Filing summary
Filing identity and period: The supplied filing text identifies the registrant as iGambit Inc., not Nutex Health Inc. It reports financial results for the quarter and six months ended June 30, 2012, but the cover page says the quarterly period ended June 30, 2011. This internal date conflict should be verified against the original filing. The statements are unaudited.
Business context
iGambit describes its operating business as Gotham Innovation Lab, Inc., which provides media technology services to the real estate industry. The company also reports legacy contingent revenue from the sale of its digital vaulting business to Digi-Data; that agreement ended February 28, 2011. Management says it is pursuing growth for Gotham and considering acquisitions or partnerships.
Financial performance
| Metric | Three months ended June 30, 2012 | Three months ended June 30, 2011 | Six months ended June 30, 2012 | Six months ended June 30, 2011 |
|---|---|---|---|---|
| Sales | $429,168 | $477,441 | $909,516 | $889,344 |
| Gross profit | $206,595 | $255,849 | $431,905 | $537,531 |
| Gross margin | 48.1% | 53.6% | 47.5% | 60.4% |
| General and administrative expense | $433,294 | $450,662 | $930,235 | $903,061 |
| Operating loss | $(226,699) | $(194,813) | $(498,330) | $(365,530) |
| Net loss | $(137,601) | $(122,235) | $(301,136) | $(76,715) |
| Basic and diluted loss per share | $(0.01) | $(0.01) | $(0.01) | $(0.00) |
Continuing-operations losses were partly offset by income tax benefits of $83,217 for the quarter and $184,473 for the six-month period. The prior-year six-month net result included $159,785 of after-tax discontinued-operations income; there was no such income in 2012.
Balance sheet and liquidity at June 30, 2012
- Cash was $653,462, up from $224,800 at December 31, 2011. Total assets were $1,706,872, down from $1,891,178.
- Current assets were $1,573,015 and current liabilities were $405,415, implying a current ratio of about 3.9. Stockholders’ equity was $1,301,457, down from $1,602,593.
- Liabilities consisted primarily of $380,350 in accounts payable and a $19,765 related-party note payable. The company reported no long-term liabilities. A $5,300 stockholder loan for equipment was reported at quarter-end and said to have been repaid by the report date.
- Assets of discontinued operations were $345,590, consisting of receivables from Digi-Data, versus $570,590 at year-end.
Cash flows for the six months ended June 30
- Net operating cash flow was $492 in 2012, compared with cash used of $341,169 in 2011. Continuing operations used $224,508; discontinued operations provided $225,000, primarily from collecting Digi-Data receivables.
- Investing activities provided $433,795, mainly from repayment of $434,512 in Allied Airbus notes. Financing activities used $5,625 for loan repayments. Cash increased by $428,662.
- Cash interest paid was $1,368 and income taxes paid were $4,125.
Material changes, outlook and risks
- Quarterly sales fell about 10% year over year; management attributed the decline to Gotham shifting away from custom development toward online real estate media. Six-month sales rose about 2%, but gross profit declined as cost of sales increased.
- Six-month general and administrative expenses increased about 3%, with management citing higher insurance costs, including health-care and D&O premiums. Quarterly expenses declined, partly due to recovery of legal fees in the Allied settlement and lower professional costs.
- The company settled its Allied Airbus dispute in June 2012 and received principal, interest and legal fees on June 27. The previously past-due $434,512 notes receivable were repaid in full, including accrued interest.
- Management said existing capital should fund present operations and expected liquidity to increase, while identifying Gotham expansion and possible acquisitions as potential funding needs. It anticipated seeking private-market capital if needed, but gave no quantified forecast or assurance of financing and had no plan for a commercial bank credit facility.
- Three Gotham customers accounted for approximately 65% of its six-month sales (38%, 14% and 13%), indicating customer concentration. Management noted that insufficient future Gotham operating results could lead to goodwill impairment; no impairment was recorded for the period.
- Management’s forward-looking statement cautions that results may be affected by quarterly fluctuations, regulation, technology change and competition. No material subsequent events were disclosed.
Key facts for investors to verify
- Confirm the issuer and reporting period: the text names iGambit Inc., conflicts with the Nutex Health metadata, and has a 2011 cover-page period despite 2012 financial statements.
- Review the original filing’s income statement presentation: the extracted text has misaligned discontinued-operations and per-share rows, and the 2011 six-month net loss includes discontinued-operations income.
- Assess the sustainability and collectability of receivables, including the $345,590 remaining Digi-Data discontinued-operations asset balance and the $161,350 continuing-operations receivables.
- Evaluate customer concentration, Gotham’s margin decline, and the company’s ability to fund expansion or acquisitions without raising capital.
- Check the filing’s control disclosures and date references: the controls section refers to an evaluation as of June 30, 2011 and changes during the second quarter of 2011, inconsistent with the 2012 financial reporting period.