Market Data

Fiscal Year December 31

Industry IT Services

Market Cap $142.4

Price/Earnings (ttm) N/A

Price/Book (mrq) 9.6x

Price/Sales (ttm) 2.6x

ROE (ttm) N/A

Institutional Ownership 4.6%

Insider Ownership 20.2%

Shares Outstanding 10.9M

Float 3.9M

Avg. Daily Vol. (3 mos.) 722,749

As of March 12, 2014

Income Snapshot

TTM

Revenue $85.0M

EBITDA $8.2M

*ProForma following acquisitions

Balance Sheet Snapshot

MRQ

Cash $3.4M

Debt* $20.2M

*Debt following recent company acquisitions and elimination of $12.6 million of MidMarket debt

March 13, 2014 Target Price: $47.10 Recent Price: $13.10

InterCloud Systems, Inc. (NASDAQCM: ICLD)

Company Overview

InterCloud Systems is a single-source provider of end-to-end IT technology

solutions to the enterprise, service provider, and Government markets

through “Cloud Platforms” and professional services. “Cloud Computing” is

defined as the use of computing resources that are delivered as a managed

service over a network. InterCloud offers its service provider customers the

ability to utilize “cloud” solutions inside their existing network footprint as

well as in a “white label environment” so they can offer a suite of cloud

products under their own brand, delivered over the broadband services they

presently sell. ICLD’s cloud services include infrastructure as a service

(IaaS), platform as a service (PaaS), and software as a service (SaaS).

Valuation

We are valuing ICLD using a forward multiple EV/S of 5.4x (equal to the

average EV/S of our peer group). We apply this multiple to our FY14E

revenue per share projection of $9.14 and derive a price target of $47.10.

Investment Highlights

Explosive growth: 423% YoY revenue growth and 13% QoQ revenue

growth in 3Q13.

Longstanding customer relationships provide strong, recurring revenue

base and in-depth understanding of customer networks.

ICLD is uniquely positioned to provide managed services that efficiently

transition clients to SDDC.

Announced RentVM acquisition expands ICLD’s technology portfolio

and service offerings.

Acquisitions build customer/revenue base and provide client specific

network expertise necessary to transition to cloud-based infrastructure.

The cloud services industry is still in its infancy and is currently growing

at 20% - 40% per year.

Managed Services industry projected to grow to $256.1 billion by 2018.

Investment Highlights

Explosive growth: 423% YoY revenue growth and 13% QoQ revenue

growth in 3Q13. For 9M13, ICLD reported $42.9 million in revenue, an

increase of approximately 630% YoY. Primarily through acquisitions, the

Company has grown its proforma revenue and adjusted EBITDA to

approximately $85.0 million and $8.2 million, respectively. These figures

provide a strong base of recurring business and cash flow for ICLD.

Longstanding customer relationships provide strong, recurring revenue

base and in-depth understanding of customer networks. ICLD has long-

term relationships (10+ years) with many of its clients. The Company’s

existing service provider relationships and its in-depth understanding of their

networks (from onsite engineering by ICLD’s professional services group)

gives ICLD a distinct competitive advantage.

The Company’s in-depth understanding of networks in the telecom and cable

industry gives ICLD the knowledge needed to easily transition a client from a

hardware-based infrastructure to a cloud-based infrastructure. According to

Nicolas Fischbach, director of network and IT platform strategy and

architecture at Colt, an international IT services company, upgrading a client

to a cloud-based infrastructure “starts with the understanding of customer

requirements and how to translate them into a system and a commercial and

technical service wrap. Executives need experience across networks, systems

and applications to operate software defined data centers (SDDC) and there

cannot be single skills/operations team silos.”

We believe more companies will switch to services like ICLD’s due to ease

of service (deal with only one vendor) and the growing trend for companies

to shift from hardware-based network and apps to software-based network

and apps.

ICLD is uniquely positioned to provide managed services that efficiently

transition clients to SDDC. With a large number of enterprises currently

experiencing rapid increases in data growth, driving high demands for a well-

structured cloud services, ICLD is positioned to be in the foreground of one

of the next major advancements in technology. We believe ICLD’s advanced

lead time in the enterprise market will help it procure clients during the

market’s early stages, allowing the Company to grow with its clients as IT

infrastructure continues to shift to the cloud.

We believe ICLD’s understanding of its clients’ networks, gained through

years of onsite engineering work for major carriers, is unrivaled and gives the

Company the necessary expertise to transition businesses from hardware to

cloud-based infrastructures.

An example of this expertise was seen recently when ICLD helped a global

retailer, who owns eight top brands, integrate and consolidate its IT

infrastructure into a private cloud architecture. By providing elastic, highly-

scalable resources, ICLD enabled the retailer to realize millions of dollars in

savings.

Similar to IBM’s onsite engineering strategy, ICLD’s longstanding client

relationships also strongly position the Company to sell new products to its

clients. The similarity to IBM’s strategy serves as an ideal business model for

ICLD. IBM is currently in the process of expanding its cloud computing

business, having invested $2 billion in acquiring SoftLayer Technologies and

committing to spend an additional $1.2 billion for 15 new data centers.

IBM’s growing focus on the cloud is another indicator of the ongoing shift in

IT from hardware to cloud-based infrastructure.

Co-located in the biggest carrier hotels (NYC, San Francisco, and Santa

Clara; along with planned expansion to Atlanta, Chicago, Ireland, Asia,

Dubai, and Europe), ICLD’s cloud services provide highly customizable,

replicable, and scalable architecture to meet a customer’s unique

requirements. Carrier hotels are colocation facilities where many carriers are

present, resulting in economies of scale and increased value to customers.

ICLD compliments this framework with extensive professional services,

providing the building blocks that enable its customers to reduce costs

(scalable, virtualized, low-cost software offered on a pay-per-use basis),

increase efficiencies (data center is transformed into an on-demand service

rather than a rigid, complex, and resource draining set of technology silos)

and take advantage of emerging cloud applications (ICLD’s 100% open-

source architecture ensures an increasing and superior set of apps). ICLD’s

cloud infrastructure is built on Tier 1 technology from vendors such as HP,

Brocade, Intel and more, ensuring that ICLD will provide top-notch service

to its clients.

Announced RentVM acquisition expands ICLD’s technology portfolio

and service offerings. Following a recent run of acquisitions that expanded

ICLD’s revenues and client base, the Company has also begun to add to its

cloud technology. RentVM, which delivers Infrastructure-as-a-Service

technology, expands ICLD’s cloud and managed services capabilities

through its SDDC platform, which offers a self-service portal that allows for

auto, on demand provisioning of cloud assets through a hierarchy system

supported by enterprise-level security, providing clients a streamlined

process to virtualize existing infrastructure and integrate cloud solutions. The

proposed price for the acquisition is 400,000 ICLD common shares.

We anticipate ICLD will continue to expand its SDDC offering, both through

internal development and other potential acquisitions, driving increased

cloud-based recurring revenue, while improving the Company’s technology

offerings.

Acquisitions build customer/revenue base and provide client specific

network expertise necessary to transition to cloud-based infrastructure.

ICLD’s acquisitions include: IPC-NY, an outsourced infrastructure service

provider who provides comprehensive, single-source solutions to design,

construct, implement, operate, and maintain wireless, wireline, fiber optic,

and DAS multi-site networks as well as providing services to IT networks for

enterprise and service provider networks; ADEX, a leading provider of

permanently-outsourced network infrastructure services to Original

Equipment Manufacturers and wireless and wireline carriers, offering

customers a broad portfolio of services that encompass the major elements of

any network buildout; Rives-Monteiro Engineering, a telecommunications

company who provides specialized maintenance, consultation, and project

management; TNS, an integrator of commercial communication system

infrastructure specializing in the design, installation, and maintenance of

structured cabling systems; and Tropical Communications, a licensed

electrical and underground utility contractor who specializes in all types of

communications wiring, low-voltage and underground utility contracting, as

well as fiber optic systems, splicing, testing and wireless capabilities. Each

acquisition has provided ICLD customers with on-going services while

increasing revenue for the Company. The acquisition of IPC-NY expanded

the Company’s customer base into large Fortune 100 and 500 enterprises. We

expect large enterprises to shift more of their IT infrastructure to the cloud

and drive organic revenue growth for ICLD over the next few years.

Revenues 2011 2012 2013

RME 2,651,711

Tropical 2,284,321

ERFS 146,036

TNS 1,042,367

ADEX 10,577,197

IPC-NY 25,000,000

Acquisitions

The companies that ICLD acquired all specialize in having an understanding

of a part or all of a client’s networks and infrastructure. This is crucial when

transitioning a client to an SDDC. Cross-selling and upselling of this client

base can substantially increase revenue growth for ICLD. Additionally,

increased scalability will allow the Company to manage larger contracts

which should drive further growth in operating results.

InterCloud awarded up to $7 million in new professional services

contracts. The Company’s Professional Services Group has signed multiple

contracts that are projected to generate revenue of $3.5 million to $7.0

million in 2014. One of the contracts is for the management of a 4G/LTE

wireless network upgrade and expansion, as well as maintenance services, for

a wireless original equipment manufacturer. A second contract award allows

ICLD to provide professional services for network engineering, project

management, and other various senior technical classifications required to

support a major carrier’s network expansions. According to Jake Saunders,

VP at ABI Research, "In 2013, mobile capital expenditure is likely to surge

4.9% to $10.5 billion as North American operators continue upgrading their

networks."

ICLD is expected to see higher demand for its services as wireless carriers

continue to upgrade their cloud infrastructure and increase virtualization as

part of their expansion strategies. Telecom companies are continuing to

heavily invest in wireless networks, providing large advantages for

experienced companies like ICLD.

Market

The cloud services industry is still in its infancy and is currently growing

at 20% - 40% per year. The global market for the cloud in 2011 was $40.7

billion (Forrester), and is forecasted to reach $130 billion by 2015 (Gartner)

and $241 billion by 2020 (Forrester). “Approximately 59% of all new

spending on cloud computing services originates from North American

enterprises, a trend projected to accelerate through 2016” (Gartner).

Managed Services industry projected to grow to $256.1 billion by 2018.

Managed services provide enterprises with data center architecture, servers,

networks, mobility, infrastructure, communications, and security. The

importance of managed services is its ability to reduce costs and manage

complex infrastructure. Managed services allow companies to scale their

resources as needed, rather than buying and maintaining similar resources,

thus providing flexibility while saving money. According to Scott Samborn,

chief business development officer for Vantage Point Solutions Group LLC,

“businesses can save 30 to 40 percent on their IT costs by switching to a

managed service provider, which is especially significant for small

businesses.”

CRN, the top news source for solution providers and the IT channel, believes

the size of the managed services industry is expected to grow from $142.75

billion in 2013 to $256.05 billion in 2018, while Philbert Shih of Structure

Research expects managed services to grow at 23% - 27% per year.

Infrastructure as a Service is projected to be the fastest growing segment

of cloud computing. Infrastructure as a Service (IaaS) is a standardized,

highly-automated offering, where computer resources, complemented by

storage and networking capabilities, are owned and hosted by a service

provider and offered to customers on-demand. Customers are able to self-

provision this infrastructure through web-based user interfaces that serve as

IT operations management consoles.

With more enterprises shifting focus towards cloud-based platforms, aiming

to utilize years’ worth of stored data, the importance of integrating legacy

systems of record to cloud-based platforms is now vital to a company’s

success. Small and medium-sized businesses are benefiting greatly from the

cheaper costs and increased security. A recent study from Gartner estimates

that IaaS will be the fastest growing area of public cloud computing,

projecting a 41.3% CAGR with the total market expected to reach $24 billion

in 2016.

Platform as a Service is projected to grow at a 26.6% CAGR to $6.45

billion in 2016. Platform as a service (PaaS) offers a cloud computing

platform and a solution stack as a service by providing a broad collection of

application infrastructure services. This unique method to utilize hardware,

operating systems, storage and network capacity over the Internet allows

businesses to develop and run applications at a lower cost. Enterprises adopt

PaaS because of its efficiency, scalability, secure multi-tenancy, and

comprehensive solution. A large number of businesses are adopting PaaS at

high rates, and Gartner estimates a 26.6% CAGR for the market, reaching

$6.45 billion in 2016. Companies like Amazon, Google, IBM, etc. have

already adopted PaaS to further strengthen their businesses. Even Netflix has

shifted to PaaS to sustain a faster data center for its customers, due to high

user demand.

http://www.forbes.com/sites/louiscolumbus/2013/02/19/gartner-predicts-infrastructure-services-will-

accelerate-cloud-computing-growth/

Software defined data center (SDDC) market expected to grow at a

68.7% CAGR to $5.41 billion in 2018. With the growing advantages of

productivity and cost effective performance, companies all over the country

are progressively adopting cloud computing services, driving high demands

for companies like ICLD, who have the capabilities to expand into SDDC.

Understanding the importance of hardware configuration being sustained

through software is vital to public and private cloud adopting companies. “It

can bring a high degree of agility and flexibility to the infrastructure,” says

Tony Lock, analyst at Freeform Dynamics. According to PRWeb, the

software defined data center market is expected to be worth $5.41 billion by

2018, representing a 68.7% CAGR from 2013 to 2018. Companies like Cisco

Systems, Hewlett-Packard, IBM, and VMWare, have all become key players

in this industry. ICLD’s acquisition of RentVM and its expertise in SDDC

provides substantial value for ICLD and its clients.

Gartner projects the cloud-based security services market to reach $3.1

billion by 2015. "The cloud-based security market remains a viable one,

offering providers many opportunities for expansion," said Ruggero Contu,

research director at Gartner. Such a large adoption of cloud-based services is

driving many organizations to implement cloud-based security controls.

Gartner expects acceptance of, and reliance on, cloud-based security-as-a-

service offerings to increase, based on organizations gaining more experience

with SaaS and more consumer-grade technology being made available to

corporate systems as a result of trends.

Valuation

We are valuing ICLD using the average forward multiple EV/S of 5.4x.

While there are no direct public comps available, we believe that ICLD

deserves a premium to our peer group due to its strong position in one of the

fastest growing areas in technology. This is due to both the Company’s

strong client base and advanced technological position.

Although currently a smaller-sized company, we recognize ICLD’s superior

growth relative to the majority of our peer group. We apply this multiple to

our FY14E revenue per share projection of $9.14 and derive a price target of

$47.10.

We conservatively project ICLD to generate $101 million and $130 million

in revenue in 2014 and 2015, respectively, driven by growth in its recurring

cloud business. Given a higher percentage of revenue generated by cloud

based managed services we are projecting increases in gross margins over

time. We also expect increases in salaries and wages, both on an absolute and

percentage of revenue basis given our belief that the Company will be

investing heavily in sales and marketing.

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Name Ticker PriceMarket

Cap

Rev

(ttm)

EBITDA

(ttm)EV

EV/EBITDA

(ttm)

EV/Sales

(ttm)

CALLIDUS SOFTWARE INC CALD 12.99 596.41 112.34 -1.10 583.63 N/A 5.20

BRIGHTCOVE BCOV 11.03 353.18 109.90 -1.56 312.59 N/A 2.84

MIX TELEMATICS LTD-SP ADR MIXT 12.07 378.59 132.01 32.61 371.30 11.39 2.81

CARBONITE INC CARB 10.71 284.38 107.19 2.36 218.99 92.79 2.04

CVENT INC CVT 42.35 1721.14 111.12 5.74 1547.12 269.39 13.92

Average 17.83 666.74 114.51 7.61 606.73 124.52 5.36

Median 12.07 378.59 111.12 2.36 371.30 92.79 2.84

INTERCLOUD SYSTEMS INC ICLD 13.10 142.35 54.28 8.04 159.37 19.82 2.94

As of March 12, 2014

Source: Bloomberg, RedChip

Peer Comparison

Risks

There is no guarantee that ICLD will be able to effectively integrate either

completed or possible future acquisitions. ICLD has made multiple

acquisitions, meaning the Company will have to integrate multiple different

offices, along with cloud-based technologies. If they cannot properly integrate

these acquisitions, growth and profitability may be hindered. Prior to

completing many of its acquisitions, ICLD worked with some of these

companies for a year or longer, which should help ease potential integration

issues.

ICLD must continue to adapt to changing technology. Failure to adapt to

changes in technology may cause the Company to lose customers and market

share. ICLD has shown the ability to make acquisitions to improve its

technology, as indicated by the announced acquisition of RentVM.

ICLD is competing against larger companies with greater resources. Better

capitalized companies may be able to devote a greater amount of resources

toward the products/markets that ICLD operates in. ICLD’s long standing

relationships should help it compete against larger competitors.

This report reflects our current beliefs, with respect to future events and

involves known and unknown risks, uncertainties and other factors, including,

but not limited to, economic, competitive, regulatory, technological, key

employees, and general business factors affecting the Company’s operations,

markets, growth, services, products, licenses and other factors.

Management Team

Mark Munro, Chairman of the Board, Chief Executive Officer

Mr. Munro has served as our Chief Executive Officer and as the Chairman of

our Board since December 2011. Mr. Munro is also the Founder and has been

President of Munro Capital Inc., a private equity investment firm, since 2005.

Mr. Munro has been the Chief Executive Officer and owner of 1112 Third Ave

Corp., a real estate holding company, since October 2000. He has also been an

investor in private companies for the last seven years, including Vaultlogix,

LLC, a provider of online data backup solutions for business data. Prior to

forming Munro Capital, Mr. Munro founded, built and sold Eastern Telcom

Inc., a telecommunication company, from 1990 to 1996. Mr. Munro has been

directly involved in over $150 million of private and public transactions as

both an investor and entrepreneur. Mr. Munro sat on the board of Vaultlogix,

LLC from March 2004 to February 2008. Mr. Munro also has experience as a

former Chairman of the Board of BiznessOnline.com Inc., a NASDAQ-listed

internet access, web design and e-commerce hosting company, from May 1999

to August 2002. Mr. Munro received his B.A. in economics from Connecticut

College. Mr. Munro brings extensive business experience, including years as a

successful entrepreneur and investor, to our board of directors and executive

management team.

Frank Jadevaia, President

Frank Jadevaia has been successful in high technology for 25 years. He

became a managing partner and co-founder at Integration Partners Corp-NY

(“IPC-NY”) effective January 2007. IPC-NY, recently acquired by InterCloud,

is a leading elite status value added reseller, specializing in consulting, services

and hardware, across competencies in data, voice and optical networks.

Prior to joining IPC-NY, Mr. Jadevaia was Vice President of sales for Nortel,

from November 2001 to November 2006. Jadevaia lead Nortel's largest

enterprise region with an approximate $350 million in sales and just under 200

employees. In addition, his organization was responsible for all verticals,

including finance and global accounts, making his responsibilities

multinational in nature.

Before joining Nortel again in 2001, Mr. Jadevaia spent time at multiple

venture-backed start-ups, in leadership roles. In addition, he formed and led a

Service Provider group at Nortel that sold into the tier two and three markets

including; CLEC's, MSO’s and bandwidth wholesalers. Revenues were

approximately $200 million in sales.

Roger M. Ponder, Chief Operating Officer

Roger Ponder served as President and CEO of Time Warner Cable Kansas City

Midwest Division from 2005 to 2009 where he drove a multi-state division to

increased profitability and operational efficiency. His people-oriented

management style and ability to address integration and performance issues

resulted in a dramatic improvement in operational metrics, customer retention

and satisfaction, placing the Kansas City division among the Top 5 in key

operational metrics within all of Time Warner. From 1996 to 2004, Mr. Ponder

was Vice President/General Manager of Commercial Operations and Business

Development at Oceanic Time Warner Cable in Hawaii. Previously, Mr.

Ponder held a number of key senior management positions with Sprint

Corporation, United/Sprint Management Company and Time Warner Telecom.

Mr. Ponder has served in a number of industry and community leadership

positions including as past Chairman of the Missouri Cable and

Telecommunications Association and as past Chairman of the Kansas Cable

and Telecommunications Association, and is currently Chairman of the Board

of Trustees for the Greater Kansas City United Way.

Daniel J. Sullivan, Chief Financial Officer

Mr. Sullivan has served as our Chief Financial Officer since December 2011

and as a member of our board of directors from 2011 to November 2012. Mr.

Sullivan has been the Chief Financial Officer for Munro Capital Inc., a

diversified finance company, since August 2010. Prior to that, he served as

Chief Financial Officer for Vaultlogix LLC, an Internet vaulting company,

from January 2003 to July 2010. Mr. Sullivan received his B.S. in accounting

from the University of Massachusetts and his M.B.A. from Southern New

Hampshire University (formerly New Hampshire College). Mr. Sullivan brings

extensive experience in finance for both publicly-traded and private companies

to our executive management team.

Lawrence M. Sands, Senior Vice President, Corporate Secretary

Mr. Sands has served as our Senior Vice President since January 2010 and was

appointed our Corporate Secretary in August 2010. From January 2009 to

September 2010, Mr. Sands was a finance manager at Vista BMW, an

automobile retailer located in Coconut Creek, Florida. From March 2010 until

September 2010, he was Vice President, Secretary and a director of Omni

Ventures, Inc., a development-stage company that planned to provide equity

funding for commercial and recreational projects in the Mid-west and Western

areas of the United States. From June 2008 to January 2010, Mr. Sands

provided strategic merger and acquisition consulting services to Digital Comm,

Inc., a provider of turnkey services and solutions to the communications

industry that we acquired in January 2010. From January 2008 until December

2008, he was Chief Executive Officer of Paivis Corp., a public company

engaged in long distance telecommunications. From September 2003 until

April 2008, Mr. Sands was a finance manager at JM Lexus, an automobile

retailer located in Margate, Florida. Mr. Sands received a B.S. in Technology

and Industrial Arts from New York University and a J.D. from Whittier

College, School of Law. Mr. Sands brings business and finance experience to

our executive management team.

Additional Information

Legal: Pryor Cashman LLP

Auditor: BDO USA, LLP

Transfer Agent: Corporate Stock Transfer

Company Information

About RedChip

RedChip Companies, an Inc. 5000 company, is an international small -cap research, investor

relations, and media company headquartered in Orlando, Florida; with affiliate offices in San

Francisco, Seoul, Hong Kong and Singapore. RedChip delivers concrete, measurable results for

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RedChip has developed the most comprehensive platform of products and services for small -cap

companies, including: RedChip Research(TM), Traditional Investor Relations, Digital Investor

Relations, Institutional and Retail Conferences, "The RedChip Money Report"(TM) television

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not a FINRA member or registered broker/dealer.

None of the profiles issued by RedChip Companies, Inc., constitute a recommendation for any

investor to purchase or sell any particular security or that any security is suitable for any

investor. Any investor should determine whether a particular security is suitable based on the

investor’s objectives, other securities hold ings, financial situation needs, and tax status.

RedChip Companies, Inc., employees and affiliates may maintain positions and buy and sell the

securities or options of the issuers mentioned herein. All materials are subject to change without

notice. Information is obtained from sources believed to be reliable, but its accuracy and

completeness are not guaranteed. InterCloud Systems Inc. (“ICLD”) is a client of RedChip

Companies, Inc. ICLD agreed to pay RedChip Companies, Inc., 7,500 shares of common stock

under Rule 144, and a monthly cash fee for six (6) months of RedChip investor awareness

services. Investor awareness services and programs are designed to help small -cap companies

communicate their investment characteristics. RedChip investor awareness serv ices include the

preparation of a research profile(s), multimedia marketing, and other awareness services.

Additional information about the subject security or RedChip Companies Inc. is available upon

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Company Contact Info:

InterCloud Systems, Inc.

331 Newman Springs Road

Building 1, Suite 104

Red Bank, NJ 07701

Phone: (561) 988-1988

www.intercloudsys.com

Investor Contact Info:

RedChip Companies, Inc.

500 Winderley Place, Suite 100

Maitland, FL 32751

(407) 644-4256

www.redchip.com