Nutex Health, Inc. - Annual Report: 2018 (Form 10-K)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2018

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-53862

IGAMBIT INC.

(Exact name of registrant as specified in its charter)

1050 W. Jericho Turnpike, Suite A
Smithtown, New York 11787
(Address of principal executive offices)

Securities registered under Section 12(b) of the Exchange Act:

Securities registered pursuant to Section 12(g) of the Act: Common Stock

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐  No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.

Yes ☐  No ☒

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of the chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒  No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 126-2 of the act):

Yes ☐  No ☒

As of June 30, 2018, the aggregate market value of shares held by non-affiliates of the registrant (based upon the closing sale prices of such shares on the OTCQB Market on June 30, 2018) was approximately $2.873 million. For purposes of calculating the aggregate market value of shares held by non-affiliates, we have assumed that all outstanding shares are held by non-affiliates, except for shares held by each of our executive officers, directors and 5% or greater stockholders. In the case of 5% or greater stockholders, we have not deemed such stockholders to be affiliates unless there are facts and circumstances which would indicate that such stockholders exercise any control over our company, or unless they hold 10% or more of our outstanding common stock. These assumptions should not be deemed to constitute an admission that all executive officers, directors and 5% or greater stockholders are, in fact, affiliates of our company, or that there are not other persons who may be deemed to be affiliates of our company. Further information concerning shareholdings of our officers, directors and principal stockholders is included or incorporated by reference in Part III, Item 12 of this Annual Report on Form 10-K.

As of April 16, 2019 there were 351,587,519 (not including 10 million shares held in treasury) shares of the Registrant’s $0.001 par value common stock outstanding and 1,000 shares of the Registrant’s preferred shares outstanding.

DOCUMENTS INCORPORATED BY REFERENCE: None

iGambit Inc.
FORM 10-K — FOR THE YEAR ENDED DECEMBER 31, 2018

TABLE OF CONTENTS

This annual report on Form 10-K is for the year ended December 31, 2018. The Securities and Exchange Commission (“SEC”) allows us to “incorporate by reference” information that we file with the SEC, which means that we can disclose important information to you by referring you directly to those documents. Information incorporated by reference is considered to be part of this annual report. In addition, information that we file with the SEC in the future will automatically update and supersede information contained in this annual report. In this annual report, “Company,” “we,” “us” and “our” refer to iGambit Inc. and its subsidiaries.

PART I

This Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company has based these forward-looking statements on the Company’s current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us and the Company’s subsidiaries that may cause the Company’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In many cases, you can identify forward-looking statements by terminology such as “anticipate,” “estimate,” “believe,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “will,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and other similar words. However, the absence of these words does not mean that the statements are not forward-looking. Factors that might cause or contribute to a material difference include, but are not limited to, those discussed elsewhere in this Annual Report, including the section entitled “Risk Factors” and the risks discussed in the Company’s other Securities and Exchange Commission filings. The following discussion should be read in conjunction with the Company’s audited Consolidated Financial Statements and related Notes thereto included elsewhere in this report.

ITEM 1.   BUSINESS

HISTORY

We were incorporated in the State of Delaware under the name BigVault.com Inc. on April 13, 2000. On April 18, 2000, we merged with BigVault.com, Inc., a New York corporation with which we were affiliated. We survived the merger, and on December 19, 2000 changed our name to bigVAULT Storage Technologies, Inc. At that time we were in the business of providing remote, internet-based storage vaulting services and related ancillary services to end users and resellers (the “Vault Business”).

On February 28, 2006 we sold all of our assets to Digi-Data Corporation (“DDC”), an unrelated third party, pursuant to the terms of an Asset Purchase Agreement dated December 21, 2005 (the “APA”), a copy of which is filed herewith as an exhibit. As consideration for our transfer of assets under the APA, DDC paid certain of our liabilities and agreed to make certain quarterly and annual revenue sharing payments to us, as is further described below. Mr. Salerno and Ms. Luqman accepted employment with DDC in senior management positions post closing, and continued to work for DDC until February 2009. As of March 1, 2009 Mr. Salerno and Ms. Luqman returned to their full time management roles with the Company.

On April 5, 2006, we changed our name to iGambit Inc.

On October 1, 2009, we acquired the assets of Jekyll Island Ventures, Inc., a New York corporation doing business as Gotham Photo Company (“Jekyll”) through our wholly owned subsidiary Gotham Innovation Lab, Inc., a New York corporation (“Gotham”).  

On November 4, 2015, we consummated the acquisition of Wala, Inc. doing business as ArcMail Technology (ArcMail) in accordance with a Stock Purchase Agreement (the “ArcMail Purchase Agreement”) by and among Wala, Inc. doing business as ArcMail Technologies (“ArcMail”), Rory T. Welch (the “Seller”) and the Company. Pursuant to the Stock Purchase, the total consideration to be paid for the outstanding capital stock of ArcMail is 11,500,000 shares of the Company’s Common stock. 10,500,000 shares of iGambit’s Common stock to the Seller, and/or Seller’s designees at Closing and the Holdback Amount of 1,000,000 shares of the iGambit’s Common stock to be held in Escrow and paid to the Seller on later of (i) the first (1^st) anniversary of completion of the first audit of Purchaser after the Closing, or (ii) that date which is twelve (12) months from the Closing, provided that in the event iGambit or the Purchaser has any claims for indemnification against the Seller under the Purchase Agreement, Purchaser shall continue to withhold the portion of the Holdback Amount subject to such claims until the parties fully and finally resolve such claims.

The ArcMail Purchase Agreement was disclosed on the Company’s current report on Form 8-K filed on November 10, 2015.

On November 5, 2015, through our wholly owned subsidiary Gotham Innovation Lab, Inc. (“Gotham”), we completed the sale of certain assets of Gotham to VHT Inc. (“VHT”) in accordance with an Asset Purchase Agreement (the “VHT Purchase Agreement”) by and between Gotham and VHT. Pursuant to the Purchase Agreement the Company received $600,000 in consideration, $400,000 of the consideration was received at closing and the remaining $200,000 portion of the consideration is subject to twelve (12) equal monthly payments beginning January 2016. The sale included certain of the assets of the Gotham, including the Elliman customer agreement, all customer accounts, all vendor agreements and all the intellectual property.

The VHT Purchase Agreement was disclosed on the Company’s current report on Form 8-K filed on November 11, 2015.

On February 14, 2017, we consummated the acquisition of HubCentrix, Inc. (HubCentrix) in accordance with a Stock Exchange Agreement (the “Exchange Agreement”) by and among HubCentrix, Jerry Robinson, Mary-Jo Robinson, Kathleen Shepherd, Edwin Shepherd, Nora Minor,,and Sandra Gacio (the “Hub Shareholders”) and the Company. Pursuant to the Exchange Agreement, the total consideration to be paid for the outstanding capital stock of HubCentrix is 15,000,000 shares of the Company’s Common stock. 13,500,00 shares of iGambit’s Common stock to the Hub Shareholders at Closing and the Holdback Amount of 1,500,000 shares of the iGambit’s Common stock to be held restricted and paid to the Seller on later of (i) the first (1^st) anniversary of completion of the first audit of Purchaser after the Closing, or (ii) that date which is twelve (12) months from the Closing, provided that in the event the Company has any claims for indemnification against the HubCentrix under the Exchange Agreement, the Company shall continue to withhold the portion of the Holdback Amount subject to such claims until the parties fully and finally resolve such claims.

The HubCentrix Exchange Agreement was disclosed on the Company’s current report on Form 8-K filed on February 15, 2017.

On March 27, 2017 we changed the name of HubCentrix, Inc. to HealthDatix, Inc.

On April 5, 2017, the Company, through its wholly owned subsidiary HealthDatix, Inc. (“HealthDatix”) consummated the acquisition of certain assets of the CyberCare Health Network Division from EncounterCare Solutions Inc. (ECSL) in accordance with an Asset Purchase Agreement (the “Agreement”) by and among, HealthDatix, ECSL and the Company. Pursuant to the Agreement, ECSL will sell, convey, transfer and assign to HealthDatix certain assets (the “Assets”), and HealthDatix will purchase and accept from the ECSL all right, title and interest in and to the Assets in exchange for sixty million 60,000,000 shares of restricted common stock of iGambit.

The ECSL Agreement was disclosed on the Company’s current report on Form 8-K filed on April 6, 2017.

On June 30, 2017, (effective March 31, 2017) we completed the sale of ArcMail to Rory T. Welch, the CEO of ArcMail (“Welch”) in accordance with a Stock Purchase Agreement (the “Purchase Agreement”) by and between the Company and Welch.  Pursuant to the Stock Purchase, the total consideration paid for the outstanding capital stock of ArcMail is remittance of 10,000,000 shares of iGambit common stock previously issued to Welch.  As per the Purchase Agreement, the Company’s operations of ArcMail ended March 31, 2017 and Welch’s operation of the business is effective as of April 1, 2017

The ArcMail Agreement was disclosed on the Company’s current report on Form 8-K filed on July 5, 2017.

OUR COMPANY

Introduction

iGambit is a company focused on the medical technology markets. Our primary focus is the expansion of our subsidiary HealthDatix™ Inc.

HealthDatix is a medical technology company that provides end to end Software-as-a-Service solutions, services and products via our HealthDatix Platform that manages, reports, and analyzes critical data, enabling healthcare and commercial organizations to deliver positive member outcomes.

HealthDatix Platform Products and Services

Health Risk Assessment (HRA)

Our Health Risk Assessment (HRA) solution is a standardized method of collecting health risk data from patients or employees that can be used by Wellness Clinics, Insurance Companies, Third Party Administrators (TPA’s) and/or self insured companies to identify the health risks of their employee or patient population. Our HRA solution can be tailored to deliver the HRA and a Preventive Plan for all beneficiaries and their dependents.

Target Market : Insurance Companies, TPA’s and/or self-insured companies.

Annual Wellness Visit (AWV)

Our Annual Wellness Visit (AWV) solution allows for a mass check of patients with CMS to determine if and when they are eligible for an initial or subsequent AWV and identifies eligibility for other preventive screenings. Our proprietary algorithm determines a patients’ qualification for preventive screenings, health and lifestyle risks and if they have 2 or more qualifying chronic conditions that make them eligible for CCM. The program creates a 5-10 year preventive plan for the patient and meets all of CMS audit requirements to bill for the services. The AWV provides a proactive approach to patient care and increases practice revenue by identifying and executing CMS recommended screenings for the patient to catch early disease states before they become chronic conditions

Target Market: Medicare Programs including ACO’s, Primary Care Offices, Chronic Care Management and Non-Medicare including Wellness Clinics, Insurance Companies, Medicare Advantage Plans (MAP)

BioDatix HealthBand

Our BioDatix Health Band requires our Remote Patient Monitoring (RPM) solution that speaks to our FDA cleared Electronic House Call system. The BioDatix Health Band passively collects heart rate, blood pressure, blood oxygen every 15 minutes. It calculates sleep and steps and sends to our BioDatix iOS/Android app and then to our RPM solution.

Target Markets: Physician Groups, ACO’s, Healthcare Systems, Cardiovascular & Pulmonary Providers, Insurance Companies, Preventive Care for High Stress Jobs, Wellness Clinics.

BioDatix Remote Patient Monitoring

In addition to our BioDatix HealthBand, our RPM solution accepts data from multiple FDA approved devices on a patient’s health status, ie. blood pressure, weight, glucose levels, etc. It’s a product that is primarily for home bound patients that need remote monitoring vs. placement in a rehab center after hospital discharge. The information in our RPM solution can then be accessed by the physician/staff to determine the health status of the patient and whether or not a critical situation is at hand for the patient to go to the hospital, come in for a visit, or receive a nursing staff visit. 

Target Markets: Physician Groups, ACO’s, Healthcare Systems, Cardiovascular & Pulmonary Providers, Insurance Companies, Preventive Care for High Stress Jobs, Wellness Clinics.

HealthDatix - Chronic Care Management (CCM) Program

Centers for Medicaid and Medicare Services(CMS) introduced the Chronic Care Management (CCM) program in 2015 with the goal of filling patient care gaps and providing patient care at home.

HealthDatix Chronic Care Management (CCM) service was established to provide better care by engaging patients between visits by providing remote monitoring of patients. eat better, exercise more, take their medications, and live healthier lives.  The CCM program delivers 20 minutes of non-face-to-face care coordination to Medicare eligible beneficiaries with two or more chronic conditions.

Target Markets:  Physician Groups, ACO’s, Healthcare Systems

Competitive Comparison

Our platform is agnostic and was developed to provide organizations with a backend solution designed to integrate with disparate wearable and non-wearable health devices, and to provide a centralized data source. The platform can tie into an organization’s existing peripherals, such as health bands, glucose meters, weight scales, temperature monitors, BP cuffs, and ECG monitors. Our HealthDatix platform collects data in an automated, secure, encrypted cloud based-platform which can be accessed by healthcare professionals, providing one centralized repository which provides trend reports and the ability to remotely triage patients.

HealthDatix Platform is built on a simple and flexible design that gives customers ownership and control over their data and offers a single comprehensive solution for Medicare compliance and data retention.

HealthDatix competes effectively against its primary competitors by providing a simple and scalable application and world-class customer support. HealthDatix’s primary competitive differentiation includes:

Proprietary algorithm to generate Medicare required patient and practice reporting

Support is provided at our U.S. headquarters by an experienced technical team

Our BioDatix differentiator from other wearables on the market is the passive collection of vitals and syncing to our RPM solution, where baseline alerts can be enabled to notify the user, designated care coordinator and the physician. The HealthDatix RPM solution creates trend reports for the physician to view and analyze. The capturing of meaningful data over the course of time paints a better picture of the overall health of the patient. Our system is not to diagnose, it is to provide the care provider with the necessary information to determine if it is medically necessary to intervene based on the data collected resulting in closer physician and patient engagement.

Future Products and Services

HeathDatix’s product strategy is to provide additional products that will support the patients that have been identified through the program to require additional chronic care management with a medical wearable that will allow ease of use for the patient and effective tracking and management by the physician through our developed chronic care management solution.

Our next generation BioDatix device will collect ECG and temperature and will have the ability to set collection times on a per patient basis.

Customers

HealthDatix operates by bringing on Channel Partners to sell the service to primary care Physicians, ACOs and Managed Care Practices. We currently have 5 Channel Partners with extensive sales arms through established healthcare technology companies.

Expansion Summary

HealthDatix objective is to be a market leader in providing a world class software application as well as expand our offering to current and new channel partners.

Employees

We presently have 6 total employees all of which are full-time for operations.

OUR CORPORATE INFORMATION

 Our principal offices are located at 1050 W. Jericho Turnpike, Suite A, Smithtown, New York, 11787. Our telephone number is (631) 670-6777 and our fax number is (516) 512-7937. We currently operate two corporate websites that can be found at www.igambit.com, and www.healthdatix.com (the information on the foregoing websites does not form a part of this report).

ITEM 1A.   RISK FACTORS

     Not Required.

ITEM 1B.   UNRESOLVED STAFF COMMENTS

     None.

ITEM 2.   PROPERTIES

        Our corporate executive office is located in Smithtown, New York, where we lease approximately 1000 square feet of office space. Monthly lease payments are approximately $1,690. The lease is for a term of two (2) years commencing on March 1, 2017 and ending on February 28, 2019. The lease contains annual escalations of 2% of the annual rent.

Our HealthDatix operations are located in St. Petersburg, Florida where we lease where office suites with furniture and equipment in the Tampa Bay Innovation Center shared coworking incubator office building. Monthly lease payments are $817 paid on a month to month basis.

 Our leased properties are suitable for their respective uses and are, in general, adequate for our present needs. Our properties are subject to various federal, state, and local statutes and ordinances regulating their operations. Management does not believe that compliance with such statutes and ordinances will materially affect our business, financial condition, or results of operations.

ITEM 3.   LEGAL PROCEEDINGS

From time-to-time, the Company is involved in various civil actions as part of its normal course of business. The Company is not a party to any litigation that is material to ongoing operations as defined in Item 103 of Regulation S-K as of the period ended December 31, 2018.

ITEM 4.   (REMOVED AND RESERVED)

PART II

ITEM 5.   MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

MARKET INFORMATION

 Effective March 19, 2011 the Company’s common stock is quoted on the Over the Counter Bulletin Board, a service maintained by the Financial Industry Regulatory Authority, under the ticker symbol “IGMB”.

HOLDERS

 As of April 16, 2019, there are 351,587,519 (not including 10 million shares held in treasury stock) shares of our common stock outstanding, held of record by approximately 1800 persons. There are 1,000 preferred shares held of record by 1 shareholder. There are 431,936,822 shares held in reserve. We have 1,875,000 common stock warrants outstanding and 20,000,000 common stock options outstanding.

            As of April 16, 2019, approximately 343,956,869 shares of our common stock are eligible to be sold under Rule 144.

DIVIDENDS

We have never declared or paid any dividends on our common stock. Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will be dependent upon our results of operations, financial condition, capital requirements, contractual restrictions and other factors deemed relevant by the Board of Directors. The Board of Directors is not expected to declare dividends or make any other distributions in the foreseeable future, but instead intends to retain earnings, if any, for use in business operations.

EQUITY COMPENSATION PLAN INFORMATION

        We currently do not have an equity compensation plan. In 2006, we adopted the 2006 Long-Term Incentive Plan (the "2006 Plan").   The Plan expired on December 31, 2009. The 2006 Plan provided for the granting of options to purchase up to 10,000,000 shares of common stock.  8,146,900 options have been issued under the plan to date of which 7,157,038 have been exercised and 692,962 have expired to date.  There were 296,900 options outstanding under the 2006 Plan on its expiration date of December 31, 2009. All options issued subsequent to this date were not issued pursuant to any plan.

In addition to the 2006 Long Term Incentive Plan, we have issued and outstanding compensatory warrants to two consultants entitling the holders to purchase a total of 275,000 shares of our common stock at an average exercise price of $0.94 per share. Warrants to purchase 25,000 shares of common stock vest upon 6 months after the Company engages in an IPO, have an exercise price of $3.00 per share, and expire 2 years after the Company engages in an IPO. Warrants to purchase 250,000 shares of common stock vest 100,000 shares on issuance (June 1, 2009), and 50,000 shares on each of the following three anniversaries of the date of issuance, have exercise prices ranging from $0.05 per share to $1.15 per share, and expire on June 1, 2019. The issuance of the compensatory warrants was not submitted to our shareholders for their approval.

RECENT SALES OF UNREGISTERED SECURITIES

During 2018 we sold securities in transactions not registered under the Securities Act of 1933, as amended (the “Securities Act”).

ITEM 6.   SELECTED FINANCIAL DATA

     Not Required

ITEM 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CRITICAL ACCOUNTING POLICIES

Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements may require us to make estimates and assumptions that may affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements. We do not currently have any estimates or assumptions where the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change or the impact of the estimates and assumptions on financial condition or operating performance is material, except as described below.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries HealthDatix, Inc.  All intercompany accounts and transactions have been eliminated.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.

Long-Lived Assets

We assess the valuation of components of its property and equipment and other long-lived assets whenever events or circumstances dictate that the carrying value might not be recoverable. We base our evaluation on indicators such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements and other external market conditions or factors that may be present. If such factors indicate that the carrying amount of an asset or asset group may not be recoverable, we determine whether an impairment has occurred by analyzing an estimate of undiscounted future cash flows at the lowest level for which identifiable cash flows exist. If the estimate of undiscounted cash flows during the estimated useful life of the asset is less than the carrying value of the asset, we recognize a loss for the difference between the carrying value of the asset and its estimated fair value, generally measured by the present value of the estimated cash flows.

Revenue Recognition

iGambit is a holding company and has no sources of revenue.

HealthDatix’s revenues are derived primarily from its Software as a Service (SaaS) offerings that are rendered to healthcare providers.  HealthDatix recognizes revenues when the products or services have been provided or delivered, the fees charged are fixed or determinable, HealthDatix and its customers understand the specific nature and terms of the agreed upon transactions, and collectability is reasonably assured.

Accounts Receivable

We analyze the collectability of accounts receivable from continuing operations each accounting period and adjust our allowance for doubtful accounts accordingly. A considerable amount of judgment is required in assessing the realization of accounts receivables, including the creditworthiness of each customer, current and historical collection history and the related aging of past due balances. We evaluate specific accounts when we become aware of information indicating that a customer may not be able to meet its financial obligations due to deterioration of its financial condition, lower credit ratings, bankruptcy or other factors affecting the ability to render payment.

Goodwill and Intangible Assets

Goodwill represents the excess of liabilities assumed over assets acquired of HealthDatix and the fair market value of the common shares issued by the Company for the acquisition of HealthDatix. In accordance with ASC Topic No. 350 “Intangibles – Goodwill and Other”), the goodwill is not being amortized, but instead will be subject to an annual assessment of impairment by applying a fair-value based test, and will be reviewed more frequently if current events and circumstances indicate a possible impairment. An impairment loss is charged to expense in the period identified. If indicators of impairment are present and future cash flows are not expected to be sufficient to recover the asset’s carrying amount, an impairment loss is charged to expense in the period identified. The Company recorded a full impairment of the Goodwill as of December 31, 2017.

Stock-Based Compensation

We account for our stock-based awards granted under our employee compensation plan in accordance with ASC Topic No. 718-20, Awards Classified as Equity, which requires the measurement of compensation expense for all share-based compensation granted to employees and non-employee directors at fair value on the date of grant and recognition of compensation expense over the related service period for awards expected to vest.  We use the Black-Scholes option pricing model to estimate the fair value of our stock options and warrants. The Black-Scholes option pricing model requires the input of highly subjective assumptions including the expected stock price volatility of the Company’s common stock, the risk free interest rate at the date of grant, the expected vesting term of the grant, expected dividends, and an assumption related to forfeitures of such grants.  Changes in these subjective input assumptions can materially affect the fair value estimate of the Company’s stock options and warrants.

Options

In 2006, we adopted the 2006 Long-Term Incentive Plan (the "2006 Plan").   Awards granted under the 2006 Plan have a ten-year term and may be incentive stock options, non-qualified stock options or warrants. The awards are granted at an exercise price equal to the fair market value on the date of grant and generally vest over a three or four year period. The Plan expired on December 31, 2009, therefore as of December 31, 2015, there was no unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the 2006 plan.

The 2006 Plan provided for the granting of options to purchase up to 10,000,000 shares of common stock.  8,146,900 options have been issued under the plan to date of which 7,157,038 have been exercised and 692,962 have expired to date.  There were 296,900 options outstanding under the 2006 Plan on its expiration date of December 31, 2009. All options issued subsequent to this date were not issued pursuant to any plan.

Stock option activity during the years ended December 31, 2018 and 2017 follows:

Options outstanding at December 31, 2018 consist of:

Warrants

In addition to our 2006 Long Term Incentive Plan, we have issued and outstanding compensatory warrants to two consultants entitling the holders to purchase a total of 275,000 shares of our common stock at an average exercise price of $0.94 per share. Warrants to purchase 25,000 shares of common stock vest upon 6 months after the Company engages in an IPO, have an exercise price of $3.00 per share, and expire 2 years after the Company engages in an IPO. Warrants to purchase 250,000 shares of common stock vest 100,000 shares on issuance (June 1, 2009), and 50,000 shares on each of the following three anniversaries of the date of issuance, have exercise prices ranging from $0.50 per share to $1.15 per share, and expire on June 1, 2019. The issuance of the compensatory warrants was not submitted to our shareholders for their approval.

Warrant activity during the years ended December 31, 2018 and 2017 follows:

Warrants outstanding at December 31, 2018 consist of:

Convertible Debenture

We issued convertible debentures to three individuals. The debentures are convertible into 75,000 shares of common stock for up to 5 years, at the holders’ option, at an exercise price of $.05 and $.25, respectively. The debentures mature on the earlier of the closing of a subsequent financing event by the Company resulting in gross proceeds of at least $10,000,000 or three years from the date of issuance. The debentures bear interest at a rate of 10%. A beneficial conversion feature was not recorded as the fair market value of the Company’s common stock was less than the exercise prices at the dates of issuance and through the end of the period. Interest expense on the convertible debentures of $8,616 and $8,782 was recorded for the years ended December 31, 2018 and 2017, respectively

Income Taxes

We follow Accounting Standards Codification subtopic 740, Income Taxes (“ASC 740”) which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under such method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred taxes are classified as current or non-current, depending on the classification of the assets and liabilities to which they relate.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

iGambit is a company focused on the medical technology markets. Our primary focus is the expansion of our newly acquired medical technology business HealthDatix Inc.

Year Ended December 31, 2018 as Compared to Year Ended December 31, 2017

 Assets. At December 31, 2018, we had $42,313 in current assets and $2,618,466 in total assets, compared to $55,080 in current assets and $3,328,755 in total assets as of December 31, 2017. There was a decrease in current assets from the reduction of prepaid expenses and cash, and there was a decrease in total assets as a result of amortization of intangible assets.

 Liabilities. At December 31, 2018, we had total liabilities of $1,385,447 compared to $959,780 at December 31, 2017. Our total liabilities at December 31, 2018 consisted of current liabilities including accounts payable and accrued expenses of $480,270, accrued interest on notes payable of $32,265, amounts due to related parties of $145,367, deferred revenue of $9,192, notes payable of $52,500, convertible debentures of $377,611 and derivative liability of $288,242, whereas our total liabilities at December 31, 2017 consisted of current liabilities including accounts payable and accrued expenses of $348,354, accrued interest on notes payable of $21,602, amounts due to related parties of $128,476, deferred revenue of $9,100, notes payable of $52,500, convertible debentures of $333,689 and derivative liability of $66,059. We had no long-term liabilities for the years ended December 31, 2018 and December 31, 2017, respectively. The increase in liabilities was primarily due to an increase in accounts payable and accrued expenses, an increase in amounts due to related parties, and increase in convertible debentures and an increase in derivative liability.

Stockholders’ Equity. Our Stockholders’ Equity was $1,233,019 at December 31, 2018 compared to $2,368,975 at December 31, 2017. This decrease was due to an increase in accumulated deficit from $(9,648,569) at December 31, 2017 to $(12,462,814) at December 31, 2018, resulting from a net loss of $(2,814,245).

Net Income (Loss). We had a loss from continuing operations of $(2,814,245) and $(6,007,474) for the years ended December 31, 2018 and December 31, 2017, respectively, and income from discontinued operations of $0 and $6,589,536 for the years ended December 31, 2018 and December 31, 2017, respectively.

General and Administrative Expenses. General and Administrative Expenses decreased to $1,163,766 for the year ended December 31, 2018 from $1,813,624 for the year ended December 31, 2017. For the year ended December 31, 2018, our General and Administrative Expenses consisted of corporate administrative expenses of $75,122, legal and accounting fees of $139,087, payroll expenses of $522,173, employee benefits expenses of $39,785 (medical and life insurance), filing fees of $21,207, marketing expense of $42,394, automobile expense of $19,260, computer software licensing expense of $14,229 finder’s fees and commissions expense of $29,000, consulting fees of $103,400, transfer agent expense of $38,178, rent expense of $28,885, contract labor expense of $52,034, travel and entertainment expense of $23,012 and board compensation expense of $16,000. For the year ended December 31, 2017, our General and Administrative Expenses consisted of corporate administrative expenses of $97,886, legal and accounting fees of $185,880, payroll expenses of $709,399, employee benefits expenses of $55,077 (medical and life insurance), filing fees of $19,756, financing expense of $15,000, marketing expense of $69,048, advertising expense of $2,517, finder’s fees and commissions expense of $84,475, consulting fees of $373,136, transfer agent expense of $14,204, rent expense of $26,745, research and development expense of $25,645 and board compensation expense of $134,856. Therefore, the decreases from the year ended December 31, 2018 to the year ended December 31, 2017 relate primarily to a decrease in legal and accounting expense, payroll, board compensation, filing fees, consulting expenses, and research and development expenses. In 2019 we anticipate an increase in general administrative expenses associated with expansion of our HealthDatix subsidiary.

LIQUIDITY AND CAPITAL RESOURCES

General

As reflected in the accompanying consolidated financial statements, at December 31, 2018, we had $369 of cash and stockholders’ equity of $1,233,019. At December 31, 2017, we had $9,449 of cash and stockholders’ equity of $2,368,975.

Our primary capital requirements in 2019 are likely to rise from the expansion of our HealthDatix operations. It is not possible to quantify those costs at this point in time, in that they depend on HealthDatix’s business opportunities and the state of the overall economy. We anticipate raising capital in the private markets to cover any such costs, though there can be no guaranty we will be able to do so on terms we deem to be acceptable. We do not have any plans at this point in time to obtain a line of credit or other loan facility from a commercial bank.

While we believe in the viability of our strategy to improve HealthDatix’s sales volume, and in our ability to raise additional funds, there can be no assurances that we will be able to fully effectuate our business plan.

We believe we will continue to increase our cash position and liquidity for the foreseeable future. We believe we have enough capital to fund our present operations.

Cash Flow Activity

Net cash used in operating activities was $765,471 for the year ended December 31, 2018, compared to $714,623 for the year ended December 31, 2017. Net cash used in continuing operating activities was $765,471 for the year ended December 31, 2018, compared to $705,407 for the year ended December 31, 2017. Our primary use of cash flows from continuing operating activities was from net losses of $2,814,245 and $6,007,474 from continuing operations for the years ended December 31, 2018 and 2017, respectively. Additional contributing factors to the change were from depreciation of $1,727, amortization of $695,870, non-cash interest expense of $638,718, stock-based compensation expense of $208,025, loss on extinguishment of debt of $312,869, change in fair value of derivative liability of $28,745, an increase in accounts receivable of $8,617, a decrease in inventory of $127, a decrease in prepaid expenses of $39,377, an increase in deposits of $75, an increase in accounts payable and accrued expenses of $131,916, and an increase in deferred revenue of $92. Net cash used in discontinued operating activities was $0 and $9,216 for the years ended December 31, 2018 and 2017, respectively. Cash used in discontinued operating activities for the year ended December 31, 2017 consisted of $9,216 in cash payments applied against accounts receivable that had been included in assets from discontinued operations.

Cash provided by investing activities was $0 and $2,050 for the years ended December 31, 2018 and December 31, 2017, respectively. Net cash used in continuing investing activities was $0 and $30,798 for the years ended December 31, 2018 and 2017, respectively. For the year ended December 31, 2017, the primary uses of cash from continuing investing activities was from, pre-acquisition loans to subsidiary of $50,000, loans to deconsolidated subsidiary of $10,382, and cash acquired from acquisition of subsidiary of $29,584. Net cash provided by discontinued investing activities was $0 and $32,848 for the years ended December 31, 2018 and 2017, respectively.

Cash provided by financing activities was $756,391 for the year ended December 31, 2018 compared to $711,500 for the year ended December 31, 2017. Net cash provided by continuing financing activities was $756,391 for the year ended December 31, 2018 and $735,492 for the year ended December 31, 2017. The cash flows provided by continuing financing activities for the year ended December 31, 2018 was from $709,500 in proceeds from convertible debentures, $30,000 in proceeds from the sale of common stock, $32,491 in proceeds from related party loans, and repayments of related party loans of $(15,600). The cash flows provided by continuing financing activities for the year ended December 31, 2017 was from $469,000 in proceeds from convertible debentures, $275,000 in proceeds from the sale of common stock, repayments of related party loans of $(508), and repayment of notes payable of $(8,000). Net cash used in discontinued financing activities was $0 and $23,992 for the years ended December 31, 2018 and 2017, respectively.

Plan of Operation and Funding

We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business. Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next twelve months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) developmental expenses associated with a start-up business and (ii) marketing expenses. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.

OFF BALANCE SHEET ARRANGEMENTS

     We have no off balance-sheet arrangements.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Not Required.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The Financial Statements required by this Item 8 are included in this Report beginning on page F-1, as follows:

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.   CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act, as of the end of the period covered by this Annual Report on Form 10-K.

Based on this evaluation, our chief executive officer and chief financial officer concluded that, as of December 31, 2018, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) of the Exchange Act. Our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2018.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

ITEM 9B.   OTHER INFORMATION

     None.

PART III

ITEM 10.   DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

DIRECTORS AND EXECUTIVE OFFICERS

Our board of directors manages our business and affairs. Under our Articles of Incorporation and Bylaws, the Board will consist of not less than one, nor more than seven directors. Currently, our Board consists of three directors.

The names, ages, positions and dates appointed of our current directors and executive officers are set forth below.

John Salerno, Chief Executive Officer, President, Chairman of the Board, and Director. Mr. Salerno is a seasoned hands-on executive with over 40 years of experience with public and private computer software and service companies. Mr. Salerno built a multi-million dollar business from a start up, servicing the real estate industry. The business was sold in 1984 and Mr. Salerno provided consulting services to a wide range of clients through 1995. In 1996, along with his daughter and a small group of private accredited investors, he co-founded the Company. Mr. Salerno was President and CEO of the Company from April 1, 2000 until February 28, 2006. After signing contracts with Verizon and Cablevision, the Company sold its assets in 2006 to Digi-Data Corporation. From March 1, 2006 thru February 2009 Mr. Salerno served as President of the Vault Services Division of Digi-Data Corporation. Upon the expiration of his 3 year contract the Vault Services Division was at a revenue run rate of $12 million annually. As of March 1, 2009, Mr. Salerno returned to his full time management roll at the Company. Mr. Salerno is an ex — US Marine Corps, Crypto/ Communications Officer and has a BS in Mathematics from Fordham University. Mr. Salerno is Elisa Luqman’s father.

Mr. Salerno was nominated as a Director because if his intimate knowledge of the Company and its history as a founder. Additionally, Mr. Salerno’s mathematical and technical background as a data center manager early in his professional career and later as a software developer offers the board hand’s on technical experience in both operations and software analysis. Mr. Salerno utilized his experience and contacts to secure the major customers driving the sales that generate the Company’s payment stream from DDC. Moreover, Mr. Salerno adds value to Gotham through his 40 plus years serving the New York Real Estate industry. He is thoroughly familiar with the unique workings of the New York real estate industry and has many contacts within that community that are a benefit to Gotham.

Elisa Luqman, Chief Financial Officer, Executive Vice President, General Counsel, and Director. Ms. Luqman is a computer literate attorney with over 19 years of experience with intellectual property and computer software. Prior to co-founding the Company, Ms. Luqman was president of University Software Corp., a software development company focused on a wide range of student educational and intellectual applications. Ms. Luqman was Chief Operating Officer of the Company, from April 1, 2000 until February 28, 2006. From March 1, 2006 through February 28, 2009 Ms. Luqman was employed as Chief Operating Officer of the Vault Services Division of Digi-Data Corporation, the company that acquired the Company’s assets in 2006, and subsequently during her tenure with Digi-Data Corporation she became the in-house general counsel for the entire corporation. In that capacity she was responsible for acquisitions, mergers, patents, and employee contracts, and worked very closely with Digi-Data’s outside counsel firms, DLA-Piper, the Law Offices of Sandra T. Carr and the patent firm of Jordan and Hamburg. As of March 1, 2009, Ms. Luqman rejoined the Company in her current capacities. Ms. Luqman received a BA degree in Marketing, a JD in Law, and a MBA Degree in Finance from Hofstra University. Ms. Luqman is a member of the bar in New York and New Jersey. Ms. Luqman is John Salerno’s daughter.

Ms. Luqman was nominated as a Director because of her intimate knowledge of the Company and its history as a founder. Additionally, as an attorney, Ms. Luqman’s legal background enables her to provide counsel to the Company. Her experience as general counsel to the Company provides her with a unique insight into the Company’s contracts with customers and vendors, intellectual property assets and issues, financing transactions and shareholder transactions. Moreover, having been through the merger and acquisition process on both sides of the table, Ms. Luqman offers the Company in-house guidance throughout the acquisition process. That combined with Ms. Luqman’s MBA in Finance aids in providing the Board with more efficient analysis of input from outside auditors and legal advisors.

COMMITTEES OF THE BOARD

 The Board has established an Audit Committee and a Compensation Committee. The Board does not currently have a Nominating Committee. The work typically conducted by a Nominating Committee is conducted by the full Board.

Audit Committee

 The Audit Committee consisted of Messrs. Charles, Keefe and Dempster, with Mr. Charles serving as chairman. On September 14, 2016 Mr. Charles resigned from the Board, as disclosed on the Company’s current report on Form 8-K filed on September 19, 2016. Our Board is actively seeking a suitable replacement that qualifies as an “audit committee financial expert” as defined under the federal securities laws. The Audit Committee is responsible for monitoring and reviewing our financial statements and internal controls over financial reporting. In addition, they recommend the selection of the independent auditors and consult with management and our independent auditors prior to the presentation of financial statements to stockholders and the filing of our forms 10-Q and 10-K. The Audit Committee has adopted a charter and it is posted on our web site at www.igambit.com.

Compensation Committee

The Compensation Committee consisted of Messrs. Charles, Keefe and Dempster, with Mr. Keefe serving as chairman. On September 14, 2016 Mr. Keefe resigned from the Board, as disclosed on the Company’s current report on Form 8-K filed on September 19, 2016. Our Board is actively seeking a suitable replacement. The Compensation Committee is responsible for reviewing and recommending to the Board the compensation and over-all benefits of our executive officers. The Compensation Committee may, but is not required to, consult with outside compensation consultants. The Compensation Committee has adopted a charter and the charter is posted on our web site at www.igambit.com.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to the Company under Rule 16a-3(e) under the Exchange Act during its most recent fiscal year and Forms 5 and amendments thereto furnished to the Company with respect to its most recent fiscal year, and any written representation to the Company from the reporting person that no Form 5 is required, no person who, at any time during the fiscal year, was a director, officer, beneficial owner of more than ten percent of the Company’s Common Stock, or any other person known to the Company to be subject to section 16 of the Exchange Act with respect to the Company, failed to file on a timely basis, as disclosed in the above Forms, reports required by section 16(a) of the Exchange Act during the most recent fiscal year or prior fiscal years.

CODE OF ETHICS

The Company has adopted a Code of Ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of the Code of Ethics is attached as an exhibit to this report. A copy of the Code of Ethics is available on the Company’s website at www.igambit.com. Any amendments to, or waivers from, the Code of Ethics will be disclosed on the Company’s website at www.igambit.com.

  ITEM 11.     EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth the compensation received by our executive officers, for their service, during the year ended December 31, 2018.

Employment Arrangements with Named Executive Officers

Effective April 1, 2017, along with the acquisition HubCentix Inc. we entered into an employment agreement with Jerry Robinson serving as President of HealthDatix Inc. Under the three-year agreement, Mr. Robinson is entitled to (a) a base salary of 75,000 per year, (b) bonuses based upon objectives set by the Company and (b) participation in all benefit programs generally made available to HealthDatix employees. The agreement also contains provisions designed to protect the confidentiality of the Company’s confidential information and restricting Mr. Robinson from engaging in certain competitive activities for the greater of 60 months from the date of the agreement or two years following the termination of his employment.

Mr. Robinson an entrepreneur and previous co-founder of HubCentrix, has over 10 years in SaaS cloud technology and is instrumental in bringing innovation and marketing approaches to HealthDatix.

For the 10 years prior to launching HubCehtrix, Mr. Robinson managed his own consulting firm Robinson BrandBuilders. He was also a founding partner of Black Bear Design Group, a breakthrough company that served agencies and direct clients for 10 years. While at Black Bear Design Group he was hired by Lebhar Friedman Publications in New York City as creative director responsible for national and international brands, including Haines, Coke, Microsoft, Revlon and OBI of Germany, to name a few. Jerry was also one of the founding partners of Full House Publications, serving regional and national brands including Equifax, Busch Gardens, TECO, CitiCorp Global Payments, MOSI and The Moorings International. He previously worked as an Art Director for five years at Nissen Advertising.

Mr. Robinson is a graduate of Florida State University.

Effective April 1, 2017, along with the acquisition HubCentix Inc. we entered into an employment agreement with MaryJo (MJ) Robinson serving as Vice President of Business Development of HealthDatix Inc. Under the three-year agreement, Mrs. Robinson is entitled to (a) a base salary of 75,000 per year, (b) bonuses based upon objectives set by the Company and (b) participation in all benefit programs generally made available to HealthDatix employees. The agreement also contains provisions designed to protect the confidentiality of the Company’s confidential information and restricting Mrs. Robinson from engaging in certain competitive activities for the greater of 60 months from the date of the agreement or two years following the termination of his employment.

Mrs. Robinson 20 years of experience in major account sales, branch management, district sales management and business ownership has prepared her for her position as VP Business Development. With a focus on personalized health monitoring and healthcare collection analytics she is recruiting channel partners with a client base in the healthcare market, and the ultimate goal of keeping people healthy while increasing their longevity.

Prior to co-founding HubCentrix, Mrs. Robinson was employed by Riso Inc., the global leader in digital-duplicating technology, as a direct sales representative she was awarded: the number one branch sales representative, master status for 100% + quota and the president’s club for number one sales representative in the country. Later, as branch manager for Riso Inc., she was responsible for managing direct sales, service and administration operations for the Tampa, Orlando and Ft. Meyers locations. She structured overall branch operations, hired and trained staff and established a team environment focused on customer service and profitability. Her branch was awarded master status for 100% of quota and awarded best branch product demonstration in the country. As a result of recruiting and supporting distributors for DocSTAR, a turnkey electronic imaging system manufactured by BitWise Designs, Inc., she brings a strong understanding of the fundamentals of dealer/manufacturing relationships. She consistently was 125% + of quota while assisting dealers in launching DocSTAR programs which included sell through, open houses, sales training and presentations.

Mrs. Robinson is a graduate of Florida Southern College.

Effective April 1, 2017, along with the acquisition HubCentrix Inc. we entered into an employment agreement with Kathleen Shepherd serving as Chief Technology Officer (CTO) of HealthDatix Inc. Under the three-year agreement, Mrs. Robinson is entitled to (a) a base salary of 75,000 per year, (b) bonuses based upon objectives set by the Company and (b) participation in all benefit programs generally made available to HealthDatix employees. The agreement also contains provisions designed to protect the confidentiality of the Company’s confidential information and restricting Mrs. Robinson from engaging in certain competitive activities for the greater of 60 months from the date of the agreement or two years following the termination of his employment.

Mrs. Shepherd experience as business analyst designing and managing office processes makes her well suited to oversee operations. Kathleen has spent the last year developing our WellDatix product.

Prior to co-founding HubCentrix, Mrs. Shepherd was employed as a business analyst, where she oversaw the design, development and installation of numerous software projects for the Palm Beach County government including significant projects for Public Safety, Water Utilities, Community Services, Human Services and Public Affairs. Prior to designing systems, Mrs. Shepherd was in charge of Barnett Brokerage’s IT Department, responsible for all the data processing services supporting branch locations.

Mrs. Shepherd is a graduate of Florida State University.

We do not currently have any other employment agreements with our executive officers.

Compensation of the Board of Directors

The following table sets forth the compensation received by our directors, for their service as directors, during the year ended December 31, 2018.

(1) These individuals serve as executive officers of the Company, and do not receive any compensation for the services they provide as directors of the Company.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth information known to us, as of April 16, 2019, relating to the beneficial ownership of shares of common stock by: (i) each person who is known by us to be the beneficial owner of more than 5% of the Company’s outstanding common stock; (ii) each director; (iii) each executive officer; and (iv) all executive officers and directors as a group. Under securities laws, a person is considered to be the beneficial owner of securities owned by him (or certain persons whose ownership is attributed to him) or securities that can be acquired by him within 60 days, including upon the exercise of options, warrants or convertible securities. The Company determines a beneficial owner’s percentage ownership by assuming that options, warrants and convertible securities that are held by the beneficial owner and which are exercisable within 60 days, have been exercised or converted. The Company believes that all persons named in the table have sole voting and investment power with respect to all shares of common stock shown as being owned by them. Unless otherwise indicated, the address of each beneficial owner in the table set forth below is care of iGambit Inc., 1050 W. Jericho Turnpike, New York, 11787. The percentages in the following table are based upon 132,290,757 shares outstanding as of April 16, 2019.

ITEM 13.   CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

RELATED PARTY TRANSACTIONS

Amounts Due to Related Parties

Amounts due to related parties with balances of $145,367 and $128,476 at December 31, 2018 and 2017, respectively, consist of cash advances from a officers/stockholders. These advances do not bear interest and are payable on demand.

BOARD INDEPENDENCE

The Company has elected to use the independence standards of the NYSE AMEX Equities Exchange in its determination of whether the members of its Board are independent. The Board has established an Audit Committee and a Compensation Committee. The Board does not currently have a Nominating Committee. The work typically conducted by a Nominating Committee is conducted by the full Board.

ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table shows what Prager Metis CPA LLC and Paritz and Company P.A. for the audit and other services for the year ended December 31, 2018 and December 31, 2017 respectively.

Audit Fees — This category includes the audit of the Company’s annual financial statements, review of financial statements included in the Company’s Form 10-Q Quarterly Reports and services that are normally provided by the independent auditors in connection with engagements for those years.

 Audit-Related Fees — This category includes assurance and related services by the independent auditor that are reasonably related to the performance of the audit or review of the Company’s financial statements and that are not reported under the caption “Audit Fees.”

 Tax Fees — This category includes services rendered by the independent auditor for tax compliance, tax advice, and tax planning.

 All Other Fees — This category includes products and services provided by the independent auditor other than the services reported under the captions “Audit Fees,” “Audit-Related Fees,” and “Tax Fees.”

 Overview — The Company’s Audit Committee, reviews, and in its sole discretion pre-approves, our independent auditors’ annual engagement letter including proposed fees and all audit and non-audit services provided by the independent auditors. Accordingly, all services described under “Audit Fees,” “Audit-Related Fees,” “Tax Fees,” and “All Other Fees” were pre-approved by our Company’s Audit Committee. The Audit Committee may not engage the independent auditors to perform the non-audit services proscribed by law or regulation. The Company’s Audit Committee may delegate pre-approval authority to a member of the Board of Directors, and authority delegated in such manner must be reported at the next scheduled meeting of the Board of Directors.

ITEM 15.   EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

PART IV

(a) Financial Statements

(b) Exhibits

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Smithtown, New York, on April 16, 2019.

    Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K has been signed by the following persons in the capacities indicated:

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

iGambit, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of iGambit, Inc. (the Company) as of December 31, 2018, and the related consolidated statement of operations, stockholders’ equity, and cash flows for the year ended December 31, 2018, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018, and the results of its operations and its cash flows for the year ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 4 to the consolidated financial statements, the Company has previously disposed of its operating subsidiary, and has an accumulated deficit of $12,462,814, and a working capital deficit of $1,343,134 at December 31, 2018. These factors, among others, raise substantial doubt regarding the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 4 to the accompanying financial statements. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

iGambit, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of iGambit, Inc. (the Company) as of December 31, 2017 and 2016, and the related consolidated statements of operation, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2017, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 4 to the consolidated financial statements, the Company has disposed of its operating subsidiary, has an accumulated deficit, and a working capital deficit at December 31, 2017. These factors, among others, raise substantial doubt regarding the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 4 to the accompanying financial statements. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.