iCoreConnect divests MSP division to focus on SaaS growth

OCOEE, Fla. - iCoreConnect Inc. (NASDAQ: ICCT), known for its cloud-based software solutions, announced today the sale of its Managed Service Provider (MSP) Division to The 20, LLC. This transaction is part of the company's strategic refocusing on its core Software as a Service (SaaS) offerings.

The divestiture aims to enhance iCoreConnect's operational efficiency and improve financial performance by reallocating resources to higher-margin SaaS products. Management anticipates that this move will streamline operations, reduce debt, and sharpen the company's strategic direction towards more lucrative SaaS opportunities.

As a part of the divestiture, iCoreConnect expects to see a simplification in its organizational structure, which should increase agility and allow the company to better respond to market changes and competitive pressures. The company's leadership believes that by narrowing the focus on its core competencies, it can make more effective decisions and foster long-term success.

The financial terms of the asset sale were not disclosed, but the company has indicated that the capital generated from this transaction will be used to reduce existing debt and to invest further in its core business areas.

iCoreConnect's decision to divest its MSP Division is also intended to make the company more attractive to investors by creating a more streamlined and easier-to-analyze business model. The company is positioning itself for sustained growth and success in its primary markets.

As with all forward-looking statements, this announcement contains predictions subject to risks and uncertainties, and the actual outcome may differ materially from what has been projected. The company has made it clear that it does not intend to update any forward-looking statements following this announcement.

This strategic move by iCoreConnect is based on a press release statement and reflects the company's efforts to optimize its operations and focus on areas that promise higher profitability and better business outcomes.

In other recent news, iCoreConnect Inc. has been actively addressing compliance issues with Nasdaq rules. Shareholders have approved key proposals, including the issuance of up to 11,203,700 shares of common stock and the issuance of shares upon conversion of an amended convertible note. The company has also made significant changes to its board of directors, appointing Wayne Kalish and Yvonne Hyland.

These developments come as iCoreConnect faces potential NASDAQ delisting due to non-compliance with listing rules. The company has been given 45 days to submit a plan to regain compliance. Additionally, iCoreConnect has amended its Prepaid Forward Purchase Agreement with RiverNorth SPAC Arbitrage Fund, deferring the conversion of preferred stock into common stock until February 25, 2025.

The company has also extended the maturity dates of two convertible promissory notes and issued a new one with a principal amount of $397,622. The recent developments also include the adjournment of a Special Meeting of Stockholders due to a lack of quorum, with the rescheduled meeting set for September 19, 2024. Lastly, iCoreConnect has expanded its operations into Tennessee, securing an endorsement from the Tennessee Dental Association for seven of its software solutions. These are the recent developments in iCoreConnect's operations.

InvestingPro Insights

iCoreConnect's strategic decision to divest its MSP Division aligns with several key financial indicators highlighted by InvestingPro. The company's current financial position underscores the urgency of this strategic shift.

According to InvestingPro data, iCoreConnect has a market capitalization of $3.64 million USD, reflecting its small-cap status. Despite a robust revenue growth of 34.56% over the last twelve months as of Q2 2024, the company faces significant challenges. An InvestingPro Tip reveals that iCoreConnect "operates with a significant debt burden," which explains the company's stated intention to use proceeds from the MSP Division sale to reduce existing debt.

Another crucial InvestingPro Tip indicates that the company is "quickly burning through cash." This aligns with the negative operating income of -$12.57 million USD for the last twelve months as of Q2 2024, representing an operating income margin of -122.41%. These figures underscore the importance of iCoreConnect's strategic refocus on higher-margin SaaS products.

The company's stock performance has been concerning, with InvestingPro data showing a one-year price total return of -91.21% as of the latest available data. This poor stock performance, combined with the fact that the stock is trading near its 52-week low (another InvestingPro Tip), suggests that investors have been skeptical about the company's previous strategy.

By divesting its MSP Division and concentrating on its core SaaS offerings, iCoreConnect aims to address these financial challenges and improve its market position. The move could potentially lead to better operational efficiency and financial performance, as management anticipates.

For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for iCoreConnect, providing a deeper understanding of the company's financial health and market position.

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