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EX-32.2 - IGAMBIT CERTIFICATION - iGambit, Inc.exhibit322.htm
EX-31.2 - IGAMBIT CERTIFICATION - iGambit, Inc.exhibit312.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 September 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

(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

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 39,683,990 shares of its common stock outstanding as of November 13, 2015.



iGambit Inc.

Form 10-Q

Part I — Financial Information

Item 1.

Financial Statements:

Consolidated Balance Sheets

1

Consolidated Statements of Income

2

Consolidated Statements of Cash Flows

3

Notes to Consolidated Financial Statements

4

Item 2.

Management’s Discussion and Analysis of Financial Condition and

Results of Operations

18

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

26

Item 4.

Controls and Procedures

26

Part II — Other Information

Item 1.

Legal Proceedings

26

Item 1A.

Risk Factors

27

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

28

Item 3.

Defaults upon Senior Securities

28

Item 4.

Removed and Reserved

28

Item 5.

Other Information

28

Item 6.

Exhibits

28

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

SEPTEMBER 30,

2015

DECEMBER 31,

(Unaudited)

2014

ASSETS

Current assets

Cash

$

18,754

$

133,436

Accounts receivable, net

145,160

81,671

Prepaid expenses

224,247

45,110

Total current assets

388,161

260,217

Property and equipment, net

9,546

8,436

Other assets

Deposits

12,133

12,133

$

409,840

$

280,786

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

Current liabilities

Accounts payable

$

315,389

$

285,277

Advances from stockholders

38,336

--

Total current liabilities

353,725

285,277

Commitments and contingencies

Stockholders' equity (deficiency)

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

no shares  issued or outstanding in 2015 and 2014,

respectively

--

--

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

issued and outstanding - 28,183,990 shares in 2015 and

26,583,990 shares in 2014, respectively

28,184

26,584

Additional paid-in capital

3,181,522

2,851,124

Accumulated deficit

(3,153,591)

(2,882,199)

Total stockholders' equity (deficiency)

56,115

(4,491)

$

409,840

$

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

NINE MONTHS

ENDED

ENDED

SEPTEMBER 30,

SEPTEMBER 30,

2015

2014

2015

2014

Sales

$

312,148

$

269,166

$

960,262

$

819,803

Cost of sales

125,809

115,214

428,875

341,829

Gross profit

186,339

153,952

531,387

477,974

Operating expenses

General and administrative expenses

258,885

338,288

795,632

998,527

Loss from operations

(72,546)

(184,336)

(264,245)

(520,553)

Other income (expenses)

Gain on derivative liability

--

--

--

152,076

Amortization of debt discount

--

--

--

(63,250)

Interest expense

(2,303)

(1,429)

(7,147)

(8,417)

Total other income (expenses)

(2,303)

(1,429)

(7,147)

80,409

Loss from continuing operations

(74,849)

(185,765)

(271,392)

(440,144)

Income from discontinued operations

--

--

--

17,531

Net loss

$

(74,849)

$

(185,765)

$

(271,392)

$

(422,613)

Basic and fully diluted loss per common

share:

Continuing operations

$

(.00)

$

(.01)

$

(.01)

$

(.02)

Discontinued operations

$

.00

$

.00

$

.00

$

.00

Net loss per common share

$

(.00)

$

(.01)

$

(.01)

$

(.02)

Weighted average common shares

outstanding - basic

27,825,294

26,709,056

27,099,008

25,737,023

Weighted average common shares outstanding

- fully diluted

27,825,294

26,709,056

27,099,008

25,737,023

The accompanying notes are an integral part of these condensed consolidated

financial statements.

2



IGAMBIT INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED SEPTEMBER 30,

(UNAUDITED)

2015

2014

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$

(271,392)

$

(422,613)

Adjustments to reconcile net loss to net

cash provided (used) by operating activities

Income from discontinued operations

--

(17,531)

Depreciation

3,916

3,574

Debt discount amortization

--

63,250

Stock-based compensation

331,998

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

(63,489)

34,902

Prepaid expenses

(179,137)

(31,113)

Due from rescission agreement

--

189,000

Accounts payable

30,112

(30,277)

Net cash used by continuing operating activities

(147,992)

(290,999)

Net cash provided by discontinued operating activities

--

655,746

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES

(147,992)

364,747

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

58,880

3,600

Repayments of advances from stockholders

(20,544)

(3,600)

Repayments of convertible note payable

--

(54,500)

NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES

38,336

(54,500)

NET INCREASE (DECREASE) IN CASH

(114,682)

305,509

CASH - BEGINNING OF PERIOD

133,436

26,870

CASH - END OF PERIOD

$

18,754

$

332,379

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest

$

7,147

$

8,417

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

Nine Months Ended September 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  nine  months  ended  September  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  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,  prepaid  expenses,  deposits,  accounts  payable,  and  advances  from

stockholders,  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  nine

months ended September 30, 2015 and 2014 were $3,352 and $1,657, 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  $5,426  and  $17,865  at  September

30, 2015 and December 31, 2014, respectively.  There was no bad debt expense charged to

operations for the nine months ended September 30, 2015 and 2014, respectively.

Property and Equipment

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 $3,916 and $3,574 was charged to operations for the nine months

ended September 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  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

6



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

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

7



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 (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

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

Nine Months Ended

September 30,

September 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  "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

September  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 nine months ended September 30, 2015 and 2014

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

4.44

Options granted

850,000

$

0.04

$

0.09

7.19

Options outstanding at

September 30, 2014

1,518,900

0.06

0.10

5.02

Options outstanding at

December 31, 2014

1,518,900

$

0.03

$

0.10

4.51

Options granted

200,000

0.01

0.40

4.48

September 30, 2015

1,718,900

$

0.03

$

0.13

4.07

follows:

9



Options outstanding at September 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

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 nine months ended September 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

5.17

No warrant activity

--

--

--

Warrants outstanding at

September 30, 2014

275,000

$

0.94

$

0.10

4.67

Warrants outstanding at

December 31, 2014

275,000

0.94

0.10

4.17

No warrant activity

--

--

--

Warrants outstanding at

September 30, 2015

275,000

$

0.94

$

0.10

3.67

10



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

Warrants outstanding at September 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

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 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

11



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  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

The  Company  issued  1,000,000  and  600,000  common  shares  for  services,  valued  at  $.20

per share on August 3, 2015 and May 18, 2015, respectively.

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.

12



Note 9 - Income Taxes

Quarter Ended September 30,

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  nine  months  ended  September  30,  2015  and

2014 were $3,678 and $5,179, respectively.

Note 11 – Concentrations and Credit Risk

Sales and Accounts Receivable

Gotham  had  sales  to  one  customer  which  accounted  for  approximately 64%  of  Gotham’s

total  sales  for  the  nine  months  ended  September  30,  2015.   The  customer  accounted  for

approximately 71% of accounts receivable at September 30, 2015.

Gotham  had  sales  to  one  customer  which  accounted  for  approximately 66%  of  Gotham’s

total  sales  for  the  nine  months  ended  September  30,  2014.   The  customer  accounted  for

approximately 70% of accounts receivable at September 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  September  30,  2015  and

December 31, 2014, respectively.

Note 12 - Fair Value Measurement

13



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.

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  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  September  30,  2015  and  December  31,  2014,  the  Company did  not  have  any items

that would be classified as level 1 or 2 disclosures.

14



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  September  30,  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 September 30, 2015 and December 31, 2014.

Advances From Stockholders

Two stockholders/officers of the Company made cash advances totaling $38,336 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.

15



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

$   4,830

2016

19,440

2017

3,240

$ 27,510

Rent expense of $50,963 and $51,209 was charged to operations for the nine months ended

September 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.

Note 15 – Subsequent Events

Acquisition

On November 4, 2015, the Company consummated the acquisition of Wala, Inc. doing business as

ArcMail  Technology  (a  Louisiana  corporation)  in  accordance  with  a  Stock  Purchase  Agreement

(the  “Purchase  Agreement”)  by  and  among  Wala,  Inc.  doing  business  as  ArcMail  Technologies

(“ArcMail”),      Rory      T.      Welch      (the      “Seller”)      and      the      Company.

Arcmail

is  engaged  in  the  business  of  creating  and  providing  email  archiving and management

solutions to customers throughout the United States.

Pursuant to the Stock Purchase, the total consideration to be paid for the outstanding capital stock

of ArcMail is 11,500,000 shares of iGambit Common stock composed of:

(1)   10,500,000  shares  of   iGambit  Common  stock  to  the  Seller,  and/or  Seller’s

designees at Closing and;

the  Holdback  Amount  of  1,000,000  shares  of  iGambit  Common  stock to be  held  in  Escrow

and paid to the Seller on later of (i) the first (1st) anniversary of completion of the first audit

of  Purchaser  after  the  Closing,  or  (ii)  that  date  which  is  twelve  (12)  months  from  the

Closing,  provided  that  in  the  event  the  Company  or  the  Purchaser  has  any  claims  for

indemnification against the Seller under the Purchase Agreement, Purchaser shall continue

to  withhold  the  portion  of  the  Holdback  Amount  subject  to  such  claims  until  the  parties

fully and finally resolve such claims.

Sale of Assets

16



On  November  5,  2015,  pursuant  to  an  asset  purchase  agreement  Gotham  sold  assets

consisting  of  fixed  assets,  client  and  supplier  lists,  trade  names,  software,  social  media

accounts  and  websites,  and  domain  names  to  VHT,  Inc.,  a  Delaware  corporation  for  a

purchase  price of  $600,000.   Gotham received $400,000 and  commencing on January 29,

2016,  VHT,  Inc.  shall  pay  twelve  equal  monthly  installments  of  $16,666.67  on  the  last

business   day  of   each   month  (the   Installment   Payments”  and   each,   an   Installment

Payment”), each Installment Payment to consist of (1) an earn-out payment of $10,000 (the

Earn-Out  Payments”  and  each,  an  Earn-Out  Payment”),  and  (2)  an  additional  payment

of  $6,666.67  (the  Additional  Payments”  and  each,  an  Additional  Payment”);  provided

that  VHT,  Inc.  shall  only  be  required  to  make  the  Earn-Out  Payments  for  as  long  as  it

maintains  its  relationship  with  Gotham’s  major  client,  unless  it  is  dissatisfied  with  VHT,

Inc.

17



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 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.

18



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 determinable, we and  our customers understand the specific nature  and terms

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

Contingency payment income was recognized quarterly from a percentage of Digi-

Data’s vaulting service revenue, and is included in discontinued operations.

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  nine  months  ended  September  30,  2015  and  2014,

respectively.

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  nine  months  ended  September

30, 2014.

Property and Equipment

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

19



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 $3,916 and $3,574 was charged to operations for the nine

months ended September 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

Company’s 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. 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  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  nine  months  ended

September 30, 2014.

20



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  passed  we

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  nine  months  ended  September30,  2014,  we  amortized

$63,250  of  debt  discount.   During  the  nine  months  ended  September30,  2014,  the  note

holder  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

Convertible Note

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

Convertible Note 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.  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  the  Company’s  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.A gain on derivative liability of

$152,076   was   recorded   during  the  nine   months   ended   September  30,   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  our  contracts  based

upon earliest issuance date.

21



MANAGEMENT’S 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.

On  November  4,  2015,  we  consummated  the  acquisition  of  Wala,  Inc.  doing  business  as

ArcMail  Technology  (the  “ArcMial”)  in  accordance  with  a  Stock  Purchase  Agreement  (the

“Purchase Agreement”) by and among ArcMail,  Rory T. Welch (the “Seller”) and the Company.

Pursuant to the Stock Purchase, the total consideration to be paid for the outstanding capital stock

of  ArcMail  is  11,500,000  shares  of  the  Company’s  Common  stock.  10,500,000  shares  of

iGambit’s   Common   stock  to  the  Seller,  and/or  Seller’s  designees  at  Closing  and  the

Holdback Amount of 1,000,000 shares of the iGambit’s Common stock to be held in Escrow

and paid to the Seller on later of (i) the first (1st) anniversary of completion of the first audit

of  Purchaser  after  the  Closing,  or  (ii)  that  date  which  is  twelve  (12)  months  from  the

Closing,   provided   that   in   the   event   iGambit   or   the   Purchaser   has   any   claims   for

indemnification against the Seller under the Purchase Agreement, Purchaser shall continue

to  withhold  the  portion  of  the  Holdback  Amount  subject  to  such  claims  until  the  parties

fully and finally resolve such claims.

The Stock Purchase Agreement was disclosed on the Company’s current report on

Form 8-K filed on November 10, 2015.

On November  5,  2015,   through  our  wholly owned  subsidiary Gotham Innovation  Lab,  Inc.

(“Gotham”),  we  announced  that  we  completed  the  sale  of  certain  assets  of  Gotham  to  VHT  Inc.

(“VHT”)  in  accordance  with  an  Asset  Purchase  Agreement  (the  “Purchase  Agreement”)  by  and

between  Gotham  and  VHT.      Pursuant  to  the  Purchase  Agreement  we  received  $600,000  in

consideration,  $400,000  of the  consideration  was  received  at closing and  the  remaining $200,000

portion  of  the  consideration  is  subject  to  twelve  (12)  equal  monthly  payments  beginning  January

2016.    The  sale  included  certain  of  the  assets  of  the  Gotham,  including  the  Elliman  customer

agreement, all customer accounts, all vendor agreements and all the intellectual property.

The Purchase Agreement was disclosed on the  Company’s  current report on Form

8-K filed on November 11, 2015.

Assets.  At  September  30,  2015,  we  had  $409,840  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 prepaid expenses.

Liabilities.  At  September  30,  2015,  our  total  liabilities  were  $353,725  compared

to  $285,277  at  December  31,  2014.  Liabilities  consist  of  accounts  payable  of  $315,389,

and   advances   from   shareholders   of   $38,336,   whereas   our   total   liabilities   as   of

December 31, 2014  consisted  of  accounts  payable  of  $285,277. The  increase  in  liabilities

was primarily due to an increase in accounts payable and a loan from stockholders.  We do

not have any long term liabilities.

22



Stockholders’ Equity. Our stockholders’ equity increased to $56,115 at September

30, 2015 from a deficit of ($4,491) at December 31, 2014.  This increase was primarily due

to an increase in assets for the nine months ended September 30, 2015.

THREE  MONTHS  ENDED  SEPTEMBER  30,  2015  AS  COMPARED  TO  THREE

MONTHS ENDED SEPTEMBER 30, 2014

Revenues and Cost of Sales. We had $312,148 of revenue during the three months

ended September 30, 2015 compared to revenue of $269,166 during the three months ended

September 30, 2014.  The increase in revenue was due primarily to an increase in revenue

generated by our Gotham subsidiary.  Our cost of goods sold increased to $125,809 for the

three  months  ended  September  30,  2015  as  opposed  to  $115,214  for  the  three  months

ending September 30, 2014 as a direct result of increased sales

General  and  Administrative  Expenses.  General  and  Administrative  Expenses

decreased to $258,885 for the three  months ended September 30, 2015 from $338,288 for

the  three  months  ended  September  30,  2014.   For  the  three  months  ended  September  30,

2015  our  General  and  Administrative  Expenses  consisted  of  corporate  administrative

expenses  of  $60,654,  rent  expense  of  $16,845,  legal  and  accounting  fees  of  $16,222,

employee benefits expense of $15,350, directors and officers insurance of $6,716, payroll

expenses  of  $100,598,  finder’s  fees  and  commissions  of  $17,500  and  investor  relations

expenses  of  $25,000.  For  the  three  months  ended  September  30,  2014  our  General  and

Administrative  Expenses  consisted  of  corporate  administrative  expenses  of  $51,116,  rent

expense  of  $16,756,  legal  and  accounting  fees  of  $24,225,  employee  benefits  expense  of

$15,933,  directors  and  officers  insurance  of  $11,075  and  payroll  expenses  of  $219,183.

The decreases from the three months ended September 30, 2014 to the three months ended

September  30,  2015  relate  primarily  to a  decrease  in  payroll  expenses  and  a  decrease  in

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

Costs  associated  with  our  general  and  administrative  expenses  are  likely to   increase  as  a

result  of the  sale of  the  assets  of  our Gotham subsidiary and  the  acquisition  of  Wala,  Inc.

doing  business  as  ArcMail  Technology  (‘ArcMail”)  in  the  fourth  quarter  of  fiscal  year

2015.

Other  Income  (Expense)  and  Taxes.  There  was  no  other  income  for  the  three

months  ended  September  30,  2015  and  2014  respectively.  We  had  interest  expense  of

$(2,303) for the  three  months  ended  September 30, 2015  compared  to  interest  expense  of

$(1,429) for the three months ended September 30, 2014.

NINE   MONTHS   ENDED   SEPTEMBER   30,   2015   AS   COMPARED   TO   NINE

MONTHS ENDED SEPTEMBER 30, 2014.

Revenues and Cost of Sales. We had $960,262 of revenue during the nine months ended

September  30,  2015,  as  compared  to  $819,803  of  revenue  during  the  nine  months  ended

September 30, 2014.  The increase in revenue was due primarily to an increase in revenue

generated by our Gotham subsidiary.  Our cost of goods sold increased to $428,875 for the

23



three  months  ended  September  30,  2015  as  opposed  to  $341,829  for  the  three  months

ending September 30, 2014 as a direct result of increased sales

General   and   Administrative   Expenses.   General   and   Administrative   Expenses

decreased  to  $795,632  for the  nine  months  ended  September 30,  2015  from $998,527  for

the nine months ended September 30, 2014. For the nine months ended September 30, 2015

our  General  and  Administrative  Expenses  consisted  of  corporate  administrative  expenses

of  $187,514,  rent  expense  of  $50,963,  legal  and  accounting  fees  of  $80,870,  employee

benefits expense of $42,405, directors and officers insurance of $27,249, payroll expenses

of  $336,982,  finder’s  fees  and  commissions  of  $35,000  and  investor  relation  expenses  of

$34,649.  For  the  nine  months  ended September 30, 2014  our  General  and  Administrative

Expenses  consisted  of  corporate  administrative  expenses  of  $189,645,  rent  expense  of

$51,209,  employee  benefits  expense  of  $53,271,  legal  and  accounting  fees  of  $73,189,

directors  and  officers  insurance  expense  of  $32,328,  payroll  expenses  of  $548,106  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  nine  months  ended  September  30,  2014  to

the  nine  months  ended  September  30,  2015  relate  primarily  to a  decrease  in  payroll

expenses  and  a decrease  in general  and  administrative costs associated with  the operation

of our  Gotham subsidiary.  Costs  associated  with  our  general  and  administrative  expenses

are likely to  increase as a result of the sale of the assets of our Gotham subsidiary and the

acquisition  of  Wala,  Inc.  doing  business  as  ArcMail  Technology  in  the  fourth  quarter  of

fiscal  year 2015.

Other Income (Expense) and Taxes.  We  had no  other income  for the  nine  months ended

September  30,  2015  as  opposed  to  other  income  of  $80,409  primarily  due  to  the  gain  on

derivative liability for the nine months ended September 30, 2014.

LIQUIDITY AND CAPITAL RESOURCES

General

As  reflected  in the  accompanying  consolidated  financial  statements,  at  September

30,  2015,  we  had  $18,754  of  cash  and  stockholders’  equity  of  $56,115  as  compared  to

$133,436  of  cash  and  stockholders’  deficiency  of  $(4,491)  at  December  31,  2014.    At

September 30,  2015  we  had  $409,840  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 new acquired ArcMail operations in fourth quarter 2015, 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  ArcMail’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

24



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 ArcMail’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  $147,992  for  the  nine  months  ended

September 30, 2015, compared to net cash provided by operating activities of $364,747 for

the  nine  months  ended  September  30,  2014.  Net  cash  used  by  continuing  operating

activities  was  $147,992  for  the  nine  months  ended  September  30,  2015,  compared  to  net

cash  used  by  continuing  operating  activities  of  $290,999  for  the  nine  months  ended

September 30, 2014. Our primary source of operating cash flows from continuing operating

activities for the nine months ended September 30, 2015 was from our Gotham subsidiary’s

revenues  of  $960,262  and  $819,903  for  the  nine  months  ended  September  30,  2014.

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

of  $63,489,  an  increase  in  prepaid  expenses  of  $179,137  and  an  increase  in  accounts

payable of $30,112. Net  cash provided by discontinued operating activities was $0 for the

nine months ended September 30, 2015 and $655,746 for the nine months ended September

30, 2014

Cash  used  by  investing  activities  was  $5,026  for  the  nine  months  ended  September

30, 2015 compared to cash used by investing activities of $4,738 for the nine months ended

September  30,  2014.  For  the  nine  months  ended  September  30,  2015  the  primary  use  of

cash  from  investing  activities  was  from  purchases  of  property  and  equipment  of  $5,026.

For  the  nine  months  ended  September  30,  2014  the  primary  use  of  cash  from  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   $38,336  for  the  nine   months  ended

September 30, 2015 compared to cash used by financing activities of $(54,500) for the nine

months ended September 30, 2014. The cash flows provided by financing activities for the

nine months ended September 30, 2015 was from advances from stockholders.    The cash

flows  used  by  financing  activities  for  the  nine  months  ended  September  30,  2014  was

primarily from repayment of the convertible note payable.

Supplemental Cash Flow Activity

In the nine months ended September 30, 2015 the company paid interest of $7,147

compared to interest of $8,417 in the nine months ended September 30, 2014.

25



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 September 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 September 30, 2015.

Change in Internal Controls

During  the  nine  months  ended  September 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.

Digi-Data Corporation

On  October  1,  2012,  we  filed  a  lawsuit  in  the  United  States  District  Court  for  the

District   of   Maryland,   Baltimore   Division,   asserting   claims   against   DigiData   Corp.

("Defendant")  for  monetary  damages  arising  from  the  Defendant's  breach  of  contract

regarding  that  certain  Asset  Purchase  Agreement  dated  February  26,  2006  among  the

parties, and to enforce payment of outstanding contingency payments due to the Company

pursuant to said agreement.

On December 13, 2013 the  Court Granted Summary Judgment in iGambit’s favor

against Digi-Data in the amount of $570,590, plus interest at the Maryland legal rate of 6%

per annum from August 31, 2012, and post judgment interest at the Federal statutory

Rate.   Furthermore, Digi-Data’s Counterclaim was dismissed.

On  February  24,  2014  we  entered  into  a  Forbearance  Agreement  with  Digi-Data

pursuant  to  which  Digi-Data  shall  pay  to  iGambit  Six  Hundred  Forty-Six  Thousand,  Six

Hundred   Sixty-Eight   Dollars   and   Sixty-Seven   Cents   ($646,668.67)   (the   “Settlement

Amount”) in full satisfaction of the Judgment based upon the following terms:

Initial Payment: Digi-Data shall pay the Settlement Amount by delivering Twenty-

Five  Thousand  Dollars  and  No  Cents  ($25,000.00)  to  iGambit  upon  the  execution  of  this

26



Agreement  (“Initial  Payment”),  and  delivering  the  remaining  Six  Hundred  Twenty-One

Thousand,  Six  Hundred  Sixty-Eight  Dollars  and  Sixty-Seven  Cents  ($621,668.67),  plus

interest at a rate of 6% per annum (calculated at Actual/360) (the “Remaining Balance”) to

iGambit.

Monthly Payments:  Commencing thirty (30) calendar days after the Effective Date,

and continuing for the three following months, Digi-Data shall make monthly payments of

Twelve Thousand, Five Hundred Dollars and No Cents ($12,500.00) to iGambit (each, an

“Initial  Monthly  Payment”).   Thirty  (30)  calendar  days  after  the  fourth  Initial  Monthly

Payment  is  made, Digi-Data shall commence  making a  monthly payment  of  Twenty-Five

Thousand  Dollars  and  No  Cents  ($25,000.00)  to  iGambit  until  the  Remaining  Balance  is

paid in full (each, a “Subsequent Monthly Payment”).  Such Initial Monthly Payments and

Subsequent Monthly Payments shall be credited to payment of the Settlement Amount and

Remaining  Balance,  with  payment  being  first  applied  to  accrued  and/or  outstanding

interests, then to principal.

Line  of  Credit  Payments:   In  the  event  that  Digi-Data  obtains  a  new  line  of  credit

subsequent  to  the  Effective  Date  under  terms  acceptable  to  Digi-Data  in  the  amount  of

Three Million Dollars and No Cents ($3,000,000.00) or greater it shall, within fifteen (15)

calendar  days  upon  obtaining  such  funding,  pay  the  full  Remaining  Balance  to  iGambit

(the “LOC Payment”).  In the event that Digi-Data obtains a new line of credit subsequent

to the Effective Date under terms  acceptable to Digi-Data for any amount less  than Three

Million  Dollars  and  No  Cents  ($3,000,000.00)  that  is  secured  by  its  receivables  it  shall,

within  fifteen  (15)  calendar  days  of  obtaining  such  funding,  pay  Twenty-Five  Thousand

Dollars  and  No  Cents  ($25,000.00)  to  iGambit  (the  “Receivables  Payment”).    Such

Receivables   Payment   shall   be   credited   to   payment   of   the   Settlement   Amount   and

Remaining  Balance,  with  payment  being  first  applied  to  accrued  and/or  outstanding

interests, then to principal.

Digi-Data  Sale:   In  the  event  of  a  Digi-Data  Sale,  iGambit  shall  be  paid  the  Remaining

Balance at closing of any such Digi-Data Sale as provided in paragraph 2, below.  iGambit

acknowledges  that,  if  the  Digi-Data  Sale  is  a  sale  or  sales  of  the  Digi-Data  Assets,  there

may be  insufficient  proceeds  to  pay the  Remaining Balance  in  full.   If the  Digi-Data  Sale

is a sale or sales of the stock of Digi-Data and there are insufficient proceeds at closing to

pay  the  Remaining  Balance  in  full,  iGambit  shall  continue  to  receive  the  Subsequent

Monthly Payment until the full Remaining Balance is paid.

On  May  12,  2014,  Digi-Data paid  the  full  balance  due on  the  judgment  plus  all  accrued

interest upon the sale of Digi-Data.

Item 1A.  Risk Factors.

Not required

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

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In  connection  with  the  convertible  note  payable  (see  Note  6),  on  April  1,  2014,  the  note

holder  elected  to  convert  $10,000  principal  amount  of  the  Note  into  90,909  shares  of

common stock at a conversion price of $.11 per share.  On April 24, 2014, the note holder

elected to convert an additional $12,000 principal amount of the Note into 112,888 shares

of  common  stock  at  a  conversion  price  of  $.1063  per  share.   On  June  2,  2014,  the  note

holder elected to convert an additional $12,000 principal amount of the Note into 427,046

shares  of common stock at  a conversion price of $.0281 per share.  On June 11, 2014, the

note  holder  elected  to  convert  an  additional  $15,000  principal  amount  of  the  Note  into

909,091 shares of common stock at a conversion price of $.0165 per share.  We repaid the

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

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.)

28



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

November 16, 2015.

iGambit Inc.

/s/ John Salerno

John Salerno

Chief Executive Officer

/s/ Elisa Luqman

Elisa Luqman

Chief Financial Officer

29



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.)

30