Business context and reporting period
Entity mismatch: The supplied filing is iGambit Inc.’s unaudited Form 10-Q for the quarter ended March 31, 2015—not a filing for Nutex Health Inc. The figures below describe iGambit and its wholly owned subsidiary, Gotham Innovation Lab, Inc.
iGambit describes itself as a holding company seeking technology acquisitions. Gotham provides media technology services to real estate agents and brokers in the New York metropolitan area. Management says it is focusing Gotham on real estate photography and marketing its services to existing and prospective clients.
Financial results and position
| Metric | Q1 2015 | Q1 2014 or prior date |
|---|---|---|
| Revenue | $300,347 | $240,213 |
| Gross profit / margin | $164,725 / 54.8% | $137,301 / 57.2% |
| Operating expenses | $307,919 | $272,267 |
| Operating loss | $(143,194) | $(134,966) |
| Net loss | $(144,897) | $(161,578) |
| Cash used by operating activities | $(119,856) | Cash provided of $2,875 |
| Cash and cash equivalents | $38,734 at March 31, 2015 | $133,436 at December 31, 2014 |
| Current assets / current liabilities | $169,698 / $331,377 | $260,217 / $285,277 at December 31, 2014 |
| Total assets | $193,987 | $280,786 at December 31, 2014 |
| Stockholders’ deficiency | $(137,390) | $(4,491) at December 31, 2014 |
Revenue increased about 25% year over year, which management attributes primarily to Gotham’s increased revenue after shifting focus away from customer technical services toward real estate photography. Gross margin declined by about 2.4 percentage points. Operating expenses rose about 13%, and operating loss widened. Net loss narrowed largely alongside the absence of the prior-year $34,500 debt-discount amortization; the prior-year period also included $11,355 of discontinued-operations income.
Q1 2015 basic and diluted loss per share was $0.01. The current ratio was approximately 0.51, with a working capital deficit of $161,679. The company had $301,197 in accounts payable and a $30,180 non-interest-bearing stockholder loan, repayable by December 31, 2015; management reported no long-term liabilities. Cash fell by $94,702 during the quarter. Financing provided $30,180, while investing used $5,026, primarily for equipment purchases.
Outlook, risks, contingencies, and unusual items
- No specific revenue, earnings, or cash-flow guidance is provided. Management says it believes current capital is sufficient for present operations and expects cash position and liquidity to increase, but also says additional funding may be needed for Gotham expansion or acquisitions.
- Management expects to seek private-market capital for potential expansion or acquisition costs; it gives no assurance funding will be available on acceptable terms. It says it has no current plan to obtain a commercial bank credit facility.
- Customer concentration is significant: one customer accounted for about 57% of Gotham’s Q1 2015 sales and 64% of receivables at March 31, 2015.
- Management cites quarterly operating fluctuations, regulation, technology change, and competition as risks. It reports no material litigation as of quarter-end and no defaults upon senior securities.
- Quarterly cash burn, limited cash, current liabilities exceeding current assets, and stockholders’ deficiency are important liquidity concerns. Management’s positive liquidity outlook should be assessed against these figures.
- The filing describes 200,000 options granted during the quarter and $11,998 of stock-based compensation expense. It reports a full valuation allowance against deferred tax assets and a 0% effective tax rate.
- The interim statements are unaudited and do not include all information and footnotes required for complete GAAP financial statements. Management says Q1 results are not necessarily indicative of full-year results.
Most important facts for investors to verify
- Confirm the filing belongs to iGambit Inc., not Nutex Health Inc., before associating any of these financials with the requested company.
- Assess whether operating cash use and the $38,734 quarter-end cash balance are consistent with management’s expectation of adequate capital and improving liquidity; verify actual subsequent financing and cash flows.
- Review the concentration and collectability risks tied to the customer representing 57% of sales and 64% of receivables.
- Verify the status and repayment of the $30,180 stockholder loan, accounts payable, and any subsequent financing, expansion, or acquisition plans.
- Check the filing’s disclosure-control statement: it says the evaluation was as of March 31, 2012, while concluding controls were effective as of March 31, 2015. The text appears inconsistent.
- Reconcile share-count disclosures: the balance sheet reports 26,583,990 shares issued and outstanding, while Q1 weighted-average shares are 26,583,900; the filing reports 26,583,990 shares outstanding as of May 15, 2015.