NUTX 10-Q Quarter ended Sept. 30, 2013

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)



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

EXCHANGE ACT OF 1934

For the Quarterly period ended September 30, 2013



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 25,044,056 shares of its common stock outstanding as of November 13, 2013.

iGambit Inc.

Form 10-Q

Part I — Financial Information

1

Item 1.

Financial Statements:

1

Consolidated Balance Sheets

1

Consolidated Statements of Income

2

Consolidated Statements of Cash Flows

3

Notes to Consolidated Financial Statements

5

Item 2 .

Management’s Discussion and Analysis of Financial Condition and

Results of Operations

17

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

23

Item 4 .

Controls and Procedures

23

Part II — Other Information

24

Item 1 .

Legal Proceedings

24

Item 1A .

Risk Factors

25

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

25

Item 3.

Defaults upon Senior Securities

25

Item 4 .

Removed and Reserved

25

Item 5.

Other Information

25

Item 6.

Exhibits

25

EX-31.1

EX-31.2

EX-32.1

EX-32.2

PART I — FINANCIAL INFORMATION

Item 1 — Financial Statements

IGAMBIT INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30,

DECEMBER

2013

31,

(Unaudited)

2012

ASSETS

Current assets

Cash

$

216,618

$

104,721

Accounts receivable, net

181,417

158,441

Prepaid expenses

45,273

133,077

Due from rescission agreement

272,223

--

Assets from discontinued operations, net

320,590

320,590

Total current assets

1,036,121

716,829

Property and equipment, net

12,985

17,870

Other assets

Deposits

9,420

11,220

$

1,058,526

$

745,919

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable

$

415,060

$

433,958

Convertible note payable

103,500

--

Note payable - related party

6,263

6,263

Total current liabilities

524,823

440,221

Stockholders' equity

Common stock, $.001 par value; authorized - 75,000,000 shares;

issued and outstanding - 25,044,056 shares, respectively

25,044

25,044

Additional paid-in capital

2,729,000

2,729,000

Accumulated deficit

(2,220,341)

(2,448,346)

Total stockholders' equity

533,703

305,698

$

1,058,526

$

745,919

1

IGAMBIT INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

THREE MONTHS

NINE MONTHS

ENDED

ENDED

SEPTEMBER 30,

SEPTEMBER 30,

2013

2012

2013

2012

Sales

$

397,081

$

416,429

$      1,171,621

$

1,325,945

Cost of sales

134,014

163,308

399,392

640,919

Gross profit

263,067

253,121

772,229

685,026

Operating expenses

General and administrative

expenses

421,298

438,058

1,299,224

1,368,293

Loss from operations

(158,231)

(184,937)

(526,995)

(683,267)

Other income

Income from rescission

agreement

--

--

755,000

--

Interest income

--

257

--

12,978

Total other income

0

257

755,000

12,978

Income (loss) from operations

before income tax

(158,231)

(184,680)

228,005

(670,289)

Income tax (benefit)

--

(70,218)

--

(254,691)

Net income (loss)

$

(158,231)

$

(114,462)

$

228,005

$

(415,598)

Basic and fully diluted

earnings (loss) per common

share:

$

(.01)

$

(.00)

$

.01

$

(.02)

Weighted average common

shares outstanding

25,044,056

23,954,056

25,044,056

23,954,056

2

IGAMBIT INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED SEPTEMBER 30,

(UNAUDITED)

2013

2012

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

$

228,005

$    (415,598)

Adjustments to reconcile net income (loss) to net

cash provided (used) by operating activities

Depreciation

4,885

6,373

Deferred income taxes

--

(254,691)

Increase (Decrease) in cash flows as a result of

changes in asset and liability account balances:

Accounts receivable

(22,976)

110,905

Prepaid expenses

87,804

30

Due from rescission agreement

(272,223)

--

Accounts payable

(18,898)

39,754

Net cash provided (used) by continuing operating activities

6,597

(513,227)

Net cash provided by discontinued operating activities

--

250,000

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES

6,597

(263,227)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

--

(6,447)

Decrease (increase) in deposits

1,800

(6,920)

Proceeds from repayments of notes receivable

--

434,512

NET CASH PROVIDED BY INVESTING ACTIVITIES

1,800

421,145

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from convertible note payable

103,500

--

Repayment of loans from shareholders

--

(19,127)

NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES

103,500

(19,127)

NET INCREASE IN CASH

111,897

138,791

CASH - BEGINNING OF PERIOD

104,721

224,800

3

CASH - END OF PERIOD

$

216,618

$

363,591

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest

$

2,644

$

1,478

Income taxes

--

4,125

Non-cash investing and financing activities:

Property and equipment purchased through loan from stockholder

$

--

$

5,300

4

IGAMBIT INC.

Notes to Condensed Consolidated Financial Statements

Nine Months Ended September 30, 2013 and 2012

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, 2012, 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, 2013 are

not necessarily indicative of results that may be expected for the year ending December

31,   2013.   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, 2012 included in the Company’s Annual Report on Form 10-K,

filed with the Securities and Exchange Commission (“SEC”) on June 20, 2013.

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. These adjustments to the sales price were included in the

5

discontinued operations line of the statements of operations for the year ended December

31, 2011, the last year of payments.

The assets of the discontinued operations are presented in the balance sheets under the

captions   “Assets   from   discontinued   operations”.      The   underlying   assets   of   the

discontinued operations consist of accounts receivable of $320,590 as of September 30,

2013 and December 31, 2012, respectively.

Accounts Receivable

Accounts  receivable  includes  50%  of  contingency  payments  earned  for  the  previous

quarters and are stated net of an allowance for bad debts of $250,000.

Note 3 – Summary of Significant Accounting Policies

Principles of Consolidation

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

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

transactions have been eliminated.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with generally accepted accounting

principles requires management to make estimates and assumptions that affect the

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

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

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

Fair Value of Financial Instruments

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

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

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

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

Revenue Recognition

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

rendered to real estate brokers.  Revenues are recognized upon delivery of the products or

services.

Advertising Costs

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

months ended September 30, 2013 and 2012 were $4,292 and $23,946, respectively.

6

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. There was no bad debt expense charged to operations for the nine

months ended September 30, 2013 and 2012, respectively.

Property and equipment and depreciation

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

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

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

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

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

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

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

charged to income.

Depreciation  expense  of  $4,885  and  $6,373  was  charged  to  operations  for  the  nine

months ended September 30, 2013 and 2012, respectively.

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”,  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,  the  Company

7

performed its annual impairment study and determined that present and future cash flows

were not expected to be sufficient to recover the carrying amount of goodwill, and the

goodwill was written off.

Stock-Based Compensation

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

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

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

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

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

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

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

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

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

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

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

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

The Company has reviewed recently issued, but not yet adopted, accounting standards in

order to determine their effects, if any, on its results of operations, financial position or

cash   flows.   Based   on   that   review,   the   Company   believes   that   none   of   these

pronouncements will have a significant effect on its consolidated financial statements.

Note 4 - Earnings Per Common Share

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

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

8

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

Septemb er 30,

S eptemb er 30,

2013

2012

2013

2012

Stock options

668,900

2,768,900

668,900

2,768,900

Stock warrants

275,000

275,000

275,000

275,000

Total shares excluded from calculation

943,900

3,043,900

943,900

3,043,900

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

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,

2013, 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.

9

Stock option activity during the nine months ended September 30, 2013 and 2012

follows:

Weighted

Average

Weighted

Remaining

Weighted

Average

Average

Contractual

Options

Grant-Date

Life

Outstanding

Exercise Price

Fair Value

(Years)

Options outstanding at

December 31, 2011

2,768,900

$

0.04

$

0.10

6.85

No option activity

--

--

--

Options outstanding at

September 30, 2012

2,768,900

$

0.04

$

0.10

6.10

Options outstanding at

December 31, 2012

1,268,900

$

0.08

$

0.10

6.16

Expired

(600,000)

0.10

--

Options outstanding at

September 30, 2013

668,900

$

0.06

$

0.10

4.94

Options outstanding at September 30, 2013 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

July 21, 2010

113,000

113,000

$0.10

July 21, 2020

July 21, 2010

59,000

59,000

$0.10

July 21, 2020

July 11, 2011

100,000

100,000

$0.10

July 11, 2021

July 11, 2011

100,000

100,000

$0.10

July 11, 2021

Total

668,900

668,900

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

10

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, 2013 and 2012 follows:

(1)Weighted

Average

Weighted

Remaining

Weighted

Average

Average

Contractual

Warrants

G rant-Date

Outstanding

Exercise Price

Fair Value

Life (Years)

Warrants outstanding

at December 31, 2011

275,000

$

0.94

$

0.10

7.42

No warrant activity

--

--

--

Warrants outstanding

at September 30, 2012

275,000

$

0.94

$

0.10

6.92

Warrants outstanding

at December 31, 2012

275,000

$

0.94

$

0.10

6.42

No warrant activity

--

--

--

Warrants outstanding

at September 30, 2013

275,000

$

0.94

$

0.10

5.67

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

Warrants outstanding at September 30, 2013 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 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 trading prices during the 10 trading day

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

11

Note 7 - Income Taxes

Nine Months Ended September 30,

2013

2012

Effective tax rate

0.0 %

38.0 %

The decrease in the effective tax rate for the nine months ended September 30, 2013 is

due to the establishment of a full valuation allowance against the Company’s net deferred

tax assets which was initially  recorded in the fourth quarter of 2012. 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 8 - 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, 2013 and

2012 were $12,690 and $5,476, respectively.

Note 9 – Concentrations and Credit Risk

Sales and Accounts Receivable

Gotham had sales to two customers which accounted for approximately 44% and 25%,

respectively of Gotham’s total sales for the nine months ended September 30, 2013. The

two  customers  accounted  for  approximately  61%  and  11%,  respectively  of  accounts

receivable at September 30, 2013.

Gotham had sales to three customers which accounted for approximately 38%, 15% and

11%, respectively of Gotham’s total sales for the nine months ended September 30, 2012.

The three customers accounted for approximately 27%, 14% and 5% of accounts

receivable at September 30, 2012.

Cash

Cash is maintained at a major financial institution and, at times, balances may exceed

federally insured limits. The Company has never experienced any losses related to these

balances. All of the Company’s non-interest bearing cash balances were fully insured at

September 30, 2013. As of December 31, 2012, the Company had no amounts of cash or

12

cash equivalents in financial institutions in excess of amounts insured by agencies of the

U.S.  Government,  the  limit  of  which  is  $250,000.    The  Company  did  not  have  any

interest-bearing accounts at September 30, 2013 and December 31, 2012, respectively.

Note 10 - Related Party Transactions

Note Payable – Related Party

Gotham was provided a loan from an entity that is controlled by the officers of Gotham,

such amounts outstanding were $6,263 at September 30, 2013 and December 31, 2012,

respectively.  The note bears interest at a rate of 5.5% and is due on December 31, 2013.

Note 11 – Commitments and Contingencies

Lease Commitment

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

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

with 2% annual increases.

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

August  2,  2012  at  a  monthly license  fee  of  $4,900.    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:

2013

$   4,590

2014

18,720

2015

19,080

2016

19,440

2017

3,240

$ 65,070

Rent expense of $55,673 and $69,642 was charged to operations for the nine months

ended September 30, 2013 and 2012, 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.

13

Litigation

Digi-Data Corporation

In connection with the asset purchase agreement discussed in Note 2, the Company filed

a  complaint  against  Digi-Data  on  October  1,  2012  for  unpaid  contingency payments

owed to the Company totaling $570,590 at June 30, 2013, exclusive of an allowance for

bad debts of $250,000. On or about December 3, 2012, Digi-Data filed its Answer,

Affirmative Defenses and Counterclaim against the Company. The Counterclaim seeks

damages against the Company 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) and an unrelated third party,

Titanide Ventures, LLC, concerning alleged patent violations (hereinafter "Verizon

Patent Litigation"). The Verizon Patent Litigation is a result of a "patent troll" whereby

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

actual adjudication of its purported patent rights. The Company has advised Digi-Data of

what it believes is "prior act" related to the subject intellectual property 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  regarding  among other  items,

discovery  cut-off and  status report  deadline  date  of  April  29,  2013 and dispositive

motions deadline date of May 28, 2013. The Company 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 the Company. No depositions have been

scheduled as of the date of this report, nor has the Company received any information

from Digi-data regarding any specific quantified “damages” directly resulting from this

Order or the settlement agreement between Verizon and the Plaintiff. 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, the Company

filed a Motion for Summary Judgment with the Court asking the Court to move in its

favor against DDC for the entire outstanding balance due along with attorney’s fees and

post and pre-judgment interest as applicable under Maryland Law.   On June 11, 2013,

Digi-Data filed its Response to the Motion for Summary Judgment and, for the first time,

purported to liquidate certain alleged damages for which Digi-Data seeks a set-off against

the  amounts  admittedly  owed  by  Digi-Data  to  iGambit  and  alludes  the  existence  of

additional although not yet quantified damages.   The Response relies entirely upon the

Affidavit of a Vice President of Digi-Data for its evidentiary support. Notwithstanding,

Digi-Data failed to produce documentary support for its alleged damages and to explain

why it failed to disclose such information during the discovery period or thereafter.

On July 9, 2013, the Company filed its Reply to Digi-Data’s Response and, thereby,

advised the Court of Digi-Data’s apparent litigation-by-ambush tactic such as

withholding allegations of damages until the end of discovery and attempting to use such

previously withheld information to defeat summary judgment, and the legal inadequacy

of  same. Pursuant  to  the  Maryland  District  Court’s Local  Rules,  Digi-Data  is  not

authorized to file a Surreply without Court order.

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Allied Airbus, Inc.

On November 1, 2011, the Company 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, the Company received payment of

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

Financial Advisor Contract

Brooks, Houghton & Company, Inc. (BHC)

The  Company  had  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, as described in Note 12, BHC initially felt

entitled to $300,000. The Company has 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.

Note 12 – Rescission of Purchase Agreement for Acquisition of IGX Global Inc. and

IGX Global UK Limited

On April 8, 2013, the Company and its wholly owned subsidiary, IGXGLOBAL, CORP.

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

purchase agreement dated December 28, 2012 (the “Purchase Agreement”) with IGX

Global   Inc.(“IGXUS”),   IGX   Global   UK   Limited   (“IGXUK”)   and   Tomas   Duffy

(“DUFFY”) the sole shareholder of both IGXUK and IGXUS.

Under the Purchase Agreement, the Company intended to purchase, as of December 31,

2012, substantially all of the assets of IGXUS and all of the issued and outstanding shares

of  IGXUK  and  thereby  the  acquired  business  operated  by  IGXUS  and  IGXUK  (the

“Acquired Business”). The original agreement called for a $500,000 payment at closing,

a  $1,000,000  Promissory  Note,  assumption  of  certain  liabilities  of  the  IGXUS  up  to

$2,500,000 and 3.75 million shares of iGambit stock to be earned over a three year period

based upon certain revenue and earnings targets. The Company had arranged financing at

the  original  effective  date  of  the  purchase  to  pay  the  $500,000  payment  and  payoff

certain liabilities of IGXUS.

15

On April 8, 2013, under the terms of a Rescission Agreement, the Company, IGXUS,

IGXUK and Duffy (IGX), agreed to unwind the Purchase Agreement in its entirety and to

fully  restore  each  to  the  positions  they  were  respectively  prior  to  entering  into  the

Purchase Agreement. This included IGX obtaining financing to payoff the entire balance

of the financing the Company had  obtained  to fund the  upfront  payment  and certain

liabilities at the original closing date; IGX also assumed and paid certain expenses related

to the purchase. Also as consideration for iGambit’s expenses and inconvenience, the

Company received $130,000 prior to the effective date of the rescission from IGX, and

upon the effective date of the rescission, an additional payment of $275,000, and will

receive an additional $350,000 payable in equal monthly installments over 18 months.

The consideration from IGX totaling  $755,000 is reported as Other Income in the

Statements of Operations.   The balance due from IGX was $272,223 at September 30,

2013.

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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.

17

CRITICAL ACCOUNTING ESTIMATES

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

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

accordance with accounting principles generally accepted in the United States of

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

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

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

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

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

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

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

described below.

Revenue Recognition

Our revenues from continuing operations consist of revenues derived primarily

from sales of products and services rendered to real estate brokers. Revenues are

recognized upon delivery of the products or services.

Contingency  payment  income  was  recognized  quarterly  from  a  percentage  of

Digi-Data’s vaulting service revenue until February 28, 2011.

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,

2013 and 2012, respectively.

Property and equipment and depreciation

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

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

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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, the Company

performed its annual impairment study and determined that present and future cash flows

were not expected to be sufficient to recover the carrying amount of goodwill, and the

goodwill was written off.

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.

19

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.

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. We are focused on expanding the

operations of Gotham by marketing the company to existing and potential new clients.

Assets. At September 30, 2013, we had $1,058,526 in total assets, compared to

$745,919 at December 31, 2012. The increase in total assets was primarily due to the

increase in accounts receivable and the receivable due from the IGX Rescission

Agreement.

Liabilities. At September 30, 2013, our total liabilities were $524,823 compared

to $440,221 at December 31, 2012. The increase in liabilities was primarily due to the

issuance of a convertible note payable to an unrelated party. We do not have any long

term liabilities.

Stockholders’   Equity. Our   stockholders’   equity   increased   to   $533,703   at

September 30, 2013 from $305,698 at December 31, 2012. This increase was primarily

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

$(2,220,341) at September 30, 2013, resulting from income from operations of $228,005

for the nine months ended September 30, 2013.

THREE MONTHS ENDED SEPTEMBER 30, 2013 AS COMPARED TO THREE

MONTHS ENDED SEPTEMBER 30, 2012

Revenues  and Cost of Sales . We had $397,081 of revenue  during the three

months ended September 30, 2013 compared to revenue of $416,429 during the three

months  ended  September  30,  2012.  The  decrease  in  revenue  was  due  primarily to  a

decrease in revenue generated by our Gotham subsidiary. The decrease in our cost of

goods sold for the three months ended September 30, 2013 was due to a decrease in the

cost of the outsourced photography vendors utilized by our Gotham subsidiary.

20

General  and  Administrative  Expenses . General  and  Administrative  Expenses

decreased to $421,298 for the three months ended September 30, 2013 from $438,058 for

the three months ended September 30, 2012. For the three months ended September 30,

2013  our  General  and  Administrative  Expenses  consisted  of  corporate  administrative

expenses of $86,338, legal and accounting fees of $19,951, employee benefits expense of

$28,640, directors and officers insurance of $10,326 and payroll expenses of $276,043.

For the three months ended September 30, 2012 our General and Administrative

expenses consisted of corporate administrative expenses of $96,829, legal and accounting

fees of $35,573, payroll expenses of $279,068, employee benefits expense of $17,131

and directors and officers insurance of $9,457.      The decreases from the three months

ended September 30, 2012 to the three months ended September 30, 2013 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

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

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

would likely increase our corporate administrative expenses.

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

months ended September 30, 2013 compared to interest income of $257 for the three

months ended September 30, 2012. There was no income tax benefit the three months

ended September 30, 2013 compared to $(70,218) for the three months ended September

30, 2012.

NINE MONTHS ENDED SEPTEMBER 30, 2013 AS COMPARED TO NINE

MONTHS ENDED SEPTEMBER 30, 2012

Revenues and Net Income . We had $1,171,621 of revenue during the nine months

ended September 30, 2013, as compared to $1,325,945 of revenue during the nine months

ended September 30, 2012. The decrease in revenue was due to decrease in revenue

generated  by our  acquired  subsidiary Gotham.    In  addition,  we  had  other  income  of

$755,000 for the nine months ended September 30, 2013, compared to $0 for the nine

months ended September 30, 2012. The decrease in our cost of goods sold for the nine

months ended September 30, 2013 was due to a decrease in the cost of the outsourced

photography vendors utilized by Gotham.

General   and   Administrative   Expenses . General   and   Administrative   Expenses

decreased to $1,299,224 for the nine months ended September 30, 2013 from $1,368,293

for the nine months ended September 30, 2012.   For the nine months ended September

30, 2013 our General and Administrative Expenses consisted of corporate administrative

expenses of $225,092, employee benefits expense of $89,504, legal and accounting fees

of   $102,655,   directors   and   officers   insurance   expense   of   $30,038,   finders   and

commission fees related the IGX transaction of $30,175 and payroll expenses of

$821,760. For the nine months ended September 30, 2012 our General and

Administrative  Expenses  consisted  of  corporate  administrative  expenses  of  $358,604,

legal and accounting fees of $67,475, payroll expenses of $863,342, employee benefit

expenses  of  $51,820  and  directors  and  officers’  insurance  expense  of  $27,052.    The

21

decreases from the nine months ended September 30, 2012 to the nine months ended

September 30, 2013 relate primarily to a decrease in payroll and corporate administrative

expenses.   Costs associated with our officers’ salaries and the operation of our Gotham

subsidiary should  remain  level  going forward,  subject  to  a  material  expansion  in the

business operations of Gotham which would likely increase our corporate administrative

expenses.

Other Income (Expense) and Taxes . There was no interest income for the nine months

ended September 30, 2013 compared to interest income of $12,978 for the nine months

ended September 30, 2012. There  was no income tax benefit the nine months ended

September 30, 2013 compared to $(254,691) for the nine ended September 30, 2012.

LIQUIDITY AND CAPITAL RESOURCES

General

As reflected in the accompanying consolidated financial statements, at September

30, 2013, we had $216,618 of cash and stockholders’ equity of $533,703 as compared to

$104,721 and $305,698 at December 31, 2012.     At September 30, 2013 we had

$1,058,526 in total assets, compared to $745,919 at December 31, 2012.

Our primary capital requirements in 2013 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 provided by operating activities was $6,597 for the nine months ended

September 30, 2013, compared to net cash used by operating activities of $(263,227) for

the nine months ended September 30, 2012. Our primary source of operating cash flows

from continuing operating activities for the nine months ended September 30, 2013 was

from our Gotham subsidiary’s revenues of $1,171,621 and $1,325,945 for the nine months ended

22

September 30,  2012. Additional contributing factors to the change were from a decrease in

prepaid expenses of $87,804, net income of $228,005 and no change in deferred income taxes.

Net cash provided by  discontinued operating  activities was $0 for the nine  months ended

September 30, 2013 and $250,000 for the nine months ended September 30, 2012.  Cash provided by discontinued operations for the nine months ended September 30, 2012 consists of $250,000 in cash payments received from DDC which was offset by a decrease in accounts receivable included in the Assets from Discontinued Operations.

Cash provided by investing activities was $1,800 for the nine months ended September 30,

2013 compared to $421,145 for the nine months ended September 30, 2012. For the nine months

ended September 30, 2013 the primary source of cash provided by investing activities was from a

decrease in deposits. For the nine months ended September 30, 2012 the source of cash provided

by investing activities was primarily from the repayment of notes receivable from Allied Airbus

Inc. of $434,512.

Cash provided by financing activities was $103,500 for the nine months ended September

30, 2013 compared to cash used in financing activities of $(19,127) for the nine months ended

September 30, 2012. The cash flows provided by financing activities for the nine months ended

September 30, 2013 was from the issuance of a Convertible note payable to at an unrelated party.

The cash flows used by financing activities for the nine months ended September 30, 2012 was

from a repayment of loans payable to a related party.

Supplemental Cash Flow Activity

In the nine months ended September 30, 2013 the company paid income taxes of $0 and

interest of $2,644 compared to income taxes of $4,125 and interest of $1,478 in the nine months

ended September 30, 2012.

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, 2013.

Change in Internal Controls

During the nine months ended September 30, 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 .

23

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

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 regarding among

other  items,  discovery  cut-off  and  status  report  deadline  date  of  April  29,  2013  and

dispositive  motions  deadline  date  of  May  28,  2013.    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. To date, no

depositions have been scheduled.   To date, we have not received any information from

DDC regarding any specific quantified “damages” directly resulting from this Order or

the settlement agreement between Verizon and the Plaintiff.

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

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

Maryland Law.

One June 11, 2013,  Digi-Data filed  its  Response  to the  Motion  for Summary

Judgment and, for the first time, purported to liquidate certain alleged damages for which

Digi-Data seeks a set-off against the amounts admittedly owed by Digi-Data to iGambit

and alludes the existence of additional although not yet quantified damages. The

Response relies entirely upon the Affidavit of a Vice President of Digi-Data for its evidentiary

24

support.    Notwithstanding,  Digi-Data  failed  to  produce  documentary  support  for  its  alleged

damages and to explain why it failed to disclose such information during the discovery period or

thereafter.

On July 9, 2013, the Company filed its Reply to Digi-Data’s Response and, thereby,

advised the Court of Digi-Data’s apparent litigation-by-ambush tactic such as withholding

allegations of damages until the end of discovery and attempting to use such previously withheld

information  to  defeat  summary  judgment,  and  the  legal  inadequacy  of  same.    Pursuant  the

Maryland District Court’s Local Rules, Digi-Data is not authorized to file a Surreply without

Court order.

Item 1A. Risk Factors.

Not required

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

None

Item 3. Defaults upon Senior Securities.

None

Item 4. Removed and Reserved.

Item 5. Other Information .

None

Item 6.

Exhibits

Exhibit No.

D escription

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.)

25

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 13, 2013.

iGambit Inc.

/s/ John Salerno

John Salerno

Chief Executive Officer

/s/ Elisa Luqman

Elisa Luqman

Chief Financial Officer

26

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.)

27