| Note 13 - Commitments and Contingencies | 6 Months Ended |
| Jun. 30, 2014 |
| Notes | ' |
| Note 13 - Commitments and Contingencies | ' |
| Note 13 – Commitments and Contingencies |
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| Lease Commitment |
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| On February 1, 2012, iGambit entered into a 5 year lease for new executive office space in Smithtown, New York commencing on March 1, 2012 at a monthly rent of $1,500 with 2% annual increases. |
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| Gotham has a month to month license agreement for office space that commenced on August 2, 2012 at a monthly license fee of $4,025. The license agreement may be terminated upon 30 days’ notice. |
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| Total future minimum annual lease payments under the lease for the years ending December 31 are as follows: |
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| 2014 $ 9,420 |
| 2015 19,080 |
| 2016 19,440 |
| 2017 3,240 |
| $51,180 |
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| Rent expense of $34,453 and $37,258 was charged to operations for the six months ended June 30, 2014 and 2013, respectively. |
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| Contingencies |
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| The Company provides accruals for costs associated with the estimated resolution of contingencies at the earliest date at which it is deemed probable that a liability has been incurred and the amount of such liability can be reasonably estimated. |
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| Litigation |
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| Digi-Data Corporation |
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| In connection with the asset purchase agreement discussed in Note 2, the Company filed a complaint against Digi-Data on October 1, 2012 for unpaid contingency payments owed to the Company totaling $570,590 at December 31, 2013, exclusive of an allowance for bad debts of $250,000.On or about December 3, 2012, Digi-Data filed its Answer, Affirmative Defenses and Counterclaim against the Company. The Counterclaim seeks damages against the Company for breach of the Agreement for the alleged failure to indemnify Digi-Data for expenses related to pending litigation between Verizon Communications, Inc. (one of Digi-Data's customers) and an unrelated third party, Titanide Ventures, LLC, concerning alleged patent violations (hereinafter "Verizon Patent Litigation").The Verizon Patent Litigation is a result of a "patent troll" whereby Titanide seeks to extract settlement funds from alleged patent infringers without seeking actual adjudication of its purported patent rights. The Company has advised Digi-Data of what it believes is "prior act" related to the subject intellectual property that is at-issue in the Verizon Patent Litigation, a possible defense to the claims by Titanide.A pre-trial order was issued by the Court with detailed deadlines regarding among other items, discovery cut-off and status report deadline date of April 29, 2013 and dispositive motions deadline date of May 28, 2013. The Company propounded its initial discovery upon Digi-Data, responses to which were due on or about March 8, 2013. On April 4, 2013, Digi-Data provided discovery to the Company. No depositions have been scheduled as of the date of this report, nor has the Company received any information from Digi-data regarding any specific quantified “damages” directly resulting from this Order or the settlement agreement between Verizon and the Plaintiff. On April 4, 2013, an Order of Dismissal in the Verizon Patent Litigation was filed. The Dismissal is with prejudice with each party to bear its own costs and fees. On May 24, 2013, the Company filed a Motion for Summary Judgment with the Court asking the Court to move in its favor against DDC for the entire outstanding balance due along with attorney’s fees and post and pre-judgment interest as applicable under Maryland Law. On June 11, 2013, Digi-Data filed its Response to the Motion for Summary Judgment and, for the first time, purported to liquidate certain alleged damages for which Digi-Data seeks a set-off against the amounts admittedly owed by Digi-Data to iGambit and alludes the existence of additional although not yet quantified damages. The Response relies entirely upon the Affidavit of a Vice President of Digi-Data for its evidentiary support. Notwithstanding, Digi-Data failed to produce documentary support for its alleged damages and to explain why it failed to disclose such information during the discovery period or thereafter. |
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| On July 9, 2013, the Company filed its Reply to Digi-Data’s Response and, thereby, advised the Court of Digi-Data’s apparent litigation-by-ambush tactic such as withholding allegations of damages until the end of discovery and attempting to use such previously withheld information to defeat summary judgment, and the legal inadequacy of same. Pursuant to the Maryland District Court’s Local Rules, Digi-Data is not authorized to file a Surreply without Court order. |
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| On December 13, 2013 the Court Granted Summary Judgment in iGambit’s favor against Digi-Data in the amount of $570,590, plus interest at the Maryland legal rate of 6% per annum from August 31, 2012, and post judgment interest at the Federal statutory |
| Rate. Furthermore, Digi-Data’s Counterclaim was dismissed. |
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| On February 24, 2014 the Company entered into a Forbearance Agreement with Digi-Data pursuant to which Digi-Data shall pay to iGambit Six Hundred Forty-Six Thousand, Six Hundred Sixty-Eight Dollars and Sixty-Seven Cents ($646,668.67) (the “Settlement Amount”) in full satisfaction of the Judgment. |
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| Initial Payment: Digi-Data shall pay the Settlement Amount by delivering Twenty-Five Thousand Dollars and No Cents ($25,000.00) to iGambit upon the execution of this Agreement (“Initial Payment”), and delivering the remaining Six Hundred Twenty-One Thousand, Six Hundred Sixty-Eight Dollars and Sixty-Seven Cents ($621,668.67), plus interest at a rate of 6% per annum (calculated at Actual/360) (the “Remaining Balance”) to iGambit. |
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| Monthly Payments: Commencing thirty (30) calendar days after the Effective Date, and continuing for the three following months, Digi-Data shall make monthly payments of Twelve Thousand, Five Hundred Dollars and No Cents ($12,500.00) to iGambit (each, an “Initial Monthly Payment”). Thirty (30) calendar days after the fourth Initial Monthly Payment is made, Digi-Data shall commence making a monthly payment of Twenty-Five Thousand Dollars and No Cents ($25,000.00) to iGambit until the Remaining Balance is paid in full (each, a “Subsequent Monthly Payment”). Such Initial Monthly Payments and Subsequent Monthly Payments shall be credited to payment of the Settlement Amount and Remaining Balance, with payment being first applied to accrued and/or outstanding interests, then to principal. |
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| Line of Credit Payments: In the event that Digi-Data obtains a new line of credit subsequent to the Effective Date under terms acceptable to Digi-Data in the amount of Three Million Dollars and No Cents ($3,000,000.00) or greater it shall, within fifteen (15) calendar days upon obtaining such funding, pay the full Remaining Balance to iGambit (the “LOC Payment”). In the event that Digi-Data obtains a new line of credit subsequent to the Effective Date under terms acceptable to Digi-Data for any amount less than Three Million Dollars and No Cents ($3,000,000.00) that is secured by its receivables it shall, within fifteen (15) calendar days of obtaining such funding, pay Twenty-Five Thousand Dollars and No Cents ($25,000.00) to iGambit (the “Receivables Payment”). Such Receivables Payment shall be credited to payment of the Settlement Amount and Remaining Balance, with payment being first applied to accrued and/or outstanding interests, then to principal. |
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| Digi-Data Sale: In the event of a Digi-Data Sale, iGambit shall be paid the Remaining Balance at closing of any such Digi-Data Sale as provided in paragraph 2, below. iGambit acknowledges that, if the Digi-Data Sale is a sale or sales of the Digi-Data Assets, there may be insufficient proceeds to pay the Remaining Balance in full. If the Digi-Data Sale is a sale or sales of the stock of Digi-Data and there are insufficient proceeds at closing to pay the Remaining Balance in full, iGambit shall continue to receive the Subsequent Monthly Payment until the full Remaining Balance is paid. On May 12, 2014, Digi-Data paid the full balance due on the judgment plus all accrued interest upon the sale of Digi-Data. |
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| Financial Advisor Contract |
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| Brooks, Houghton & Company, Inc. (BHC) |
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| The Company had entered into a contract with BHC in which BHC would provide financial advisory services in connection with the Company’s proposed business combinations and related fund raising transactions. As part of that agreement BHC would be entitled to a “Business Combination Fee” equal to three percent of the amount of the company’s total proceeds and other consideration paid or to be paid for the assets acquired, inclusive of equity or any debt issued; however the fee was to be no less than $300,000. As a result of the IGX transaction, as described in Note 14, BHC initially felt entitled to $300,000. The Company has taken a position that since the transaction has been rescinded, that the fee is has not been earned and thus not to be paid. While the ultimate outcome of this matter is not presently determinable, it is the opinion of management that the resolution of any outstanding claim will not have a material adverse effect on the financial position or results of operations of the Company. |
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