holders of Series J preferred stock also have a liquidation preference in the amount of $4,916 per share that is senior to the distributions, if any, to be paid to the holders of common stock.</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-size: 6pt;">&#160;</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><u>Designation of Series K Preferred Stock</u></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-size: 6pt;">&#160;</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">On November 10, 2017, the Board of Directors designated 3,000 shares of the Company&#8217;s authorized preferred stock, with a par value of $0.0001 per share, as Series K preferred stock. The Series K preferred stock has a stated value of $10,000 per share. The Series K preferred stock is convertible into common stock of the Company at the lower of $3.00 or 95% of the weighted average trading price for the five days prior to conversion. The Series K preferred stock has a liquidation preference equal to $10,000 per share. There are no dividends on the Series K preferred stock. 1,512 shares of the Series K preferred stock were issued and outstanding as of December 31, 2017.</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-size: 6pt;">&#160;</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><u>Designation of Series L Preferred Stock</u></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-size: 6pt;">&#160;</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">On October 12, 2017, the Board of Directors designated 1,000 shares of the Company&#8217;s authorized preferred stock, with a par value of $0.0001 per share, as Series L preferred stock. The Series L preferred stock has a stated value of $10,000 per share. The Series L preferred stock is convertible into common stock of the Company at 105% of the weighted average trading price for the five days prior to conversion. The Series L preferred stock has a liquidation preference equal to $10,000 per share. There are no dividends on the Series L preferred stock. 227 shares of the Series L preferred stock were issued and outstanding as of December 31, 2017.</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-size: 6pt;">&#160;</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><u>Designation of Series M Preferred Stock</u></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-size: 6pt;">&#160;</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">On December 1, 2017, the Board of Directors designated 500 shares of the Company&#8217;s authorized preferred stock, with a par value of $0.0001 per share, as Series M preferred stock. The Series M preferred stock has a stated value of $10,000 per share. The Series M preferred stock is convertible into common stock of the Company at 105% of the weighted average trading price for the five days prior to conversion. The Series M preferred stock has a liquidation preference equal to $10,000 per share. There are no dividends on the Series M preferred stock. 386 shares of the Series M preferred stock were issued and outstanding as of December 31, 2017.</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-size: 6pt;">&#160;</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><u>Exchange of related party debt for preferred stock</u></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-size: 6pt;">&#160;</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">On July 25, 2017, Mark Munro, CEO, and Mark Durfee, Board Member, exchanged their outstanding related party debt for the Company&#8217;s Series J preferred stock with special voting rights. Mark Munro converted principal and interest of $1,709 and $195, respectively. Mark Durfee converted principal and interest of $2,550 and $464, respectively. As a result of the exchange, Mark Munro and Mark Durfee received 387 and 613 shares, respectively, of the Company&#8217;s Series J preferred stock (Refer to Note 13, Related Parties, for further detail). The fair value of the Series J Preferred Stock on date of issuance was $1,753. 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The Company evaluated and concluded that the embedded conversion feature in Preferred Series K and L and determined that the embedded conversion feature needs to be bifurcated (refer to Note 12, Derivative Instruments, for further information regarding the embedded conversions features of the Series K and L preferred stock). In accordance with ASR 268 these equity securities are required to be classified outside of permanent equity since they are redeemable for cash. 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margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"><b><i>&#160;</i></b></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (&#8220;GAAP&#8221;). The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, which include Tropical Communications, Inc. (&#8220;Tropical&#8221;) (since August 2011 &#8211; sold in April 2017 in connection with the sale of the AWS Entities), Rives-Monteiro Leasing, LLC (&#8220;RM Leasing&#8221;) (since December 2011), ADEX Corporation, ADEX Puerto Rico, LLC and Highwire (collectively, &#8220;ADEX&#8221; or &#8220;ADEX Entities&#8221;) (since September 2012 &#8211; Highwire was sold in January 2017 &#8211; refer to Note 5, Acquisitions and Disposals of Subsidiaries, for further detail, and the ADEX Entities were sold in February 2018 &#8211; refer to Note 22, Subsequent events, for further detail), TNS, Inc. (&#8220;TNS&#8221;) (since September 2012), AW Solutions, Inc. and AW Solutions Puerto Rico, LLC (collectively, the &#8220;AWS Entities&#8221;) (since April 2013 &#8211; the AWS Entities were sold in April 2017 &#8211; refer to Note 5, Acquisitions and Disposals of Subsidiaries, for further detail), SDN Essentials, LLC (&#8220;SDNE&#8221;) (since January 2016 &#8211; SDNE was sold in May 2017 &#8211; refer to Note 5, Acquisitions and Disposals of Subsidiaries, for further detail), and SDN Systems, LLC (&#8220;SDNS&#8221;) (since January 2017). The results of operations of the Company&#8217;s former subsidiaries, VaultLogix, LLC (&#8220;VaultLogix&#8221;) (since October 2014), PCS Holdings LLC (&#8220;Axim&#8221;) (since December 2014), Integration Partners &#8211; NY Corporation (&#8220;IPC) (since January 2014 &#8211; the assets were sold in November 2017), and RentVM Inc. 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During the year ended December 31, 2017, the Company disposed of six subsidiaries. During the year ended December 31, 2016, the Company disposed of two subsidiaries. The results of certain of these subsidiaries are included within discontinued operations for the years ended December 31, 2017 and 2016. The Company retrospectively updated the consolidated financial statements as of and for the year ended December 31, 2016 to reflect this change.</p></div> <div><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><b><i>REVERSE STOCK SPLITS</i></b></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">&#160;</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">On July 7, 2017, the Company filed a Certificate of Amendment of its Certificate of Incorporation that effected a one-for-four reverse split of the Company&#8217;s issued and outstanding shares of common stock, par value $0.0001 per share, effective as of the open of trading on July 12, 2017. The Company&#8217;s stockholders, at the 2016 Annual Meeting of Stockholders, had previously authorized the Company&#8217;s Board of Directors to effect a reverse stock split within a range of ratios, including one-for-four, at any time within one year following such Annual Meeting, as determined by the board.</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">&#160;</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">On February 22, 2018, the Company filed a Certificate of Amendment of its Certificate of Incorporation that effected a one-for-one hundred reverse split of the Company&#8217;s issued and outstanding shares of common stock, par value $0.0001 per share, effective as of the open of trading on February 23, 2018. The Company&#8217;s stockholders, by written consent dated December 5, 2017, had previously authorized the Company&#8217;s Board of Directors to effect a reverse stock split within a range of ratios, including one-for-one hundred, at any time within one year following the date of such written consent, as determined by the board.</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">&#160;</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">All common share, warrant, stock option, and per share information in the consolidated financial statements gives retroactive effect to the one-for-four reverse stock split that was effected on July 12, 2017 and the one-for-one hundred reverse stock split that was effected on February 23, 2018. There was no change to the number of authorized shares of common stock of the Company as a result of the reverse stock split. 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Changes in estimates and assumptions are reflected in reported results in the period in which they become known. Significant uses of estimates include the following: 1) valuation of derivative instruments, 2) allowance for doubtful accounts, 3) estimated useful lives of property, equipment and intangible assets, 4) valuation of contingent consideration, 5) revenue recognition, 6) estimates related to the recovery of deferred tax assets, 7) valuation of intangible assets, 8) goodwill impairment, 9) recoverability of indefinite lived intangible assets, 10) estimates in connection with the allocation of the purchase price allocations, 11) stock-based compensation valuation, and 12) inventory reserve. Actual results could differ from estimates.&#160;</p></div> <div><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b><i>SEGMENT INFORMATION</i></b></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">&#160;</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">During 2016, the Company consummated the sale of certain assets of its former VaultLogix and Axim subsidiaries. These subsidiaries comprised the Company&#8217;s former cloud services segment. Additionally, during 2017, the Company sold the assets of its IPC subsidiary and returned its interest in Nottingham. These entities comprised the Company&#8217;s former managed services segment. 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Based upon the Company&#8217;s internal investigations, the Company does not believe either it or any of its current or former officers or directors engaged in any activities that violated applicable securities laws. 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border-bottom-width: 4pt; border-bottom-style: double;">13,754</td><td style="padding: 0px 0px 4pt; text-align: left; text-indent: 0px;">&#160;</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="padding: 0px; text-indent: 0px;">&#160;</td><td style="padding: 0px; text-indent: 0px;">&#160;</td><td style="padding: 0px; text-align: left; text-indent: 0px;">&#160;</td><td style="padding: 0px; text-align: right; text-indent: 0px;">&#160;</td><td style="padding: 0px; text-align: left; text-indent: 0px;">&#160;</td><td style="padding: 0px; text-indent: 0px;">&#160;</td><td style="padding: 0px; text-align: left; text-indent: 0px;">&#160;</td><td style="padding: 0px; text-align: right; text-indent: 0px;">&#160;</td><td style="padding: 0px; text-align: left; text-indent: 0px;">&#160;</td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="padding: 0px; text-align: left; text-indent: 0px; font-style: italic; text-decoration: underline;">Total Assets by Segment</td><td style="padding: 0px; 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This note is convertible into shares of common stock of the buyer at a conversion price per share equal to 75% of the lowest VWAP during the fifteen (15) trading days immediately prior to the conversion date. (i) $4.00 or (ii) 75% of the lowest VWAP over the twenty trading days prior to the date of conversion. During the year ended December 31, 2017, JGB Waltham converted $511 of principal and accrued interest into shares of the Company's common stock (refer to Note 16, Stockholders' Deficit, for further information). As a result of these conversions, the Company recorded a loss on extinguishment of debt of $636 in the consolidated statement of operations for the year ended December 31, 2017. During the year ended December 31, 2016, JGB Waltham converted $384 of principal and accrued interest into shares of the Company's common stock (refer to Note 16, Stockholders' Deficit, for further information).Principal of $3,091 and $5,034 related to the JGB Waltham December Debenture remained outstanding as of December 31, 2017 and 2016, respectively. Principal of $294 and $592 related to the JGB Waltham 2.7 Note remained outstanding as of December 31, 2017 and 2016, respectively. 1057000 1174000 1650000 1963000 14247000 1743000 3021000 2231000 3613000 105000 100000 1411000 31644000 29249000 -19477000 -30259000 -25149000 -31818000 -25160000 -31262000 -239.93 -10.26 4000000 1400000 275000 200000 275000 3000000 400000 61000 3003000 160000 637000 39000 123000 0.801 2000000 (i) three times EBITDA of the AWS Entities for the six-month period immediately following the closing and (ii) $1,500. 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The LIBOR Index Rate was 1.0896 as of December 31, 2015; however, this did not exceed the 12% stated rate as defined in item (ii) above. 36796000 16385000 1008690 253 1600000 250000 15627000 15626000 2105000 36796000 3529000 6711000 The lesser of $125.00 or 75% of the average daily VWAP for the five (5) trading days prior to the conversion date. (a) $2.00 per share, (b) 80% of the average of the volume weighted average prices for each of the five consecutive trading days immediately prior to the applicable conversion date, and (c) 85% of the volume weighted average price for the trading day immediately preceding the applicable conversion date, subject to adjustment as set forth in the note. The note is convertible at 70% of the lowest VWAP in the 15 trading days prior to the conversion date. Refer to Note 12, Derivative Instruments, for further detail on the derivative features associated with the January 31, 2017 convertible note. The Company shall pay JGB Waltham an additional amount equal to 7.5% of the outstanding principal amount on the Amended and Restated Debenture on each of May 31, 2018 and May 31, 2019, subject to certain exceptions set forth in the Amended and Restated Debenture. <div>In connection with such restructuring, Forward Investments, LLC agreed to lend to the Company an amount substantially similar to the accrued interest the Company owed to Forward Investments, LLC on the restructured notes. In consideration for such restructuring and additional payments made by Forward Investments, LLC to the Company, the Company issued to Forward Investments, LLC an additional convertible note in the original principal amount of $1,730 with an interest rate of 3% per annum, which matured on January 1, 2018, and an initial conversion price of $2,544.00 per share until the Convertible Debentures were repaid in full and thereafter $940.00 per share, subject to further adjustment as set forth therein, and provided Forward Investments, LLC the option to lend the Company an additional $8,000 in the form of convertible notes similar to the existing convertible notes of the Company issued to Forward Investments, LLC. The convertible note was issued to Forward Investments, LLC as an incentive to restructure the above-mentioned notes and resulted in the Company recording a loss on modification of debt of $1,508 on the unaudited condensed consolidated statement of operations as of March 31, 2015.</div> On May 23, 2016, the Company entered into an amended agreement with JGB Concord, JGB Waltham, White Oak Global Advisors, LLC, VaultLogix, and the Guarantors thereto (the "Amended Agreement") pursuant to which (i) JGB Concord permitted the Company to withdraw $172 from the Blocked Account (as defined in the original debenture), and (ii) JGB Concord permitted the Company to withdraw $328 from the Deposit Account (as defined in the original note) and, in exchange for the foregoing, (i) VaultLogix guaranteed the obligations of, and provide security for, the Amended and Restated Debenture and the 2.7 Note, (ii) the Company's subsidiaries guaranteed all indebtedness due to JGB Concord under the Amended and Restated Note and 5.2 Note, and (iii) the Company and its subsidiaries pledged their assets as security for all obligations owed to JGB Concord under the Amended and Restated Note and the 5.2 Note in accordance with the terms of an Additional Debtor Joinder, dated May 23, 2016 (i) VaultLogix guaranteed the obligations of, and provide security for, the Amended and Restated Debenture and the 2.7 Note, (ii) the Company's subsidiaries guaranteed all indebtedness due to JGB Concord under the Amended and Restated Note and 5.2 Note, and (iii) the Company and its subsidiaries pledged their assets as security for all obligations owed to JGB Concord under the Amended and Restated Note and the 5.2 Note in accordance with the terms of an Additional Debtor Joinder, dated May 23, 2016, pursuant to which the Company and each additional party thereto agreed to be bound by the terms of that certain Security Agreement, dated as of February 18, 2016, made by VaultLogix in favor of the secured party thereto (the "February Security Agreement"). (i) JGB Concord permitted the Company to withdraw $172 from the Blocked Account (as defined in the original debenture), and (ii) JGB Concord permitted the Company to withdraw $328 from the Deposit Account (as defined in the original note). (i) JGB Waltham and JGB Concord released to the Company an aggregate of $1,500 from the Deposit Account (as defined in the original note). Upon the release of the funds (i) the JGB Waltham senior secured convertible debenture (the "December Debenture") was amended to increase the Applicable Interest Rate (as defined in the original note) by 3.0% to take effect on July 1, 2016; (ii) the December Debenture was amended to increase the annual rate of interest by 3.0% to take effect on July 1, 2016; (iii) the JGB Concord senior secured convertible note (the "February Convertible Note") was amended to increase the Applicable Interest Rate (as defined in the original February Convertible Note) by 3.0%, to take effect on July 1, 2016; and (iv) the February Note was amended to increase the annual rate of interest by 3.0%, to take effect on July 1, 2016. (i) provide that the Company may prepay such debenture upon prior notice at a 10% premium, (ii) modify the conversion price at which such debenture converts into common stock from a fixed price of $320.00 to the lowest of (a) $81.72 per share, (b) 80% of the average VWAPs (as defined in the Amended and Restated Debenture) for each of the five consecutive trading days immediately prior to the applicable conversion, and (c) 85% of the VWAP (as defined in the Amended and Restated Debenture) for the trading day immediately preceding the applicable conversion (the "Conversion Price"), and (iii) eliminate three additional 7.5% payments due to JGB Waltham in 2017, 2018 and 2019, as per such debenture. (i) increase the interest rate payable thereon from 0.67% to 4.67%, (ii) provide that the Company may prepay the Amended and Restated Convertible Note upon prior notice at a 10% premium, (iii) provide that the Holder Affiliate may convert its interest in the Amended and Restated Convertible Note into shares of Common Stock at the applicable Conversion Price, and (iv) eliminate three additional 7.5% payments due to the Holder Affiliate in 2017, 2018, and 2019, as per the Convertible Note. On February 28, 2017, the Company entered into a consent agreement with JGB Waltham and JGB Concord in order to, among other things, (i) obtain the consent of JGB Waltham and JGB Concord to the Highwire Asset Purchase Agreement ("APA"); (ii) amend the conversion price of the JGB Waltham Debenture, JGB Waltham 2.7 Note, and the JGB Concord Debenture to the lower of (a) $16.00 per share and (b) 80% of the lowest daily VWAP (as defined in the Debenture) for the 30 consecutive trading days immediately prior to the applicable conversion; (iii) apply $3,625 of the purchase price received in connection with the APA to payments to JGB Waltham and JGB Concord in respect of the convertible note, as more particularly set forth in the consent. On March 9, 2017, JGB Waltham, the Company, and a third-party investor effectuated a two-part exchange with respect to a portion of the Amended and Restated Debenture in which JGB Waltham assigned a portion of its interest in the Amended and Restated Debenture (the "Assigned Debt") to MEF I, L.P. pursuant to an Assignment and Assumption Agreement, dated as of March 9, 2017. Simultaneously therewith, the Company, entered into an Exchange Agreement, dated as of March 9, 2017 (the "Exchange Agreement"), pursuant to which the Company issued to MEF I, L.P. a 4.67% Convertible Promissory Note, dated as of March 9, 2017, in the principal amount of $550 (the "Exchange Note") (refer to MEF I, L.P. section below for additional details). On March 9, 2017, JGB Waltham, the Company, and a third-party investor effectuated a two-part exchange with respect to a portion of the Amended and Restated Debenture in which JGB Waltham assigned a portion of its interest in the Amended and Restated Debenture (the "Assigned Debt") to MEF I, L.P. pursuant to an Assignment and Assumption Agreement, dated as of March 9, 2017. Simultaneously therewith, the Company entered into an Exchange Agreement, dated as of March 9, 2017 (the "Exchange Agreement"), pursuant to which the Company issued to MEF I, L.P. a 4.67% convertible promissory note, dated as of March 9, 2017, in the aggregate principal amount of $550 (the "Exchange Note"). The Exchange Note is convertible at the lower of (i) $16.00 or (ii) 80% of the lowest VWAP in the 30 trading days prior to the conversion date (refer to Note 12, Derivative Instruments, for further detail on the derivative features associated with the Exchange Note). On November 17, 2017, the Company amended a convertible promissory note originally issued to London Bay VL Holding Company LLC on October 9, 2014. The amendment extended the maturity date to October 9, 2018. The amended note is in the principal amount of $2,003 and does not accrue interest. The note is convertible at 95% of the average of the three lowest prices during the 5 days preceding conversion (refer to Note 12, Derivative Instruments, for further detail on the derivative features associated with the amended note).On December 8, 2017, the holder of the amended note assigned $600 of principal to RDW Capital LLC (refer to the "RDW December 8, 2017 9.9% Convertible Promissory Note" section of this note for further detail).During the year ended December 31, 2017, the investor who holds the amended note did not convert any principal or accrued interest into shares of the company's common stock. On November 17, 2017, the Company amended a convertible promissory note originally issued to WV VL Holding Corp on October 9, 2014. The amendment extended the maturity date to October 9, 2018. The amended note is in the principal amount of $2,005 and does not accrue interest. The note is convertible at 95% of the average of the three lowest prices during the 5 days preceding conversion (refer to Note 12, Derivative Instruments, for further detail on the derivative features associated with the amended note).During the year ended December 31, 2017, the investor who holds the amended note did not convert any principal or accrued interest into shares of the company's common stock. 3000000 7500000 36000000 Note matured on the thirtieth trading day following the earlier of the closing of any capital raise by the Company of at least $3,000 or October 26, 2013. (i) the Company used $2,300 of the JGB (Cayman) Waltham Ltd. senior secured convertible debentures (as described later within this footnote) to reduce the total amount owed by the Company to GPB Life Science Holdings, LLC to $1,500, (ii) if the closing price per share of the Company's common stock 90 days after December 29, 2015 is less than the remaining balance conversion price, as adjusted, then the Company shall issue to GPB Life Science Holdings, LLC additional unregistered shares of the Company's common stock in an aggregate amount equal to the amount set forth in the conversion agreement, (iii) GPB Life Science Holdings, LLC and the Company will convert the remaining balance of $1,500 into shares of the Company's common stock at a conversion price per share equal to 75% multiplied by the lower of (x) the average volume weighted average price per share of the Company's common stock for the five prior trading days and (y) the one day volume weighted price for a share of the Company's common stock on December 29, 2015, (iv) GPB Life Science Holdings, LLC will reduce the exercise price of those certain outstanding warrants originally issued by the Company on May 14, 2015 to $1.75, and (v) GPB Life Science Holdings, LLC will release all of its remaining security interest in the Company. The note is convertible into shares of common stock of the buyer at a conversion price per share equal to 75% of the lowest VWAP during the fifteen (15) trading days immediately prior to the conversion date. The note is convertible into shares of the Company's common stock at a conversion price per share equal to 80% of the average of the three (3) lowest VWAPs over the five (5) trading days prior to the conversion date. 194000 310000 421000 8370000 3380000 3780000 1350000 280000 1200000 242000 39000 0 250000 0 15748000 1664000 3015000 8860000 8860000 131000 524000 7640000 149000 164000 164000 205000 205000 109000 109000 1479000 8410000 791000 139000 397000 126000 122000 348000 7000 94000 108000 15748000 1664000 On May 7, 2014, the Company issued a promissory note to the Mark Munro 1996 Charitable Remainder UniTrust in the principal amount of $300 that bears interest at the rate of 18% per annum and matures on March 31, 2016. A term of one year (i) cash, in which case the Company would also have to issue to the investor a number of shares of the Company's common stock equal to 5% of such amortization payment or (ii) subject to the Company satisfying certain equity conditions, shares of the Company's common stock, pursuant to the amortization conversion rate, which was equal to the lower of (x) $700.00 and (y) a 25% discount to lowest volume weighted average price of the Company's common stock in the prior three trading days. (i) cash, in which case the Company would also have to issue to the investor a number of shares of the Company's common stock equal to 5% of such redemption payment or (ii) subject to the Company satisfying certain equity conditions, shares of the Company's common stock, pursuant to the redemption conversion rate, which was equal to the lower of (x) $500.00 and (y) a 25% discount to lowest volume weighted average price of the Company's common stock in the prior three trading days. The maturity date of the note was extended from November 4, 2016 to November 4, 2017. 209000 The note may be redeemed at any time prior to maturity at an amount equal to 110% of the outstanding principal amount plus any accrued and unpaid interest on the note. The redemption premium (10%) can be paid in cash or common stock at the option of the Company. If the Company's common stock is used to make such payment, then such shares shall be delivered by the third business day following the maturity date, or date of demand, as applicable, at a mutually agreed upon conversion price by both parties. 17000 264000 264000 25000 283000 25000 1850 4150 30000 4000 30000 35000 238000 197000 10000000 250000 P3Y P180D 2000.00 7.25 3.75 5.00 0.55 0.001 16 1500000 55000 1500000 500000 500000 500000 7500000 4094000 606000 465000 7500000 2300000 195000 0.08 0.08 0.10 3000000 500000 199000 250000 150000 200000 425000 80000 1199000 500000 500000 391000 30000 12000 <div>On January 1, 2014, the Company acquired all of the outstanding capital stock of IPC. As part of the purchase price for the acquisition, the Company issued a convertible promissory note to Frank Jadevaia, then President of the Company, in the original principal amount of $6,255. The convertible promissory note accrued interest at the rate of 8% per annum, and all principal and interest accruing thereunder was originally due and payable on December 31, 2014. At the election of Mr. Jadevaia, the convertible promissory note was convertible into shares of the Company&#8217;s common stock at a conversion price of $6,796.00 per share (subject to equitable adjustments for stock dividends, stock splits, recapitalizations and other similar events). The Company could have elected to force the conversion of the convertible promissory note if the Company&#8217;s common stock was trading at a price greater than or equal to $6,796.00 for ten consecutive trading days. 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Upon the release of the funds (i) the JGB Waltham senior secured convertible debenture (the "December Debenture") was amended to increase the Applicable Interest Rate (as defined in the original note) by 3.0% to take effect on July 1, 2016; (ii) the December Debenture was amended to increase the annual rate of interest by 3.0% to take effect on July 1, 2016; (iii) the JGB Concord senior secured convertible note (the "February Convertible Note") was amended to increase the Applicable Interest Rate (as defined in the original February Convertible Note) by 3.0%, to take effect on July 1, 2016; and (iv) the February Note was amended to increase the annual rate of interest by 3.0%, to take effect on July 1, 2016. After giving effect to the foregoing annual rate of interest on each December Debenture and February Convertible Note as of July 1, 2016, was 4.67%. As additional consideration for the release of the funds, the Company issued 2,250 shares of the Company's common stock on June 23, 2016 to JGB Concord, and agreed to a make-whole provision whereby the Company will pay JGB Concord in cash the difference between $376.00 per share of the Company's common stock and the average volume weighted average price of the Company's common stock sixty days after the shares of the Company's common stock are freely tradable. Refer to Note 9, Derivative Instruments, for further detail on the Company's accounting for the JGB Concord make-whole provision. The note is convertible at the lower of (i) $4.00, or (ii) 75% of the lowest VWAP day for the 15 days prior to the conversion date. On April 3, 2017, Scott Davis, a former officer of the Company assigned $100 of his promissory note in the original principal amount of $250, reduced to $225 based on a $25 conversion into common stock, to RDW. As consideration for the assignment, RDW paid Scott Davis $40. The note was convertible at a price of $888.00 and was due on demand. As of April 3, 2017, the outstanding amount of principal and accrued interest for the note was $225 and $57, respectively. Subsequent to the assignment of $100 principal amount of the note to RDW, the remainder of the note was forgiven. The original note was included within notes payable, related parties on the consolidated balance sheets. Per ASC 470-50-40-2, debt extinguishment transactions between related parties are in essence a capital contribution from a related party. 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The note is convertible at the lower of (i) $4.00 or (ii) 75% of the lowest five VWAPS over the seven trading days prior to the date of conversion (refer to Note 12, Derivative Instruments, for further detail on the derivative features associated with the RDW July 14, 2017 9.9% convertible note). <font style="font-family: 'times new roman', times, serif; font-size: 10pt;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">During the year ended December 31, 2017, the investor who holds the 9.9% promissory note did not convert any principal or accrued interest into shares of the Company&#8217;s common stock.</font></font></font></p></div> On July 18, 2017, Tim Hannibal assigned 100% of his 8% convertible promissory note in the original principal amount of $1,215, due October 9, 2017, to RDW. This note was convertible into the Company's common stock at a price of $2,548.00 per share. RDW then exchanged this original note for a new 2.5% convertible promissory note in the principal amount of $1,215 that matures on July 18, 2018. The conversion price of such note is equal to the lower of (i) $4.00 or (ii) 75% of the lowest five VWAPS over the seven trading days prior to the date of conversion (refer to Note 12, Derivative Instruments, for further detail on the derivative features associated with the RDW July 18, 2017 2.5% convertible note). In addition, Tim Hannibal forgave all outstanding interest relating to the original note. 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The note is convertible at the lower of (i) $4.00 or (ii) 75% of the lowest five VWAPS over the twenty trading days prior to the date of conversion (refer to Note 12, Derivative Instruments, for further detail on the derivative features associated with the RDW September 27, 2017 9.9% convertible note). <font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">During the year ended December 31, 2017, the investor who holds the 9.9% promissory note did not convert any principal or accrued interest into shares of the Company&#8217;s common stock.</font></font></p></div> On October 12, 2017, Frank Jadevaia, former owner of IPC, assigned $400 of his outstanding promissory notes to RDW. The new note is in the principal amount of $400, bears interest at the rate of 9.9% per annum, and matures on September 27, 2018. The note is convertible at the lower of (i) $4.00 or (ii) 75% of the lowest VWAP over the twenty trading days prior to the date of conversion (refer to Note 12, Derivative Instruments, for further detail on the derivative features associated with the RDW October 12. 2017 9.9% convertible note).During the year ended December 31, 2017, the investor who holds the October 12, 2017 9.9% promissory note converted $267 of principal into shares of the Company's common stock (refer to Note 16, Stockholders' Deficit, for further information). As a result of these conversions, the Company recorded a loss on extinguishment of debt of $114 to the consolidated statement of operations for the year ended December 31, 2017. On December 8, 2017, London Bay VL Holding Company LLC assigned $600 of an outstanding promissory note to RDW. The new note is in the principal amount of $600, bears interest at the rate of 9.9% per annum, and matures on December 8, 2018. The note is convertible at the lower of (i) $4.00 or (ii) 65% of the lowest VWAP over the twenty trading days prior to the date of conversion (refer to Note 12, Derivative Instruments, for further detail on the derivative features associated with the RDW December 8. 2017 9.9% convertible note).During the year ended December 31, 2017, the investor who holds the December 8, 2017 9.9% promissory note converted $120 of principal into shares of the Company's common stock (refer to Note 16, Stockholders' Deficit, for further information). As a result of these conversions, the Company recorded a loss on extinguishment of debt of $203 to the consolidated statement of operations for the year ended December 31, 2017. 8860000 500000 485000 9000 101000 50000 44000 38000 36000 860000 62000 152000 1000000 1000000 1961 79853 100000 300000 128205 252525 1600000 223031 192096 94905 94905 500000 1250 1167 1623 499 1007 265 185 222 2250 712 171 1472 125 246 1509 377 3500000 5162 7756 16670 41241 13000 56276 67502 4577 133323 53952 373438 178119 106425 49415 63691 25792 63282 212718 224747 100000 200000 200000 681818 2017-09-17 2017-12-31 2017-12-31 972000 4.00 (i) obtain the consent of JGB Waltham and JGB Concord to the Highwire Asset Purchase Agreement ("APA"); (ii) amend the conversion price of the JGB Waltham Debenture, JGB Waltham 2.7 Note, and the JGB Concord Debenture to the lower of (a) $16.00 per share and (b) 80% of the lowest daily VWAP (as defined in the Debenture) for the thirty consecutive trading days immediately prior to the applicable conversion; (iii) apply $3,625 of the purchase price received in connection with the APA to payments to JGB Waltham and JGB Concord in respect of the convertible note, as more particularly set forth in the consent. 172000 328000 1500000 0.10 7.5 The principal amount was increased by $40, and the note became convertible into shares of the Company's common stock. The note is convertible at the lower of (i) $0.10, or (ii) 75% of the lowest VWAP day for the 15 days prior to the conversion date. (i) $40.00 or (ii) 75% of the lowest VWAP in the 15 trading days prior to the conversion date (for additional detail refer to Note 11, Term Loans). The Company evaluated the senior convertible note's settlement provisions and determined that the voluntary conversion feature and fundamental transaction clauses met the criteria to be classified as embedded derivatives as set forth in ASC 815, Derivatives and Hedging and ASC 480, Distinguishing Liabilities from Equity. (i) $16.00 or (ii) 80% of the lowest VWAP in the 30 trading days prior to the conversion date. <div><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font: 10pt/normal 'times new roman', times, serif; font-size-adjust: none; font-stretch: normal;">The Company determined the fair value of these warrants as of March 31, 2017 to be as follows:</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px; 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The Company ascribed a value of $911 related to the conversion feature and recorded this item on the consolidated balance sheets as a derivative liability. (i) $4.00 or (ii) 75% of the average of the lowest five VWAPS over the twenty trading days prior to the date of conversion. The Company evaluated the convertible note's settlement provisions and determined that the voluntary conversion feature and fundamental transaction clauses met the criteria to be classified as embedded derivatives as set forth in ASC 815, Derivatives and Hedging and ASC 480, Distinguishing Liabilities from Equity. The Company issued a convertible promissory note to London Bay VL Holding Company LLC in the principal amount of $2,003, which does not bear interest, and matures on October 9, 2018. The note is convertible at 95% of the average of the three lowest prices during the 5 days preceding conversion. The Company evaluated the convertible note's settlement provisions and determined that the voluntary conversion feature and fundamental transaction clauses met the criteria to be classified as embedded derivatives as set forth in ASC 815, Derivatives and Hedging and ASC 480, Distinguishing Liabilities from Equity. On October 9, 2017, the Company used a Monte Carlo simulation to value the settlement features. The Company ascribed a value of $282 related to the conversion feature and recorded this item on the consolidathe Company amended a convertible promissory note originally issued to London Bay VL Holding Company LLC on October 9, 2014. The amendment extended the maturity date to October 9, 2018. The amended note is in the principal amount of $2,003 and does not accrue interest. The note is convertible at 95% of the average of the three lowest prices during the 5 days preceding conversion. The Company evaluated the convertible note's settlement provisions and determined that the voluntary conversion feature and fundamental transaction clauses met the criteria to be classified as embedded derivatives as set forth in ASC 815, Derivatives and Hedging and ASC 480, Distinguishing Liabilities from Equity. On November 17, 2017, the Company used a Monte Carlo simulation to value the settlement features. The Company ascribed a value of $282 related to the conversion feature and recorded this item on the consolidated balance sheets as a derivative liability.ted balance sheets as a derivative liability. On December 31, 2017, the Company used a Monte Carlo simulation to value the settlement features of the convertible note and determined the fair value to be $190. The Company recorded a gain on fair value of derivative instruments of $92 for the year ended December 31, 2017 on the consolidated statement of operations. The Company amended a convertible promissory note originally issued to WV VL Holding Corp on October 9, 2014. The amendment extended the maturity date to October 9, 2018. The amended note is in the principal amount of $2,005 and does not accrue interest. The note is convertible at 95% of the average of the three lowest prices during the 5 days preceding conversion. The Company evaluated the convertible note's settlement provisions and determined that the voluntary conversion feature and fundamental transaction clauses met the criteria to be classified as embedded derivatives as set forth in ASC 815, Derivatives and Hedging and ASC 480, Distinguishing Liabilities from Equity. On November 17, 2017, the Company used a Monte Carlo simulation to value the settlement features. The Company ascribed a value of $282 related to the conversion feature and recorded this item on the consolidated balance sheets as a derivative liability. London Bay VL Holding Company LLC assigned $600 of an outstanding promissory note to RDW. The new note is in the principal amount of $600, bears interest at the rate of 9.9% per annum, and matures on December 8, 2018. The note is convertible at the lower of (i) $4.00 or (ii) 65% of the lowest VWAP over the twenty trading days prior to the date of conversion. The Company evaluated the convertible note's settlement provisions and determined that the voluntary conversion feature and fundamental transaction clauses met the criteria to be classified as embedded derivatives as set forth in ASC 815, Derivatives and Hedging and ASC 480, Distinguishing Liabilities from Equity. On December 8, 2017, the Company used a Monte Carlo simulation to value the settlement features. The Company ascribed a value of $600 related to the conversion feature and recorded this item on the consolidated balance sheets as a derivative liability. 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In general, an ownership change occurs whenever the percentage of the shares of a corporation owned, directly or indirectly, by 5-percent shareholders, as defined in Section 382 of the Code, increases by more than 50 percentage points over the lowest percentage of the shares of such corporation owned, directly or indirectly, by such 5-percent shareholders at any time over the preceding three years. 11428000 24242000 35534000 48241000 277000 1196000 165000 120000 96000 0.21 3 95000 97000 57000 249000 692000 441000 Various dates through 2020. 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("Spectrum") in exchange for a warrant to purchase shares equal to 4% of the outstanding shares of Spectrum on the date the exercise notice is delivered, at an exercise price of $0.0001 per share. 25% of the closing price of the Company's common stock on the trading day immediately preceding the date of exercise. 2021-02-14 2018-05-23 5000000 105000 105000 100000 100000 5096103 InterCloud Systems, Inc., a Delaware corporation (the "Company"), is filing this Form 10-K/A ("Form 10-K/A") to amend its Annual Report on Form 10-K for the year ended December 31, 2017, originally filed with the Securities and Exchange Commission (the "SEC") on April 17, 2018 ("Original Filing"), to restate its consolidated financial statements and related footnote disclosures for the year ended December 31, 2016. Amendment Background The Company received an SEC Comment Letter on October 23, 2018, and as a result of this letter, the Company: (1) Discovered that it inadvertently did not include a consent from its auditors related to the December 31, 2017 financial statements incorporated by reference into Form S-8 filed March 13, 2018. (2) Identified an error related to the weighted average shares outstanding, basic and diluted, for the year ended December 31, 2016. Impact on Financial Statements The error identified above had the following impact on the Company's consolidated financial statements and related footnote disclosures for the year ended December 31, 2016 included in the Original Filing: (1) The error related to the weighted average shares outstanding, basic and diluted, for the year ended December 31, 2016 resulted in an understatement of loss per share attributable to InterCloud Systems, Inc. common stockholders, basic and diluted, for the year ended December 31, 2016. The Company reported 1,049,866 weighted average shares outstanding, basic and diluted, for the year ended December 31, 2016. The correct weighted average shares outstanding, basic and diluted, for the year ended December 31, 2016 was 104,866. The correct net loss per share from continuing operations, net loss per share on discontinued operations, net of taxes, and net loss per share for the year ended December 31, 2016 are $198.45, $54.09, and $252.54, respectively. This has been corrected on the consolidated statement of operations for the year ended December 31, 2016 and in Item 6 - Selected Financial Data. (2) In Note 5, Acquisitions and Disposals of Subsidiaries, the Company discloses pro forma data which reflects the impact of sales that took place during the reported periods. This disclosure includes a pro forma loss per share attributable to InterCloud Systems, Inc. common stockholders, basic and diluted, which has been adjusted to $239.93 based on the correct weighted average shares outstanding, basic and diluted, for the year ended December 31, 2016. No other changes have been made to the Annual Report except as noted above. This Amendment to the Annual Report speaks as of the original filing date of the Annual Report, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the original Annual Report except that changes have been made to the cover page and Note 5 - Acquisitions and Disposals of Subsidiaries. In addition, in connection with the restatement, this Amendment reflects the revisions to Item 6 - Selected Financial Data. Otherwise, the Originally Filed Form 10-K is restated herein in its entirety and no other information in the Originally Filed Form 10-K is amended hereby. Disclosures and forward-looking information in this Amendment continue to speak as of the date of the Originally Filed Form 10-K, and do not reflect events occurring after the filing of the Originally Filed Form 10-K. Accordingly, this Amendment should be read in conjunction with our other filings made with the SEC after the filing of the Originally Filed Form 10-K, including any amendments to those filings. true false false true <div> <table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"> <tr style="text-align: justify; vertical-align: top;"> <td style="width: 48px; text-align: left;"><b>23.</b></td> <td style="text-align: justify;"><b>RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS</b></td> </tr> </table> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-size-adjust: none; font-stretch: normal; 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font-size: 10pt;">&#160;</td> <td style="text-align: left; font-size: 10pt; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">&#160;</td> <td style="text-align: right; font-size: 10pt; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">104,866</td> <td style="text-align: left; padding-bottom: 4pt; font-size: 10pt;">&#160;</td> </tr> </table> </div> 3012000 232000 The conversion price per share is equal to the lesser of $4.00 or 80% of VWAP on the conversion date. The conversion price per share is equal to the lesser of $10.00 or 75% of average daily VWAP for the fifteen trading days prior to the conversion date. The conversion price per share is equal to 75% of the lowest VWAP during the fifteen trading days immediately prior to the conversion date. The conversion price per share is equal to 70% of average daily VWAP for the fifteen trading days prior to the conversion date. The conversion price per share is equal to the lesser of $4.00 or 75% of the lowest VWAP over the twenty trading days prior to the date of conversion The conversion price per share is equal to the lesser of $4.00 or 65% of the lowest VWAP over the twenty trading days prior to the date of conversion The conversion price per share is equal to 95% of the average of the three lowest prices during the 5 days preceding conversion