NUTX 10-Q Quarter ended June 30, 2015

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

þ

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

EXCHANGE ACT OF 1934

For the Quarterly period ended June 30, 2015\



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

For the transition period from

to

Commission file number 000-53862

iGambit Inc.

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

Delaware

11-3363609

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

1050 W. Jericho Turnpike, Suite A

Smithtown, New York 11787

(Address of Principal Executive Offices)(Zip Code)

(631) 670-6777

(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 27,183,990 shares of its common stock outstanding as of August 18, 2015.

iGambit Inc.

Form 10-Q

Part I — Financial Information

1

Item 1.

Financial Statements:

1

Consolidated Balance Sheets

1

Consolidated Statements of Income

2

Consolidated Statements of Cash Flows

3

Notes to Consolidated Financial Statements

4

Item 2 .

Management ’ s Discussion and Analysis of Financial Condition and

Results of Operations

16

Item 3 .

Quantitative and Qualitative Disclosures About Market Risk

22

Item 4 .

Controls and Procedures

22

Part II — Other Information

23

Item 1.

Legal Proceedings

23

Item 1A .

Risk Factors

23

Item 2 .

Unregistered Sales of Equity Securities and Use of Proceeds

23

Item 3 .

Defaults upon Senior Securities

23

Item 4 .

Removed and Reserved

23

Item 5 .

Other Information

23

Item 6 .

Exhibits

23

EX-31.1

EX-31.2

EX-32.1

EX-32.2

PART I — FINANCIAL INFORMATION

Item 1 — Financial Statements

IGAMBIT INC.

CONSOLIDATED BALANCE SHEETS

JUNE 30,

DECEMBER 31,

2015

2014

(Unaudited)

ASSETS

Current assets

Cash

$

40,976

$

133,436

Accounts receivable, net

107,531

81,671

Prepaid expenses

100,448

45,110

Total current assets

248,955

260,217

Property and equipment, net

10,851

8,436

Other assets

Deposits

12,133

12,133

$

271,939

$

280,786

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities

Accounts payable

$

308,539

$

285,277

Advances from stockholders

32,436

--

Total current liabilities

340,975

285,277

Commitments and contingencies

Stockholders' deficiency

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

issued and outstanding - 0 shares in 2015 and 2014, respectively

--

--

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

issued and outstanding - 27,183,990 shares in 2015 and

26,583,990 shares in 2014, respectively

27,184

26,584

Additional paid-in capital

2,982,522

2,851,124

Accumulated deficit

(3,078,742)

(2,882,199)

Total stockholders' deficiency

(69,036)

(4,491)

$

178,189

$

280,786

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

1

IGAMBIT INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

THREE MONTHS

SIX MONTHS

ENDED

ENDED

JUNE 30,

JUNE 30,

2015

2014

2015

2014

Sales

$

347,767

$

310,424

$

648,114

$

550,637

Cost of sales

167,444

123,703

303,066

226,615

Gross profit

180,323

186,721

345,048

324,022

Operating expenses

General and administrative expenses

228,828

387,972

536,747

660,239

Loss from operations

(48,505)

(201,251)

(191,699)

(336,217)

Other income (expenses)

Gain on derivative liability

--

152,076

--

152,076

Amortization of debt discount

--

(28,750)

--

(63,250)

Interest expense

(3,141)

(3,521)

(4,844)

(6,988)

Total other income (expenses)

(3,141)

119,805

(4,844)

81,838

Loss from continuing operations

(51,646)

(81,446)

(196,543)

(254,379)

Income from discontinued operations

--

6,176

--

17,531

Net loss

$

(51,646)

$

(75,270)

$

(196,543)

$

(236,848)

Basic and fully diluted loss per common

share:

Continuing operations

$

(.01)

$

(.00)

$

(.01)

$

(.01)

Discontinued operations

$

.00

$

(.00)

$

.00

$

.00

Net loss per common share

$

(.01)

$

(.00)

$

(.01)

$

(.01)

Weighted average common shares outstanding

- basic

26,874,100

25,439,660

26,729,846

25,242,951

Weighted average common shares outstanding

- fully diluted

26,874,100

25,439,660

26,729,846

25,242,951

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

2

IGAMBIT INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30,

(UNAUDITED)

2015

2014

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$

(196,543)

$

(236,848)

Adjustments to reconcile net loss to net

cash provided (used) by operating activities

Income from discontinued operations

--

(17,531)

Depreciation

2,611

2,383

Debt discount amortization

--

63,250

Stock-based compensation

131,998

21,106

Uncollectible portion of due from rescission agreement

--

50,779

Gain on derivative liability

--

(152,076)

Increase (Decrease) in cash flows as a result of

changes in asset and liability account balances:

Accounts receivable

(25,860)

37,886

Prepaid expenses

(55,338)

(1,745)

Due from rescission agreement

--

189,000

Accounts payable

23,262

7,007

Net cash used by continuing operating activities

(119,870)

(36,789)

Net cash provided by discontinued operating activities

--

655,746

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES

(119,870)

618,957

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

(5,026)

(2,026)

Increase in deposits

--

(2,712)

NET CASH USED BY INVESTING ACTIVITIES

(5,026)

(4,738)

CASH FLOWS FROM FINANCING ACTIVITIES:

Advances from stockholders

43,180

3,600

Repayments of stockholders' loans

(10,744)

(500)

Repayments of convertible note payable

--

(54,500)

NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES

32,436

(51,400)

NET INCREASE (DECREASE) IN CASH

(92,460)

562,819

CASH - BEGINNING OF PERIOD

133,436

26,870

CASH - END OF PERIOD

$

40,976

$

589,689

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest

$

4,844

$

6,988

Non-cash investing and financing activities:

Note payable converted to common stock

$

--

$

(49,000)

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

3

IGAMBIT INC.

Notes to Condensed Consolidated Financial Statements

Six Months Ended June 30, 2015 and 2014

Note 1 - Organization and Basis of Presentation

The consolidated financial statements presented are those of iGambit Inc., (the “ Company ” ) and

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

incorporated under the laws of the State of Delaware on April 13, 2000. The Company was

originally incorporated as Compusations Inc. under the laws of the State of New York on October

2, 1996. The Company changed its name to BigVault.com Inc. upon changing its state of domicile

on April 13, 2000. The Company changed its name again to bigVault Storage Technologies Inc.

on December 21, 2000 before  changing  to iGambit Inc. on April 5, 2006. Gotham was

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

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

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

in the New York metropolitan area.

Interim Financial Statements

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

derived from audited financial statements, and (b) the unaudited condensed consolidated interim

financial statements of the Company have been prepared in accordance with the instructions to

Form  10-Q  and  Rule  8-03  of  Regulation  S-X.  Accordingly,  they do  not  include  all  of  the

information and footnotes required by GAAP for complete financial statements. In the opinion of

management, all adjustments (consisting of normal recurring accruals) considered necessary for a

fair presentation have been included. Operating results for the six months ended June 30, 2015 are

not necessarily indicative of results that may be expected for the year ending December 31, 2015.

These condensed consolidated financial statements should be read in conjunction with the audited

consolidated financial statements and notes thereto for the year ended December 31, 2014 included

in the Company ’ s Annual Report on Form 10-K, filed with the Securities and Exchange

Commission ( “ SEC ” ) on April 15, 2015.

Note 2 – Discontinued Operations

Sale of Business

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

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

digital vaulting business operations in exchange for $1,500,000, which was deposited into an

escrow account for payment of the Company ’ s outstanding liabilities. In addition, as part of the

sales agreement, the Company received payments from Digi-Data based on 10% of the net vaulting

revenue payable quarterly over five years.  The Company was also entitled to an additional 5% of

the increase in net vaulting revenue over the prior year ’ s revenue.

4

Accounts Receivable

Assets from discontinued operations, net includes accounts receivable which represents 50% of

contingency payments earned for the previous quarters. The reserve for bad debts of $250,000

charged  to  operations in 2010 was reversed  in connection with the Summary Judgment and

Forbearance Agreement described in Note 11.   Also included is accrued interest receivable of

$85,156 recorded for interest granted on the balance due from Digi-data through May 2014. The

entire balance including accrued interest totaling $655,746 was repaid to the Company by Digi-

data in the year ended December 31, 2014

Note 3 – Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned

subsidiary, Gotham Innovation Lab, Inc. All intercompany accounts and transactions have been

eliminated.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with generally accepted accounting

principles  requires  management  to  make  estimates  and  assumptions  that  affect  the  reported

amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the

consolidated financial statements and the reported amounts of revenues and expenses during the

period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

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

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

approximate fair value due to their short maturities.  Additionally, there are no assets or liabilities

for which fair value is remeasured on a recurring basis.

Revenue Recognition

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

real estate brokers. The Company recognizes revenues when the services or products have been

provided or delivered, the fees charged are fixed or determinable, the Company and its customers

understand the specific nature and terms of the agreed upon transactions, and collectability is

reasonably assured.

Advertising Costs

The Company expenses advertising costs as incurred.  Advertising costs for the six months ended

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

5

Cash and Cash Equivalents

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

market accounts and any highly liquid debt instruments purchased with a maturity of three months

or less.

Accounts Receivable

The Company analyzes the collectability of accounts receivable from continuing operations each

accounting period and adjusts its allowance for doubtful accounts accordingly.   A considerable

amount of judgment is required in assessing the realization of accounts receivables, including the

creditworthiness of each customer, current and historical collection history and the related aging

of  past  due  balances. The  Company evaluates specific accounts when it becomes aware  of

information indicating that a customer may not be able to meet its financial obligations due to

deterioration of its financial condition, lower credit ratings, bankruptcy or other factors affecting

the ability to render payment.  Allowance for doubtful accounts was $17,865 at June 30, 2015 and

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

six months ended June 30, 2015 and 2014, respectively.

Property and equipment and depreciation

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

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

estimated lives of the respective assets. Computer equipment is depreciated over 5 years and

furniture and fixtures are depreciated over 7 years. Maintenance and repairs are charged to expense

when incurred. When property and equipment are retired or otherwise disposed of, the related cost

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

credited or charged to income.

Depreciation expense of $2,611 and $2,383 was charged to operations for the six months ended

June 30, 2015 and 2014, respectively.

Stock-Based Compensation

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

in accordance with ASC Topic No. 718-20, Awards Classified as Equity, which requires the

measurement of compensation expense for all share-based compensation granted to employees

and non-employee directors at fair value on the date of grant and recognition of compensation

expense over the related service period for awards expected to vest. The Company uses the Black-

Scholes option pricing model to estimate the fair value of its stock options and warrants. The

Black-Scholes option pricing model requires the input of highly subjective assumptions including

the expected stock price volatility of the 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.

6

Income Taxes

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

ASC Topic No. 740, Income Taxes. Under this method, deferred tax assets and liabilities are

determined based on differences between financial reporting and tax bases of assets and liabilities,

and are measured using the enacted tax rates and laws that are expected to be in effect when the

differences are expected to reverse.

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

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

statements . In accordance with this provision, tax positions must meet a more-likely-than-not

recognition  threshold  and  measurement  attribute  for  the  financial  statement  recognition  and

measurement of a tax position.

Recent Accounting Pronouncements

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

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

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

scope of other standards (e.g., insurance contracts or lease contracts). The guidance requires an

entity to recognize revenue on contracts with customers to depict the transfer of promised goods

or services to customers in an amount that reflects the consideration to which the entity expects to

be entitled in exchange for those goods or services. The guidance requires that an entity depict the

consideration by applying the following steps:

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

Step 2: Identify the performance obligations in the contract.

Step 3: Determine the transaction price.

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

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

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

15, 2016, including interim periods within that reporting period. Early application is not permitted.

This amendment is to be either retrospectively adopted to each prior reporting period presented or

retrospectively with the cumulative effect of initially applying this ASU recognized at the date of

initial application. Adoption of this guidance is not expected to have a material impact on the

Company's consolidated financial statements.

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

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

718):  Accounting  for  Share-Based  Payments  When  the  Terms  of  an  Award  Provide  that  a

Performance Target Could be Achieved after the Requisite Service Period," ("ASU 2014-12").

The amendments in ASU 2014-12 require that a performance target that affects vesting and that

7

could be achieved after the requisite service period be treated as a performance condition.   A

reporting entity should apply existing  guidance in ASC Topic No. 718,  "Compensation  - Stock

Compensation" as it relates to awards with performance conditions that affect vesting to account

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

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

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

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

performance targets that are outstanding as of the beginning of the earliest annual period presented

in the financial statements and to all new or modified awards thereafter. The Company does not

anticipate that the adoption of

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

Note 4 - Earnings (Loss) Per Common Share

The Company calculates net earnings (loss) per common share in accordance with ASC 260

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

determined by dividing net earnings (loss) applicable to common stockholders by the weighted

average number of common shares outstanding during the period. The 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

Six Months Ended

June 30,

J une 30,

2015

2014

2015

2014

Stock options

1,718,900

1,518,900

1,718,900

1,518,900

Stock warrants

275,000

275,000

275,000

275,000

Total shares excluded from

calculation

1,993,900

1,793,900

1,993,900

1,793,900

Note 5 – Stock Based Compensation

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

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

Topic 718 of the FASB ASC. Stock-based compensation expense, which is calculated net of

estimated forfeitures, is computed using the grant date fair-value and amortized over the requisite

service period for all stock awards that are expected to vest. The grant date fair value for stock

options and warrants is calculated using the Black-Scholes option pricing model. Determining the

fair value of options at the grant date 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.

8

Options

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

granted under the 2006 Plan have a ten-year term and may be incentive stock options, non-qualified

stock options or warrants. The awards are granted at an exercise price equal to the fair market

value on the date of grant and generally vest over a three or four year period. The Plan expired on

December 31, 2009, therefore as of June 30, 2015, there was no unrecognized compensation cost

related to non-vested share-based compensation arrangements granted under the 2006 plan.

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

stock. 8,146,900 options have been issued under the plan to date of which 7,157,038 have been

exercised and 692,962 have expired to date. There were 296,900 options outstanding under the

2006 Plan on its expiration date of December 31, 2009. All options issued subsequent to this date

were not issued pursuant to any plan.

Stock option activity during the six months ended June 30, 2015 and 2014 follows:

Weighted

Average

Weighted

Remaining

Weighted

Average

Average

Contractual

Options

G rant-Date

Life

Outstanding

Exercise Price

Fair Value

(Years)

Options outstanding at

December 31, 2013

668,900

$

0.06

$

0.10

4.69

Options granted

850,000

$

0.04

$

0.09

7.44

Options outstanding at

June 30, 2014

1,518,900

0.06

0.10

5.27

Options outstanding at

December 31, 2014

1,518,900

$

0.03

$

0.10

4.76

Options granted

200,000

0.01

0.40

4.74

June 30, 2015

1,718,900

$

0.03

$

0.13

4.32

Options outstanding at June 30, 2015 consist of:

Date

Number

Number

Exercise

Expiration

Issued

Outstanding

Exercisable

Price

Date

May 1, 2006

100,000

100,000

$0.01

May 1, 2016

May 1, 2006

100,000

100,000

$0.01

May 1, 2016

May 1, 2006

50,000

50,000

$0.01

May 1, 2016

May 1, 2006

46.900

46,900

$0.01

May 1, 2016

June 9, 2014

213,000

213,000

$0.03

June 9, 2024

June 9, 2014

159,000

159,000

$0.03

June 9, 2024

June 9, 2014

600,000

600,000

$0.03

June 9, 2024

9

June 6, 2014

250,000

250,000

$0.05

June 6, 2019

March 24, 2015

200,000

200,000

$0.01

March 24, 2020

Total

1,718,900

1,718,900

Warrants

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

warrants to two consultants entitling the holders to purchase a total of 275,000 shares of our

common stock at an average exercise price of $0.94 per share. Warrants to purchase 25,000 shares

of common stock vest upon 6 months after the Company engages in an IPO, have an exercise price

of $3.00 per share, and expire 2 years after the Company engages in an IPO. Warrants to purchase

250,000 shares of common stock vest 100,000 shares on issuance (June 1, 2009), and 50,000 shares

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

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

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

Warrant activity during the six months ended June 30, 2015 and 2014 follows:

Weighted

(1)Weighted

Weighted

Average Grant-

Average

Date

Remaining

Warrants

Average

Contractual

Outstanding

Exercise Price

Fair Value

Life (Years)

Warrants outstanding at

December 31, 2013

275,000

$

0.94

$

0.10

5.42

No warrant activity

--

--

--

Warrants outstanding at

June 30, 2014

275,000

$

0.94

$

0.10

5.17

Warrants outstanding at

December 31, 2014

275,000

0.94

0.10

4.42

No warrant activity

--

--

--

Warrants outstanding at

June 30, 2015

275,000

$

0.94

$

0.10

3.92

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

Warrants outstanding at June 30, 2015 consist of:

Date

Number

Number

Exercise

Expiration

Issued

Outstanding

Exercisable

Price

Date

April 1, 2000

25,000

25,000

$3.00

2 years after IPO

June 1, 2009

100,000

100,000

$0.50

June 1, 2019

June 1, 2009

50,000

50,000

$0.65

June 1, 2019

June 1, 2009

50,000

50,000

$0.85

June 1, 2019

June 1, 2009

50,000

50,000

$1.15

June 1, 2019

Total

275,000

275,000

10

Note 6 – Convertible Note Payable

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

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

including accrued interest was due June 18, 2014 and was convertible any time after 180 days at

the option of the holder into shares of the Company ’ s common stock at 55% of the average stock

price of the lowest 3 closing bid prices during the 10 trading day period ending on the latest

complete trading day prior to the conversion date.   Interest expense on the convertible note of

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

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

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

Company recorded a debt discount related to identified embedded derivatives relating to

conversion features and a reset provisions (see Note 7) based fair values as of the inception date

of the Note.  The calculated debt discount equaled the face of the note and was amortized over the

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

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

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

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

Note 7 - Derivative Liability

Convertible Note

During the year ended December 31, 2013, the Company issued a convertible note (see Note 6

above).

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

of the Company ’ s common stock. The Company has identified embedded derivatives included in

these notes as a result of certain anti-dilutive (reset) provisions, related to certain conversion

features. The accounting treatment of derivative financial instruments requires that the Company

record the fair value of the derivatives as of the inception date of the convertible note and debt

discount amortization to fair value as of each subsequent reporting date. This resulted in a fair

value of derivative liability of $152,076 in which to the extent of the face value of convertible note

was treated as debt discount with the remainder treated as interest expense.

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

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

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

rate  of  0.09%, (4) expected lives of 0.72 to 0.75  years, and (5)  estimated  fair  value  of  the

Company ’ s common stock of $0.51 per share. The Company recorded interest expense from the

excess of the derivative liability over the convertible note of $48,576 during the year ended

December 31, 2013. A gain on derivative liability of $152,076 was recorded during the year ended

December 31, 2014 for the satisfaction of the convertible note.

11

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

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

Pursuant to the sequencing approach, the Company evaluates its contracts based upon earliest

issuance date.

Note 8 – Stock Transactions

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

Articles of Incorporation to increase the number of shares of Common Stock which the Company

is authorized to issue from seventy five million (75,000,000) to Three Hundred Million

(300,000,000) shares of Common Stock, $0.001 par value per share, and to create a new class of

stock entitled “ preferred stock ” (together, the “ Capitalization Amendments ” ). The Capitalization

Amendments create provisions in the Company ’ s Articles of Incorporation, which allows the

voting powers, designations, preferences and other special rights, and qualifications, limitations

and restrictions of each series of preferred stock to be established from time to time by the Board

without approval of the stockholders. No dividend, voting, conversion, liquidation or redemptions

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

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

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

Common Stock Issued

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

share.

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

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

December 31, 2014.  The stock issued was determined based on the terms of the convertible note.

Note 9 - Income Taxes

Quarter Ended June 30,

2015

2014

Effective tax rate

0.0 %

0.0 %

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

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

will not be realized. This assessment is based upon consideration of available positive and negative

evidence, which includes, among other things, the Company ’ s most recent results of operations

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

valuation allowance against the Company ’ s deferred tax assets has been established as

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

12

Note 10 - Retirement Plan

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

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

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

Code. The Company matches up to 3% of employee contributions.  The Company's contributions

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

Note 11 – Concentrations and Credit Risk

Sales and Accounts Receivable

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

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

accounts receivable at June 30, 2015.

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

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

accounts receivable at June 30, 2014.

Cash

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

insured by the FDIC up to $250,000. Cash balances could exceed insured amounts at any given

time, however, the Company has not experienced any such losses. The Company did not have any

interest-bearing accounts at June 30, 2015 and December 31, 2014, respectively.

Note 12 - Fair Value Measurement

The Company adopted the provisions of Accounting Standards Codification subtopic 825-10,

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

price that would be received from selling an asset or paid to transfer a liability in an orderly

transaction between market participants at the measurement date. When determining the fair value

measurements for assets and liabilities required or permitted to be recorded at fair value, the

Company considers the principal or most advantageous market in which it would transact and

considers assumptions that market participants would use when pricing the asset or liability, such

as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair

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

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

inputs that may be used to measure fair value:

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

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

liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active

markets); or model-derived valuations in which all significant inputs are observable or can be

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derived principally from or corroborated by observable market data for substantially the full term

of the assets or liabilities.

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

measurement of fair value of assets or liabilities.

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

and are based upon level 3 inputs.

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

in the market, the determination of fair value requires more judgment. In certain cases, the inputs

used to measure fair value may fall into different levels of the fair value hierarchy. In such cases,

for disclosure purposes, the level is the fair value hierarchy within which the fair value

measurement is disclosed and is determined based on the lowest level input that is significant to

the fair value measurement.

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

earnings and no impact on the consolidated financial statements.

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

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

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

As of June 30, 2015 and December 31, 2014, the Company did not have any items that would be

classified as level 1 or 2 disclosures.

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

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

appropriate and consistent with other market participants, it recognizes that the use of different

methodologies or assumptions to determine the fair value of certain financial instruments could

result in a different estimate of fair value at the reporting date. The primary assumptions that would

significantly affect the fair values using the methods discussed in Note 7 are that of volatility and

market price of the underlying common stock of the Company.

As of June 30, 2015 and December 31, 2014, the Company did not have any derivative instruments

that were designated as hedges.

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

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

derivative instruments, the value to the holder of the instrument generally decreases, therefore

decreasing the liability on the Company ’ s balance sheet. Additionally, stock price volatility is one

of the significant unobservable inputs used in the fair value measurement of each of the Company ’ s

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

Company ’ s expected volatility. A 10% change in pricing inputs and changes in volatilities and

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

liability.

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Note 13 - Related Party Transactions

Note Payable – Related Party

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

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

in accounts payable at June 30, 2015 and December 31, 2014.

Advances From Stockholders

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

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

Note 14 – Commitments and Contingencies

Lease Commitment

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

Smithtown, New York commencing on March 1, 2012 at a monthly rent of $1,500 with 2% annual

increases.

Gotham has a month to month license agreement for office space that commenced on August 2,

2012 at a monthly license fee of $4,025.  The license agreement may be terminated upon 30 days ’

notice.

Total future minimum annual lease payments under the lease for the years ending December 31

are as follows:

2015

$   9,600

2016

19,440

2017

3,240

$ 32,280

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

2015 and 2014, respectively.

Contingencies

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

at the earliest date at which it is deemed probable that a liability has been incurred and the amount

of such liability can be reasonably estimated.

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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.

CRITICAL ACCOUNTING ESTIMATES

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

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

accounting principles generally accepted in the United States of America. The preparation of

financial statements may require us to make estimates and assumptions that may affect the reported

amounts of assets and liabilities and the related disclosures at the date of the financial statements.

We do not currently have any estimates or assumptions where the nature of the estimates or

assumptions is material due to the levels of subjectivity and judgment necessary to account for

highly uncertain matters or the susceptibility of such matters to change or the impact of the

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

described below.

Revenue Recognition

Our revenues from continuing operations consist of revenues derived primarily

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

the  services  or  products  have  been  provided  or  delivered,  the  fees  we  charge  are  fixed  or

16

determinable, we and our customers understand the specific nature and terms of the agreed upon

transactions, and collectability is reasonably assured.

Cash and Cash Equivalents

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

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

months or less.

Accounts Receivable

We  analyze  the  collectability of  accounts receivable from continuing operations each

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

amount of judgment is required in assessing the realization of accounts receivables, including the

creditworthiness of each customer, current and historical collection history and the related aging

of past due balances. We evaluate specific accounts when we become aware of information

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

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

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

30, 2015 and 2014, respectively.

Property and equipment and depreciation

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

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

over the estimated lives of the respective assets. Computer equipment is depreciated over 5 years

and furniture and fixtures are depreciated over 7 years. Maintenance and repairs are charged to

expense when incurred. When property and equipment are retired or otherwise disposed of, the

related cost and accumulated depreciation are removed from the respective accounts and any gain

or loss is credited or charged to income.

Depreciation expense of $2,611 and $2,383 was charged to operations for the six months

ended June 30, 2015 and 2014, respectively.

Stock-Based Compensation

We account for our stock-based awards granted under our employee compensation plan in

accordance  with  ASC  Topic  No.  718-20, Awards  Classified  as  Equity, which  requires  the

measurement of compensation expense for all share-based compensation granted to employees

and non-employee directors at fair value on the date of grant and recognition of compensation

expense over the related service period for awards expected to vest. We use the Black-Scholes

option valuation model to estimate the fair value of our stock options and warrants. The Black-

Scholes option valuation model requires the input of highly subjective assumptions including the

expected stock price volatility of the Company ’ s common stock. Changes in these subjective input

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

17

Income Taxes

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

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

based on differences between financial reporting and tax bases of assets and liabilities, and are

measured using the enacted tax rates and laws that are expected to be in effect when the differences

are expected to reverse.

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

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

statements . In accordance with this provision, tax positions must meet a more-likely-than-not

recognition  threshold  and  measurement  attribute  for  the  financial  statement  recognition  and

measurement of a tax position. Management has determined that the Company has no significant

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

Convertible Note

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

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

including accrued interest is due June 18, 2014 and is convertible any time after 180 days at the

option of the holder into shares of our common stock at 55% of the average stock price of the

lowest 3 closing bid prices during the 10 trading day period ending on the latest complete trading

day prior to the conversion date. Interest expense on the convertible note of $3,242 was recorded

for the year ended December 31, 2014.

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

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

related to identified embedded derivatives relating to conversion features and a reset provisions

based fair values as of the inception date of the Note. The calculated debt discount equaled the

face of the note and was amortized over the term of the note. During the year ended December

31, 2014, we amortized $63,250 of debt discount.  During the year ended December 31, 2014, the

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

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

Derivative Liability

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

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

market price of our common stock. We identified embedded derivatives included in these notes as

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

accounting treatment of derivative financial instruments requires that we record the fair value of

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

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

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

with the remainder treated as interest expense.

18

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

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

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

rate of 0.09%, (4) expected lives of 0.72 to 0.75 years, and (5) estimated fair value of our common

stock of $0.51 per share. We recorded interest expense from the excess of the derivative liability

over the convertible note of $48,576 during the year ended December 31, 2013. We recorded a

gain  on  derivative  liability  of  $152,076  during  the  year  ended  December  31,  2014  for  the

satisfaction of the convertible note.

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

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

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

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

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

receivable and an increase in prepaid expenses.

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

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

stockholders of $32,436,  whereas our  total  liabilities as of  December 31, 2014 consisted  of

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

Stockholders ’ Deficiency. Our stockholders ’ deficiency increased to $69,036 at June 30,

2015 from $4,491 at December 31, 2014. This increase was primarily due to an increase in

accumulated deficit from $(2,882,199) at December 31, 2014 to $(3,078,742) at June 30, 2015,

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

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

ENDED JUNE 30, 2014

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

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

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

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

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

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

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

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

30, 2014, respectively.

General and Administrative Expenses. General and Administrative Expenses decreased

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

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

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

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

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

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

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

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

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

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

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

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

payroll expenses; (ii) a decrease in rent; and (iii) a decrease in general and administrative costs

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

and the operation of our Gotham subsidiary should remain level going forward, subject to a

material expansion in the business operations of Gotham which would likely increase our corporate

administrative expenses.

Other Income (Expense) and Taxes. We had interest expense of $3,141 for the three

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

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

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

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

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

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

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

general and administrative expenses.

General and Administrative Expenses. General and Administrative Expenses decreased to

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

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

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

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

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

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

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

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

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

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

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

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

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

expense, health benefits and corporate administrative expenses. Costs associated with our officers ’

salaries and the operation of our Gotham subsidiary should remain level going forward, subject to

a  material expansion in the  business operations of Gotham  which  would likely increase  our

corporate administrative expenses.

Other Income (Expense) and Taxes. We had interest expense of $4,844 for the three months

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

liability for the six months ended June 30, 2014.

LIQUIDITY AND CAPITAL RESOURCES

General

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

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

stockholders ’ deficiency of $4,491 at December 31, 2014.

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

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

purchase  price  payable  in  cash  at  closing,  if  any;  (ii)  professional  fees  associated  with  the

negotiation, structuring, and closing of the transaction; and (iii) post-closing costs. It is not possible

to quantify those costs at this point in time, in that they depend on 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.

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Cash Flow Activity

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

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

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

operating activities for the six months ended June 30, 2015 was from our Gotham subsidiary ’ s

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

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

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

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

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

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

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

receivable included in the Assets from Discontinued Operations.

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

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

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

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

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

increase in deposits of $2,712.

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

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

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

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

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

Supplemental Cash Flow Activity

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

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

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Not Required.

Item 4. Controls and Procedures.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

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

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

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

controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as

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

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

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Change in Internal Controls

During the six months ended June 30, 2015, there were no changes in our internal control

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

internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

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

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

defined in Item 103 of Regulation S-K as of the period ended June 30, 2015.

Item 1A. Risk Factors.

Not required

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

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

share.

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

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

stock issued was determined based on the terms of the convertible note.

Item 3. Defaults upon Senior Securities.

None

Item 4. Removed and Reserved.

Item 5. Other Information.

None

Item 6.

Exhibits

Exhibit No.

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.

23

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

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

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

otherwise subject to the liability of that section. Further, this exhibit shall not be

deemed to be incorporated by reference into any filing under the Securities Act of

1933, as amended, or the Securities Exchange Act of 1934, as amended.)

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

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

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

otherwise subject to the liability of that section. Further, this exhibit shall not be

deemed to be incorporated by reference into any filing under the Securities Act of

1933, as amended, or the Securities Exchange Act of 1934, as amended.)

24

SIGNATURES

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

signed on its behalf by the undersigned, thereunto duly authorized, on August 18, 2015.

iGambit Inc.

/s/ John Salerno

John Salerno

Chief Executive Officer

/s/ Elisa Luqman

Elisa Luqman

Chief Financial Officer

25

Exhibit Index

Exhibit No.

Description

31.1

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

Sarbanes-Oxley Act of 2002.

31.2

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

the Sarbanes-Oxley Act of 2002.

32.1

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

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

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

otherwise subject to the liability of that section. Further, this exhibit shall not be

deemed to be incorporated by reference into any filing under the Securities Act

of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)

32.2

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

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

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

otherwise subject to the liability of that section. Further, this exhibit shall not be

deemed to be incorporated by reference into any filing under the Securities Act

of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)

26