NUTX 10-K Fiscal year ended Dec. 31, 2013

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2013

OR

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-53862

IGAMBIT INC.

(Exact name of registrant 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)

(631) 670-6777

(Registrant’s telephone number)

(Registrant’s former telephone number)

Securities registered under Section 12(b) of the Exchange Act:

Title of Each Class: NONE

Name of Each Exchange on Which

Registered:

Securities registered pursuant to Section 12(g) of the Act: Common Stock

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in

Rule 405 of the Securities Act. Yes o No þ

Indicate  by  check mark if  the registrant is not required to file reports pursuant to

Section 13 or Section 15(d) of the Exchange Act. Yes o No þ

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

by Section 13 or 15(d) of the Securities Exchange  Act of 1934 during the preceding

12 months (or for such shorter period that the registrant was required to file such reports),

and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

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

its corporate website, if any, every Interactive Date File required to be submitted and

posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of the chapter) during

the preceding 12 months (or for such shorter period that the registrant was required to

submit and post such files). Yes þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of

Regulation S-K is not contained herein, and will not be contained, to the best of

registrant’s  knowledge,  in  definitive  proxy or  information  statements incorporated  by

reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

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

Non-accelerated filer o

Smaller

accelerated

filer o

reporting

filer o

company þ

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 126-

2 of the act): Yes o No þ

There is not currently a market for the Registrant’s common stock.

As of March 31, 2014 there were 25,044,056 shares of the Registrant’s $0.001 par value

common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE: None

iGambit Inc.

FORM 10-K — FOR THE YEAR ENDED DECEMBER 31, 2013

TABLE OF CONTENTS

Page No.

PART I

Item 1

Business

1

Item 1A

Risk Factors

9

Item 1B

Unresolved Staff Comments

9

Item 2

Properties

9

Item 3

Legal Proceedings

10

Item 4

(Removed and Reserved)

12

PART II

Item 5

Market for Registrant’s Common Equity, Related Stockholder Matters

and Issuer Purchases of Equity Securities

13

Item 6

Selected Financial Data

14

Item 7

Management’s Discussion and Analysis of Financial Condition and

Results of Operations

15

Item 7A

Quantitative and Qualitative Disclosure About Market Risk

21

Item 8

Financial Statements and Supplementary Data

21

Item 9

Changes in and Disagreements with Accountants on Accounting and

Financial Disclosure

21

Item 9A

Controls and Procedures

22

Item 9B

Other Information

23

PART III

Item 10

Directors, Executive Officers and Corporate Governance

23

Item 11

Executive Compensation

28

Item 12

Security Ownership of Certain Beneficial Owners and Management

and Related Stockholder Matters

30

Item 13

Certain Relationships, Related Transactions and Director

Independence

30

Item 14

Principal Accountant Fees and Services

31

PART IV

Item 15

Exhibits and Financial Statement Schedules

32

EX-31.1

EX-31.2

EX-32.1

EX-32.2

i

This annual report on Form 10-K is for the year ended December 31, 2013. The

Securities and Exchange Commission (“SEC”) allows us to “incorporate by reference”

information  that  we  file  with  the  SEC,  which  means  that  we  can  disclose  important

information   to   you   by   referring you   directly   to   those   documents. Information

incorporated  by reference  is  considered  to  be  part  of  this  annual  report.  In  addition,

information that we  file  with the SEC in the future will  automatically  update and

supersede information contained in this annual report. In this annual report, “Company,”

“we,” “us” and “our” refer to iGambit Inc. and its subsidiaries.

ii

PART I

This Annual Report on Form 10-K 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. The Company has based these forward-

looking statements on the Company’s current expectations and projections about future

events. These forward-looking statements are subject to known and unknown risks,

uncertainties and assumptions about us and the Company’s subsidiaries that may cause

the  Company’s  actual  results,  levels  of  activity,  performance  or  achievements  to  be

materially   different   from   any   future   results,   levels   of   activity,   performance   or

achievements expressed or implied by such forward-looking statements. In many cases,

you can identify forward-looking statements by terminology such as “anticipate,”

“estimate,” “believe,” “continue,” “could,” “intend,” “may,” “plan,” “potential,”

“predict,” “should,” “will,” “expect,” “objective,” “projection,” “forecast,” “goal,”

“guidance,” “outlook,” “effort,” “target” and other similar words. However, the

absence  of  these  words  does  not  mean  that  the  statements  are  not  forward-looking.

Factors  that  might  cause  or  contribute  to  a  material  difference  include,  but  are  not

limited to, those discussed elsewhere in this Annual Report, including the section entitled

“Risk Factors” and the risks discussed in the Company’s other Securities and Exchange

Commission  filings. The  following  discussion should be read in  conjunction with the

Company’s   audited   Consolidated   Financial   Statements   and   related   Notes   thereto

included elsewhere in this report.

ITEM 1. BUSINESS

HISTORY

We were incorporated in the State of Delaware under the name BigVault.com Inc.

on April 13, 2000. On April 18, 2000, we merged with BigVault.com, Inc., a New York

corporation with which we were affiliated. We survived the merger, and on December 19,

2000 changed our name to bigVAULT Storage Technologies, Inc. At that time we were

in the business of providing remote, internet-based storage vaulting services and related

ancillary services to end users and resellers (the “Vault Business”).

On February 28, 2006 we sold all of our assets to Digi-Data Corporation

(“DDC”), an unrelated third party, pursuant to the terms of an Asset Purchase Agreement

dated December 21, 2005 (the “APA”), a copy of which is filed herewith as an exhibit.

As  consideration for our transfer of assets  under the APA, DDC  paid  certain of our

liabilities and agreed to make certain quarterly and annual revenue sharing payments to

us, as is further described below. Mr. Salerno and Ms. Luqman accepted employment

with DDC in senior management positions post closing, and continued to work for DDC

until February 2009. As of March 1, 2009 Mr. Salerno and Ms. Luqman returned to their

full time management roles with the Company.

On April 5, 2006, we changed our name to iGambit Inc.

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On October 1, 2009, we acquired the assets of Jekyll Island Ventures, Inc., a New

York  corporation  doing  business  as  Gotham  Photo  Company  (“Jekyll”)  through  our

wholly owned subsidiary Gotham Innovation Lab, Inc., a New York corporation

(“Gotham”). Pursuant to the terms of the Asset Purchase Agreement and Plan of

Reorganization (“APAPR”), we (i) issued 500,000 shares of our common stock to Jekyll

at closing; (ii) assumed $10,410.59 of Jekyll accounts payable relating to office rent and

health insurance premiums; and (iii) issued Jekyll warrants to purchase 1,500,000 shares

of our common stock, at $0.01 per share, subject to a 3 year vesting schedule and the

attainment by Gotham of certain revenue targets during said 3 year period.   The 3 year

period has ended and Gotham did not attain the revenue targets.

On December 28, 2012, we entered into an Asset and Stock Purchase Agreement

(the “Purchase Agreement”) to acquire substantially all of the assets of IGX Global Inc. a

Connecticut corporation (“IGXUS”), and all of the issued and outstanding shares of IGX

Global  UK  Limited  a  UK  Private  Limited  company  (“IGXUK”)  through  our  wholly

owned subsidiary IGXGLOBAL CORP., a Delaware corporation (“IGXGLOBAL”), and

thereby acquired the business operated by IGSUS and IGSUK (the “Acquired Business”).

Thomas Duffy is the sole shareholder of both IGXUK and IGXUS (the “Shareholder”).

The Purchase Agreement was disclosed on the Company’s current report on Form 8-K

filed on January 7, 2013.

Pursuant to the terms of the Purchase Agreement Thomas Duffy was to receive

(i) $1,500,000 payable $ 500,000 in cash and a Promissory Note in the principal sum of

$1,000,000 and (ii) Thomas Duffy was to receive 3.75 million iGambit Inc. Common

voting shares over a three-year period starting on the first through third anniversary of

signing of this agreement, based upon certain criteria. In addition, iGambit was to pay

approximately   $2,500,000   of the Acquired Business’s liabilities (the “Assumed

Liabilities”).

The cash portion and certain debt assumed of the Purchase Price was financed

through asset based funding issued by Keltic Financial Partners II LLP for a $6 million

revolving credit line.

On April 8, 2013, iGambit  Inc. (“iGambit”) and its wholly owned subsidiary,

IGXGLOBAL,  CORP.    (“IGXGLOBAL”,  and  collectively,  the  "Company"),  entered

into,  and  became  obligated  under,  a  transaction  to  rescind  the  Company’s  Purchase

Agreement dated December 28, 2012   with   IGX Global Inc. (“IGXUS”), IGX Global

UK Limited (“IGXUK”, and collectively, “IGXNJ”) and Tomas Duffy (“Duffy”) the sole

shareholder of both IGXUK and IGXUS (the “Shareholder”). The Rescission Agreement

was disclosed on the Company’s current report on Form 8-K filed on April 12, 2013.

Under the terms of the Rescission Agreement, the Company, IGXNJ and

Shareholder (collectively “IGX”), agreed to unwind the Purchase Agreement in its

entirety  and  to  fully  restore  each  to  the  positions  they  were  respectively  in  prior  to

entering the  Purchase  Agreement,  in  every respect  other  than  as  otherwise  expressly

contemplated by the Rescission Agreement; and key terms as follows:

2

(i)  IGX to payback or arrange acceptable payoff of the Keltic Financing;

(ii) Cancellation of any future consideration to IGX;

(iii) IGX to pay to iGambit $625,000 in consideration for its expenses and

inconvenience; and

(v) IGX  to assume  and pay  certain expenses related to the  contemplated

Purchase Agreement.

On  April  25,  2013  the  conditions  to  closing  the  Rescission  Agreement  were

completed.

OUR COMPANY

Introduction

We are a company focused on the technology markets. Presently we have one

operating subsidiary, Gotham Innovation Lab Inc. (“Gotham”). Gotham is in the business

of providing media technology services to the real estate industry. Revenues consist

mostly of revenues from the operation of our Gotham subsidiary ($1,461,183 during year

ended December 31, 2013). . In addition to Gotham’s operations, we earned other income

of $755,000 and income from discontinued operations of $317,625.

Our primary focus is the acquisition of additional technology companies. We

believe that the background of our management and of our Board of Directors in the

technology markets is a valuable resource that makes us a desirable business partner to

the companies that we are seeking to acquire. When we acquire a company, we work to

assume an active role in the development and growth of the company, providing both

strategic guidance and operational support. We provide strategic guidance to our partner

companies relating  to, among  other things, market positioning,  business model and

product development, strategic capital expenditures, mergers and acquisitions and exit

opportunities. Additionally, we provide operational support to help our partner companies

manage day-to-day business and operational issues and implement best practices in the

areas of finance, sales and marketing, business development, human resources and legal

services. Once a company joins our partner company network, our collective expertise is

leveraged   to   help   position   that   company to   produce   high-margin,   recurring   and

predictable earnings and generate long-term value for our stockholders.

Our  current  intention  is  to  fund  the  purchase  price  of  acquisitions  through  a

combination of the issuance of our common stock at closing and the issuance of common

stock purchase or common-stock warrants that would become exercisable only in the

event certain earn-out conditions are satisfied by the acquired company. In addition to

acquiring  entire  companies,  we  would  also  consider  entering  into  joint  ventures  and

acquiring less than 100 percent of a target company.

3

Our Strategy to Grow the Company

General

We have an overall corporate business plan as a holding company to seek out and

acquire operating companies. Phase one of our strategy is complete. We established new

corporate headquarters   and a website,   expanded our board to include 3 outside

independent directors, set up periodic board meetings, engaged a sophisticated full

service law firm, engaged a new PCAOB registered auditing firm, engaged an investment

banking firm as advisors to assist in the analysis of target acquisitions, and become an

SEC reporting company. In addition, we have identified and acquired our first target

company, Jekyll Island Ventures Inc. We are working on a daily basis towards phase two

of our strategy, identifying further acquisitions that will expand and or complement our

existing subsidiary.

Sources of Target Businesses

We anticipate that target business candidates will be brought to our attention from

various sources, including our management team, investment bankers, venture  capital

funds,   private   equity   funds,   leveraged   buyout   funds,   management   buyout   funds,

consulting firms and other members of the financial community who will become aware

that we are seeking business partners via public relations and marketing efforts, direct

contact by management or other similar efforts, who may present solicited or unsolicited

proposals. Any finder  or broker  would only be  paid  a fee  upon the  completion  of a

business  combination.  While  we  do  not  presently anticipate  engaging  the  services of

professional firms that specialize in acquisitions on any formal basis, we may decide to

engage such firms in the future or we may be approached on an unsolicited basis. Our

officers and directors, as well as their affiliates, may also bring to our attention target

business candidates that they become aware of through their business contacts. While our

officers and directors make no commitment as to the amount of time they will spend

trying to identify or investigate potential target businesses, they believe that the various

relationships they have developed over their careers together with their direct inquiry,

will   generate   a   number   of   potential   target   businesses   that   will   warrant   further

investigation.  In no event  will  we pay any of our existing officers, directors, special

advisors or stockholders or any entity with which they are affiliated any finder’s fee or

other compensation for services rendered to us prior to or in connection with the

completion of a business combination. In addition, none of our officers, directors, special

advisors or existing stockholders will receive any finder’s fee, consulting fees or any

similar  fees  from  any  person  or  entity in  connection  with  any  business  combination

involving us other than any compensation or fees that may be received for any services

provided following such business combination.

Selecting Acquisition Targets

Our management has virtually unrestricted flexibility in identifying prospective

target business and diligently reviews all of the proposals we receive.

4

The criteria we look for in a potential acquisition include, but are not limited to,

the following:

Company Characteristics

§ Established Company with proven track record

o Company with history of strong operating and financial performance, or

o Company undergoing a turnaround that demonstrates strong prospects for

future growth

§ Strong Cash Flow Characteristics.

o Cash flow neutral or positive,

o Predictable recurring revenue stream,

o High gross margins and

o Low working capital and capital expenditure needs

§ Strong Competitive Industry Position

o Leading or niche market position, and/or

o Strong channel relationships that promote barriers to entry

§ Strong Management Team

o Experienced,  proven  track  record  in  delivering    revenue  and  ability to

execute, or

o A management team that can be complemented with our contacts and

team

§ Diversified Customer and Supplier base

§ Proprietary products or marketing position

Industry Characteristics

§ Non-cyclical

§ Services Consumer or niche market

§ Fragmented with potential for consolidation or growth

§ Emerging markets

Industries of Interest

§ Real Estate Services

§ Managed Security Services Providers (MSSP)

§ IT Solutions Providers specializing in security and network technology

products, services, and support

§ Internet

o Cloud Computing

o Security focused applications

Investment Criteria

5

§ Sales Volumes: $500 thousand to $30 million

§ Cash Flow: Neutral or positive

§ Structure: Controlled ownership. Closely held private company

§ Geography: North America  Investment size: $1 million to $5 Million

§ Involvement: Board oversight

§ Controlling Interest: Acquire 100% of controlling interest in target

§ Marketing:

o Target captures a particular segment of the market

o Target has a focused strategic marketing plan.

These criteria are not intended to be exhaustive. Any evaluation relating to the

merits of a particular business combination will be based, to the extent relevant, on the

above factors as well as other considerations deemed relevant by our management in

effecting a business combination consistent with our business objective.

Diligence Process

Upon receipt of a business plan, the procedure is for management to review the

business plan and determine if it satisfies the Company’s acquisition criteria, and whether

the business plan should be rejected or pursued further. If the plan satisfies the

requirements, then Management meets with the target’s management to determine if there

is a synergy that can work and to explore the business plan in greater detail. Generally

this occurs over several meetings and can take some time. Depending on the nature of the

business, management may enlist certain technical or industry consultants to meet with

the target and provide feedback and analysis. Management will also review the target’s

financials.  If the analysis suggests the target should be explored further Management will

present the opportunity to the BOD for approval to pursue the opportunity further. One or

two outside directors may meet with the target to make an independent assessment. If the

opportunity is approved for further exploration management will discuss potential

purchase structure with target’s management to be sure that a meeting of the minds exists

for a potential deal.    At this point management will request that our investment banking

advisors give their opinion of the industry, the market and potential financing options of

the deal. Often, the investment bankers will meet with target’s management. The

investment banker’s feedback  is presented to the  board and, if positive, the Board

analyzes the proposed financing  structure, discusses effects of a transaction on the

Company as they relate to taxes, capitalization, stock value etc., engaging the necessary

outside consultants. If all appears positive a letter of intent is negotiated and executed,

additional diligence is conducted, and definitive  transaction documents are negotiated

and executed.

6

Evaluation of the Target’s Management

We would condition any acquisition on the commitment of management of the

target business to remain in place post closing. Following a business combination, we

may seek to recruit additional managers to supplement the incumbent management of the

target business. We cannot assure you that we will have the ability to recruit additional

managers, or that any such additional managers will have the requisite skills, knowledge

or experience necessary to enhance the incumbent management. Although we intend to

closely scrutinize the management of a prospective target business when evaluating the

desirability of effecting a business combination, we   cannot   assure   you that   our

assessment of the target business’s management will prove to be correct.

Competition

In  identifying,  evaluating  and  selecting  a  target  business,  we  may  encounter

intense competition from other entities having a business objective similar to ours. Many

of  these  entities  are  well  established  and  have  extensive  experience  identifying  and

effecting business combinations directly or through affiliates. Many of these competitors

possess greater technical, human and other resources than us and our financial resources

will be relatively limited when contrasted with those of many of these competitors, which

may limit our ability to compete in acquiring certain target businesses. This inherent

competitive limitation gives others an advantage in pursuing the acquisition of a target

business.

Companies Currently Under Review

We are constantly in the process of reviewing potential target companies.

Currently, we are not under contract to acquire any companies.

Our Partner Company

Gotham Innovation Lab Inc.

Products and Services

Gotham’s business is directed at providing media technology services to the real

estate  community.  The range  of media  services includes Real  Estate  Sales location

Photography,

the   exclusive   Gotham EXPO   Full   Screen   Experience;   Floorplan

Measurements, and Redraws and E-Brochures, Virtual Staging, Headshots, and HD

Video.

In 2012, Gotham launched its new offering ScreenPLAY. Gotham's ScreenPLAY

is a low cost tool that gets real estate agents listings on YouTube, Wellcomemat, and

other popular video platforms with enhanced visibility on Google quickly. Gotham has

also seen success in its Headshot events for real estate agents, Headshot events offer

professional headshots photo sessions on an individual or company wide basis. Gotham

7

also provides website development services, sales office technology and data interchange

services for many of the real estate firms in New York City.

When it comes to selling real estate every broker or seller listing has to have

pictures. Utilizing the latest technology Gotham’s service offerings provide a full listing

experience for real estate agents’ clients. Gotham service offerings allow brokers and

sellers to present their listings in the best possible light while giving the viewer control of

the show. Gotham’s services integrate images, photos, floor plans, video, virtual staging,

agent and key listing details in an engaging format that immerses the viewer.

All  systems  are  built  on  accessible  web  platforms  that  integrate  quickly  and

seamlessly into the agent’s workflow.

In  addition  to  natural  expansion  into  the  areas  surrounding  NYC,  Gotham  is

actively working to expand other geographic locations on the East Coast. Gotham has

already established a presence in Florida, covering the Miami to West Palm Beach area.

Competitive Comparison

Gotham competes  with others in the industry by focusing on user interaction,

technology and delivery. Gotham maintains strict standards of photography and a roster

of accomplished photographers who we engage in between their premium assignments

such as fashion shoots, architectural projects, etc.

In   addition   to   superior   media,   in   the   opinion   of   management,   Gotham’s

technology  tools  set  us  apart  from  our  competition.  For  example,  our  expo  product

offering utilizes the pre-generation of a multitude of media sets to deliver images sized

perfectly for the users screen, wasting no bandwidth or file size, thereby enabling us to

maintain the speed and efficiency of the product at an optimal level. In the opinion of

management, a majority of our competitors either don’t seem to employ similar measures

in their full screen product offerings or do so, on a more limited basis.

Future Products and Services

Future offerings will include enhanced products that focus on social media

interaction, mobile applications and tools for realtors, as well as multi touch augmented

reality technologies  for  presentations,  etc.  Gotham will  continue  to  expand  its  media

offerings, integrating with and adopting technologies as they become available.

Customers

Gotham currently  has approximately  400 client accounts, including accounts

ranging from single agent accounts to large “master accounts” with large firms such as

Douglas Elliman and Halstead. Taking these and other master accounts into

consideration, Gotham does business with over 3,000 New York City real estate agents.

The following five customers constituted approximately 81% of the Company’s sales in

2013: EGR International, Inc. – approximately 24% of sales; Cambridge Who’s Who –

8

approximately 6% of sales; Douglas Elliman Real Estate, LLC – approximately 45% of

sales; Halstead Property Development Marketing LLC – approximately 3% of sales; and

Richard  Caplan  Photography  –  approximately 2%  of  sales.     The  loss  of  any  of  the

foregoing client accounts could have a material adverse affect on the Company’s

financial condition.

Expansion Summary

Gotham’s objective is to be a market leader in offering EXPO, Virtual Tours, and

Video, type services to the real estate industry. Gotham is currently providing services to

a number of realtors and brokers in the New York Metropolitan area including, but not

limited  to,  Douglas  Elliman  (“DE”),  Corcoran,  Trump  among  others.   In  addition  to

natural expansion into the areas surrounding NYC such as Long Island, Gotham has

recently expanded into Florida, and is actively working to expand by further providing

services to large accounts that exist in both Manhattan and targeted secondary markets,

and through the selective hiring of one-off service providers who are currently operating

in other markets

Employees

We presently have 9 total employees all of which are full-time.

OUR CORPORATE INFORMATION

Our principal offices are located at 1050 W. Jericho Turnpike, Suite A,

Smithtown, New York,  11787. Our telephone number is  (631) 670-6777 and our fax

number  is  (631) 670-6780.  We  currently  operate  two  corporate  websites  that  can  be

found at www.igambit.com, and www.gothamphotocompany.com (the information on

the foregoing websites does not form a part of this report).

ITEM 1A. RISK FACTORS

Not Required.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Our corporate executive office is located in Smithtown, New York, where we

lease approximately  1000 square feet of office space. Monthly lease payments are

approximately $1,560. The lease is for a term of five (5) years commencing on March 1,

2012 and ending on February 28, 2017. The lease contains annual escalations of 2% of

the annual rent.

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Our Gotham operations are located in New York, New York, where we license

office suites with furniture and equipment in a shared global office building. Monthly

license payments are approximately $4,025 and the fees are paid on a month to month

basis.

Our leased and licensed properties are suitable for their respective uses and are, in

general, adequate for our present needs. Our properties are subject to various federal,

state, and local statutes and ordinances regulating their operations. Management does not

believe  that  compliance  with  such  statutes  and  ordinances  will  materially  affect  our

business, financial condition, or results of operations.

ITEM 3. 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 or about December 3, 2012, Digi-Data filed its Answer, Affirmative Defenses

and Counterclaim against iGambit. The Counterclaim seeks damages against iGambit for

breach  of the Agreement for the alleged failure to indemnify Digi-Data for expenses

related to pending litigation between Verizon Communications, Inc. (one of Digi-Data's

customers) an unrelated third party, Titanide Ventures, LLC, concerning alleged patent

violations (hereinafter "Verizon Patent Litigation").

Upon  information  and  belief,  the  Verizon  Patent  Litigation  is  a  "patent  troll"

whereby Titanide seeks to extract settlement funds from alleged patent infringers without

seeking actual adjudication of its purported patent rights. iGambit has advised Digi-Data

of what iGambit believes is "prior art" related to the subject intellectual properly that is

at-issue in the Verizon Patent Litigation, a possible defense to the claims by Titanide.

A pre-trial order was issued by the Court with detailed deadlines. E.g., discovery

cut-off and status report (4/29/13) and dispositive motions (5/28/13). iGambit

propounded its initial discovery upon Digi-Data, responses to which were due on or about

March 8, 2013.

On April 4, 2013, Digi-Data provided discovery to iGambit.

On April 4, 2013 an Order of Dismissal in the Verizon Patent Litigation was

filed.  The Dismissal is with prejudice with each party to bear its own costs and fees.

On  May 24,  2013  we  filed  a  Motion  for  Summary Judgment  with  the  Court

asking the Court to move in our favor against DDC for the entire outstanding balance due

10

along with attorney’s fees and post and pre-judgment interest as applicable under

Maryland Law.

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: D igi-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 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: C ommencing 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,

11

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.

Allied Airbus, Inc.

On November 1, 2011, we commenced collection proceedings against Allied Airbus, Inc.

(“Allied”) for nonpayment of various promissory notes totaling $434,512 at December

31, 2011 in connection with a letter of intent the Company entered into to acquire the

assets and business of Allied, to which a definitive agreement could not be reached. The

claim against Allied included accrued interest at the rate of 6% per annum.

As a result of a settlement reached on June 12, 2012, we received payment of the total

balance, accrued interest and legal fees on June 27, 2012.

Financial Advisor Contract

Brooks, Houghton & Company, Inc. (BHC)

We entered into a contract with BHC in which BHC would provide financial advisory

services in connection with the Company’s proposed business combinations and related

fund raising transactions. As part of that agreement BHC would be entitled to a “Business

Combination Fee” equal to three percent of the amount of the company’s total proceeds

and other consideration paid or to be paid for the assets acquired, inclusive of equity or

any debt issued; however the fee was to be no less than $300,000. As a result of the IGX

transaction, BHC initially felt entitled to $300,000. We have taken a position that since

the transaction has been rescinded, that the fee is has not been earned and thus not to be

paid. While the ultimate outcome of this matter is not presently determinable, it is the

opinion  of  management  that  the  resolution  of any outstanding  claim  will  not  have  a

material adverse effect on the financial position or results of operations of the Company.

ITEM 4. ( REMOVED AND RESERVED)

12

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED

STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY

SECURITIES

MARKET INFORMATION

Effective March 19, 2011 the Company’s common stock is quoted on the Over

the Counter Bulletin Board, a service maintained by the Financial Industry Regulatory

Authority, under the ticker symbol “IGMB”.

HOLDERS

As of March 31, 2014, there are 25,044,056 shares of our common stock

outstanding, held of record by 158 persons.   We have 275,000 common stock warrants

outstanding and 1,268,900 common stock options outstanding.

As of March 31, 2014, approximately 21,737,018 shares of our common stock are

eligible to be sold under Rule 144.

DIVIDENDS

We  have never declared or paid any  dividends on our common stock. Any

determination to pay dividends in the future will be at the discretion of our Board of

Directors  and  will  be  dependent  upon  our  results  of  operations,  financial  condition,

capital requirements, contractual restrictions and other factors deemed relevant by the

Board of Directors. The Board of Directors is not expected to declare dividends or make

any other distributions in the foreseeable future, but instead intends to retain earnings, if

any, for use in business operations.

EQUITY COMPENSATION PLAN INFORMATION

We currently have one equity compensation plan outstanding which is our 2006

Long Term Incentive Plan. The Plan was adopted by our directors and approved by our

stockholders on March 26, 2006. The Plan permits the award of incentive stock options,

non-qualified stock options, stock appreciation rights, and stock grants. We have reserved

10 million shares for issuance under the Plan, plus an annual increase equal to 10% of the

number of outstanding shares of our common stock on the first day of each year, but in

no event more than 15 million shares of common stock in the aggregate. As of December

31, 2009 the Company no longer has the ability to issue shares under the Plan.   As of

December 31, 2009, there were 0 shares available for issuance under the Plan.

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

13

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.

The following table describes our equity compensation plans as of December 31,

2013:

Number of Securities

Remaining Available

for Future Issuance

Number of

Securities

under Equity

to be Issued Upon     Weighted Average      Compensation Plans

Exercise of

Exercise Price of

(excluding securities

Outstanding

Options,

Outstanding Options,

referenced in

Warrants and

Rights

Warrants and Rights

column (a))

Plan Category

( a)

(b)

(c)

Equity

compensation

plans approved by

our stockholders

(1)

296,900  $

0.08

0

Equity

compensation

plans not approved

by our

stockholders

372,000  $

0.08

0

(1) Equity compensation plans approved by our stockholders consist of our 2006

Long Term Incentive Plan.

RECENT SALES OF UNREGISTERED SECURITIES

During 2013 we not sell securities in transactions not registered under the

Securities Act of 1933, as amended (the “Securities Act”).

ITEM 6. SELECTED FINANCIAL DATA

Not Required

14

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

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.

Fair Value of Financial Instruments

For certain of our financial instruments, including cash and cash equivalents,

accounts  receivable,  accounts payable,  and  amounts due  to/from  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

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

15

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. No

reserve for bad debts was charged to operations for the year ended December 31, 2013.

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.

Goodwill

Goodwill represents the excess of the aggregate purchase price over the fair  value

of the net assets acquired in a business combination, specifically the acquisition of Jekyll

by the Company’s subsidiary, Gotham.     In accordance with ASC Topic No. 350

“Intangibles – Goodwill and Other”), the goodwill is not  amortized, but instead is subject

to an annual assessment of impairment by  applying a  fair-value  based test, and is

reviewed more frequently if current events and circumstances indicate a possible

impairment.    If  indicators  of  impairment  are  present  and  future  cash  flows  are  not

expected to be sufficient to recover the asset’s carrying amount, an impairment loss is

charged to expense in the period identified. A lack of projected future operating results

from Gotham’s operations may cause impairment. At December 31, 2012, we performed

an annual impairment study and determined that present and future cash flows are not

expected to be sufficient to recover the carrying amount of goodwill. Based on our

evaluation of goodwill, an impairment of $111,026 was charged to operations during the

year ended December 31, 2012.

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.

16

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.

Convertible Note

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 is due June 18, 2014 and is 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 $2,405 was recorded for the year ended December 31,

2013.

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 is being amortized over the term of the note. During the year ended December 31,

2013, the Company amortized $40,250 of debt discount.

Derivative Liability

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

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

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

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

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

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

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

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

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

discount with the remainder treated as interest expense.

17

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.

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.

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.  During the  years  ended December 31,

2013   and   December   31,   2012   Gotham   produced   approximately   $1,460,923   and

$1,528,822  of  revenue,  respectively.  We  are  focused  on  expanding the  operations  of

Gotham by marketing the company to existing and potential new clients. In addition to

Gotham’s operations, we earned $260 and $65,064 in technical consulting fees, other

income   of   $755,000   from   the   IGX   Rescission   and   $30,000,   and   income   from

discontinued operations of $317,625 and $0 for the years ended December 31, 2013 and

December 31, 2012, respectively.

Year Ended December 31, 2013 as Compared to Year Ended December 31, 2012

Assets. At December 31, 2013, we had $1,050,746 in current assets and

$1,071,342 in total assets, compared to $716,829 in current assets and $745,919 in total

assets as of December 31, 2012. The increase in total assets was primarily due to an

increase  in  assets  from  discontinued  operations  as  a  result  of  reversing  the  bad  debt

allowance  for  the  DDC  Judgment  and  the  receivable  due  from  the  IGX  Rescission

Agreement.

Liabilities. At December 31, 2013, we had total liabilities of $515,155 compared

to $440,221 at December 31, 2012. Our total liabilities at December 31, 2013 consisted

of accounts payable of $316,566, a convertible note payable of $40.250, a derivative

liability for certain provisions of the convertible note of $152,076 and a note to a related

party  of  $6,263,  whereas  our  total  liabilities  as  of  December 31,  2012  consisted  of

accounts payable of $433,958, and a note to a related party of $6,263. The increase in

liabilities  was  primarily  due  to  a  derivative  liability  recorded  for  the  issuance  of  a

convertible note payable to an unrelated party. We do not have any long term liabilities.

18

Stockholders’   Equity. Our   Stockholders’   Equity increased   to   $556,187   at

December 31, 2013 from $305,698 at December 31, 2012. This increase was due to a

decrease in accumulated deficit from $(2,448,346) at December 31, 2012 to $(2,197,857)

at December 31, 2013 resulting from net income of $250,489 for the year ended

December 31, 2013 compared to net losses of $(1,623,895) for the year ended December

31, 2012.

Revenue and Net Income . We had revenue of $1,461,183 for the year ended

December 31, 2013, compared to revenue of $1,593,886 for the year ended December 31,

2012. The decrease in revenue was due primarily to a decrease in revenue generated by

our  Gotham  subsidiary  as  result  of  transitioning  out  our  customer  technical  services

division  and  focusing  more  on  the  real  estate  photography  division.    In  addition  to

Gotham’s operations, we earned $260 and $65,064 in technical consulting fees, other

income of $755,000 and $30,000 , and income from discontinued operations of $317,625

and $0 for the years ended December 31, 2013 and December 31, 2012, respectively.

Our net income was $250,489 for the year ended December 31, 2013, compared to a net

loss  of  $(1,623,895)  for  the  year  ended  December 31,  2012.      Therefore  net  income

resulted from a decrease in our cost of goods sold for the year ended December 31, 2013

due to a decrease in the cost of the outsourced photography vendors utilized by Gotham,

other income from the IGX Rescission Agreement and income from discontinued

operations as a result of the DDC Judgment Award.

General  and  Administrative  Expenses . General  and  Administrative  Expenses

decreased to $1,692,556 for the year ended December 31, 2013 from $2,383,568 for the

year ended December 31, 2012. For the year ended December 31, 2013 our General and

Administrative  Expenses  consisted  of  corporate  administrative  expenses  of  $269,596,

legal and accounting fees of $153,113, payroll expenses of $1,082,212, Directors and

Officers Insurance of $40,381, employee benefits expenses of $117,079 (medical, dental,

retirement plan, and life insurance), and business advisory fees, commissions and

expenses primarily associated with the IGX purchase and rescission transaction, of

$30,175. For the year ended December 31, 2012 our General and Administrative

Expenses   consisted   of   corporate   administrative   expenses   of   $456,097,   legal   and

accounting fees of $184,848 consulting fees of $45,660, payroll expenses of $1,161,861,

Directors and Officers Insurance of $37,076, goodwill impairment expense of $111,026

and business advisory fees, commissions and expenses associated with the IGX purchase

and rescission transaction, of $387,000. Therefore the decreases from the  year ended

December 31, 2012 to the year ended December 31, 2013 relate primarily to a decrease in

payroll and corporate administrative expenses. In the event the company effectuates an

acquisition in 2014 we anticipate additional professional fees associated with the

acquisition.

LIQUIDITY AND CAPITAL RESOURCES

General

As reflected in the accompanying consolidated financial statements, at December

31, 2013, we had $26,870 of cash and stockholders’ equity of $556,187.   At December

31, 2012, we had $104,721 of cash and stockholders’ equity of $305,698.

19

Our primary capital requirements in 2014 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 Gotham’s business opportunities, the state of the overall economy, the relative

size of any target company we identify and the complexity of the related acquisition

transaction(s).  We  anticipate raising capital  in the  private  markets to  cover any such

costs, though there can be no guaranty we will be able to do so on terms we deem to be

acceptable. We do not have any plans at this point in time to obtain a line of credit or

other loan facility from a commercial bank.

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

volume and to acquire companies, and in our ability to raise additional funds, there can

be no assurances that we will be able to fully effectuate our business plan.

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

foreseeable future. We believe we have enough capital to fund our present operations.

Cash Flow Activity

Net cash used by operating activities was $183,151 for the year ended December

31, 2013, compared to net cash used by operating activities of $518,687 for the year

ended December 31, 2012. Our primary source of operating cash flows from continuing

operating activities for the year ended December 31, 2013 was from our Gotham

subsidiary’s revenues of $1,461,183, and $1,528,822 for the year ending December 31,

2012.   Additional contributing factors to the change were from a decrease in accounts

receivable of $23,149, a decrease in prepaid expenses of $122,487 and a decrease in

accounts payable of $117,392. Net cash provided by discontinued operating activities

was $0  for  the  year  ended December  31,  2013  and cash provided by  discontinued

operating activities was $250,000 for the ended December 31, 2012. For the year ended

December 31, 2012 we received $250,000 in cash payments from DDC which was offset

by a decrease in   accounts   receivable included in the Assets   from Discontinued

Operations.

Cash   provided   by   continuing   investing   activities   was   $1,800   and   $417,735

respectively, for the years ended December 31, 2013 and December 31, 2012.   For the

year ended December 31, 2013 the entire source of cash provided by investing activities

was a decrease in deposits. For the year ended December 31, 2012 the primary source of

cash provided by investing activities was from the repayment of notes receivable due

from Allied Airbus Inc.

Cash provided by financing activities was $103,500 for the year ended December

31, 2013 compared to cash used by financing activities of $19,127 for the year ended

December 31, 2012. The cash flows provided by financing activities for the year ended

December  31,  2013  was from  the  issuance  of  a  Convertible  note  payable  to  at  an

20

unrelated party.

The cash flows used by financing activities for the year ended

December 31, 2012 was from a repayment of loans payable to a related party.

Supplemental Cash Flow Activity

In the year ended December 31, 2013 the  company  paid interest of $3,524

compared to interest of $1,884 in the year ended December 31, 2012.

OFF BALANCE SHEET ARRANGEMENTS

We have no off balance-sheet arrangements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT

MARKET RISK

Not Required.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Financial Statements required by this Item 8 are included in this Report beginning

on page F-1, as follows:

Report of Independent Registered Public Accounting Firm

F-1

Consolidated Balance Sheet as of December 31, 2013 and 2012

F-2

Consolidated Statement of Income for the years ended December 31, 2013 and

F-3

2012

Consolidated Statement of Changes in Stockholder’s Equity for the years ended          F-4

December 31, 2013 and 2012

Consolidated Statement of Cash Flows for the years ended December 31, 2013

F-5

and 2012

Notes to Financial Statements

F-7

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON

ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. 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

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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 December 31, 2013. Based upon that evaluation,

our Chief Executive Officer and Chief Financial Officer concluded that our disclosure

controls and procedures were effective as of December 31, 2013.

Management’s Annual Report on Internal Control over Financial Reporting.

We  are  responsible  for  establishing  and  maintaining  adequate  internal  control

over financial reporting. Internal control over financial reporting is defined in Rule 13a-

15(f) and Rule 15d-15(f) promulgated under the Exchange Act as a process designed by,

or under the supervision of, our Chief Executive Officer (our principal executive officer)

and Chief Financial Officer (our principal accounting and financial officer), and effected

by  our board of directors, management and other personnel, to provide reasonable

assurance regarding the reliability of financial reporting and the preparation of financial

statements for external purposes in accordance with generally accepted accounting

principles. Our internal control over financial reporting includes those policies and

procedures that:

§ Pertain to the maintenance of records that, in reasonable detail, accurately and

fairly reflect the transactions and dispositions of our assets;

§ Provide reasonable assurance that transactions are recorded as necessary to

permit preparation of financial statements in accordance with generally

accepted  accounting  principles,  and  that  our  receipts  and  expenditures  are

being made only in accordance with authorizations of our management and

our directors; and

§ Provide  reasonable  assurance regarding  prevention or timely  detection of

unauthorized acquisition, use or disposition of our assets that could have a

material effect on the financial statements.

Our internal control system was designed to provide reasonable assurance to our

management and board of directors regarding the preparation and fair presentation of

published financial statements. Because of its inherent limitations, internal control over

financial  reporting may not prevent or detect  misstatements. Also, projections of any

evaluation of effectiveness to future periods are subject to the risk that controls may

become inadequate because of changes in conditions, or that the degree of compliance

with the policies or procedures may deteriorate.

Our management assessed the effectiveness of the Company’s internal  control

over   financial   reporting   as   of   December 31, 2013.   In   making   this   assessment,

management used the criteria set forth in the Internal Control — Integrated Framework

issued  by the  Committee  of  Sponsoring  Organizations  of  the  Treadway  Commission

(COSO). Based on management’s assessment, we concluded that, as of December 31,

2013, our internal control over financial reporting was effective.

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Change in Internal Controls

During the quarter ended December 31, 2013, 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.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS , EXECUTIVE OFFICERS AND CORPORATE

GOVERNANCE

DIRECTORS AND EXECUTIVE OFFICERS

Our board of directors manages our business and affairs. Under our Articles of

Incorporation and Bylaws, the Board will consist of not less than one, nor more than

seven directors. Currently, our Board consists of five directors.

The  names,  ages,  positions  and  dates  appointed  of  our  current  directors  and

executive officers are set forth below.

Name

A ge

Position

Appointed

John Salerno

75     Chief Executive Officer, President, March 2009

Chairman of the Board, and

(appointed Chairman

Director

and Director in

April 2000)

Elisa Luqman

49     Chief Financial Officer, Executive     March 2009

Vice President, General Counsel,

(appointed Director

and Director

in August 2009)

James J. Charles

71     Director

March 2006

George G. Dempster

74     Director

January 2001

John Keefe

71     Director

July 2013

John Salerno, Chief Executive Officer, President, Chairman of the Board,

and  Director. Mr.  Salerno  is  a  seasoned  hands-on  executive  with  over  40 years  of

experience with public and private computer software and service companies.

Mr. Salerno built a multi-million dollar business from a start up, servicing the real estate

industry. The business was sold in 1984 and Mr. Salerno provided consulting services to

a wide range of clients through 1995. In 1996, along with his daughter and a small group

of private accredited investors, he co-founded the Company. Mr. Salerno was President

and CEO of the Company from April 1, 2000  until  February 28, 2006. After signing

contracts with Verizon and Cablevision, the Company sold its assets in 2006 to Digi-Data

Corporation. From March 1, 2006 thru February 2009 Mr. Salerno served as President of

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the Vault Services Division of Digi-Data Corporation. Upon the expiration of his 3 year

contract the Vault Services Division was at a revenue run rate of $12 million annually. As

of March 1, 2009, Mr. Salerno returned to his full time management roll at the Company.

Mr. Salerno is an ex — US Marine Corps, Crypto/ Communications Officer and has a BS

in Mathematics from Fordham University. Mr. Salerno is Elisa Luqman’s father.

Mr. Salerno was nominated as a Director because if his intimate knowledge of the

Company and its history as a founder. Additionally, Mr. Salerno’s mathematical and

technical background as a data center manager early in his professional career and later as

a software developer offers the board hand’s on technical experience in both operations

and software analysis.     Mr. Salerno utilized his experience and contacts to secure the

major customers driving the sales that generate the Company’s payment  stream from

DDC.   Moreover, Mr. Salerno adds value to Gotham through his 40 plus years serving

the New York Real Estate industry. He is thoroughly familiar with the unique workings

of the New York real estate industry and has many contacts within that community that

are a benefit to Gotham.

Elisa Luqman,  Chief  Financial Officer, Executive  Vice  President, General

Counsel, and Director. Ms. Luqman is a computer literate attorney with over 18 years

experience with intellectual property and computer software. Prior to co-founding the

Company,   Ms. Luqman   was   president   of   University   Software   Corp.,   a   software

development company focused on a wide range of student educational and intellectual

applications. Ms. Luqman was Chief Operating Officer of the Company, from April 1,

2000   until   February 28,   2006.   From   March 1,   2006   through February 28,   2009

Ms. Luqman was employed as Chief Operating Officer of the Vault Services Division of

Digi-Data Corporation, the company that acquired the Company’s assets in 2006, and

subsequently  during  her  tenure  with  Digi-Data  Corporation  she  became  the  in-house

general  counsel  for  the  entire  corporation.  In that  capacity  she  was responsible  for

acquisitions, mergers, patents, and employee  contracts, and worked very closely with

Digi-Data’s outside counsel firms, DLA-Piper, the Law Offices of Sandra T. Carr and the

patent firm of Jordan and Hamburg. As of March 1, 2009, Ms. Luqman rejoined the

Company in her current capacities. Ms Luqman received a BA degree in Marketing, a JD

in  Law,  and  a  MBA  Degree  in  Finance  from  Hofstra  University.  Ms. Luqman  is  a

member of the bar in New York and New Jersey. Ms. Luqman is John Salerno’s

daughter.

Ms. Luqman was nominated as a Director because of her intimate knowledge of

the Company and its history as a founder.   Additionally, as an attorney, Ms. Luqman’s

legal  background  enables  her to  provide counsel  to  the Company. Her experience as

general counsel to the Company provides her with a unique insight into the Company’s

contracts with customers and vendors, intellectual property assets and issues, financing

transactions and shareholder transactions. Moreover, having been through the merger

and acquisition process on both sides of the table, Ms. Luqman offers the Company in-

house guidance throughout the acquisition process. That combined with Ms. Luqman’s

MBA in Finance aids in providing the Board with more efficient analysis of input from

outside auditors and  legal advisors.

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James J. Charles, Director. Mr. Charles is a high profile financial executive

with a broad base of experience with firms ranging in size from $24MM to $180MM in

annual revenue. He worked closely with management and Boards of Directors on matters

ranging from mergers and acquisitions to stock restructurings and spin-offs. Mr. Charles

has been a self employed Certified Public Accountant from 1999 to present. From 1994

to 1999 Mr. Charles was the chief financial officer of Interpharm Holdings, Inc.

Interpharm Holdings, Inc., through its subsidiary, Interpharm, Inc., engaged in the

development, manufacture, and marketing of generic prescription strength and over-the-

counter  pharmaceuticals  in  the  United  States.  It  also  focused  on  the  development  of

products in the areas of female hormone, scheduled narcotic, soft gelatin capsule, oral

liquid, products coming off patent, and other products. From 1966 to 1994 Mr. Charles

was a Senior Managing Partner with Ernst & Young. Mr. Charles’ education includes

studies   and   management   programs   at   Harvard   University and   Williams   College.

Mr. Charles received his BBA in Accounting at Manhattan College.

Mr. Charles was nominated as a Director because of his financial expertise. He

has been involved in the practice of public accounting for over forty years.   During his

tenure  as  a  Senior  Managing  Partner  at  Ernst  &  Young  he  spent  considerable  years

analyzing potential acquisition targets for corporate clients and has particular experience

and skills on matter such as mergers and acquisitions, stock restructuring and spin-offs.

He has also been a Chief Financial Officer of a public company.

George G. Dempster, Director. Mr. Dempster was Commissioner of Commerce

for the State of New York from 1979 to 1983. He served as the Chairman of the Finance

Committee for Hofstra University for 25 years from 1976 through 2001, and is currently

Chairman Emeritus of the Board of Trustees. Mr. Dempster has been the Chairman of

Tran-Leisure Corp. since 1983, and was its CEO from 1983-2002. Tran -Leisure Corp is

a diversified holding company with interests ranging from helicopter services to

manufacturing. From 1969 to 1973 Mr. Dempster served as the CEO of Cybernetics, a

major computer software developer. Mr. Dempster served as a marketing manager for

IBM from 1961 to 1968. Mr. Dempster has a BA in business administration from Hofstra

University.

Mr. Dempster was nominated as a Director because of his strong administrative,

financial and economic background. Having served as Commissioner of Commerce for

the State of New York for 4 years and on the Board of Hofstra University for over 25

years, Mr. Dempster provides the Company with extensive experience in commerce and

administration in both the private and public sectors.     Moreover, during his tenure at

Hofstra   University   Mr. Dempster   was   intimately   involved   in   several   financing

transactions to maintain the University in a solvent and profitable manner. Additionally,

having been CEO of a diversified holding company, Mr. Dempster is thoroughly familiar

with the merger and acquisition process. He offers years of experience analyzing

business, their models and economics, and identifying the appropriate financing vehicles.

John Keefe, Director . Mr. Keefe is an investment banker, venture capitalist, founder

of three businesses, and a turnaround consultant to businesses in trouble. Since 2011 to

Present, Mr. Keefe is the Founder and Chief Development Officer of Security Capital

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Advisors  LLC, located  in Jersey City, NJ. Security Capital Advisors  LLC is  a firm

providing indirect financing to local governments in the US. From 2007 to 2011 Mr.

Keefe was Managing Director of Nachman Hays Brownstein, located in New York, NY.

Nachman   Hays   Brownstein   is   a   national   turnaround   management   firm,   assisting

underperforming and troubled companies, maximizing value for owners, investors,

creditors and employees. Mr. Keefe was also a founding General Partner of a venture

capital firm, a founder and CFO of a computer software company, a Senior Vice

President of an investment banking firm, and emergency CFO and Chief Restructuring

Officer of several distressed businesses. He is a graduate of Harvard College and Harvard

Business School.

Mr. Keefe’ was nominated as a Director because of his financial expertise

combined  with  his  strong technical  background.  He  started  his  career  as  a  computer

software  engineer  and  designer  for  IBM,  General  Electric,  and  Litton  Industries.  He

evolved into the financial arena serving many years a corporate Chief Financial Officer.

He   is now involved in the practice of venture capital and investment banking   He has

particular skills acting as a turnaround consultant to businesses in trouble being a

‘Certified  Turnaround  Professional’  by the  Turnaround  Management  Association.  He

offers  years  of  experience  analyzing  business,  their  revenue  models,  and  identifying

appropriate financing vehicles.

On  April  22,  2013,  the  Board  of  Directors  (the  “Board”)  of  iGambit  Inc.  (the

“Company”) accepted the resignation of Mr. John Waters from the Board and related

responsibilities on the Audit and Compensation Committees. Mr. Waters’ resignation is

not  the  result  of  any  disagreement  with  the  Company  on  any  matter  relating  to  the

Company’s operations, policies or practices.  Mr. Waters was replaced by Mr. Keefe.

COMMITTEES OF THE BOARD

The Board has established an Audit Committee and a Compensation Committee.

The Board does not currently have a Nominating Committee. The work typically

conducted by a Nominating Committee is conducted by the full Board.

Audit Committee

The Audit Committee presently   consists of Messrs. Charles, Keefe and

Dempster, with Mr. Charles serving as chairman. Our Board has determined that

Mr. Charles  qualifies  as an  “audit  committee  financial  expert”  as  defined  under  the

federal securities laws. The Audit Committee is responsible for monitoring and reviewing

our financial statements and internal controls over financial reporting. In addition, they

recommend the selection of the independent auditors and consult with management and

our independent auditors prior to the presentation of financial statements to stockholders

and the filing of our forms 10-Q and 10-K. The Audit Committee has adopted a charter

and it is posted on our web site at www.igambit.com.

26

Compensation Committee

The Compensation Committee presently consists of Messrs. Charles, Keefe and

Dempster, with Mr. Keefe serving as chairman. The Compensation Committee is

responsible for reviewing and recommending to the Board the compensation and over-all

benefits of our executive officers, including administering the Company’s 2006  Long

Term Incentive Plan. The Compensation Committee may, but is not required to, consult

with  outside  compensation  consultants.  The  Compensation  Committee  has  adopted  a

charter and the charter is posted on our web site at www.igambit.com.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

Based solely upon a review of Forms 3 and 4 and amendments thereto furnished

to the Company under Rule 16a-3(d) of the Securities Exchange Act of 1934, as amended

(the “Exchange Act”) the Company is not aware of any person that failed to file on a

timely basis, as disclosed in the aforementioned Forms, reports required by Section 16(a)

of the Exchange Act during the year ended December 31, 2013.

CODE OF ETHICS

The Company has adopted a Code of Ethics that applies to its principal executive

officer, principal financial officer, principal accounting officer or controller, or persons

performing similar functions.    A copy of the Code of Ethics is attached as an exhibit to

this report. A copy of the Code of Ethics is available on the Company’s website at

www.igambit.com. Any amendments to, or waivers from, the Code of Ethics will be

disclosed on the Company’s website at www.igambit.com.

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