Item 3.01.
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Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
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On August
22, 2016, InterCloud Systems, Inc., a Delaware corporation (the “Company”), received a delisting determination letter
(the “Determination Letter”) from the staff of the Listing Qualifications Department (the “Staff”) of The
Nasdaq Stock Market (“NASDAQ”) notifying the Company that it has not regained compliance with the minimum bid price
requirement set forth in NASDAQ Listing Rule 5550(a)(2) (the “Bid Price Rule”). As previously disclosed in the Company’s
Current Report on Form 8-K filed on February 19, 2016, the Staff initially notified the Company by letter on February 18, 2016
that it was not in compliance with the Bid Price Rule for continued listing on NASDAQ. The initial notice stated that the Company
had 180 calendar days, or until August 16, 2016, to regain compliance with the Bid Price Rule. To regain compliance, the bid price
of the Company’s Common Stock was required to close at $1.00 per share or more for a minimum of 10 consecutive business days.
As a separate
and additional basis for delisting the Company’s securities from NASDAQ, the Staff notified the Company in the Determination
Letter that it also has not regained compliance with the minimum $2,500,000 stockholders’ equity requirement set forth in
NASDAQ Listing Rule 5550(b)(1) (the “Stockholders’ Equity Rule”). As previously disclosed in the Company’s
Current Report on Form 8-K filed on July 1, 2016, the Staff initially notified the Company by letter on June 24, 2016 that it was
not in compliance with the Stockholders’ Equity Rule for continued listing on NASDAQ. The initial notice stated that the
Company had 45 calendar days, or until August 8, 2016, to submit a plan to regain compliance with the Stockholders’ Equity
Rule. The Company timely submitted to NASDAQ its plan to regain compliance with the Stockholders’ Equity Rule.
Further,
as separate and additional bases for delisting the Company’s securities from NASDAQ, the Staff determined that the Company’s
issuance of certain new securities had the effect of reducing the conversion price of certain existing securities requiring shareholder
approval under NASDAQ Listing Rule 5635(d)(1), which shareholder approval was not obtained in violation of NASDAQ Listing Rule
5635(d)(1). Additionally, the Staff determined that the Company’s issuance of certain new securities to its officers in lieu
of cash interest owed to them constituted “equity compensation arrangements” requiring shareholder approval under Listing
Rule 5635(c), which shareholder approval was not obtained in violation of NASDAQ Listing Rule 5635(c).
Lastly,
the Staff stated in the Determination Letter that the Company’s failure to provide information requested by the Staff relating
to a Securities and Exchange Commission investigation disclosed in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2015 violates NASDAQ Listing Rule 5250(a), requiring the Company to provide to NASDAQ requested information
within a reasonable period of time and which was not so provided, and could raise public interest concerns under NASDAQ Listing
Rule 5101, each of which would also serve as separate and additional bases for delisting the Company’s securities from NASDAQ.
NASDAQ’s
determination (the “Delisting Determination”) will not immediately result in the delisting of the Company’s Common
Stock. Pursuant to the Determination Letter, unless a request for a hearing to appeal the Delisting Determination is received by
the NASDAQ Hearings Department by no later than 4:00 p.m. Eastern time on August 29, 2016, trading of the Company’s Common
Stock on NASDAQ will be suspended at the opening of business on August 31, 2016 and a Form 25-NSE will be filed with the Securities
and Exchange Commission, which will remove the Company’s securities from listing and registration on NASDAQ. The Board of
Directors of the Company is currently considering whether to request a hearing to appeal the Delisting Determination or to apply
for listing of the Company’s Common Stock on the OTCQX.
In the event
that the Company decides to appeal the Delisting Determination, while the appeal process is pending, the suspension of trading
of the Company’s Common Stock and the filing of the Form 25-NSE will be stayed, and the Company’s Common Stock will
continue to trade on NASDAQ until the hearing panel (the “Panel”) makes a determination. There can be no assurance
that the Company would be successful in its appeal, that the Panel would grant the Company an additional compliance period prior
to suspension and delisting of the Company’s Common Stock from NASDAQ or that, if the Panel grants the Company an additional
compliance period, it would be able to regain compliance with the above-mentioned NASDAQ Listing Rules within the required time
period.