Filing summary
Identity and period: The supplied filing is iGambit, Inc.’s Form 10-K for the fiscal year ended December 31, 2011, not a Nutex Health Inc. filing. It reports annual results, not standalone fourth-quarter results. Verify the issuer and filing before relying on this summary.
Business context
iGambit operated Gotham Innovation Lab, which provided media technology services to real estate firms, and pursued acquisitions of additional technology businesses. Its legacy revenue-sharing agreement with Digi-Data Corporation (DDC), arising from the 2006 sale of iGambit’s vaulting business, ended February 28, 2011.
Financial performance and liquidity
| Metric | 2011 | 2010 |
|---|---|---|
| Revenue (continuing operations) | $1,783,904 | $874,774 |
| Gross profit | $1,019,155 | $483,188 |
| Gross margin | 57.1% | 55.2% |
| General and administrative expenses | $1,863,732 | $1,829,401 |
| Loss from continuing operations | $(546,981) | $(839,166) |
| Income from discontinued operations | $163,588 | $997,303 |
| Net income (loss) | $(383,393) | $158,137 |
| Cash and cash equivalents, year-end | $224,800 | $465,549 |
| Total assets, year-end | $1,891,178 | $2,336,788 |
| Total liabilities, year-end | $288,585 | $351,617 |
| Stockholders’ equity, year-end | $1,602,593 | $1,985,171 |
| Cash used in operating activities | $659,136 | $1,637,145 |
Revenue more than doubled, largely reflecting Gotham’s revenue growth to $1,623,654 from $850,222; Gotham reported net income of $44,998 in 2011 versus a $375,073 loss in 2010. Continuing operations remained loss-making. The net loss in 2011 chiefly reflected the sharp decline in DDC-related discontinued-operations income. Current liabilities were $288,585; the filing reports no bank credit facility or other loan facility. Current assets were $1,759,089, including $570,590 of assets from discontinued operations and $434,512 of notes receivable.
DDC income recognized in 2011 was $247,860, all relating to January and February. The company reported $490,000 of DDC cash receipts during 2011 and said it expected the remaining amounts due to be paid in 2012; the amount and timing are not clearly reconciled in the filing text. The cash-flow statement reports net cash provided by investing activities of $418,387 and no financing cash flow.
Changes, outlook, and risks
- DDC-related income from discontinued operations fell to $163,588 from $997,303 as the agreement expired. Management attributed the decline in earnings to that expiration.
- Gotham focused on expanding recurring revenue, developing its EXPO product and broadening its real-estate client base. Management anticipated revenue growth in 2012 but provided no quantified guidance.
- The company was discussing potential acquisitions with four candidates but was not under contract to acquire any. Management said it might raise private-market capital to fund expansion or acquisitions; it gave no assurance financing would be available on acceptable terms.
- Customer concentration is significant. The business discussion says five customers represented approximately 81% of 2011 sales; the financial-statement note says two customers represented approximately 55%. The filing’s figures should be reconciled.
- Notes receivable from Allied Airbus totaled $434,512 at year-end; $340,512 was past due. iGambit had sued Allied and guarantors to collect, while defendants filed counterclaims alleging fraud and violations of Florida’s deceptive-practices law, including an alleged failure to provide a previously committed $1.5 million loan. The outcome and collectability are uncertain.
- Management reported effective disclosure controls and internal control over financial reporting. The independent auditor expressed an unqualified opinion on the financial statements but did not audit or opine on internal control.
Key facts for investors to verify
- Confirm the issuer: this text identifies iGambit, Inc., not Nutex Health Inc.
- Reconcile the DDC receivable, collections, and amounts expected in 2012, including the $570,590 discontinued-operations asset balance.
- Assess recovery prospects for Allied notes receivable and the status and potential exposure from the litigation and counterclaims.
- Reconcile customer-concentration disclosures and evaluate dependence on major real-estate accounts.
- Review cash needs and financing plans for Gotham’s expansion and possible acquisitions, given operating cash outflow and reduced cash reserves.
- Consider potential dilution: 23,954,056 common shares were outstanding as of March 30, 2012, alongside outstanding options and warrants; the filing reports no established public trading market.