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EX-31.2 - IGAMBIT CERTIFICATION - iGambit, Inc.exhibit312.htm
EX-32.2 - IGAMBIT CERTIFICATION - iGambit, Inc.exhibit322.htm
EX-32.1 - IGAMBIT CERTIFICATION - iGambit, Inc.exhibit321.htm
EX-31.1 - IGAMBIT CERTIFICATION - iGambit, Inc.exhibit311.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 June 30, 2015\

 

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

(Issuers 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

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

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  

Smaller reporting

filer  

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     No þ

The Registrant had 27,183,990 shares of its common stock outstanding as of August 18, 2015.



iGambit Inc.

Form 10-Q

Part I Financial Information

1

Item 1.

Financial Statements:

1

Consolidated Balance Sheets

1

Consolidated Statements of Income

2

Consolidated Statements of Cash Flows

3

Notes to Consolidated Financial Statements

4

Item 2.

Managements 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

23

Item 1.

Legal Proceedings

23

Item 1A.

Risk Factors

23

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



PART I FINANCIAL INFORMATION

Item 1 Financial Statements

IGAMBIT INC.

CONSOLIDATED BALANCE SHEETS

JUNE 30,

DECEMBER 31,

2015

2014

(Unaudited)

ASSETS

Current assets

Cash

$

40,976

$

133,436

Accounts receivable, net

107,531

81,671

Prepaid expenses

100,448

45,110

Total current assets

248,955

260,217

Property and equipment, net

10,851

8,436

Other assets

Deposits

12,133

12,133

$

271,939

$

280,786

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities

Accounts payable

$

308,539

$

285,277

Advances from stockholders

32,436

--

Total current liabilities

340,975

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 - 27,183,990 shares in 2015 and

26,583,990 shares in 2014, respectively

27,184

26,584

Additional paid-in capital

2,982,522

2,851,124

Accumulated deficit

(3,078,742)

(2,882,199)

Total stockholders' deficiency

(69,036)

(4,491)

$

178,189

$

280,786

The accompanying notes are an integral part of these condensed consolidated financial statements.

1



IGAMBIT INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

THREE MONTHS

SIX MONTHS

ENDED

ENDED

JUNE 30,

JUNE 30,

2015

2014

2015

2014

Sales

$

347,767

$

310,424

$

648,114

$

550,637

Cost of sales

167,444

123,703

303,066

226,615

Gross profit

180,323

186,721

345,048

324,022

Operating expenses

General and administrative expenses

228,828

387,972

536,747

660,239

Loss from operations

(48,505)

(201,251)

(191,699)

(336,217)

Other income (expenses)

Gain on derivative liability

--

152,076

--

152,076

Amortization of debt discount

--

(28,750)

--

(63,250)

Interest expense

(3,141)

(3,521)

(4,844)

(6,988)

Total other income (expenses)

(3,141)

119,805

(4,844)

81,838

Loss from continuing operations

(51,646)

(81,446)

(196,543)

(254,379)

Income from discontinued operations

--

6,176

--

17,531

Net loss

$

(51,646)

$

(75,270)

$

(196,543)

$

(236,848)

Basic and  fully diluted loss per common

share:

Continuing operations

$

(.01)

$

(.00)

$

(.01)

$

(.01)

Discontinued operations

$

.00

$

(.00)

$

.00

$

.00

Net loss per common share

$

(.01)

$

(.00)

$

(.01)

$

(.01)

Weighted average common shares outstanding

- basic

26,874,100

25,439,660

26,729,846

25,242,951

Weighted average common shares outstanding

- fully diluted

26,874,100

25,439,660

26,729,846

25,242,951

The accompanying notes are an integral part of these condensed consolidated  financial statements.

2



IGAMBIT INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30,

(UNAUDITED)

2015

2014

CASH  FLOWS  FROM OPERATING ACTIVITIES:

Net  loss

$

(196,543)

$

(236,848)

Adjustments to reconcile net  loss to  net

cash provided (used) by operating activities

Income  from discontinued operations

--

(17,531)

Depreciation

2,611

2,383

Debt  discount  amortization

--

63,250

Stock-based compensation

131,998

21,106

Uncollectible portion of due  from rescission agreement

--

50,779

Gain on derivative  liability

--

(152,076)

Increase (Decrease)  in cash flows as a result of

changes in asset  and  liability account  balances:

Accounts receivable

(25,860)

37,886

Prepaid expenses

(55,338)

(1,745)

Due from rescission agreement

--

189,000

Accounts payable

23,262

7,007

Net  cash used by continuing operating activities

(119,870)

(36,789)

Net  cash provided by discontinued operating activities

--

655,746

NET  CASH PROVIDED (USED) BY OPERATING ACTIVITIES

(119,870)

618,957

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)

CASH  FLOWS  FROM FINANCING  ACTIVITIES:

Advances from stockholders

43,180

3,600

Repayments of stockholders' loans

(10,744)

(500)

Repayments of convertible note payable

--

(54,500)

NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES

32,436

(51,400)

NET INCREASE (DECREASE) IN CASH

(92,460)

562,819

CASH  - BEGINNING OF PERIOD

133,436

26,870

CASH  - END OF PERIOD

$

40,976

$

589,689

SUPPLEMENTAL DISCLOSURES OF CASH FLOW  INFORMATION:

Cash paid during the period for:

Interest

$

4,844

$

6,988

Non-cash investing and financing activities:

Note payable converted to common stock

$

--

$

(49,000)

The accompanying notes are an integral part of these condensed consolidated  financial statements.

3



IGAMBIT INC.

Notes to Condensed Consolidated Financial Statements

Six Months Ended June 30, 2015 and 2014

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 six months ended June 30, 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   Companys   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  Companys  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  Companys  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 years 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 Companys 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 Companys 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 six months ended

June 30, 2015 and 2014 were $2,037 and $2,233, 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 June 30, 2015 and

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

six months ended June 30, 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  $2,611  and  $2,383  was  charged  to  operations  for  the  six  months  ended

June 30, 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  Companys  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 assumptions can materially

affect the fair value estimate of the Companys stock options and warrants.

6



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  Companys  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.

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

7



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 (Loss) 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  Companys  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

Six Months Ended

June 30,

June 30,

2015

2014

2015

2014

Stock options

1,718,900

1,518,900

1,718,900

1,518,900

Stock warrants

275,000

275,000

275,000

275,000

Total shares excluded from

calculation

1,993,900

1,793,900

1,993,900

1,793,900

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  "CompensationStock  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  requires  judgment,  including  estimating  the  expected  term

that stock options will be outstanding prior to exercise, the associated volatility of the Companys

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.

8



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 June 30, 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 six months ended June 30, 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

Options granted

850,000

$

0.04

$

0.09

7.44

Options outstanding at

June 30, 2014

1,518,900

0.06

0.10

5.27

Options outstanding at

December 31, 2014

1,518,900

$

0.03

$

0.10

4.76

Options granted

200,000

0.01

0.40

4.74

June 30, 2015

1,718,900

$

0.03

$

0.13

4.32

Options outstanding at June 30, 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

9



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 six months ended June 30, 2015 and 2014 follows:

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

June 30, 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

June 30, 2015

275,000

$

0.94

$

0.10

3.92

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

Warrants outstanding at June 30, 2015 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

10



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  Companys  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 Companys 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 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 Companys 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

Companys  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.

11



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  Companys

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  Companys  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 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

Companys  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

On  May  18,  2015,  the  Company issued  600,000  common  shares  for  services,  valued  at  $.20  per

share.

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 June 30,

2015

2014

Effective tax rate

0.0 %

0.0 %

A  full  valuation  allowance  was  recorded  against  the  Companys  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  Companys  most  recent  results  of  operations

and expected future profitability. Based on the Companys cumulative losses in recent years, a full

valuation   allowance   against   the   Companys   deferred   tax   assets   has   been   established   as

Management believes that the Company will not realize the benefit of those deferred tax assets.

12



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 six months ended June 30, 2015 and 2014 were $2,477 and $3,581, respectively.

Note 11 Concentrations and Credit Risk

Sales and Accounts Receivable

Gotham had sales to one customer which accounted for approximately 65% of Gothams total sales

for  the  six  months  ended  June  30,  2015.    The  customer  accounted  for  approximately  66%  of

accounts receivable at June 30, 2015.

Gotham had sales to one customer which accounted for approximately 65% of Gothams total sales

for  the  six  months  ended  June  30,  2014.    The  customer  accounted  for  approximately  62%  of

accounts receivable at June 30, 2014.

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 June 30, 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

13



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.

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

earnings and no impact on the consolidated financial statements.

The  carrying  value  of  the  Companys  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 June 30, 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 June 30, 2015 and December 31, 2014, the Company did not have any derivative instruments

that were designated as hedges.

Fluctuations  in  the  Companys  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 Companys balance sheet. Additionally, stock price volatility is one

of the significant unobservable inputs used in the fair value measurement of each of the Companys

derivative  instruments.  The  simulated  fair  value  of  these  liabilities  is  sensitive  to  changes  in  the

Companys  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.

14



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 June 30, 2015 and December 31, 2014.

Advances From Stockholders

Two stockholders/officers of the Company made cash advances totaling $32,436 on behalf of the

Company.  These advances do not bear interest and will be repaid by December 31, 2015.

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

$   9,600

2016

19,440

2017

3,240

$ 32,280

Rent expense of $34,118 and $34,453 was charged to operations for the six months ended June 30,

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.

15



Item 2 Managements 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 Companys 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  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  managements  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  we  charge  are  fixed  or

16



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

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. There was no bad debt expense charged to operations for six months ended June

30, 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  $2,611  and  $2,383  was  charged  to  operations  for  the  six months

ended June 30, 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 the Companys common stock.  Changes in these subjective input

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

17



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  Companys  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. Management has determined that the Company has  no significant

uncertain tax positions requiring recognition and measurement under ASC 740-10.

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  Companys  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.

18



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.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

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.

Assets.  At  June  30,  2015,  we  had  $271,939  in  total  assets,  compared  to  $280,786  at

December  31,  2014.  The  increase  in  total  assets  was  primarily  due  to  the  increase  in  accounts

receivable and an increase in prepaid expenses.

Liabilities. At  June 30, 2015, our total liabilities were $340,975 compared to $285,277 at

December  31,  2014.  Liabilities  consist  of  accounts  payable  of  $308,539  and  loans  payable  to

stockholders  of  $32,436,  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  $69,036  at June  30,

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  $(3,078,742)  at  June  30,  2015,

resulting from losses from operations of $(196,543) for the six months ended June 30, 2015.

19



THREE  MONTHS  ENDED  JUNE  30,  2015  AS  COMPARED  TO  THREE  MONTHS

ENDED JUNE 30, 2014

Revenues and Net Loss. We had $347,767 of revenue and a net loss of $51,646 during the

three  months  ended  June  30,  2015  compared  to  revenue  of  $310,424  and  a  net  loss  of  $75,270

during the  three  months  ended June  30, 2014.  The increase  in revenue  and decrease  in  net losses

was  due  to an  increase in  revenue  generated  by our  Gotham  subsidiary and  a  decrease  in  general

and administrative expenses. We also earned other income of $0 for the three months ended June

30,  2015,  compared  to  other  income  of  $119,805  for  the  three  months  ended  June  30,  2014

primarily due to the gain on derivative liability. In addition to Gothams operations, we had income

from discontinued operations of $0 and $6,176 for the three months ended June 30, 2015 and June

30, 2014, respectively.

General  and  Administrative  Expenses.  General  and  Administrative  Expenses  decreased

to $228,828 for the three months ended June  30, 2015 from $387,972 for the three months ended

June  30,  2014.     For  the  three  months  ended  June  30,  2015  our  General  and  Administrative

Expenses  consisted  of  corporate  administrative  expenses  of  $42,853,  rent  expense  of  $16,845,

employee   benefits,   consisting  primarily  of   health  insurance  expense   of   $10,414,   legal   and

accounting fees of $24,569, business insurance expenses of $11,655, finders fees and commissions

of $17,500, investor relations expenses of $9,649, and payroll expenses of $95,343. For the three

months  ended  June  30,  2014  our  General  and  Administrative  Expenses  consisted  of  corporate

administrative expenses of $68,022, rent expense of $16,997, legal and accounting fees of $12,628,

employee benefits, consisting primarily of health insurance expense of $15,416, consulting fees of

$26,106, payroll expenses of $198,024 and a bad debt write off of $50,779 as part of a settlement

for the receivable balance on the IGX rescission agreement. The decreases from the three months

ended June 30, 2014 to the three months ended June 30, 2014 relate primarily to: (i) a decrease in

payroll  expenses;  (ii)  a  decrease  in  rent;  and  (iii)  a  decrease  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)  and  Taxes.  We  had  interest  expense  of  $3,141  for  the  three

months  ended  June  30,  2015  compared  to  other  income  of  $119,805  for  the  three  months  ended

June 30, 2014, primarily due to the gain on derivative liability.

Six Months Ended June 30, 2015 as Compared to Six Months Ended June 30, 2014

Revenues and Net Loss. We had $648,114 of revenue and a net loss of $196,543 during the six

months  ended  June  30,  2015,  as  compared  to  $550,637  of  revenue  and  a  net  loss  of  $236,8448

during  the  six  months  ended  June  30,  2014.   The  increase  in  revenue  and  decrease  in  net  losses

was due to an increase in revenue generated by our acquired subsidiary Gotham and a decrease in

general and administrative expenses.

General  and  Administrative  Expenses.  General  and  Administrative  Expenses  decreased  to

$536,747  for  the  six  months  ended  June  30,  2015  from  $660,239  for  the  six  months  ended  June

20



30,  2014.  For  the  six  months  ended  June  30,  2015  our  General  and  Administrative  Expenses

consisted  of  corporate  administrative  expenses  of  $107,752,  rent  expense  of  $34,118,  employee

benefits, consisting primarily of health insurance expense of $18,102, legal and accounting fees of

$64,649,  business  insurance  expenses  of  $23,990,  consulting  fees  of  $14,498,  finders  fees  and

commissions of $17,500, investor relations expenses of $9,649, filing fees of $10,105, and payroll

expenses  of  $236,384.  For  the  six  months  ended  June  30,  2014  our  General  and  Administrative

Expenses  consisted  of  corporate  administrative  expenses  of  $110,176,  rent  expense  of  $34,453,

employee   benefits,   consisting  primarily  of   health  insurance  expense   of   $37,338,   legal   and

accounting fees  of  $48,964,  business  insurance expenses  of  $23,500,  consulting fees  of  $26,106,

payroll  expenses  of  $328,923,  and  a  bad  debt  write  off  of  $50,779  as  part  of  a  settlement  for  the

receivable  balance  on  the  IGX  rescission  agreement.  The  decreases  from  the  six  months  ended

June  30,  2014  to  the  six  months  ended  June  30,  2015  relate  primarily  to  a  decrease  in  payroll

expense, health benefits and corporate administrative expenses.  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)  and  Taxes.  We  had  interest  expense  of  $4,844  for  the  three  months

ended June 30, 2015 compared to other income of $81,838 primarily due to the gain on derivative

liability for the six months ended June 30, 2014.

LIQUIDITY AND CAPITAL RESOURCES

General

As  reflected in  the accompanying consolidated financial  statements, at June 30,  2015,  we

had $40,976 of cash and stockholders deficiency of $69,036 as compared to $133,436 of cash and

stockholders deficiency of $4,491 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 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 Gothams 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  Gothams  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.

21



Cash Flow Activity

Net  cash  used  by  continuing  operating  activities  was  $119,870  for  the  six  months  ended

June  30,  2015,  compared  to  net  cash  provided  by  operating  activities  of  $618,957  for  the  six

months  ended  June  30,  2014.    Our  primary  source  of  operating  cash  flows  from  continuing

operating  activities  for  the  six  months  ended  June  30,  2015  was  from  our  Gotham  subsidiarys

revenues of $648,114 and $550,637 for the six months ended June 30, 2015 and 2014, respectively.

Additional  contributing  factors  to  the  change  were  from  an  increase  in  accounts  receivable  of

$25,860,  an  increase  in  prepaid  expenses  of  $55,338,  and  an  increase  in  accounts  payable  of

$23,262.  Net cash provided by discontinued operating activities was $0 for the six months ended

June  30,  2015  and  cash  provided  by  discontinued  operating  activities  was  $655,746  for  the  six

months ended June 30, 2014.  Cash provided by discontinued operations for the six months ended

June  30,  2014  consisted  of  $655,746  in  cash  payments  received  from  DDC  against  accounts

receivable included in the Assets from Discontinued Operations.

Cash  used  by  investing  activities  was  $5,026  for  the  six  months  ended  June  30,  2015

compared to  cash used  by investing activities  of  $4,738  for  the  six  months  ended  June  30,  2014.

For  the  six  months  ended June 30,  2015 the  use  of  cash  used  in investing activities was  from the

purchase  of  property and  equipment.  For  the  six  months  ended June  30,  2014  the  primary use  of

cash  in  investing  activities  was  from  purchases  of  property  and  equipment  of  $2,026  and  an

increase in deposits of $2,712.

Cash  provided  by  financing  activities  was  $32,436  for  the  six  months  ended  June  30,  2015

compared to cash used by financing activities of $(51,400) for the six months ended June 30, 2014.

The cash flows provided by financing activities for the six months ended June 30,2015 was from

stockholder  loans  and  the  cash  flows  used  by  financing  activities  for  the  six  months  ended  June

30, 2014 was primarily from repayment of the convertible note payable.

Supplemental Cash Flow Activity

In  the  six  months  ended  June  30,  2015  the  company paid  interest  of  $4,844  compared  to

interest of $6,988 in the six months ended June 30, 2014.

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  June  30,  2012.  Based  upon  that  evaluation,  our  Chief  Executive  Officer  and  Chief  Financial

Officer concluded that our disclosure controls and procedures were effective as of June 30, 2015.

22



Change in Internal Controls

During the six months ended June 30, 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 June 30, 2015.

Item 1A.    Risk Factors.

Not required

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

On  May  18,  2015,  the  Company issued  600,000  common  shares  for  services,  valued  at  $.20  per

share.

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.

23



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.)

24



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 August 18, 2015.

iGambit Inc.

/s/ John Salerno

John Salerno

Chief Executive Officer

/s/ Elisa Luqman

Elisa Luqman

Chief Financial Officer

25



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.)

26