Filing summary
Identity and period: The supplied filing is iGambit Inc.’s unaudited Form 10-Q for the quarter and nine months ended September 30, 2015. It is not identified as a Nutex Health Inc. filing; verify the issuer before relying on this summary.
Business context and financial results
At the reporting date, iGambit was a technology holding company whose wholly owned subsidiary, Gotham Innovation Lab, provided media technology services to real estate agents and brokers. The September 30 results do not include the November 2015 ArcMail acquisition or Gotham asset sale.
| Metric | Q3 2015 | Q3 2014 | Nine months 2015 | Nine months 2014 |
|---|---|---|---|---|
| Revenue | $312,148 | $269,166 | $960,262 | $819,803 |
| Gross profit | $186,339 | $153,952 | $531,387 | $477,974 |
| Gross margin | 59.7% | 57.2% | 55.3% | 58.3% |
| General and administrative expense | $258,885 | $338,288 | $795,632 | $998,527 |
| Operating loss | $(72,546) | $(184,336) | $(264,245) | $(520,553) |
| Net loss | $(74,849) | $(185,765) | $(271,392) | $(422,613) |
Revenue increased year over year, attributed mainly to Gotham. Lower general and administrative expenses—particularly payroll—reduced operating losses. Nine-month 2014 results also included a $152,076 gain on extinguishment of a derivative liability and $17,531 of discontinued-operations income; neither recurred in 2015. Stock-based compensation was $331,998 in the first nine months of 2015, versus $21,106 in 2014.
Cash, liquidity, debt, and equity
- At September 30, cash was $18,754, down from $133,436 at December 31, 2014. Current assets were $388,161 and current liabilities $353,725, implying working capital of $34,436 and a current ratio of approximately 1.10.
- For the first nine months, operating cash use was $147,992; investing cash use was $5,026; and financing provided $38,336, all from net stockholder advances. Cash declined by $114,682.
- Liabilities were $353,725, comprising $315,389 of accounts payable and $38,336 of non-interest-bearing stockholder advances. Management reported no long-term liabilities. The advances were due by December 31, 2015.
- Stockholders’ equity was $56,115, compared with a $4,491 deficit at year-end 2014. The company reported 28,183,990 shares issued and outstanding at September 30; the cover reports 39,683,990 outstanding on November 13.
Outlook, transactions, and risks
- After quarter-end, on November 4, the company acquired ArcMail, an email archiving and management business, for 11.5 million iGambit common shares (10.5 million at closing and 1 million held in escrow subject to the agreement’s terms).
- On November 5, Gotham sold specified assets, including customer and vendor relationships and intellectual property, to VHT for $600,000: $400,000 at closing and twelve monthly installments beginning January 2016. The $10,000 monthly earn-out component is payable only while VHT maintains its relationship with Gotham’s major client, subject to stated terms.
- Management anticipated higher general and administrative costs following the asset sale and ArcMail acquisition. It expected to fund expansion and potential acquisition-related costs through private-market capital, but gave no quantified forecast and cautioned that acceptable financing was not assured. Management said it believed available capital was sufficient for present operations.
- Customer concentration was substantial: one customer represented approximately 64% of Gotham’s nine-month 2015 sales and 71% of receivables at September 30. The filing also cites risks including operating-result fluctuations, regulation, technological change, and competition.
- The company reported a full valuation allowance against deferred tax assets due to recent cumulative losses. It reported disclosure controls as effective, although the filing’s controls discussion contains an apparent date inconsistency, referring once to an evaluation as of September 30, 2012 and later to September 30, 2015.
Key facts for investors to verify
- Confirm the issuer: the filing names iGambit Inc., while the request metadata names Nutex Health Inc.
- Reconcile the September 30 share count of 28,183,990 with the November 13 cover-page count of 39,683,990, including the ArcMail consideration and other issuances.
- Review the ArcMail acquisition terms, post-acquisition financials, integration costs, and resulting dilution.
- Verify collection and timing of VHT’s deferred and conditional payments, particularly the customer-relationship condition on earn-out payments.
- Assess liquidity and financing needs in light of $18,754 quarter-end cash, operating cash use, stockholder advances due by year-end, and customer concentration.