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EXCEL - IDEA: XBRL DOCUMENT - iGambit, Inc.Financial_Report.xls
EX-31.2 - IGAMBIT CERTIFICATION - iGambit, Inc.exhibit312.htm
EX-31.1 - IGAMBIT CERTIFICATION - iGambit, Inc.exhibit311.htm
EX-32.2 - IGAMBIT CERTIFICATION - iGambit, Inc.exhibit322.htm
EX-32.1 - IGAMBIT CERTIFICATION - iGambit, Inc.exhibit321.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

 þ

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the Quarterly period ended March 31, 2015

 o

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from

to

Commission file number 000-53862

iGambit Inc.

(Exact name of small business issuer as specified in its charter)

Delaware

11-3363609

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

1050 W. Jericho Turnpike, Suite A

Smithtown, New York 11787

(Address of Principal Executive Offices) (Zip Code)

(631) 670-6777

(Issuer’s Telephone Number, Including Area Code)

Indicate  by check  mark  whether  the  registrant  (1) has  filed  all  reports  required  to  be  filed  by Section 13  or

15(d)  of  the  Securities  Exchange  Act  of  1934  during  the  preceding  12 months  (or  for  such  shorter  period

that the registrant  was  required to file such reports), and (2) has  been subject to such filing requirements for

the past 90 days. Yes þ    No o

Indicate by check  mark whether the registrant has  submitted electronically and posted  on its corporate Web

site,  if  any,  every  Interactive  Data  File  required  to  be  submitted  and  posted  pursuant  to  Rule 405  of

Regulation S-T  (§232.405  of  this  chapter)  during  the  preceding  12 months  (or  for  such  shorter  period  that

the registrant was required to submit and post such files). Yes þ     No o

Indicate  by  check  mark  whether  the  registrant  is  a  large  accelerated  filer,  an  accelerated  filer,  a  non-

accelerated   filer,   or   a   smaller   reporting   company.   See   the   definitions   of   “large   accelerated   filer”,

“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated      Accelerated filer

Non-accelerated filer o

Smaller reporting

filer o

o

company þ

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange

Act). Yes o     No þ

The Registrant had 26,583,990 shares of its common stock outstanding as of May 15, 2015.



iGambit Inc.

Form 10-Q

Page No.

Part I — Financial Information

1

Item 1.

Financial Statements:

1

Condensed Consolidated Balance Sheets

1

Condensed Consolidated Statements of Income

2

Condensed Consolidated Statements of Cash Flows

3

Notes to Condensed Consolidated Financial Statements

4

Item 2.

Management’s Discussion and Analysis of Financial Condition and

Results of Operations

16

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

22

Item 4.

Controls and Procedures

22

Part II — Other Information

22

Item 1.

Legal Proceedings

22

Item 1A.

Risk Factors

22

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

23

Item 3.

Defaults upon Senior Securities

23

Item 4.

Removed and Reserved

23

Item 5.

Other Information

23

Item 6.

Exhibits

23

EX-31.1

EX-31.2

EX-32.1

EX-32.2

i



IGAMBIT INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31,

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements

IGAMBIT INC.

CONSOLIDATED BALANCE SHEETS

MARCH 31,

2015

DECEMBER 31,

(Unaudited)

2014

ASSETS

Current assets

Cash

$

38,734      $

133,436

Accounts receivable, net

111,529

81,671

Prepaid expenses

19,435

45,110

Total current assets

169,698

260,217

Property and equipment, net

12,156

8,436

Other assets

Deposits

12,133

12,133

$

193,987      $

280,786

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities

Accounts payable

$

301,197      $

285,277

Note payable - stockholder

30,180

--

Total current liabilities

331,377

285,277

Commitments and contingencies

Stockholders' deficiency

Preferred stock, $.001 par value; authorized - 100,000,000 shares;

issued and outstanding - 0 shares in 2015 and 2014,

respectively

--

--

Common stock, $.001 par value; authorized - 200,000,000 shares;

issued and outstanding - 26,583,990 shares in 2015 and

2014, respectively

26,584

26,584

Additional paid-in capital

2,863,122

2,851,124

Accumulated deficit

(3,027,096)

(2,882,199)

Total stockholders' deficiency

(137,390)

(4,491)

$

193,987      $

280,786

1



IGAMBIT INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31,

(UNAUDITED)

2015

2014

Sales

$

300,347    $

240,213

Cost of sales

135,622

102,912

Gross profit

164,725

137,301

Operating expenses

General and administrative expenses

307,919

272,267

Loss from operations

(143,194)

(134,966)

Other income (expenses)

Interest expense

(1,703)

(3,467)

Amortization of debt discount

--

(34,500)

Total other income (expenses)

(1,703)

(37,967)

Loss from continuing operations

(144,897)

(172,933)

Income from discontinued operations

--

11,355

Net loss

$      (144,897)    $      (161,578)

Basic and fully diluted earnings (loss) per common share:

Continuing operations

$

(.01)    $

(.01)

Discontinued operations

$

.00    $

.00

Net loss per common share

$

(.01)    $

(.01)

Weighted average common shares outstanding

26,583,900

25,044,056

2



IGAMBIT INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31,

(UNAUDITED)

2015

2014

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$    (144,897)

$    (161,578)

Adjustments to reconcile net loss to net

cash provided (used) by operating activities

Income from discontinued operations

--

(11,355)

Depreciation

1,306

1,191

Debt discount amortization

--

34,500

Stock-based compensation expense

11,998

--

Increase (Decrease) in cash flows as a result of

changes in asset and liability account balances:

Accounts receivable

(29,858)

32,581

Prepaid expenses

25,675

(14,204)

Due from rescission agreement

--

10,000

Accounts payable

15,920

74,240

Net cash used by continuing operating activities

(119,856)

(34,625)

Net cash provided by discontinued operating activities

--

37,500

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES

(119,856)

2,875

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

(5,026)

(2,026)

Increase in deposits

--

(2,712)

NET CASH USED BY INVESTING ACTIVITIES

(5,026)

(4,738)

NET CASH PROVIDED BY FINANCING ACTIVITIES:

Proceeds from stockholder's loan

30,180

3,600

NET INCREASE (DECREASE) IN CASH

(94,702)

1,737

CASH - BEGINNING OF PERIOD

133,436

26,870

CASH - END OF PERIOD

$

38,734

$

28,607

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest

$

1,703

$

1,425

3



Note 1 - Organization and Basis of Presentation

The   consolidated   financial   statements   presented   are   those   of   iGambit   Inc.,   (the

“Company”)  and  its  wholly-owned  subsidiary,  Gotham  Innovation  Lab  Inc.  (“Gotham”).

The  Company  was  incorporated  under  the  laws  of  the  State  of  Delaware  on  April  13,

2000.  The  Company  was  originally incorporated  as  Compusations  Inc.  under  the  laws  of

the   State   of   New   York   on   October   2,   1996.     The   Company   changed   its   name   to

BigVault.com  Inc.  upon  changing its  state  of  domicile  on  April  13,  2000.   The  Company

changed  its  name  again  to  bigVault  Storage  Technologies  Inc.  on  December  21,  2000

before  changing  to  iGambit  Inc.  on  April  5,  2006.   Gotham  was  incorporated  under  the

laws  of  the  state  of  New  York  on  September  23,  2009.    The  Company  is  a  holding

company  which  seeks  out  acquisitions  of  operating  companies  in  technology  markets.

Gotham  is  in  the  business  of  providing  media  technology  services  to  real  estate  agents

and brokers in the New York metropolitan area.

Interim Financial Statements

The  following (a) condensed  consolidated  balance  sheet  as  of December 31, 2014,  which

has  been  derived  from  audited  financial  statements,  and  (b)  the  unaudited  condensed

consolidated   interim   financial   statements   of   the   Company   have   been   prepared   in

accordance   with   the   instructions   to   Form   10-Q   and   Rule   8-03   of   Regulation   S-X.

Accordingly,  they  do  not  include  all  of  the  information  and  footnotes  required  by  GAAP

for   complete   financial   statements.   In   the   opinion   of   management,   all   adjustments

(consisting  of  normal  recurring  accruals)  considered  necessary  for  a  fair  presentation

have been  included.  Operating results  for the three  months ended  March  31, 2015 are not

necessarily  indicative  of  results  that  may  be  expected  for  the  year  ending  December  31,

2015.  These  condensed  consolidated  financial  statements  should  be  read  in  conjunction

with  the  audited  consolidated  financial  statements  and  notes  thereto  for  the  year  ended

December  31,  2014  included  in  the  Company’s  Annual  Report  on  Form  10-K,  filed  with

the Securities and Exchange Commission (“SEC”) on April 15, 2015.

Note 2 – Discontinued Operations

Sale of Business

On  February 28,  2006, the Company entered  into  an asset  purchase  agreement with Digi-

Data  Corporation  (“Digi-Data”),  whereby  Digi-Data  acquired  the  Company’s  assets  and

its  online  digital  vaulting  business  operations  in  exchange  for  $1,500,000,  which  was

deposited  into  an  escrow  account  for  payment  of  the  Company’s  outstanding  liabilities.

In  addition,  as  part  of  the  sales  agreement,  the  Company  received  payments  from  Digi-

Data  based  on  10%  of  the  net  vaulting  revenue  payable  quarterly  over  five  years.   The

Company  was  also  entitled  to  an  additional  5%  of  the  increase  in  net  vaulting  revenue

over the prior year’s revenue.

4



Accounts Receivable

Assets  from  discontinued  operations,  net  includes  accounts  receivable  which  represents

50% of contingency payments earned for the previous quarters. The reserve for bad debts

of $250,000 charged to operations  in 2010 was reversed in  connection with the Summary

Judgment  and  Forbearance  Agreement  described  in  Note  11.   Also  included  is  accrued

interest receivable of $85,156 recorded for interest  granted on the balance due  from Digi-

data  through  May  2014.   The  entire  balance  including  accrued  interest  totaling  $655,746

was repaid to the Company by Digi-data in the year ended December 31, 2014

Note 3 – Summary of Significant Accounting Policies

Principles of Consolidation

The  consolidated   financial  statements  include  the  accounts   of  the  Company  and   its

wholly-owned  subsidiary,  Gotham  Innovation  Lab,  Inc.  All  intercompany  accounts  and

transactions have been eliminated.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with generally accepted accounting

principles   requires   management   to   make   estimates   and   assumptions   that   affect   the

reported   amounts   of   assets   and   liabilities   and   disclosure   of   contingent   assets   and

liabilities  at  the  date of  the  consolidated  financial  statements  and  the  reported  amounts  of

revenues and expenses during the period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

For  certain  of  the  Company’s  financial  instruments,  including  cash  and  cash  equivalents,

accounts  receivable,  accounts  payable,  and  amounts  due  to  related  parties,  the  carrying

amounts  approximate  fair  value  due  to  their  short  maturities.   Additionally,  there  are  no

assets or liabilities for which fair value is remeasured on a recurring basis.

Revenue Recognition

The  Company’s  revenues  are  derived  primarily  from  the  sale  of  products  and  services

rendered  to  real  estate  brokers.    The  Company recognizes  revenues  when  the  services  or

products  have  been  provided  or delivered,  the  fees  charged  are  fixed  or  determinable, the

Company  and  its  customers  understand  the  specific  nature  and  terms  of  the  agreed  upon

transactions, and collectability is reasonably assured.

Advertising Costs

The  Company  expenses  advertising  costs  as  incurred.    Advertising  costs  for  the  three

months ended March 31, 2015 and 2014 were $1,325 and $843, respectively.

5



Cash and Cash Equivalents

For  purposes  of  reporting  cash  flows,  cash  and  cash  equivalents  include  checking  and

money market accounts and any highly liquid debt instruments purchased with a maturity

of three months or less.

Accounts Receivable

The   Company   analyzes   the   collectability   of   accounts   receivable   from   continuing

operations   each   accounting   period   and   adjusts   its   allowance   for   doubtful   accounts

accordingly.   A  considerable  amount  of  judgment  is  required  in  assessing  the  realization

of  accounts  receivables,  including  the  creditworthiness  of  each  customer,  current  and

historical  collection  history  and  the  related  aging  of  past  due  balances.   The  Company

evaluates  specific  accounts  when  it  becomes  aware  of  information  indicating  that  a

customer  may  not  be  able  to  meet  its  financial  obligations  due  to  deterioration  of  its

financial  condition,  lower  credit  ratings,  bankruptcy  or  other  factors  affecting  the  ability

to render payment.  Allowance  for doubtful  accounts  was  $17,865 at  March 31, 2015 and

December  31,  2014,  respectively.   There  was  no  bad  debt  expense  charged  to  operations

for the three months ended March 31, 2015 and 2014, respectively.

Property and equipment and depreciation

Property  and  equipment  are  stated  at  cost.   Depreciation  for  both  financial  reporting  and

income  tax  purposes  is  computed  using  combinations  of  the  straight  line  and  accelerated

methods   over  the   estimated  lives   of  the   respective  assets.     Computer  equipment  is

depreciated   over   5   years   and   furniture   and   fixtures   are   depreciated   over   7   years.

Maintenance  and  repairs  are  charged  to  expense  when  incurred.    When  property  and

equipment   are   retired   or   otherwise   disposed   of,   the   related   cost   and   accumulated

depreciation  are  removed  from the  respective  accounts  and  any gain  or loss  is  credited  or

charged to income.

Depreciation  expense  of  $1,306  and  $1,191  was  charged  to  operations  for  the  three

months ended March 31, 2015 and 2014, respectively.

Stock-Based Compensation

The   Company   accounts   for   its   stock-based   awards   granted   under   its   employee

compensation  plan  in  accordance  with  ASC  Topic  No.  718-20,  Awards  Classified  as

Equity,  which  requires  the  measurement  of  compensation  expense  for  all  share-based

compensation  granted  to  employees  and  non-employee  directors  at  fair  value  on  the  date

of  grant  and  recognition  of  compensation  expense  over  the  related  service  period  for

awards  expected  to  vest.  The  Company  uses  the  Black-Scholes  option  pricing  model  to

estimate  the  fair  value  of  its  stock  options  and  warrants.  The  Black-Scholes  option

pricing  model  requires  the  input  of  highly subjective  assumptions  including  the  expected

stock  price  volatility  of  the  Company’s  common  stock,  the  risk  free  interest  rate  at  the

date   of   grant,   the   expected   vesting   term   of   the   grant,   expected   dividends,   and   an

assumption   related   to   forfeitures   of   such   grants.  Changes   in   these   subjective   input

6



assumptions  can  materially affect  the  fair  value  estimate  of  the  Company’s  stock  options

and warrants.

Income Taxes

The   Company   accounts   for   income   taxes   using   the   asset   and   liability   method   in

accordance  with  ASC  Topic  No.  740,  Income  Taxes.  Under  this  method,  deferred  tax

assets  and  liabilities  are  determined  based  on  differences  between  financial  reporting  and

tax  bases  of  assets  and  liabilities,  and  are  measured  using  the  enacted  tax  rates  and  laws

that are expected to be in effect when the differences are expected to reverse.

The  Company  applies  the  provisions  of  ASC  Topic  No.  740  for  the  financial  statement

recognition,  measurement  and  disclosure  of  uncertain  tax  positions  recognized  in  the

Company’s  financial  statements.  In  accordance  with  this  provision,  tax  positions  must

meet  a  more-likely-than-not  recognition  threshold  and  measurement  attribute  for  the

financial statement recognition and measurement of a tax position.

Recent Accounting Pronouncements

FASB ASC 606 ASU 2014-09 - Revenue from contracts with customers:

In May 2014, the FASB issued amended guidance  on contracts with customers to transfer

goods   or   services   or   contracts   for   the   transfer   of   nonfinancial   assets,   unless   those

contracts   are  within  the  scope  of  other  standards  (e.g.,  insurance  contracts  or  lease

contracts).   The   guidance   requires   an   entity  to   recognize   revenue   on   contracts   with

customers  to  depict  the  transfer  of  promised  goods  or  services  to  customers  in  an  amount

that  reflects  the  consideration  to  which  the  entity  expects  to  be  entitled  in  exchange  for

those  goods  or  services.  The  guidance  requires  that  an  entity  depict  the  consideration  by

applying the following steps:

Step 1: Identify the contract(s) with a customer.

Step 2: Identify the performance obligations in the contract.

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to the performance obligations in the contract.

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

The  amendments  in  this  ASU  are  effective  for  annual  reporting  periods  beginning  after

December   15,   2016,   including   interim   periods   within   that   reporting   period.   Early

application  is  not  permitted.  This  amendment  is  to  be  either  retrospectively  adopted  to

each  prior  reporting  period  presented  or  retrospectively  with  the  cumulative  effect  of

initially  applying  this  ASU  recognized  at  the  date  of  initial  application.  Adoption  of  this

guidance  is  not  expected  to  have  a  material  impact  on  the  Company's  consolidated

financial statements.

7



FASB ASC 718 ASU 2014-12 – Compensation – Stock Compensation:

In June 2014, the  FASB  issued ASU No. 2014-12, "Compensation - Stock Compensation

(Topic   718):   Accounting   for   Share-Based   Payments   When   the  Terms   of  an   Award

Provide   that   a   Performance   Target   Could   be   Achieved   after   the   Requisite   Service

Period,"   ("ASU      2014-12").      The   amendments   in   ASU   2014-12   require   that   a

performance  target  that  affects  vesting  and  that  could  be  achieved  after  the  requisite

service  period  be  treated  as  a  performance  condition.   A  reporting  entity   should  apply

existing   guidance in ASC Topic No. 718,   "Compensation   - Stock   Compensation"   as  it

relates  to  awards  with   performance   conditions  that  affect   vesting  to  account  for  such

awards.   The  amendments  in  ASU  2014-12  are  effective  for  annual  periods  and  interim

periods  within  those  annual  periods  beginning  after  December  15,  2015.   Early  adoption

is   permitted.      Entities   may   apply   the   amendments   in   ASU   2014-12   either:   (a)

prospectively   to   all   awards   granted   or   modified   after   the   effective   date;   or   (b)

retrospectively  to  all  awards  with  performance  targets  that  are  outstanding  as  of  the

beginning  of  the  earliest  annual  period  presented  in  the  financial  statements  and  to  all

new or modified awards thereafter. The Company does not anticipate that the adoption of

ASU 2014-12 will have a material impact on its consolidated financial statements.

Note 4 - Earnings Per Common Share

The  Company  calculates  net  earnings  (loss)  per  common  share  in  accordance  with  ASC

260   Earnings   Per   Share”  (“ASC   260”).   Basic  and   diluted   net   earnings   (loss)  per

common  share  was  determined  by  dividing  net  earnings  (loss)  applicable  to  common

stockholders  by  the  weighted  average  number  of  common  shares  outstanding  during  the

period.  The  Company’s  potentially  dilutive  shares,  which  include  outstanding  common

stock  options  and  common  stock  warrants,  have  not  been  included  in  the  computation  of

diluted net earnings (loss) per share for all periods as the result would be anti-dilutive.

Three Months Ended

March 31,

2015

2014

Stock options

1,718,900

668,900

Stock warrants

275,000

275,000

Total shares excluded from calculation

1,993,900

943,900

Note 5 – Stock Based Compensation

Stock-based  compensation  expense  for  all  stock-based  award  programs,  including  grants

of  stock  options  and  warrants,  is  recorded  in  accordance  with  "Compensation—Stock

Compensation", Topic 718 of the  FASB ASC. Stock-based compensation expense, which

is  calculated  net  of  estimated  forfeitures,  is  computed  using  the  grant  date  fair-value  and

amortized  over  the  requisite  service  period  for  all  stock  awards  that  are  expected  to  vest.

The  grant  date  fair  value  for  stock  options  and  warrants  is  calculated  using  the  Black-

Scholes  option  pricing  model.  Determining  the  fair  value  of  options  at  the  grant  date

8



requires  judgment,  including  estimating  the  expected  term  that  stock  options  will  be

outstanding  prior  to  exercise,  the  associated  volatility  of  the  Company’s  common  stock,

expected  dividends,  and  a  risk-free  interest  rate.  Stock-based  compensation  expense  is

reported  under  general  and  administrative  expenses  in  the  accompanying  consolidated

statements of operations.

Options

In  2006,  the  Company  adopted  the  2006  Long-Term  Incentive  Plan  (the  "2006  Plan").

Awards  granted  under  the  2006  Plan  have  a  ten-year  term  and  may  be  incentive  stock

options,  non-qualified  stock  options  or  warrants.  The  awards  are  granted  at  an  exercise

price  equal to the  fair market value  on the date of  grant  and  generally vest  over a  three  or

four  year  period.  The  Plan  expired  on  December  31,  2009,  therefore  as  of  March  31,

2015,  there  was  no  unrecognized  compensation  cost  related  to  non-vested  share-based

compensation arrangements granted under the 2006 plan.

The  2006  Plan  provided  for  the  granting  of  options  to  purchase  up  to  10,000,000  shares

of  common  stock.  8,146,900  options  have  been  issued  under  the  plan  to  date  of  which

7,157,038  have  been  exercised  and  692,962  have  expired  to  date.  There  were  296,900

options outstanding under the  2006 Plan on its expiration date of December 31, 2009. All

options issued subsequent to this date were not issued pursuant to any plan.

Stock option activity during the three months ended March 31, 2015 and 2014 follows:

Weighted

Average

Weighted

Remaining

Weighted

Average

Average

Contractual

Options

Grant-Date

Life

Outstanding

Exercise Price

Fair Value

(Years)

Options outstanding at

December 31, 2013

668,900

$

0.06

$

0.10

4.69

No option activity

--

--

--

Options outstanding at

March 31, 2014

668,900

0.06

0.10

4.44

Options outstanding at

December 31, 2014

1,518,900

$

0.03

$

0.10

4.76

Options granted

200,000

0.01

0.40

4.98

March 31, 2015

1,718,900

$

0.03

$

0.13

4.57

9



Options outstanding at March 31, 2015 consist of:

Date

Number

Number

Exercise

Expiration

Issued

Outstanding

Exercisable

Price

Date

May 1, 2006

100,000

100,000

$0.01

May 1, 2016

May 1, 2006

100,000

100,000

$0.01

May 1, 2016

May 1, 2006

50,000

50,000

$0.01

May 1, 2016

May 1, 2006

46.900

46,900

$0.01

May 1, 2016

June 9, 2014

213,000

213,000

$0.03

June 9, 2024

June 9, 2014

159,000

159,000

$0.03

June 9, 2024

June 9, 2014

600,000

600,000

$0.03

June 9, 2024

June 6, 2014

250,000

250,000

$0.05

June 6, 2019

March 24,  2015

200,000

200,000

$0.01

March 24, 2020

Total

1,718,900

1,718,900

Warrants

In  addition  to  our  2006  Long  Term  Incentive  Plan,  we  have  issued  and  outstanding

compensatory  warrants  to  two  consultants  entitling  the  holders  to  purchase  a  total  of

275,000  shares  of  our  common  stock  at  an  average  exercise  price  of  $0.94  per  share.

Warrants  to  purchase  25,000  shares  of  common  stock  vest  upon  6  months  after  the

Company  engages  in  an  IPO,  have  an  exercise  price  of  $3.00  per  share,  and  expire  2

years  after  the  Company  engages  in  an  IPO.  Warrants  to  purchase  250,000  shares  of

common stock vest 100,000 shares on issuance (June 1, 2009), and 50,000 shares on each

of  the  following  three  anniversaries  of  the  date  of  issuance,  have  exercise  prices  ranging

from  $0.50  per  share  to  $1.15  per  share,  and  expire  on  June 1,  2019.  The  issuance  of  the

compensatory warrants was not submitted to our shareholders for their approval.

Warrant activity during the three months ended March 31, 2015 and 2014 follows:

10



Weighted

(1)Weighted

Weighted

Average Grant-

Average

Date

Remaining

Warrants

Average

Contractual

Outstanding

Exercise Price

Fair Value

Life (Years)

Warrants outstanding at

December 31, 2013

275,000

$

0.94

$

0.10

5.42

No warrant activity

--

--

--

Warrants outstanding at

March 31, 2014

275,000

$

0.94

$

0.10

5.17

Warrants outstanding at

December 31, 2014

275,000

0.94

0.10

4.42

No warrant activity

--

--

--

Warrants outstanding at

March 31, 2015

275,000

$

0.94

$

0.10

4.17

(1)  Exclusive of 25,000 warrants expiring 2 years after initial IPO.

Warrants outstanding at December 31, 2014 consist of:

Date

Number

Number

Exercise

Expiration

Issued

Outstanding

Exercisable

Price

Date

April 1, 2000

25,000

25,000

$3.00

2  years after IPO

June 1, 2009

100,000

100,000

$0.50

June 1, 2019

June 1, 2009

50,000

50,000

$0.65

June 1, 2019

June 1, 2009

50,000

50,000

$0.85

June 1, 2019

June 1, 2009

50,000

50,000

$1.15

June 1, 2019

Total

275,000

275,000

Note 6 – Convertible Note Payable

On  September  16,  2013,  the  Company  issued  an  8%  convertible  note  in  the  aggregate

principal  amount  of  $103,500,  convertible  into  shares  of  the  Company’s  common  stock.

The Note, including accrued interest was due June 18, 2014 and was convertible any time

after  180  days  at  the  option  of  the  holder  into  shares  of  the  Company’s  common  stock  at

55%  of  the  average  stock  price  of  the  lowest  3  closing  bid  prices  during  the  10  trading

day period ending on the latest complete trading day prior to the conversion date.  Interest

expense on the  convertible note of $3,242  was  recorded for the  year ended  December 31,

2014.

Initially  the  Company  had  anticipated  repaying  the  obligation  prior  to  the  effective  date

of  the  holder  electing  to  convert.   Since  the  effective  date  of  the  election  to  convert  has

passed  the  Company  recorded  a  debt  discount  related  to  identified  embedded  derivatives

relating  to  conversion  features  and  a  reset  provisions  (see  Note  7)  based  fair  values  as  of

the  inception  date  of  the  Note.   The  calculated  debt  discount  equaled  the  face  of  the  note

and was  amortized  over  the term of the  note.   During the  year ended December 31, 2014,

the  Company  amortized  $63,250  of  debt  discount.   During  the  year  ended  December  31,

2014,  the  noteholder  converted  $49,000  of  the  principal  balance  to  1,539,934  shares  of

11



common  stock,  and  the  Company  repaid  the  remaining  note  balance  of  $54,500  and

accrued interest of $5,646 on June 18, 2014.

Note 7 - Derivative Liability

Convertible Note

During  the  year  ended  December  31,  2013,  the  Company  issued  a  convertible  note  (see

Note 6 above).

The  note  is  convertible  into  common  stock,  at  the  holders’  option,  at  a  discount  to  the

market  price  of  the  Company’s  common  stock.  The  Company  has  identified  embedded

derivatives  included  in  these  notes  as  a  result  of  certain  anti-dilutive  (reset)  provisions,

related  to  certain  conversion  features.  The  accounting  treatment  of  derivative  financial

instruments  requires  that  the  Company  record  the  fair  value  of  the  derivatives  as  of  the

inception  date  of  the  convertible  note  and  debt  discount  amortization  to  fair  value  as  of

each  subsequent  reporting  date.    This  resulted  in  a  fair  value  of  derivative  liability  of

$152,076  in  which  to  the  extent  of  the  face  value  of  convertible  note  was  treated  as  debt

discount with the remainder treated as interest expense.

The  fair  value  of  the  embedded  derivatives  at  December  31,  2013,  in  the  amount  of

$152,076,   was   determined   using   the   Binomial   Option   Pricing   Model   based   on   the

following  assumptions:  (1)  dividend  yield  of  0%;  (2)  expected  volatility  of  243.00%,  (3)

weighted average  risk-free interest rate of 0.09%, (4) expected lives of 0.72 to 0.75 years,

and  (5)  estimated  fair  value  of  the  Company’s  common  stock  of  $0.51  per  share.  The

Company  recorded  interest  expense  from  the  excess  of  the  derivative  liability  over  the

convertible  note  of  $48,576  during  the  year  ended  December  31,  2013.    A  gain  on

derivative  liability  of  $152,076  was  recorded  during  the  year  ended  December  31,  2014

for the satisfaction of the convertible note.

Based  upon  ASC  840-15-25  (EITF  Issue  00-19,  paragraph  11)  the  Company has  adopted

a   sequencing   approach   regarding   the   application   of   ASC   815-40   to   its   outstanding

convertible   note.   Pursuant   to   the   sequencing   approach,   the   Company   evaluates   its

contracts based upon earliest issuance date.

Note 8 – Stock Transactions

On   September   25,   2014,   the   Board   unanimously   approved   an   amendment   to   the

Company’s  Articles  of  Incorporation  to  increase  the  number  of  shares  of  Common  Stock

which  the  Company  is  authorized  to  issue  from  seventy  five  million  (75,000,000)  to

Three  Hundred  Million  (300,000,000)  shares  of  Common  Stock,  $0.001  par  value  per

share,   and   to   create   a   new   class   of   stock   entitled   “preferred   stock”   (together,   the

“Capitalization  Amendments”).  The  Capitalization  Amendments  create  provisions  in  the

Company’s  Articles  of  Incorporation,  which  allows  the  voting  powers,  designations,

preferences  and  other  special  rights,  and  qualifications,  limitations  and  restrictions  of

each  series  of  preferred  stock  to  be  established  from  time  to  time  by  the  Board  without

12



approval of the stockholders. No dividend, voting, conversion, liquidation or redemptions

rights as well  as redemption or sinking fund provisions are  yet established  with respect to

the Company’s preferred  stock.   On October 3, 2014, the Majority Stockholders executed

and delivered to the Company a written consent approving the Current Action.

Common Stock Issued

In  connection  with  the  convertible  note  payable  (see  Note  6   above)  the  noteholder

converted  $49,000  of  the  principal  balance  to  1,539,934  shares  of  common  stock  during

the  year  ended  December 31, 2014.   The  stock issued was  determined based on the  terms

of the convertible note.

Note 9 - Income Taxes

Quarter Ended March 31,

2015

2014

Effective tax rate

0.0 %

0.0 %

A full valuation allowance was recorded against the Company’s net deferred tax assets. A

valuation  allowance  must  be  established  if  it  is  more  likely  than  not  that  the  deferred  tax

assets  will  not  be  realized.  This  assessment  is  based  upon  consideration  of  available

positive and negative  evidence, which includes, among other things, the Company’s  most

recent  results  of  operations  and  expected  future  profitability.  Based  on  the  Company’s

cumulative  losses  in  recent  years,  a  full  valuation  allowance  against  the  Company’s

deferred  tax  assets  has  been  established  as  Management  believes  that  the  Company  will

not realize the benefit of those deferred tax assets.

Note 10 - Retirement Plan

Gotham  has  adopted  the  Gotham  Innovation  Lab,  Inc.  SIMPLE  IRA  Plan,  which  covers

substantially  all  employees.  Participating  employees  may  elect  to  contribute,  on  a  tax-

deferred  basis,  a  portion  of  their  compensation  in  accordance  with  Section  408  (a)  of  the

Internal Revenue Code. The Company matches up to 3% of employee contributions.  The

Company's contributions to the plan for the three months ended March 31, 2015 and 2014

were $1,300 and $2,149, respectively.

Note 11 – Concentrations and Credit Risk

Sales and Accounts Receivable

Gotham  had  sales  to  one  customer  which  accounted  for  approximately 57%  of  Gotham’s

total  sales  for  the  three  months  ended  March  31,  2015.   The  one  customer  accounted  for

approximately 64% of accounts receivable at March 31, 2015.

Gotham  had  sales  to  one  customer  which  accounted  for  approximately 65%  of  Gotham’s

total  sales  for  the  three  months  ended  March  31,  2014.   The  one  customer  accounted  for

approximately 62% of accounts receivable at March 31, 2014.

13



Cash

Cash  is  maintained  at  a  major  financial  institution.  Accounts  held  at  U.S.  financial

institutions  are  insured  by the  FDIC  up  to  $250,000.  Cash  balances  could  exceed  insured

amounts  at  any  given  time,  however,  the  Company  has  not  experienced  any  such  losses.

The   Company   did   not   have   any   interest-bearing   accounts   at   March   31,   2015   and

December 31, 2014, respectively.

Note 12 - Fair Value Measurement

The  Company  adopted  the  provisions  of  Accounting  Standards  Codification  subtopic

825-10,  Financial  Instruments  (“ASC  825-10”)  on  January  1,  2008.  ASC  825-10  defines

fair  value  as  the  price  that  would  be  received  from  selling  an  asset  or  paid  to  transfer  a

liability  in  an  orderly  transaction  between  market  participants  at  the  measurement  date.

When  determining  the  fair  value  measurements  for  assets  and  liabilities  required  or

permitted  to  be  recorded  at  fair  value,  the  Company  considers  the  principal  or  most

advantageous  market  in  which  it  would  transact  and  considers  assumptions  that  market

participants  would  use  when  pricing  the  asset  or  liability,  such  as  inherent  risk,  transfer

restrictions,  and  risk  of  nonperformance.  ASC  825-10  establishes  a  fair  value  hierarchy

that  requires  an  entity  to  maximize  the  use  of  observable  inputs  and  minimize  the  use  of

unobservable  inputs  when  measuring  fair  value.  ASC  825-10  establishes  three  levels  of

inputs that may be used to measure fair value:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level  2    Observable  inputs  other  than  Level  1  prices  such  as  quoted  prices  for  similar

assets  or  liabilities;  quoted  prices  in  markets  with  insufficient  volume  or  infrequent

transactions  (less  active  markets);  or  model-derived  valuations  in  which  all  significant

inputs  are  observable  or  can  be  derived  principally  from  or  corroborated  by  observable

market data for substantially the full term of the assets or liabilities.

Level  3    Unobservable  inputs  to  the  valuation  methodology  that  are  significant  to  the

measurement of fair value of assets or liabilities.

All  items  required  to  be  recorded  or  measured  on  a  recurring  basis  consist  of  derivative

liabilities and are based upon level 3 inputs.

To  the  extent  that  valuation  is  based  on  models  or  inputs  that  are  less  observable  or

unobservable  in  the  market,  the  determination  of  fair  value  requires  more  judgment.  In

certain  cases,  the  inputs  used  to  measure  fair  value  may  fall  into  different  levels  of  the

fair  value  hierarchy.  In  such  cases,  for  disclosure  purposes,  the  level  is  the  fair  value

hierarchy  within  which  the  fair  value  measurement  is  disclosed  and  is  determined  based

on the lowest level input that is significant to the fair value measurement.

14



Upon  adoption  of  ASC  825-10,  there  was  no  cumulative  effect  adjustment  to  beginning

retained earnings and no impact on the financial statements.

The  carrying  value  of  the  Company’s  cash  and  cash  equivalents,  accounts  receivable,

accounts  payable,  short-term  borrowings  (including  convertible  note  payable),  and  other

current assets and liabilities approximate fair value because of their short-term maturity.

As  of March  31,  2015  and  December 31, 2014, the  Company did  not  have  any items  that

would be classified as level 1 or 2 disclosures.

The  Company  recognizes  its  derivative  liabilities  as  level  3  and  values  its  derivatives

using  the  methods  discussed  in  Note  7.  While  the  Company  believes  that  its  valuation

methods  are  appropriate  and  consistent  with  other  market  participants,  it  recognizes  that

the  use  of  different  methodologies  or  assumptions  to  determine  the  fair  value  of  certain

financial  instruments  could  result  in  a  different  estimate  of  fair  value  at  the  reporting

date.  The  primary  assumptions  that  would  significantly  affect  the  fair  values  using  the

methods  discussed  in  Note  7  are  that  of  volatility  and  market  price  of  the  underlying

common stock of the Company.

As  of March  31,  2015  and  December 31, 2014, the  Company did  not  have  any derivative

instruments that were designated as hedges.

Fluctuations  in  the  Company’s  stock  price  are  a  primary  driver  for  the  changes  in  the

derivative  valuations  during  each  reporting  period.  As  the  stock  price  decreases  for  each

of  the  related  derivative  instruments,  the  value  to  the  holder  of  the  instrument  generally

decreases,    therefore    decreasing    the    liability    on    the    Company’s    balance    sheet.

Additionally,  stock  price  volatility  is  one  of  the  significant  unobservable  inputs  used  in

the   fair   value   measurement   of   each   of   the   Company’s   derivative   instruments.   The

simulated  fair  value  of these  liabilities  is  sensitive to  changes  in  the  Company’s  expected

volatility.  A  10%  change  in  pricing  inputs  and  changes  in  volatilities  and  correlation

factors  would  currently  not  result  in  a  material  change  in  value  for  the  level  3  financial

liability.

Note 13 - Related Party Transactions

Note Payable – Related Party

Gotham  was  provided  a  loan  which  was  due  on  December  31,  2013  from  an  entity  that

was   previously   a   related   party.     The   balance   of   $6,263   has   not   been   paid   and   is

accordingly included in accounts payable at December 31, 2014.

Loan Payable - Stockholder

A  stockholder/officer  of  the  Company  made  cash  advances  totaling $30,180  on  behalf  of

the Company.  The loan does not bear interest and will be repaid by December 31, 2015.

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Note 14 – Commitments and Contingencies

Lease Commitment

On  February  1,  2012,  iGambit  entered  into  a  5  year  lease  for  new  executive  office  space

in  Smithtown,  New  York  commencing  on  March  1,  2012  at  a  monthly  rent  of  $1,500

with 2% annual increases.

Gotham  has  a  month  to  month  license  agreement  for  office  space  that  commenced  on

August  2,  2012  at  a  monthly  license  fee  of  $4,025.    The  license  agreement  may  be

terminated upon 30 days’ notice.

Total   future   minimum   annual   lease  payments   under   the   lease   for   the   years   ending

December 31 are as follows:

2015

$ 14,370

2016

19,440

2017

3,240

$ 37,050

Rent  expense  of  $17,273  and  $17,456  was  charged  to  operations  for  the  three  months

ended March 31, 2015 and 2014, respectively.

Contingencies

The  Company  provides  accruals  for  costs  associated  with  the  estimated  resolution  of

contingencies  at  the  earliest  date  at  which  it  is  deemed  probable  that  a  liability  has  been

incurred and the amount of such liability can be reasonably estimated.

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results

of Operations

FORWARD LOOKING STATEMENTS

This  Form  10-Q  includes  “forward-looking  statements”  within  the  meaning  of

Section 27A of the Securities Act of 1933, as amended, and Section 21E of  the  Securities

Exchange  Act  of  1934,  as  amended.  All  statements,  other  than  statements  of  historical

facts,  included  or  incorporated  by  reference  in  this  Form  10-Q  which  address  activities,

events  or  developments  that  the  Company expects  or  anticipates  will  or  may  occur  in  the

future,  including  such  things  as  future  capital  expenditures  (including  the  amount  and

nature  thereof),  finding  suitable  merger  or  acquisition  candidates,  expansion  and  growth

of  the  Company’s  business  and  operations,  and  other  such  matters  are  forward-looking

statements.  These  statements  are  based  on  certain  assumptions  and  analyses  made  by the

Company   in   light   of   its   experience   and   its   perception   of   historical   trends,   current

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conditions  and  expected  future  developments  as  well  as  other  factors  it  believes  are

appropriate in the circumstances.

Investors   are   cautioned   that   any   such   forward-looking   statements   are   not

guarantees  of  future  performance  and  involve  significant  risks  and  uncertainties,  and  that

actual   results   may   differ   materially   from   those   projected   in   the   forward-looking

statements.  Factors  that  could  adversely  affect  actual  results  and  performance  include,

among   others,   potential   fluctuations   in   quarterly   operating   results   and   expenses,

government  regulation,  technology  change  and  competition.  Consequently,  all  of  the

forward-looking  statements  made  in  this  Form  10-Q  are  qualified  by  these  cautionary

statements   and   there   can   be   no   assurance   that   the   actual   results   or   developments

anticipated  by  the  Company  will  be  realized  or,  even  if  substantially  realized,  that  they

will  have  the  expected  consequence  to  or  effects  on  the  Company  or  its  business  or

operations.  The  Company  assumes  no  obligations  to  update  any  such  forward-looking

statements.

CRITICAL ACCOUNTING ESTIMATES

Our  management’s  discussion  and  analysis  of  our  financial  condition  and  results

of   operations   are   based   on   our   financial   statements,   which   have   been   prepared   in

accordance   with   accounting   principles   generally   accepted   in   the   United   States   of

America.  The  preparation  of  financial  statements  may  require  us  to  make  estimates  and

assumptions  that  may  affect  the  reported  amounts  of  assets  and  liabilities  and  the  related

disclosures at the date of the financial statements. We do not currently have any estimates

or  assumptions  where  the  nature  of  the  estimates  or  assumptions  is  material  due  to  the

levels  of  subjectivity  and  judgment  necessary  to  account  for  highly  uncertain  matters  or

the   susceptibility   of   such   matters   to   change   or   the   impact   of   the   estimates   and

assumptions   on   financial   condition   or   operating   performance   is   material,   except   as

described below.

Revenue Recognition

Our  revenues  from  continuing  operations  consist  of  revenues  derived  primarily

from   sales   of   products   and   services   rendered   to   real   estate   brokers.   We   recognize

revenues when the services or products have been  provided or delivered, the fees charged

are  fixed or determinable, we and  our  customers understand the specific nature  and terms

of the agreed upon transactions, and collectability is reasonably assured.

Cash and Cash Equivalents

For  purposes  of  reporting  cash  flows,  cash  and  cash  equivalents  include  checking

and  money  market  accounts  and  any  highly  liquid  debt  instruments  purchased  with  a

maturity of three months or less.

Accounts Receivable

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We  analyze  the  collectability  of  accounts  receivable  from  continuing  operations

each  accounting  period  and  adjust  our  allowance  for  doubtful  accounts  accordingly.  A

considerable  amount  of  judgment  is  required  in  assessing  the  realization  of  accounts

receivables,  including  the    creditworthiness  of  each  customer,  current  and  historical

collection  history  and  the  related  aging  of  past  due  balances.   We   evaluate  specific

accounts  when  we  become  aware  of  information  indicating  that  a  customer  may  not  be

able  to  meet  its  financial  obligations  due  to  deterioration  of  its  financial  condition,  lower

credit   ratings,   bankruptcy   or   other   factors   affecting   the   ability   to   render   payment.

Allowance  for  doubtful  accounts  was  $17,865  at  March  31,  2015  and  December  31,

2014,  respectively.    There  was  no  bad  debt  expense  charged  to  operations  for  three

months ended March 31, 2015 and 2014, respectively.

Property and equipment and depreciation

Property   and   equipment   are   stated   at   cost.     Depreciation   for   both   financial

reporting  and  income  tax  purposes  is  computed  using  combinations  of  the  straight  line

and  accelerated  methods  over  the  estimated  lives  of  the  respective  assets.  Computer

equipment  is  depreciated  over  5  years  and  furniture  and  fixtures  are  depreciated  over  7

years.   Maintenance  and  repairs  are  charged  to  expense  when  incurred.   When  property

and  equipment  are  retired  or  otherwise  disposed  of,  the  related  cost  and  accumulated

depreciation  are  removed  from the  respective  accounts  and  any gain  or loss  is  credited  or

charged to income.

Depreciation  expense  of  $1,306  and  $1,191  was  charged  to  operations  for  the

three months ended March 31, 2015 and 2014, respectively.

Stock-Based Compensation

We    account    for    our    stock-based    awards    granted    under    our    employee

compensation  plan  in  accordance  with  ASC  Topic  No.  718-20,  Awards  Classified  as

Equity,  which  requires  the  measurement  of  compensation  expense  for  all  share-based

compensation  granted  to  employees  and  non-employee  directors  at  fair  value  on  the  date

of  grant  and  recognition  of  compensation  expense  over  the  related  service  period  for

awards  expected  to  vest.  We  use  the  Black-Scholes  option  valuation  model  to  estimate

the  fair  value  of  our  stock  options  and  warrants.  The  Black-Scholes  option  valuation

model  requires  the  input  of  highly  subjective  assumptions  including  the  expected  stock

price  volatility of  our  common  stock.  Changes  in  these  subjective  input  assumptions  can

materially affect the fair value estimate of our stock options and warrants.

Income Taxes

We  account  for  income  taxes  using  the  asset  and  liability  method  in  accordance  with  ASC  Topic

No.  740,  Income  Taxes.  Under  this  method,  deferred  tax  assets  and  liabilities  are  determined  based  on

differences  between  financial  reporting  and  tax  bases  of  assets  and  liabilities,  and  are  measured  using  the

enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.

We   apply   the   provisions   of   ASC   Topic   No.   740   for   the   financial   statement   recognition,

measurement  and  disclosure  of  uncertain  tax  positions  recognized  in  the  Company’s  financial  statements.

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In  accordance with this  provision, tax positions must meet a more-likely-than-not  recognition threshold and

measurement attribute for the financial statement recognition and measurement of a tax position.

Convertible Note

On  September  16,  2013,  we  issued  an  8%  convertible  note  in  the  aggregate  principal  amount  of

$103,500, convertible into shares of the Company’s common stock.   The Note, including accrued interest is

due  June  18,  2014  and  is  convertible  any time  after  180  days  at  the  option  of  the  holder  into  shares  of  our

common  stock  at  55%  of  the  average  stock  price  of  the  lowest  3  closing  bid  prices  during  the  10  trading

day  period  ending  on  the  latest  complete  trading  day  prior  to  the  conversion  date.  Interest  expense  on  the

convertible note of $3,242 was recorded for the year ended December 31, 2014.

Initially we  anticipated  repaying  the  obligation  prior  to  the  effective  date  of  the  holder  electing  to  convert.

Since  the  effective  date  of  the  election  to  convert  has  passed  we  recorded  a  debt  discount  related  to

identified  embedded  derivatives  relating  to  conversion  features  and  a  reset  provisions  based  fair  values  as

of  the  inception  date  of  the  Note.    The  calculated  debt  discount  equaled  the  face  of  the  note  and  was

amortized  over  the  term  of  the  note.   During  the  year  ended  December  31,  2014,  we  amortized  $63,250  of

debt  discount.    During  the  year  ended  December  31,  2014,  the  noteholder  converted  $49,000  of  the

principal  balance  to  1,539,934  shares  of  common  stock,  and  we  repaid  the  remaining  note  balance  of

$54,500 and accrued interest of $5,646 on June 18, 2014.

Derivative Liability

During the year ended December 31, 2013, we issued a convertible note.

The note is convertible into common stock, at the holders’ option, at a discount to the market price

of  our  common  stock.  We  identified  embedded  derivatives  included  in  these  notes  as  a  result  of  certain

anti-dilutive   (reset)   provisions,   related   to   certain   conversion   features.   The   accounting   treatment   of

derivative  financial  instruments  requires  that  we  record  the  fair  value  of  the  derivatives  as  of  the  inception

date  of  the  convertible  note  and  debt  discount  amortization  to  fair  value  as  of  each  subsequent  reporting

date.   This resulted in a fair value of derivative liability of $152,076 in which to the extent of the face value

of convertible note was treated as debt discount with the remainder treated as interest expense.

The  fair  value  of  the  embedded  derivatives  at  December  31,  2013,  in  the  amount  of  $152,076,  was

determined  using  the  Binomial  Option  Pricing  Model  based  on  the  following  assumptions:  (1)  dividend

yield  of  0%;  (2)  expected  volatility  of  243.00%,  (3)  weighted  average  risk-free  interest  rate  of  0.09%,  (4)

expected  lives  of  0.72  to  0.75  years,  and  (5)  estimated  fair  value  of  our  common  stock  of  $0.51  per  share.

We  recorded  interest  expense  from  the  excess  of  the  derivative  liability  over  the  convertible  note  of

$48,576  during  the  year  ended  December  31,  2013.  We  recorded  a  gain  on  derivative  liability of  $152,076

during the year ended December 31, 2014 for the satisfaction of the convertible note.

Based  upon  ASC  840-15-25  (EITF  Issue  00-19, paragraph 11)  we  adopted  a  sequencing approach

regarding  the  application  of  ASC  815-40  to  its  outstanding  convertible  note.  Pursuant  to  the  sequencing

approach, we evaluate its contracts based upon earliest issuance date.

INTRODUCTION

iGambit  is a  company focused  on the technology markets.  Our  sole operating subsidiary,  Gotham

Innovation  Lab,  Inc.,  is  in  the  business  of  providing  media  technology  services  to  the  real  estate  industry.

We are focused on expanding the operations of Gotham by marketing the company to existing and potential

new clients.

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Assets.  At  March  31,  2015,  we  had  $193,987  in  total  assets,  compared  to  $280,786  at  December

31,  2014. The decrease in total  assets  was  primarily due to the  decrease in  cash  and  the decrease in  prepaid

expenses.

Liabilities.  At  March  31,  2015,  our  total  liabilities  were  $331,377  compared  to  $285,277  at

December  31,  2014.  Our total  liabilities  at  March  31,  2015  consisted  of  accounts  payable  of  $301,197,  and

a  note  payable  to  a  shareholder  of  $30,180,  whereas  our  total  liabilities  as  of  December 31,  2014  consisted

of accounts payable of $285,277. We do not have any long term liabilities.

Stockholders’  Deficiency.  Our  stockholders’  deficiency increased  to  $137,390  at  March  31,  2015

from  $4,491  at  December  31,  2014.   This  increase  was  primarily due  to  an  increase  in  accumulated  deficit

from  $(2,882,199)  at  December  31,  2014  to  $(3,027,096)  at  March  31,  2015,  resulting  from  losses  from

operations of $(144,897) for the three months ended March 31, 2015.

THREE  MONTHS  ENDED  MARCH  31,  2015  AS  COMPARED  TO  THREE  MONTHS  ENDED

MARCH 31, 2014

Revenues  and  Cost  of  Sales.  We  had  $300,347  of  revenue  during  the  three  months  ended  March

31, 2015  compared to revenue of $240,213 during the three months  ended  March  31, 2014.  The increase in

revenue  was  due  primarily  to  an  increase  in  revenue  generated  by  our  Gotham  subsidiary  as  result  of

transitioning out  our customer technical  services  division  and  focusing more on the  real  estate photography

division.  In  addition  to  Gotham’s  operations,  we  had  income  from  discontinued  operations  of  $0  and

$11,355 for the three months ended March 31, 2015 and March 31, 2014, respectively.

General   and   Administrative   Expenses.   General   and   Administrative   Expenses   increased   to

$307,919 for the three months ended March 31,  2015  from $272,267  for the three months ended March  31,

2014.  For  the  three  months  ended  March  31,  2015  our  General  and  Administrative  Expenses  consisted  of

corporate  administrative   expenses   of  $85,794,  legal   and   accounting   fees   of   $40,080,health   insurance

expenses  of  $7,688,  directors  and  officers  insurance  expenses  of  $10,600,   payroll  expenses  of  $141,041,

consulting  expenses  of  $14,498  and  exchange  filing  fees  of  $8,218.  For  the  three  months  ended  March  31,

2014  our  General  and  Administrative  Expenses  consisted  of corporate  administrative  expenses  of  $74,221,

legal   and   accounting   fees   of   $36,336,   health   insurance   expenses   of   $19,887,   directors   and   officers

insurance  expenses  of  $10,924  and  payroll  expenses  of  130,899..  The  increases  from  the  three  months

ended  March  31,  2014  to  the  three  months  ended  March  31,  2014  relate  primarily  to:  (i) an  increase  in

payroll  expenses;  (ii) an  increase  in  consulting  expenses;  (iii)  an  increase  exchange  filing  fees;  and  (iv)  an

increase  in  general  and  administrative  costs  associated  with  the  operation  of  our  Gotham  subsidiary.  Costs

associated with  our officers’ salaries  and the operation  of our Gotham subsidiary should  remain level  going

forward,  subject  to  a  material  expansion  in  the  business  operations  of  Gotham  which  would  likely increase

our corporate administrative expenses.

Other  Income  (Expense).  There  was  interest  expense  of  $1,703  and  $3,467  for  the  three  months

ended  March  31,  2015  and  March  31,  2014,  respectively.    There  was  $34,500  in  amortization  of  debt

discount for the three months ending March 31, 2014.

LIQUIDITY AND CAPITAL RESOURCES

General

As  reflected  in  the  accompanying  consolidated  financial  statements,  at  March  31,  2015,  we  had

$38,734  of  cash  and  a  stockholders’  deficiency  of  $137,390  as  compared  to  $133,436  and  $4,491  at

December  31,  2014.  At  March  31,  2015  we  had  $193,987  in  total   assets,  compared  to  $280,786  at

December 31, 2014.

Our  primary  capital  requirements  in  2015  are  likely  to  arise  from  the  expansion  of  our  Gotham

operations,  and,  in  the  event  we  effectuate  an  acquisition,  from:  (i) the  amount  of  the  purchase  price

payable  in  cash  at  closing,  if  any;  (ii) professional  fees  associated  with  the  negotiation,  structuring,  and

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closing  of  the  transaction;  and  (iii) post  closing  costs.  It  is  not  possible  to  quantify those  costs  at  this  point

in  time,  in  that  they  depend  on  Gotham’s  business  opportunities,  the  state  of  the  overall  economy,  the

relative  size  of any target  company we  identify and  the complexity of  the  related  acquisition  transaction(s).

We  anticipate  raising  capital  in  the  private  markets  to  cover  any  such  costs,  though  there  can  be  no

guaranty  we  will  be  able  to  do  so  on  terms  we  deem  to  be  acceptable.  We  do  not  have  any  plans  at  this

point in time to obtain a line of credit or other loan facility from a commercial bank.

While  we  believe  in  the  viability  of  our  strategy  to  improve  Gotham’s  sales  volume  and  to  acquire

companies,  and  in  our  ability  to  raise  additional  funds,  there  can  be  no  assurances  that  we  will  be  able  to

fully effectuate our business plan.

We  believe  we  will  continue  to  increase  our  cash  position  and  liquidity  for  the  foreseeable  future.  We

believe we have enough capital to fund our present operations.

Cash Flow Activity

Net  cash  used  by  operating  activities  was  $119,856  for  the  three  months  ended  March  31,  2015,

compared  to  net  cash  provided  by  operating  activities  of  $2,875  for  the  three  months  ended  March  31,

2014. Our primary source of  operating cash flows  from  continuing  operating  activities for the three months

ended  March  31, 2015  was from our  Gotham subsidiary’s  revenues  of  $300,347  and $240,213 for the three

months  ended  March  31,  2014.   Additional  contributing  factors  to  the  change  were  from  an  increase  in

accounts  receivable  of  $29,858,  a  decrease  in  prepaid  expenses  of  $25,675  and  an  increase  in  accounts

payable  of  $15,920.   Net  cash  provided  by  discontinued  operating  activities  was  $0  for  the  three  months

ended  March  31,  2015  and  cash  provided  by  discontinued  operating  activities  was  $37,500  for  the  three

months  ended March  31, 2014. The $37,500  cash provided  by discontinued operations for the three months

ended  March  31,  2014,  represents  cash  payments  received  from  DDC  which  was  offset  by  a  decrease  in

accounts receivable included in the Assets from Discontinued Operations.

Cash  used  in  investing  activities  was  $5,026  for  the  three  months  ended  March  31,  2015  and  $4,738

for  the  three  months  ended  March  31,  2044.  For  the  three  months  ended  March  31,  2015  the  use  of  cash

from  investing  activities  was  from  the  purchase  of  property  and  equipment  of  $5,026.      For  the  three

months  ended  March  31,  2014  the  use  of  cash  from  investing  activities  was  $2,026  from  the  purchase  of

property and equipment and from an increase in deposits of $2,712.

Cash  provided  by  financing  activities  was  $30,180  for  the  three  months  ended  March  31,  2015

compared  to  $3,600  for the three  months  ended  March  31,  2014.  The  cash  provided  by financing  activities

for  the  three  months  ended  March  31,  2015  and  March  31,  2014  was  loans  from  shareholders  of  $30,180

and $3,600, respectively.

Supplemental Cash Flow Activity

In  the  three  months  ended  March  31,  2015  the  company  paid  interest  of  $1,703  compared  to

interest of $1,425 in the three months ended March 31, 2014.

21



Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Not Required.

Item 4. Controls and Procedures.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

We  carried  out  an  evaluation,  as  required  by  paragraph  (b) of  Rule 13a-15  and  15d-15  of  the

Exchange  Act  under  the  supervision  and  with  the  participation  of  our  management,  including  our  Chief

Executive   Officer   and   Chief   Financial   Officer,   of   the   effectiveness   of   our   disclosure   controls   and

procedures,  as  defined  in  Rules 13a-15(e)  and  15d-15(e)  under  the  Exchange  Act  as  of  March  31,  2012.

Based  upon  that  evaluation,  our  Chief  Executive  Officer  and  Chief  Financial  Officer  concluded  that  our

disclosure controls and procedures were effective as of March 31, 2015.

Change in Internal Controls

During  the  quarter  ended  March 31,  2015,  there  were  no  changes  in  our  internal  control  over

financial  reporting that  materially affected, or are reasonably likely to materially affect, our internal control

over financial reporting.

.

PART II — OTHER INFORMATION

Item 1.  Legal Proceedings.

From  time-to-time,  the  Company  is  involved  in  various  civil  actions  as  part  of  its  normal  course  of

business.  The  Company  is  not  a  party  to  any  litigation  that  is  material  to  ongoing  operations  as  defined  in

Item 103 of Regulation S-K as of the period ended March 31, 2015.

 

Item 1A. Risk Factors

 

Not required

22



Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds.

In  connection  with  the  convertible  note  payable  the  noteholder  converted  $49,000  of  the  principal  balance

to  1,539,934  shares  of  common  stock  during  the  year  ended  December  31,  2014.   The  stock  issued  was

determined based on the terms of the convertible note.

Item 3.     Defaults upon Senior Securities.

None

Item 4.

Removed and Reserved.

Item 5.    Other Information.

None

Item 6.

Exhibits

Exhibit No.

Description

31.1   Certification of the Chief Executive Officer Pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002.

31.2   Certification of the Chief Financial Officer Pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002.

32.1   Certification of the Chief Executive Officer Pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002. (This exhibit shall not be deemed “filed” for

the purposes of Section 18 of the Securities Exchange Act of 1934, as

amended, or otherwise subject to the liability of that section. Further, this

exhibit shall not be deemed to be incorporated by reference into any filing

under the Securities Act of 1933, as amended, or the Securities Exchange

Act of 1934, as amended.)

32.2   Certification of the Interim Chief Financial Officer Pursuant to Section 906

of the Sarbanes-Oxley Act of 2002. (This exhibit shall not be deemed

“filed” for the purposes of Section 18 of the Securities Exchange Act of

1934, as amended, or otherwise subject to the liability of that section.

Further, this exhibit shall not be deemed to be incorporated by reference

into any filing under the Securities Act of 1933, as amended, or the

Securities Exchange Act of 1934, as amended.)

23



SIGNATURES

In  accordance  with  the  requirements  of  the  Exchange  Act,  the  registrant  caused  this

report  to  be  signed  on  its  behalf  by  the  undersigned,  thereunto  duly  authorized,  on  May

14, 2015.

iGambit Inc.

/s/ John Salerno

John Salerno

Chief Executive Officer

/s/ Elisa Luqman

Elisa Luqman

Chief Financial Officer and

Principal Accounting Officer



Exhibit Index

Exhibit No.

Description

31.1

Certification of the Chief Executive Officer Pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002.

31.2

Certification of the Interim Chief Financial Officer Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification of the Chief Executive Officer Pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002. (This exhibit shall not be deemed “filed” for

the purposes of Section 18 of the Securities Exchange Act of 1934, as

amended, or otherwise subject to the liability of that section. Further, this

exhibit shall not be deemed to be incorporated by reference into any filing

under the Securities Act of 1933, as amended, or the Securities Exchange

Act of 1934, as amended.)

32.2

Certification of the Interim Chief Financial Officer Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002. (This exhibit shall not be

deemed “filed” for the purposes of Section 18 of the Securities Exchange

Act of 1934, as amended, or otherwise subject to the liability of that

section. Further, this exhibit shall not be deemed to be incorporated by

reference into any filing under the Securities Act of 1933, as amended, or

the Securities Exchange Act of 1934, as amended.)