þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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11-3363609
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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(631) 780-7055
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||
(Registrant’s telephone number)
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(Registrant’s former telephone number)
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Title of Each Class: NONE
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Name of Each Exchange on Which Registered:
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Large accelerated filer
o
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
þ
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|||
(Do not check if a smaller reporting company)
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Page No.
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||||||
PART I
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|||||
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||||||
Item 1
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Business
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1
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||||
Item 1A
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Risk Factors
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5
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||||
Item 1B
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Unresolved Staff Comments
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5
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||||
Item 2
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Properties
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5
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||||
Item 3
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Legal Proceedings
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5
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||||
Item 4
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(Removed and Reserved)
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5
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||||
PART II
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||||||
Item 5
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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5
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||||
Item 6
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Selected Financial Data
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6
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||||
Item 7
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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6
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||||
Item 7A
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Quantitative and Qualitative Disclosure About Market Risk
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8
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||||
Item 8
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Financial Statements and Supplementary Data
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8
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||||
Item 9
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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8
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Item 9A
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Controls and Procedures
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9
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||||
Item 9B
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Other Information
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9
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||||
PART III
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||||||
Item 10
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Directors, Executive Officers and Corporate Governance
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9
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||||
Item 11
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Executive Compensation
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10
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||||
Item 12
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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11
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||||
Item 13
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Certain Relationships and Related Transactions, and Director Independence
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12
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||||
Item 14
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Principal Accountant Fees and Services
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12
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||||
PART IV
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||||||
Item 15
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Exhibits and Financial Statement Schedules
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13
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||||
EX – 14
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||||||
EX-31.1
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||||||
EX-31.2
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||||||
EX-32.1
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||||||
EX-32.2
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ITEM 1.
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BUSINESS
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·
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Established Company with proven track record
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o
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Company with history of strong operating and financial performance, or
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o
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Company undergoing a turnaround that demonstrates strong prospects for future growth
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·
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Strong Cash Flow Characteristics.
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o
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Cash flow neutral or positive,
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o
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Predictable recurring revenue stream,
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o
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High gross margins over 60%, and
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o
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Low working capital and capital expenditure needs
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·
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Strong Competitive Industry Position
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o
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Leading or niche market position, and/or
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o
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Strong channel relationships that promote barriers to entry
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·
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Strong Management Team
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o
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Experienced, proven track record in delivering revenue and ability to execute, or
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o
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A management team that can be complemented with our contacts and team
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·
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Diversified Customer and Supplier base
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·
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Proprietary products or marketing position
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·
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Non-cyclical
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·
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Services Consumer or niche market
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·
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Fragmented with potential for consolidation or growth
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·
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Emerging markets
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·
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Real Estate Services
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·
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Hospitality Services
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·
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Health and Medical records management and billing systems
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·
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Internet
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o
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Social Networks
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o
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Media Distribution
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·
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User Experience
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o
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Online
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o
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Handheld devices
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o
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Voice interaction
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·
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Sales Volumes: $500 thousand to $30 million
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·
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Cash Flow: Neutral or positive
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·
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Structure: Controlled ownership. Closely held private company
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·
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Geography: North America, Asia
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·
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Investment size: $1 million to $5 Million
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·
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Involvement: Board oversight
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·
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Controlling Interest: Acquire 100% of controlling interest in target
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·
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Marketing:
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o
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Target captures a particular segment of the market
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o
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Target has a focused strategic marketing plan.
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Period Covered
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Amount
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Date Received
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||||
March 1, 2006 - December 31, 2006 Quarterly Revenue Share Payment
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$
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18,576.42
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2/14/2007
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|||
1
st
Quarter 2007 Quarterly Revenue Share Payment
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$
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20,085.64
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7/18/2007
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|||
2
nd
Quarter 2007 Quarterly Revenue Share Payment
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$
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54,429.29
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9/18/2007
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|||
3
rd
Quarter 2007 Quarterly Revenue Share Payment
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$
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81,761.49
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12/17/2007
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|||
4
th
Quarter 2007 Quarterly Revenue Share Payment
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$
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112,343.36
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2/22/2008
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|||
1
st
Quarter 2008 Quarterly Revenue Share Payment
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$
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142,403.25
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5/1/2008
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|||
March 2007 — February 2008 Annual Increase Payment
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$
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159,190.30
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5/1/2008
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|||
2
nd
Quarter 2008 Quarterly Revenue Share Payment
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$
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143,815.13
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8/9/2008
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|||
3
rd
Quarter 2008 Quarterly Revenue Share Payment
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$
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168,844.36
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11/10/2008
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|||
4
th
Quarter 2008 Quarterly Revenue Share Payment
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$
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246,005.85
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3/10/2009
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|||
1
st
Quarter 2009 Quarterly Revenue Share Payment
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$
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286,976.65
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6/30/2009
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|||
March 2008 — February 2009 Annual Increase Payment
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$
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222,322.00
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6/30/2009
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|||
2
nd
Quarter 2009 Quarterly Revenue Share Payment
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$
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325,514.21
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9/25/2009
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|||
3
rd
Quarter 2009 Quarterly Revenue Share Payment
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$
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365,194.95
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12/24/2009
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|||
4
th
Quarter 2009 Quarterly Revenue Share Payment
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$
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414,851.58
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2/28/2010
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|||
1
st
Quarter 2010 Quarterly Revenue Share Payment
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$
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472,384
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5/26/2010
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|||
March 2009 — February 2010 Annual Increase Payment
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$
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362,202
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*
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|||
2
nd
Quarter 2010 Quarterly Revenue Share Payment
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$
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536,349
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Anticipated in September 2010
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|||
$
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4,133,249.20
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|||||
ITEM 1A.
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RISK FACTORS
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS
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ITEM 2.
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PROPERTIES
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ITEM 3.
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LEGAL PROCEEDINGS
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ITEM 4.
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(REMOVED AND RESERVED)
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ITEM 5.
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MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
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Number of Securities
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||||||||||||
Remaining Available
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||||||||||||
for Future Issuance
|
||||||||||||
Number of Securities
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under Equity
|
|||||||||||
to be Issued Upon
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Weighted Average
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Compensation Plans
|
||||||||||
Exercise of
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Exercise Price of
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(excluding securities
|
||||||||||
Outstanding Options,
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Outstanding Options,
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referenced in
|
||||||||||
Warrants and Rights
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Warrants and Rights
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column (a))
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||||||||||
Plan Category
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(a)
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(b)
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(c)
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|||||||||
Equity compensation plans approved by our stockholders (1)
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1,796,900
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$
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0.01
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4,798,708
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||||||||
Equity compensation plans not approved by our stockholders
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2,310,000
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$
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0.75
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0
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(1)
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Equity compensation plans approved by our stockholders consist of our 2006 Long Term Incentive Plan.
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ITEM 6.
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SELECTED FINANCIAL DATA
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ITEM 7.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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ITEM 7A.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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ITEM 8.
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FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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Report of Independent Registered Public Accounting Firm
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F-1
|
||||||
Consolidated Balance Sheet as of December 31, 2009 and 2008
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F-2
|
||||||
Consolidated Statement of Income for the years ended December 31, 2009 and 2008
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F-3
|
||||||
Consolidated Statement of Changes in Stockholder’s Equity for the years ended December 31, 2009 and 2008
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F-4
|
||||||
Consolidated Statement of Cash Flows for the years ended December 31, 2009 and 2008
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F-5
|
||||||
Notes to Financial Statements
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F-6
|
||||||
ITEM 9.
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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
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ITEM 9A(T).
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CONTROLS AND PROCEDURES
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ITEM 9B.
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OTHER INFORMATION
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ITEM 10.
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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
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Name
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Age
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Position
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Appointed
|
|||||
John Salerno
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71
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Chief Executive Officer, President, Chairman of the Board, and Director
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March 2009 (appointed Chairman and Director in April 2000)
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|||||
Elisa Luqman
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45
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Chief Financial Officer, Executive Vice President, General Counsel, and Director
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March 2009 (appointed Director in August 2009)
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|||||
James J. Charles
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67
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Director
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March 2006
|
|||||
George G. Dempster
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70
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Director
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January 2001
|
|||||
John Waters
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64
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Director
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August 2009
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ITEM 11.
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EXECUTIVE COMPENSATION
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Current
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Non-Equity
|
|||||||||||||||||||||||||||||||||||
Officers
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Incentive
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Nonqualified
|
||||||||||||||||||||||||||||||||||
Name &
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Option
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Plan
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Deferred
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All Other
|
||||||||||||||||||||||||||||||||
Principal
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Salary
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Bonus
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Stock
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Awards
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Compensation
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Compensation
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Compensation
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Total
|
||||||||||||||||||||||||||||
Position
|
Year
|
($)
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($)
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($)(1)
|
($)
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($)
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Earnings ($)
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($)
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($)
|
|||||||||||||||||||||||||||
John Salerno
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2009
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77,885
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(1)
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0
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0
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0
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0
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0
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8,739
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(2)
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86,624
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|||||||||||||||||||||||||
CEO, President,
|
2008
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0
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0
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0
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0
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0
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0
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0
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0
|
|||||||||||||||||||||||||||
Chairman & Director
|
||||||||||||||||||||||||||||||||||||
Elisa Luqman
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2009
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69,231
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(3)
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0
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0
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0
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0
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0
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0
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69,231
|
||||||||||||||||||||||||||
CFO, EVP, General
|
2008
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0
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0
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0
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0
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0
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0
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0
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0
|
|||||||||||||||||||||||||||
Counsel, & Director
|
(1)
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Does not include $200,000 in deferred compensation that was earned prior to December 31, 2006, and paid during 2009.
|
|
(2)
|
Includes $5,766 in health insurance premiums and $4,069 in life insurance premiums.
|
|
(3)
|
Does not include $150,000 in deferred compensation that was earned prior to December 31, 2006, and paid during 2009.
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Name
|
Fees earned or paid in cash ($)
|
Stock awards ($)
|
Option awards ($)
|
Non-equity incentive plan compensation ($)
|
Nonqualified deferred compensation earnings
($)
|
All other compensation ($)
|
Total
($)
|
John Salerno (1)
|
-
|
-
|
-
|
-
|
-
|
-
|
0
|
Elisa Luqman (1)
|
-
|
-
|
-
|
-
|
-
|
-
|
0
|
James J. Charles
|
$4,000
|
-
|
-
|
-
|
-
|
-
|
$4,000
|
George G. Dempster
|
$4,000
|
-
|
-
|
-
|
-
|
-
|
$4,000
|
John Waters
|
$4,000
|
-
|
-
|
-
|
-
|
-
|
$4,000
|
Amount and Nature
|
||||||||
of Beneficial
|
||||||||
Name of Beneficial Owner
|
Ownership
|
Percent of Class
|
||||||
John Salerno, C.E.O., President, Chairman of the Board, and Director
|
5,616,900
|
(1)
|
23.3
|
%
|
||||
Elisa Luqman, C.F.O., Executive Vice President, General Counsel and Director
|
5,715,000
|
(2)
|
23.9
|
%
|
||||
James J. Charles, Director
|
500,000
|
(3)
|
2.1
|
%
|
||||
George G. Dempster, Director
|
505,000
|
(4)
|
2.1
|
%
|
||||
John Waters, Director
|
500,000
|
(5)
|
2.1
|
|||||
Mehul Mehta
|
2,450,000
|
10.2
|
%
|
|||||
Executive Officers and Directors as a Group:
|
12,836,900
|
(6)
|
51.7
|
%
|
1.
|
Includes: options to purchase 46,900 shares of common stock at $0.01 per share held by John L. Salerno, Mr. Salerno’s son; and options to purchase 100,000 shares of common stock at $0.01 per share held by Dean T. Salerno, Mr. Salerno’s son.
|
|
2.
|
Includes 245,000 shares of common stock held by Muhammad Luqman, Ms. Luqman’s husband.
|
|
3.
|
Includes options to purchase 59,000 shares of the common stock at $0.10 per share.
|
|
4.
|
Includes options to purchase 113,000 shares of the common stock at $0.10 per share.
|
|
5.
|
Includes options to purchase 500,000 shares of the common stock at $0.10 per share.
|
|
6.
|
Includes the disclosures in footnotes 1 through 5 above.
|
ITEM 13.
|
CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
Year Ended
|
Year Ended
|
|||||||
12/31/ 2009
|
12/31/08
|
|||||||
Audit Fees
|
$
|
14,000
|
$
|
25,000
|
||||
Audit-Related Fees
|
—
|
—
|
||||||
Tax Fees
|
—
|
—
|
||||||
All Other Fees
|
—
|
—
|
||||||
Total
|
$
|
14,000
|
$
|
25,000
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
Report of Independent Registered Public Accounting Firm
|
F-1
|
|
Consolidated Balance Sheet as of December 31, 2009 and 2008
|
F-2
|
|
Consolidated Statement of Income for the years ended December 31, 2009 and 2008
|
F-3
|
|
Consolidated Statement of Changes in Stockholder’s Equity for the years ended December 31, 2009 and 2008
|
F-4
|
|
Consolidated Statement of Cash Flows for the years ended December 31, 2009 and 2008
|
F-5
|
|
Notes to Financial Statements
|
F-6
|
Exhibit No.
|
Description
|
|||
2.1
|
Asset Purchase Agreement between the Company and Digi-Data Corporation, dated December 21, 2005 (1)
|
|||
2.2
|
Asset Purchase Agreement and Plan of Reorganization between Jekyll Island Ventures Inc. and Gotham Innovation Lab Inc., dated September 30, 2009 (1)
|
|||
3.1
|
(i)
|
Certificate of Incorporation, filed with the Delaware Secretary of State on April 13, 2000 (1)
|
||
3.1(ii)
|
Certificate of Merger, filed with the Delaware Secretary of State on April 18, 2000 (1)
|
|||
3.1(iii)
|
Certificate of Amendment Changing Name, filed with the Delaware Secretary of State on December 19, 2000 (1)
|
|||
3.1(iv)
|
Certificate of Merger filed with the Delaware Secretary of State on February 17, 2006 (1)
|
|||
3.1
|
(v)
|
Certificate of Amendment Changing Name filed with the Delaware Secretary of State on April 5, 2006 (1)
|
||
3.1(vi)
|
Certificate of Amendment Increasing Authorized Common Stock to 75 Million Shares, filed with the Delaware Secretary of State on December 2, 2009 (1)
|
|||
3.2
|
Bylaws (1)
|
|||
4.1
|
Form of Stock Certificate (2)
|
|||
4.2
|
Common Stock Purchase Warrant issued to Newbridge Securities (3)
|
|||
4.3
|
Common Stock Purchase Warrant issued to Roetzel & Andress (3)
|
|||
10.1
|
iGambit, Inc. 2006 Long Term Incentive Plan, Amended 12/31/2006 (1)
|
|||
10.2
|
Newbridge Consulting Agreement (2)
|
|||
10.3
|
Employment Agreement between Digi-Data Corporation and Mr. Salerno (2)
|
|||
10.4
|
Employment Agreement between Digi-Data Corporation and Mrs. Luqman (2)
|
|||
10.5
|
Agreement between the Company and Digi-Data Corporation regarding the payment of consulting fees to Mr. Dempster (2)
|
|||
14
|
Code of Ethics
|
|||
21
|
Subsidiaries (1)
|
|||
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
|
|||
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 incorporated by reference into any other filing under the Security Act of 1933, as amended, or by the Security Exchange Act of 1934, as amended.)
|
|||
32.2
|
Certification of the 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 incorporated by reference into any other filing under the Security Act of 1933, as amended, or by the Security Exchange Act of 1934, as amended.)
|
(1)
|
Incorporated by reference to Form 10 filed on December 31, 2009.
|
|
(2)
|
Incorporated by reference to Amendment No. 1 to Form 10 filed on June 11, 2010.
|
|
(3)
|
Filed with initial Form 10-K on June 15, 2010.
|
iGAMBIT, INC.
|
||||
By:
|
/s/ John Salerno
|
|||
John Salerno, Chief Executive Officer
|
||||
Signature
|
Title
|
Date
|
||
/s/ John Salerno
John Salerno
|
Chief Executive Officer and Director
|
September 13, 2010
|
||
/s/ Elisa Luqman
Elisa Luqman
|
Chief Financial Officer, Executive Vice President, General Counsel, Principal Accounting Officer and Director
|
September 13, 2010
|
||
/s/ James J. Charles
James J. Charles
|
Director
|
September 13, 2010
|
||
/s/ George G. Dempster
George G. Dempster
|
Director
|
September 13, 2010
|
||
/s/ John Waters
John Waters
|
Director
|
September 13, 2010
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANT
|
To the Board of Directors and Shareholders of:
|
iGambit Inc.
|
I have audited the accompanying consolidated balance sheets of iGambit Inc. as of
|
December 31, 2009 and December 31, 2008 and the related statements of income,
|
changes in stockholders’ equity, and cash flows for the years then ended. These consolidated
|
financial statements are the responsibility of the Company's management. My responsibility
|
is to express an opinion on these consolidated financial statements based on my audits.
|
I conducted my audits in accordance with the standards of the Public Company Accounting Oversight
|
Board (United States). Those standards require that I plan and perform the audits to obtain
|
reasonable assurance about whether the consolidated financial statements are free of material
|
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
|
and disclosures in the consolidated financial statements. An audit also includes assessing the
|
accounting principles used and significant estimates made by management, as well as evaluating
|
the overall consolidated financial statement presentation. I believe that my audits provide a
|
reasonable basis for my opinion.
|
In my opinion, the consolidated financial statements referred to above present fairly, in all
|
material respects, the financial position of iGambit Inc. as of December 31, 2009 and
|
December 31, 2008, and the results of its operations and cash flows for the years
|
then ended in conformity with accounting principles generally accepted in the United States
|
of America.
|
The Company is not required to have, nor were we engaged to perform, an audit of its internal
|
control over financial reporting. Our audit included consideration of internal control over
|
financial reporting as a basis for designing audit procedures that are appropriate in the
|
circumstances, but not for the purpose of expressing an opinion on the Company’s internal
|
control over financial reporting. Accordingly, we express no such opinion
|
___________________________
|
___________________________
|
Michael F. Albanese, CPA
|
Parsippany, NJ
|
May 6, 2010 - Updated July 29, 2010
|
IGAMBIT INC.
|
||||||||
CONSOLIDATED STATEMENTS OF INCOME
|
||||||||
YEARS ENDED DECEMBER 31,
|
||||||||
2009
|
2008
|
|||||||
Sales
|
$ | 173,011 | $ | -- | ||||
Cost of sales
|
47,458 | -- | ||||||
Gross profit
|
125,553 | -- | ||||||
Operating expenses
|
||||||||
General and administrative expenses
|
861,512 | 196,589 | ||||||
Loss from operations
|
(735,959 | ) | (196,589 | ) | ||||
Other income
|
||||||||
Interest income
|
3,908 | 2,554 | ||||||
Loss from continuing operations before income tax benefit
|
(732,051 | ) | (194,035 | ) | ||||
Income tax benefit
|
(254,071 | ) | (44,065 | ) | ||||
Loss from continuing operations
|
(477,980 | ) | (149,970 | ) | ||||
Income from discontinued operations (net of taxes of $806,898
|
||||||||
and $361,286)
|
923,739 | 553,363 | ||||||
Net income
|
$ | 445,759 | $ | 403,393 | ||||
Basic and fully diluted earnings (loss) per common share:
|
||||||||
Continuing operations
|
$ | (.02 | ) | $ | (.01 | ) | ||
Discontinued operations, net of tax
|
$ | .04 | $ | .03 | ||||
Net earnings per common share
|
$ | .02 | $ | .02 | ||||
Weighted average common shares outstanding
|
23,009,029 | 22,402,104 |
IGAMBIT INC.
|
||||||||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
|
||||||||||||||||||||
YEARS ENDED DECEMBER 31, 2009 AND 2008
|
||||||||||||||||||||
Additional
|
||||||||||||||||||||
Common stock
|
Paid-in
|
Accumulated
|
||||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Totals
|
||||||||||||||||
Balances, December 31, 2007
|
21,737,018 | $ | 21,737 | $ | 1,987,749 | $ | (1,607,876 | ) | $ | 401,610 | ||||||||||
Compensation for vested stock options
|
-- | -- | 72,900 | -- | 72,900 | |||||||||||||||
Common stock issued in consideration
|
||||||||||||||||||||
of cashless exercise of options,
|
||||||||||||||||||||
valued at $.01 per share
|
788,100 | 788 | 7,093 | -- | 7,881 | |||||||||||||||
Common stock issued in exercise
|
||||||||||||||||||||
of warrants, valued at $.01 per share
|
60,000 | 60 | 540 | -- | 600 | |||||||||||||||
Common stock issued in exercise
|
||||||||||||||||||||
of warrants, valued at $.50 per share
|
135,000 | 135 | 67,365 | -- | 67,500 | |||||||||||||||
Common stock retired
|
(1,062 | ) | (1 | ) | 1 | -- | -- | |||||||||||||
Net income
|
403,393 | 403,393 | ||||||||||||||||||
Balances, December 31, 2008
|
22,719,056 | 22,719 | 2,135,648 | (1,204,483 | ) | 953,884 | ||||||||||||||
Compensation for vested stock options
|
-- | -- | 67,500 | -- | 67,500 | |||||||||||||||
Compensation for vested warrants
|
-- | -- | 54,000 | -- | 54,000 | |||||||||||||||
Common stock issued in consideration
|
||||||||||||||||||||
of cashless exercise of options,
|
||||||||||||||||||||
valued at $.01 per share
|
735,000 | 735 | 6,765 | -- | 7,500 | |||||||||||||||
Assets of acquired business
|
-- | -- | 73,974 | -- | 73,974 | |||||||||||||||
Common stock issued in business
|
||||||||||||||||||||
acquisition
|
500,000 | 500 | 49,500 | -- | 50,000 | |||||||||||||||
Stock options granted for acquired
|
||||||||||||||||||||
business resulting in goodwill
|
135,000 | 135,000 | ||||||||||||||||||
Net income
|
445,759 | 445,759 | ||||||||||||||||||
Balances, December 31, 2009
|
23,954,056 | $ | 23,954 | $ | 2,522,387 | $ | (758,724 | ) | $ | 1,787,617 |
Cash | $ | 4,023 | ||
Accounts receivable | 66,958 | |||
Fixed assets | 2,993 | |||
$ | 73,974 |
Year ended December 31, 2008:
|
||||||
Pro Forma Balance Sheets
|
||||||
iGambit
|
Jekyll
|
Combined
|
||||
Current assets
|
$
|
985,927
|
$
|
80,650
|
$
|
1,066,577
|
Fixed assets
|
1,491
|
--
|
1,491
|
|||
Other assets
|
462,758
|
--
|
462,758
|
|||
Total assets
|
1,450,176
|
80,650
|
1,530,826
|
|||
Current liabilities
|
4,754
|
3,929
|
8,683
|
|||
Long-term liabilities
|
491,538
|
--
|
491,538
|
|||
Total liabilities
|
496,292
|
3,929
|
500,221
|
|||
Stockholders' equity
|
953,884
|
76,721
|
1,030,605
|
|||
Total liabilities and stockholders' equity
|
$
|
1,450,176
|
$
|
80,650
|
$
|
1,530,826
|
Pro Forma Statements of Operations
|
||||||
iGambit
|
Jekyll
|
Combined
|
||||
Revenue
|
$
|
--
|
$
|
359,590
|
$
|
359,590
|
Cost of sales
|
--
|
62,100
|
62,100
|
|||
Gross profit
|
--
|
297,490
|
297,490
|
|||
General and administrative expenses
|
123,689
|
280,198
|
403,887
|
|||
(Loss) income from operations
|
(123,689)
|
17,292
|
(106,397)
|
|||
Other income
|
2,554
|
--
|
2,554
|
|||
Income tax benefit
|
44,065
|
--
|
44,065
|
|||
(Loss) income from continuing operations
|
(77,070)
|
17,292
|
(59,778)
|
|||
Income from discontinued operations
|
553,363
|
--
|
553,363
|
|||
Net income
|
$
|
476,293
|
$
|
17,292
|
$
|
493,585
|
Year ended December 31, 2009:
|
||||||||||||
Pro Forma Statements of Operations
|
||||||||||||
iGambit
|
Jekyll
|
Combined
|
||||||||||
Revenue
|
$ | 6,500 | $ | 416,586 | $ | 423,086 | ||||||
Cost of sales
|
-- | 90,608 | 90,608 | |||||||||
Gross profit
|
6,500 | 325,978 | 332,478 | |||||||||
General and administrative expenses
|
617,505 | 453,123 | 1,070,628 | |||||||||
Loss from operations
|
(611,005 | ) | (127,145 | ) | (738,150 | ) | ||||||
Other income
|
3,908 | -- | 3,908 | |||||||||
Income tax benefit
|
254,071 | -- | 254,071 | |||||||||
Loss from continuing operations
|
(353,026 | ) | (127,145 | ) | (480,171 | ) | ||||||
Income from discontinued operations
|
923,739 | -- | 923,739 | |||||||||
Net income (loss)
|
$ | 570,713 | $ | (127,145 | ) | $ | 443,568 |
Revenue
|
$ | 166,661 | ||
Cost of sales
|
47,457 | |||
Gross profit
|
119,204 | |||
General and administrative expenses
|
244,158 | |||
Net loss
|
$ | (124,954 | ) |
2009
|
2008
|
|||||||
ASSETS
|
||||||||
Current:
|
||||||||
Accounts receivable
|
$
|
713,732
|
$
|
367,430
|
||||
Deferred income taxes
|
--
|
279,058
|
||||||
Noncurrent:
|
||||||||
Restricted cash
|
150,985
|
165,727
|
||||||
Deferred income taxes
|
--
|
98,750
|
||||||
Assets of discontinued operations
|
$
|
864,717
|
$
|
910,965
|
||||
LIABILITIES
|
||||||||
Noncurrent:
|
||||||||
Prepaid contingency
|
$
|
--
|
$
|
141,538
|
||||
Deferred compensation
|
--
|
350,000
|
||||||
Liabilities of discontinued operations
|
$
|
--
|
$
|
491,538
|
Year Ended
December 31,
|
||||||||||||||||
2009
|
2008
|
|||||||||||||||
Stock options
|
1,796,900
|
1,046,900
|
||||||||||||||
Common stock warrants
|
3,085,000
|
835,000
|
||||||||||||||
Total shares excluded from calculation
|
4,881,900
|
1,881,900
|
Weighted
|
|||||||||||||
Average
|
|||||||||||||
Weighted
|
Remaining
|
||||||||||||
Average
|
Average
|
Contractual
|
|||||||||||
Warrants
|
Exercise Price
|
Grant-Date
Fair Value
|
Life
(Years)
|
||||||||||
Warrants outstanding at January 1, 2008
|
1,652,518 | $ | 0.67 | $ | 0.10 | ||||||||
Granted during 2008
|
60,000 | 0.01 | 0.10 | ||||||||||
Exercised during 2008
|
(195,000 | ) | 0.35 | 0.10 | |||||||||
Expired during 2008
|
(682,518 | ) | 0.32 | 0.10 | |||||||||
Warrants outstanding at December 31, 2008
|
835,000 | 0.99 | 0.10 | ||||||||||
Granted during 2009
|
2,250,000 | 0.77 | 0.10 | ||||||||||
Warrants outstanding at December 31, 2009
|
3,085,000 | $ | 0.83 | $ | 0.10 |
7.07
|
Weighted
|
|||||||||||||
Average
|
|||||||||||||
Weighted
|
Remaining
|
||||||||||||
Average
|
Average
|
Contractual
|
|||||||||||
Warrants
|
Exercise Price
|
Grant-Date
Fair Value
|
Life
(Years)
|
||||||||||
Options outstanding at January 1, 2008
|
1,835,000 | $ | 0.01 | $ | 0.10 | ||||||||
Exercised during 2008
|
(788,100 | ) | 0.01 | 0.10 | |||||||||
Options outstanding at December 31, 2008
|
1,046,900 | 0.01 | 0.10 | ||||||||||
Exercised during 2009
|
(750,000 | ) | 0.01 | 0.10 | |||||||||
Granted during 2009
|
1,500,000 | 0.01 | 0.10 | ||||||||||
Options outstanding at December 31, 2009
|
1,796,900 | $ | 0.01 | $ | 0.10 |
5.85
|
Years ended December 31,
|
||||||||
2009
|
2008
|
|||||||
Weighted average risk-free rate
|
4.87
|
%
|
4.64
|
%
|
||||
Average expected life in years
|
6.6
|
5.8
|
||||||
Expected dividends
|
None
|
None
|
||||||
Volatility
|
20
|
%
|
20
|
%
|
||||
Forfeiture rate
|
0
|
%
|
0
|
%
|
2009 | 2008 | |||||||
From operations: | ||||||||
Continuing operations: | ||||||||
Current tax expense (benefit): | ||||||||
Federal | $ | (254,578 | ) | $ | (46,228 | ) | ||
State and local | 507 | 2,163 | ||||||
(254,071 | ) | (44,065 | ) | |||||
Deferred tax expense (benefit) | -- | -- | ||||||
Total from continuing operations | (254,071) | (44,065) | ||||||
Discontinued operations: | ||||||||
Current tax expense (benefit) | -- | |||||||
Federal | 128,827 | -- | ||||||
State and local | 45,773 | -- | ||||||
174,600 | ||||||||
Deferred tax expense (benefit): | ||||||||
Federal | 508,622 | 285,370 | ||||||
State and local | 123,676 | 75,916 | ||||||
632,298 | 361,286 | |||||||
Total from discontinued operations | 806,898 | 361,286 | ||||||
Total | $ | 552,827 | $ | 317,221 | ||||
Year Ended | ||||||||
December 31, | ||||||||
2009 | 20008 | |||||||
Statutory tax rate | 34.0 | % | 34.0 | % | ||||
Effect of: | ||||||||
State income taxes, net of | ||||||||
Federal income tax benefit | 5.3 | % | 5.3 | % | ||||
Effective tax rate | 39.5 | % | 39.5 | % | ||||
2009 | 2008 | |||||||
Current: | ||||||||
Net operating loss carryforwards | $ | -- | $ | 279,058 | ||||
Non-current: | ||||||||
Net operating loss carryforwards | -- | -- | ||||||
Deferred compensation | -- | 98,750 | ||||||
$ | -- | $ | 377,808 | |||||
|
•
|
Loyalty.
No director, officer, or employee should be, or appear to be, subject to influences, interests or relationships that conflict with the best interests of the Company.
|
|
•
|
Compliance with Applicable Laws.
The Company, its directors, officers, and its employees are expected to comply with laws and regulations applicable to the Company’s activities.
|
|
•
|
Observance of Ethical Standards.
In the conduct of their duties, each director, officer, and employee must adhere to high ethical standards. These include honesty and fairness.
|
|
•
|
Improper conduct and activities.
Directors, officers, and employees may not engage in any conduct or activities that are inconsistent with the Company’s best interests or that disrupt or impair the Company’s relationship with any person or entity with which the Company has or proposes to enter into a business or contractual relationship.
|
|
•
|
Compensation from non-Company sources.
Directors, officers, and employees may not accept compensation (in any form) for services performed for the Company from any source other than the Company.
|
|
•
|
Gifts.
Directors, officers, employees, and members of their immediate families may not accept gifts from persons or entities where any such gift is being made in order to influence the director’s, officer’s, or employee's actions, or where acceptance of the gifts could create the appearance of a conflict of interest.
|
|
•
|
Personal use of Company assets.
Directors, officers, and employees may not use Company assets, labor or information for personal use unless approved by the Board or as part of a compensation or expense reimbursement program.
|
1.
|
I have reviewed this Annual Report on Form 10-K of iGambit, Inc. (the “Registrant”);
|
||||||
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
|
||||||
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
||||||
4.
|
The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
||||||
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
||||||
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
||||||
c)
|
evaluated the effectiveness of the Registrant’s disclosure controls and procedures presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
||||||
d)
|
disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
||||||
5.
|
The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions):
|
||||||
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
||||||
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
||||||
Date: September 13, 2010
|
/s/ John Salerno
|
||||||
John Salerno
|
|||||||
Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this Annual Report on Form 10-K of iGambit, Inc. (the “Registrant”);
|
||||||
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
|
||||||
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
||||||
4.
|
The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
||||||
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
||||||
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
||||||
c)
|
evaluated the effectiveness of the Registrant’s disclosure controls and procedures presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
||||||
d)
|
disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
||||||
5.
|
The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions):
|
||||||
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
||||||
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
||||||
Date: September 13, 2010
|
/s/ Elisa Luqman
|
||||||
Elisa Luqman
|
|||||||
Chief Financial Officer
(Principal Financial Officer)
|
By:
|
/s/ John Salerno
|
|||
John Salerno
|
||||
Principal Executive Officer
|
||||
By:
|
/s/ Elisa Luqman
|
|||
Elisa Luqman
|
||||
Principal Financial Officer
|
||||