Notes
to Condensed Consolidated Financial Statements
Three
Months Ended March 31, 2018 and 2019
(Unaudited)
Note
1 - Organization and Basis of Presentation
The
consolidated financial statements presented are those of iGambit Inc., (the “Company”) and its wholly-owned subsidiary,
HealthDatix, Inc. (“HealthDatix. The Company is a holding company which seeks out acquisitions of operating companies in
technology markets. HealthDatix, Inc. is engaged in the business of streamlining the process of managing information in the document-intensive
medical field for customers throughout the United States.
Interim
Financial Statements
The
following (a) condensed consolidated balance sheet as of December 31, 2018, which has been derived from audited financial statements,
and (b) the unaudited condensed consolidated interim financial statements of the Company have been prepared in accordance with
the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes
required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March
31, 2019 are not necessarily indicative of results that may be expected for the year ending December 31, 2019. These condensed
consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto
for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K, filed with the Securities and
Exchange Commission (“SEC”) on April 16, 2019.
Note
2 – Summary of Significant Accounting Policies
Principles
of Consolidation
The
consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. 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.
Fair
Value Measurements
The
Company adopted the provisions of ASC Topic 820,
Fair Value Measurements and Disclosures,
which defines fair value as used
in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.
The
estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable
and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature
of these instruments. The carrying amounts of our short- and long-term credit obligations approximate fair value because the effective
yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances
of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk.
ASC
820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price)
in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants
on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may
be used to measure fair value:
Level
1 – quoted prices in active markets for identical assets or liabilities
Level
2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable
Level
3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions)
The
estimated fair value of the derivative liability was calculated using the Black-Scholes option pricing model. The Company uses
Level 3 inputs to value its derivative liabilities. The following table provides a reconciliation of the beginning and ending
balances for the major classes of assets and liabilities measured at fair value using significant unobservable inputs (Level 3)
and reflects gains and losses for the three months ended March 31, 2019 and 2018.
|
|
2019
|
|
2018
|
Liabilities:
|
|
|
|
|
Balance
of derivative liabilities - beginning of period
|
|
$
|
288,242
|
|
|
$
|
66,059
|
|
Issued
|
|
|
273,450
|
|
|
|
43,249
|
|
Converted
|
|
|
(395,339
|
)
|
|
|
(227,409
|
)
|
Change
in fair value recognized in operations
|
|
|
53,163
|
|
|
|
118,101
|
|
Balance
of derivative liabilities - end of period
|
|
$
|
219,516
|
|
|
$
|
—
|
|
Convertible
Instruments
The
Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815,
Derivatives
and Hedging Activities.
Applicable
GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative
financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics
and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks
of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is
not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate
instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.
The
Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated
from their host instruments) as follows: The Company records, when necessary, discounts to convertible notes for the intrinsic
value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common
stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under
these arrangements are amortized over the term of the related debt to their stated date of redemption.
The
Company accounts for the conversion of convertible debt when a conversion option has been bifurcated using the general extinguishment
standards. The debt and equity linked derivatives are removed at their carrying amounts and the shares issued are measured at
their then-current fair value, with any difference recorded as a gain or loss on extinguishment of the two separate accounting
liabilities.
Revenue
Recognition
Effective
January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes
revenue from the commercial sales of products by: (1) identify the contract (if any) with a customer; (2) identify the performance
obligations in the contract (if any); (3) determine the transaction price; (4) allocate the transaction price to each performance
obligation in the contract (if any); and (5) recognize revenue when each performance obligation is satisfied. For the comparative
periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605,
revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance
of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and
determinable; and (4) the collectability of the fee is reasonably assured. The Company has no outstanding contracts with any of
is’ customers. There was no impact on the Company’s financial statements as a result of adopting Topic 606 for the
three months ended March 31, 2019 and 2018.
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.
Advertising
Costs
The
Company expenses advertising costs as incurred. There were no advertising costs charged to operations for the three months ended
March 31, 2019 and 2018, respectively.
Cash
and Cash Equivalents
For
purposes of reporting cash flows, cash and cash equivalents include checking and money market accounts and any highly liquid debt
instruments purchased with a maturity of three months or less.
Accounts
Receivable
The
Company analyzes the collectability of accounts receivable from continuing operations each accounting period and adjusts its 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. The Company evaluates specific accounts when it becomes 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.
Inventory
Inventory
consisting of finished products is stated at the lower of cost or net realizable value.
Property
and equipment and depreciation
Property
and equipment are stated at cost. Maintenance and repairs are charged to expense when incurred. When property and equipment are
retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and any
gain or loss is credited or charged to income. Depreciation for both financial reporting and income tax purposes is computed using
combinations of the straight line and accelerated methods over the estimated lives of the respective assets as follows:
Office
equipment and fixtures
|
|
|
5
- 7 years
|
|
Computer
hardware
|
|
|
5
years
|
|
Computer
software
|
|
|
3
years
|
|
Development
equipment
|
|
|
5
years
|
|
Amortization
Intangible
assets are amortized using the straight line method over the estimated lives of the respective assets as follows:
Software
|
|
|
5
years
|
|
Technology
license
|
|
|
5
years
|
|
Purchased
in process R&D
|
|
|
Indefinite
|
|
Customer
contracts
|
|
|
10
years
|
|
Long-Lived
Assets
The
Company assesses 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. The Company bases its 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, the Company determines 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, the Company recognizes 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.
Deferred
Revenue
Deposits
from customers are not recognized as revenues, but as liabilities, until the following conditions are met: revenues are realized
when cash or claims to cash (receivable) are received in exchange for goods or services or when assets received in such exchange
are readily convertible to cash or claim to cash or when such goods/services are transferred. When such income item is earned,
the related revenue item is recognized, and the deferred revenue is reduced. To the extent revenues are generated from the Company’s
support and maintenance services, the Company recognizes such revenues when services are completed and billed. The Company has
received deposits from its various customers that have been recorded as deferred revenue and presented as current liabilities
in the amount of $5,467 and $9,192 as of March 31, 2019 and December 31, 2018, respectively.
Stock-Based
Compensation
The
Company accounts for its stock-based awards granted under its 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. The Company uses the Black-Scholes option pricing model to estimate the
fair value of its 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.
Income
Taxes
The
Company accounts for income taxes using the asset and liability method in accordance with ASC Topic No. 740,
Income Taxes
.
Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax
bases of assets and liabilities, and are measured using the enacted tax rates and laws that are expected to be in effect when
the differences are expected to reverse.
The
Company applies the provisions of ASC Topic No. 740 for the financial statement recognition, measurement and disclosure of uncertain
tax positions recognized in the Company’s financial statements
.
In accordance with this provision, tax positions
must meet a more-likely-than-not recognition threshold and measurement attribute for the financial statement recognition and measurement
of a tax position.
Recent
Accounting Pronouncements
We
have reviewed other recent accounting pronouncements and concluded they are either not applicable to the business, or no material
effect is expected on the condensed consolidated financial statements as a result of future adoption.
Note
3 – Going Concern
The
accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business. The Company has an accumulated deficit of
$13,022,181, and a working capital deficit of $1,178,484 at March 31, 2019. These factors, among others, raise substantial doubt
about the ability of the Company to continue as a going concern for a reasonable period of time. The Company’s
continuation as a going concern is dependent upon its ability to obtain necessary equity financing and ultimately from generating
revenues from its newly acquired subsidiary to continue operations. The Company expects that working capital requirements will
continue to be funded through a combination of its existing funds and further issuances of securities. Working capital requirements
are expected to increase in line with the growth of the business. Existing working capital, further advances and debt instruments,
and anticipated cash flow are expected to be adequate to fund operations over the next twelve months. The Company has no lines
of credit or other bank financing arrangements. The Company has financed operations to date through the proceeds of a private
placement of equity and debt instruments. In connection with the Company’s 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. The Company intends to finance these expenses with further issuances of securities, and debt issuances.
Thereafter, the Company expects it 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 current stockholders. Further, such securities
might have rights, preferences or privileges senior to 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, the Company may not be able to
take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict business
operations.
The
condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of
recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to
continue as a going concern.
Note
4 – Property and Equipment
Property
and equipment are carried at cost and consist of the following at March 31, 2019 and December 31, 2018:
|
|
2019
|
|
2018
|
Office
equipment and fixtures
|
|
$
|
10,964
|
|
|
$
|
10,964
|
|
Less:
Accumulated depreciation
|
|
|
9,093
|
|
|
|
8,846
|
|
|
|
$
|
1,871
|
|
|
$
|
2,118
|
|
Depreciation
expense of $247 and $432 was charged to operations for the three months ended March 31, 2019 and 2018, respectively.
Note
5 – Intangible Assets
Intangible
assets from the acquisitions of HealthDatix and ECSL consist of the following at March 31, 2019 and December 31, 2018:
|
|
2019
|
|
2018
|
|
Life
|
Software
|
|
$
|
156,925
|
|
|
$
|
156,925
|
|
|
|
5
years
|
|
Customer
contracts
|
|
|
644,846
|
|
|
|
644,846
|
|
|
|
10
years
|
|
FDA
510K clearance
|
|
|
1,396,000
|
|
|
|
1,396,000
|
|
|
|
5
years
|
|
Technology
license
|
|
|
1,000,000
|
|
|
|
1,000,000
|
|
|
|
5
years
|
|
In
process research and development
|
|
|
604,000
|
|
|
|
604,000
|
|
|
|
Indefinite
|
|
|
|
|
3,801,771
|
|
|
|
3,801,771
|
|
|
|
|
|
Less:
Accumulated amortization
|
|
|
1,403,723
|
|
|
|
1,229,756
|
|
|
|
|
|
|
|
$
|
2,398,048
|
|
|
$
|
2,572,015
|
|
|
|
|
|
Amortization
expense of $173,967 was charged to operations for the three months ended March 31, 2019 and 2018, respectively.
Note
6 - Earnings (Loss) Per Common Share
The
Company calculates net income (loss) per common share in accordance with ASC 260 “
Earnings Per Share
” (“ASC
260”). Basic and diluted net earnings (loss) per common share was determined by dividing net earnings (loss) applicable
to common stockholders by the weighted average number of common shares outstanding during the period. The Company’s potentially
dilutive shares, which include outstanding common stock options and common stock warrants, have not been included in the computation
of diluted net loss per share for the three months ended March 31, 2019 and 2018 as the result would be anti-dilutive.
|
|
Three
Months Ended
|
|
|
March
31,
|
|
|
2019
|
|
2018
|
Stock
options
|
|
|
20,500,000
|
|
|
|
8,463,000
|
|
Stock
warrants
|
|
|
1,875,000
|
|
|
|
1,150,000
|
|
Total
shares excluded from calculation
|
|
|
22,375,000
|
|
|
|
9,613,000
|
|
Note
7 – Stock Based Compensation
Options
In
2006, the Company 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 March 31, 2019, 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 three months ended March 31, 2019 and 2018 follows:
|
|
Options
Outstanding
|
|
Weighted
Average Exercise Price
|
|
Weighted
Average Grant-Date
Fair
Value
|
|
Weighted
Average Remaining Contractual Life
(Years)
|
Options
outstanding at December 31, 2017
|
|
|
8,463,000
|
|
|
$
|
0.07
|
|
|
$
|
0.07
|
|
|
|
7.41
|
|
No
option activity
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
Options
outstanding at March 31, 2018
|
|
|
8,463,000
|
|
|
$
|
0.07
|
|
|
|
0.07
|
|
|
|
7.16
|
|
Options
outstanding at December 31, 2018
|
|
|
20,500,000
|
|
|
|
0.03
|
|
|
|
0.03
|
|
|
|
7.52
|
|
No
option activity
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
Options
outstanding at March 31, 2019
|
|
|
20,500,000
|
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
|
7.27
|
|
Options
outstanding at March 31, 2019 consist of:
Date
Issued
|
|
Number
Outstanding
|
|
Number
Exercisable
|
|
Exercise
Price
|
|
Expiration
Date
|
June
6, 2014
|
|
|
250,000
|
|
|
|
250,000
|
|
|
$
|
0.05
|
|
|
June
6, 2019
|
March
24, 2015
|
|
|
200,000
|
|
|
|
200,000
|
|
|
$
|
0.01
|
|
|
March
24, 2020
|
April
6, 2017
|
|
|
600,000
|
|
|
|
600,000
|
|
|
$
|
0.03
|
|
|
April
6, 2027
|
June
6, 2017
|
|
|
700,000
|
|
|
|
700,000
|
|
|
$
|
0.07
|
|
|
June
6, 2022
|
June
6, 2017
|
|
|
6,500,000
|
|
|
|
6,500,000
|
|
|
$
|
0.07
|
|
|
June
6, 2027
|
November
1, 2018
|
|
|
12,250,000
|
|
|
|
12,250,000
|
|
|
$
|
0.01
|
|
|
November
1, 2028
|
Total
|
|
|
20,500,000
|
|
|
|
20,500,000
|
|
|
|
|
|
|
|
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 three months ended March 31, 2019 and 2018 follows:
|
|
Warrants
Outstanding
|
|
Weighted
Average Exercise Price
|
|
Weighted
Average Grant-Date Fair Value
|
|
Weighted
Average Remaining Contractual Life
(Years)
|
Warrants
outstanding at December 31, 2017
|
|
|
400,000
|
|
|
$
|
0.62
|
|
|
$
|
0.10
|
|
|
|
3.27
|
|
Warrant
granted
|
|
|
750,000
|
|
|
|
0.05
|
|
|
|
—
|
|
|
|
|
|
Warrants
outstanding at March 31, 2018
|
|
|
1,150,000
|
|
|
$
|
0.21
|
|
|
$
|
0.10
|
|
|
|
3.64
|
|
Warrants
outstanding at December 31, 2018
|
|
|
1,875,000
|
|
|
$
|
0.12
|
|
|
$
|
0.12
|
|
|
|
3.24
|
|
No
warrant activity
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
Warrants
outstanding at March 31, 2019
|
|
|
1,875,000
|
|
|
$
|
0.12
|
|
|
$
|
0.12
|
|
|
|
3.00
|
|
Warrants
outstanding at March 31, 2019 consist of:
Dater
Issued
|
|
Number
Outstanding
|
|
Number
Exercisable
|
|
Exercise
Price
|
|
Expiration
Date
|
June
1, 2009
|
|
|
100,000
|
|
|
|
100,000
|
|
|
$
|
0.50
|
|
|
June
1, 2019
|
June
1, 2009
|
|
|
50,000
|
|
|
|
50,000
|
|
|
$
|
0.65
|
|
|
June
1, 2019
|
June
1, 2009
|
|
|
50,000
|
|
|
|
50,000
|
|
|
$
|
0.85
|
|
|
June
1, 2019
|
June
1, 2009
|
|
|
50,000
|
|
|
|
50,000
|
|
|
$
|
1.15
|
|
|
June
1, 2019
|
January
1, 2017
|
|
|
50,000
|
|
|
|
50,000
|
|
|
$
|
0.25
|
|
|
October
10, 2021
|
January
1, 2017
|
|
|
50,000
|
|
|
|
50,000
|
|
|
$
|
0.50
|
|
|
November
7, 2021
|
January
5, 2017
|
|
|
25,000
|
|
|
|
25,000
|
|
|
$
|
0.50
|
|
|
January
5, 2022
|
February
5, 2018
|
|
|
750,000
|
|
|
|
750,000
|
|
|
$
|
0.05
|
|
|
February
5, 2023
|
April
27, 2018
|
|
|
750,000
|
|
|
|
750,000
|
|
|
$
|
0.05
|
|
|
April
27, 2023
|
Total
|
|
|
1,875,000
|
|
|
|
1,875,000
|
|
|
|
|
|
|
|
Note
8 – Convertible Debt
Convertible
Notes Payable
On
January 10, 2018, the Company issued an 8% convertible note in the aggregate principal amount of $240,000, convertible into shares
of the Company’s common stock, and includes a back-ended note with principal of $120,000 that was funded on July 10, 2018.
The back-ended Note, including accrued interest is due July 10, 2019 and is convertible any time after 180 days at the option
of the holder into shares of the Company’s common stock at 65% of the average stock price of the lowest 3 closing bid prices
during the 15 trading day period ending on the latest complete trading day prior to the conversion date. During the three months
ended March 31, 2019, the noteholder converted $66,000 of the principal balance and accrued interest of $4,995 to 44,490,002 shares
of common stock. The balance of the note was $100,000 on March 31, 2019.
On
March 6, 2018, the Company issued an 8% convertible note in the aggregate principal amount of $126,000, convertible into shares
of the Company’s common stock. The Note, including accrued interest is due March 6, 2019 and is convertible any time after
180 days at the option of the holder into shares of the Company’s common stock at 65% of the lowest trading price during
the 20 trading day period ending on the latest complete trading day prior to and including the conversion date. During the three
months ended March 31, 2019, the noteholder converted the remaining principal balance of $60,000 and accrued interest of $4,342
to 35,446,300 shares of common stock.
On
May 3, 2018, the Company entered into a Convertible Promissory Note pursuant to which the Company borrowed in the aggregate principal
amount of $83,500. The convertible note is due 12 months after issuance and bears interest at a rate of 8%. The Note is convertible
into shares of common stock of the Company 180 days following the date of funding and thereafter. The conversion price shall be
subject to a discount of 35% applied to the average of the three lowest closing bid prices of the Common Stock during the prior
twenty (20) trading day period. The Investor will be limited to convert no more than 4.99% of the issued and outstanding Common
Stock at the time of conversion at any one time. At any time during the period beginning on the date of the Note and ending on
the date which is 180 days thereafter, the Company may repay the Note by paying an amount equal to the then outstanding amount
multiplied by 130%. During the three months ended March 31, 2019, the noteholder converted the remaining principal balance of
$53,957 and accrued interest of $4,600 to 25,674,344 shares of common stock.
On
June 25, 2018, the Company issued an 8% convertible note in the aggregate principal amount of $53,000, convertible into shares
of the Company’s common stock. The Note, including accrued interest is due April 15, 2019 and is convertible any time after
180 days at the option of the holder into shares of the Company’s common stock at 65% of the average stock price of the
lowest 3 closing bid prices during the 10 trading day period ending on the latest complete trading day prior to the conversion
date. During the three months ended March 31, 2019, the noteholder converted the remaining principal balance of $38,000 and accrued
interest of $2,120 to 14,859,260 shares of common stock.
On
August 13, 2018, the Company issued an 8% convertible note in the aggregate principal amount of $53,000, convertible into shares
of the Company’s common stock. The Note, including accrued interest is due May 30, 2019 and is convertible any time after
180 days at the option of the holder into shares of the Company’s common stock at 65% of the average stock price of the
lowest 3 closing bid prices during the 10 trading day period ending on the latest complete trading day prior to the conversion
date. During the three months ended March 31, 2019, the noteholder converted the principal balance of the note and accrued interest
of $2,120 to 26,247,619 shares of common stock.
On
September 17, 2018, the Company issued an 8% convertible note in the aggregate principal amount of $33,000, convertible into shares
of the Company’s common stock. The Note, including accrued interest is due June 30, 2019 and is convertible any time after
180 days at the option of the holder into shares of the Company’s common stock at 65% of the average stock price of the
lowest 3 closing bid prices during the 10 trading day period ending on the latest complete trading day prior to the conversion
date.
On
January 3, 2019, the Company issued an 8% convertible note in the aggregate principal amount of $38,000, convertible into shares
of the Company’s common stock. The Note, including accrued interest is due October 30, 2019 and is convertible any time
after 180 days at the option of the holder into shares of the Company’s common stock at 65% of the average stock price of
the lowest 3 closing bid prices during the 10 trading day period ending on the latest complete trading day prior to the conversion
date.
On
February 15, 2019, the Company issued an 8% convertible note in the aggregate principal amount of $38,000, convertible into shares
of the Company’s common stock. The Note, including accrued interest is due November 30, 2019 and is convertible any time
after 180 days at the option of the holder into shares of the Company’s common stock at 65% of the average stock price of
the lowest 3 closing bid prices during the 10 trading day period ending on the latest complete trading day prior to the conversion
date.
On
March 29, 2019, the Company issued an 8% convertible note in the aggregate principal amount of $38,000, convertible into shares
of the Company’s common stock. The Note, including accrued interest is due February 15, 2020 and is convertible any time
after 180 days at the option of the holder into shares of the Company’s common stock at 65% of the average stock price of
the lowest 3 closing bid prices during the 10 trading day period ending on the latest complete trading day prior to the conversion
date.
The
Company recorded a debt discount related to identified embedded derivatives relating to conversion features and a reset provisions
(see Note 9) based fair values as of the inception date of the Notes. The calculated debt discount equaled the face of the 8%
note dated January 10, 2018 and is being amortized and revalued over the term of the note. The calculated debt discount equaled
the face of the 8% note dated March 6, 2018 and was amortized through the date the convertible debt was fully extinguished. The
calculated debt discount equaled the face of the 8% note dated May 3, 2018 and was amortized through the date the convertible
debt was fully extinguished. The calculated debt discount equaled the face of the 8% note dated June 25, 2018 and was amortized
through the date the convertible debt was fully extinguished. The calculated debt discount equaled the face of the 8% note dated
August 13, 2018 and was amortized through the date the convertible debt was fully extinguished. The calculated debt discount equaled
the face of the 8% note dated September 17, 2018 and is being amortized and revalued over the term of the note. Interest expense
on the convertible notes of $130,362 and $14,878 was recorded for the three months ended March 31, 2019 and 2018, respectively.
The
Company issued convertible debentures in the amount of $75,000 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 $.50 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 year. Interest expense on the convertible debentures of $2,120 and $1,829 was recorded
for the three months ended March 31, 2019 and 2018, respectively.
Convertible
notes payable at March 31, 2019 and December 31, 2018 are summarized as follows:
|
|
2019
|
|
2018
|
Total
face value of notes
|
|
$
|
322,000
|
|
|
$
|
478,957
|
|
Less:
Discount
|
|
|
107,632
|
|
|
|
101,346
|
|
Balance
|
|
$
|
214,368
|
|
|
$
|
377,611
|
|
Note
9 – Derivative Liability
The
Company has determined that the conversion feature embedded in the convertible notes described in Note 8 contain a potential variable
conversion amount which constitutes a derivative which has been bifurcated from the note and recorded as a derivative liability
at fair value, with a corresponding discount recorded to the associated debt. The excess of the derivative value over the face
amount of the note is recorded immediately to interest expense at inception. The Company used the Binomial Option Pricing model
to value the conversion features.
The
Company used Level 3 inputs for its valuation methodology for the conversion option liability in determining the fair value using
a Black-Scholes option-pricing model with the following assumption inputs:
|
|
|
March
31,
|
|
|
|
December
31,
|
|
|
|
|
2019
|
|
|
|
2018
|
|
Annual
dividend yield
|
|
|
—
|
|
|
|
—
|
|
Expected
life (years)
|
|
|
0.78
- 1.0
|
|
|
|
0.77
- 1.0
|
|
Risk-free
interest rate
|
|
|
2.44%
- 2.52%
|
|
|
|
2.07%
- 2.57%
|
|
Expected
volatility
|
|
|
274%
- 280%
|
|
|
|
257%
- 293%
|
|
Based
upon ASC 840-15-25 (EITF Issue 00-19, paragraph 11) the Company has adopted a sequencing approach regarding the application of
ASC 815-40 to its outstanding convertible notes. Pursuant to the sequencing approach, the Company evaluates its contracts based
upon earliest issuance date.
Note
10 – Notes Payable
Notes
payable at March 31, 2019 and December 31, 2018 consists of loans to HealthDatix from 3 individuals totaling $52,500. The loans
do not bear interest and there are no specific terms for repayment.
Note
11 – Stock Transactions
Designation
of Preferred Stock
On
August 2, 2018, the Company filed a Certificate of Designation with the Delaware Division of Corporations whereby the Company
designated a Series A Preferred Stock and issued 1,000 shares to the Company’s CEO. The holders of Series A Preferred Stock
will have voting rights, when combined with their existing holdings of the Company’s common stock, that entitle them to
have an aggregate of 51% of the votes eligible to be cast by all stockholders with respect to all matters brought before a vote
of the stockholders of the Company.
Common
Stock Issued
On
August 8, 2018, the Board unanimously approved an amendment to the Company’s Articles of Incorporation to increase the number
of shares of Common Stock which the Company is authorized to issue from Four hundred million (400,000,000) to Eight Hundred Million
(800,000,000) shares of Common Stock, $0.001 par value per share.
In
connection with the convertible notes payable (see Note 8 above) the noteholders converted $270,957 of principal balance and $18,177
of accrued interest to 146,717,525 shares of common stock during the three months ended March 31, 2019. The stock issued was determined
based on the terms of the convertible notes.
Note
12 - Income Taxes
A
full valuation allowance was recorded against the Company’s net deferred tax assets. A valuation allowance must be established
if it is more likely than not that the deferred tax assets will not be realized. This assessment is based upon consideration of
available positive and negative evidence, which includes, among other things, the Company’s most recent results of operations
and expected future profitability. Based on the Company’s cumulative losses in recent years, a full valuation allowance
against the Company’s deferred tax assets has been established as Management believes that the Company will not realize
the benefit of those deferred tax assets.
Note
13 – Concentrations and Credit Risk
Sales
and Accounts Receivable
HealthDatix
had sales to three customers which accounted for approximately 24%, 17%, and 17%, respectively of HealthDatix’s total sales
for the three months ended March 31, 2019. One customer accounted for approximately 96% of accounts receivable at March 31, 2019.
HealthDatix
had sales to four customers which accounted for approximately 30%, 21%, 21%, and 19%, respectively of HealthDatix’s total
sales for the three months ended March 31, 2018. One customer accounted for 100% of accounts receivable at March 31, 2018.
Cash
Cash
is maintained at a major financial institution. Accounts held at U.S. financial institutions are insured by the FDIC up to $250,000.
Cash balances could exceed insured amounts at any given time, however, the Company has not experienced any such losses. The Company
did not have any interest-bearing accounts at March 31, 2019 and December 31, 2018, respectively.
Note
14 - Related Party Transactions
Amounts
Due to Related Parties
Amounts
due to related parties with balances of $139,753 and $145,367 at March 31, 2019 and December 31, 2018, respectively, do not bear
interest and are payable on demand. The Company’s former subsidiary, Arcmail owed amounts on a credit card that is guaranteed
by the husband of the Company’s Executive Vice President, who was held personally responsible by the credit card company
for the unpaid balance.
Note
15 – Commitments and Contingencies
Lease
Commitment
The
Company is obligated under an operating lease for its premises in Smithtown, New York that expires on May 31, 2019. The lease
was not renewed and the officers of the Company will provide office space to the Company at no charge.
Total
future minimum annual lease payments under the lease for the years ending December 31 are as follows:
Rent
expense of $7,728 and $7,048 was charged to operations for the three months ended March 31, 2019 and 2018, respectively.
Employment
Arrangements With Executive Officers
Effective
April 1, 2017, in connection with the acquisition of HealthDatix Inc., the Company entered into employment agreements with Jerry
Robinson, MaryJo Robinson, and Kathleen Shepherd each under a three-year term at a base salary of $75,000 per year, bonuses based
upon objectives set by the Company, and participation in all benefit programs generally made available to HealthDatix employees.
The employment agreements restrict the executive officers from engaging in certain competitive activities for the greater of 60
months from the date of the agreements or two years following the termination of their respective employment.
Note
16 – Subsequent Events
Common
Stock Issued
Subsequent
to the end of the period through the date of the report, a noteholder converted $55,232 of principal and $1,691 of accrued interest
to 35,966,371 shares of the Company’s common stock.
Item
2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD
LOOKING STATEMENTS
This
Form 10-Q 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. All statements, other than statements of
historical facts, included or incorporated by reference in this Form 10-Q which address activities, events or developments that
the Company expects or anticipates will or may occur in the future, including such things as future capital expenditures (including
the amount and nature thereof), finding suitable merger or acquisition candidates, expansion and growth of the Company’s
business and operations, and other such matters are forward-looking statements. These statements are based on certain assumptions
and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected
future developments as well as other factors it believes are appropriate in the circumstances.
Investors
are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks
and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements. Factors
that could adversely affect actual results and performance include, among others, potential fluctuations in quarterly operating
results and expenses, government regulation, technology change and competition. Consequently, all of the forward-looking statements
made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance that the actual results or developments
anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to
or effects on the Company or its business or operations. The Company assumes no obligations to update any such forward-looking
statements.
INTRODUCTION
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
Assets.
At March 31, 2019, we had $2,446,329 in total assets, compared to $2,618,466, at December 31, 2018. The decrease in total
assets was primarily due to amortization of intangible assets from the acquisition of our HealthDatix subsidiary.
Liabilities.
At March 31, 2019, our total liabilities were $1,222,874 compared to $1,385,447 at December 31, 2018. Our current liabilities
at March 31, 2019 consisted of accounts payable and accrued expenses of $570,331, accrued interest on notes payable of $20,939,
amounts due to related parties of $139,753, deferred revenue of $5,467, notes payable of $52,500, convertible notes payable of
$214,368 and derivative liability of $219,516, whereas 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 notes payable of $377,611 and derivative
liability of $288,242.
Stockholders’
Equity.
Our Stockholders’ Equity decreased to $1,223,455 at March 31, 2019 from $1,233,019 at December 31, 2018.
This decrease was primarily due to an increase in accumulated deficit for the three months ended March 31, 2019.
Three
Months Ended March 31, 2019 as Compared to Three Months Ended March 31, 2018
Revenues
and Net Loss
.
We had $5,325 of revenue from our HealthDatix subsidiary and a net loss of $559,367 during the three months
ended March 31, 2019, compared to revenue of $4,192 and a net loss of $610,033 for the three months ended March 31, 2018. The
increase in revenue was due primarily to the revenue generated by our HealthDatix subsidiary.
General
and Administrative Expenses
.
General and Administrative Expenses decreased to $190,264 for the three months ended March
31, 2019 from $234,264 for the three months ended March 31, 2018. For the three months ended March 31, 2019 our General and Administrative
Expenses consisted of corporate administrative expenses of $30,381, legal and accounting fees of $24,455 employee benefits expenses
(health and life insurance) of $3,215, payroll expenses of $109,746, contract labor of $10,000, and transfer agent fees of 12,467.
For the three months ended March 31, 2018 our General and Administrative Expenses consisted of corporate administrative expenses
of $44,315, legal and accounting fees of $18,110, employee benefits expenses (health and life insurance) of $10,268, marketing
expenses of $16,675, payroll expenses of $105,086, contract labor expense of $12,200, commissions and fees expenses of $21,000,
and exchange filing fees of $6,610. The decreases from the three months ended March 31, 2018 to the three months ended March 31,
2019 relate primarily due to: (i) a decrease in employee benefits; (ii) a decrease in commissions and fees expenses; (iii)
a decrease in contract labor expense; (iv) a decrease in marketing expense; and (v) a decrease in general and administrative costs
associated with the operation of our HealthDatix subsidiary. Costs associated with our officers’ salaries and the operation
of our HealthDatix subsidiary are expected to increase going forward, as we expand the business operations of HealthDatix which
would likely increase our corporate administrative expenses.
Other
Income (Expense)
.
We reported change in fair value of derivative liability of $53,163, loss on extinguishment of debt
of $5,838, and interest expense of $133,253 for the three months ended March 31, 2019. We reported change in fair value of derivative
liability of $118,101, loss on extinguishment of debt of $63,699, and interest expense of $16,264 for the three months ended March
31, 2018.
Liquidity
and Capital Resources
General
As
reflected in the accompanying consolidated financial statements, at March 31, 2019, we had $7,036 of cash and stockholders’
equity of $1,223,455. At December 31, 2018, we had $369 of cash and stockholders’ equity of $1,233,019.
Our
primary capital requirements in 2019 are likely to arise 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 $101,719, for the three months ended March 31, 2019, compared to $273,204 for the three
months ended March 31, 2018. Our primary use of cash flows from operating activities was from net losses of $559,367 and $610,033
for the three months ended March 31, 2019 and 2018, respectively. Additional contributing factors to the change were from depreciation
expense of $247, amortization expense of $173,967, non-cash interest expense of $132,482, stock based compensation of $1,025,
a loss on extinguishment of debt of $5,838, change in fair value of derivative liability of $53,163, a decrease in accounts receivable
of $4,505, a decrease in inventory of $85, an increase in accounts payable and accrued expenses of $90,061, and a decrease in
deferred revenue $3,725.
There
were no cash flows from investing activities for the three months ended March 31, 2019 and 2018, respectively.
Net
Cash provided by financing activities was $108,386 for the three months ended March 31, 2019 compared to $324,000 for the three
months ended March 31, 2018. The cash flows provided by financing activities for the three months ended March 31, 2019 was primarily
from $114,000 in proceeds from convertible debt, $6,386 in proceeds from related party loans, and $12,000 in repayments of related
party loans. The cash flows provided by financing activities for the three months ended March 31, 2018 was primarily from $309,000
in proceeds from convertible debt and $15,000 in proceeds from the sale of common stock.
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.
Item 3.
Quantitative and Qualitative Disclosures about Market Risk.
Not
Required.
Item 4.
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 Quarterly Report on Form 10-Q.
Based
on this evaluation, our chief executive officer and chief financial officer concluded that, as of March 31, 2019, 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 March 31, 2019 that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting
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.
PART
II — OTHER INFORMATION
Item 1.
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 March 31, 2019.
Item 1A.
Risk Factors.
Not
required
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
None
Item 3.
Defaults upon Senior Securities.
None
Item 4.
Removed and Reserved.
Item 5.
Other Information.
None
Item 6.
Exhibits
Exhibit
No.
|
|
Description
|
31.1
|
|
Certification
of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
|
Certification
of the Interim 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 to be incorporated by reference into any
filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
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32.2
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Certification
of the Interim 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 to be incorporated by reference
into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
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