Delaware
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52-1490422
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(State
or other jurisdiction of incorporation
or
organization)
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(IRS
Employer Identification No.)
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Large accelerated filer
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☐
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Accelerated filer
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☐
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Non-accelerated
filer
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☐
(Do not check if a smaller reporting company)
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Smaller reporting company
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☒
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Emerging
growth company
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☐
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Infinite Group, Inc.
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Quarterly Report on Form 10-Q
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For the Period Ended March 31, 2017
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Table of Contents
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PART I - FINANCIAL INFORMATION
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PAGE
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Item 1.
Financial Statements
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Balance
Sheets – March 31, 2017 (Unaudited) and December 31,
2016
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3
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Statements
of Operations (Unaudited) for the three months ended March 31, 2017
and 2016
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4
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Statements
of Cash Flows (Unaudited) for the three months ended March 31, 2017
and 2016
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5
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Notes
to Financial Statements – (Unaudited)
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6
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Item 2.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations
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9
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Item 3.
Quantitative and Qualitative Disclosures About Market
Risk
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10
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Item 4.
Controls and Procedures
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10
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PART II - OTHER INFORMATION
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Item 6.
Exhibits
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11
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SIGNATURES
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11
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INFINITE
GROUP, INC.
BALANCE
SHEETS
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March
31,
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December
31,
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2017
(Unaudited)
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2016
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ASSETS
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Current
assets:
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Cash
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$28,756
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$42,436
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Accounts
receivable, net of allowances of $70,000
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204,779
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243,477
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Prepaid expenses
and other current assets
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16,131
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16,076
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Total current
assets
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249,666
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301,989
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Property
and equipment, net
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24,034
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26,079
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Software,
net
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78,750
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105,000
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Deposits
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8,985
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8,985
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Total
assets
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$361,435
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$442,053
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LIABILITIES
AND STOCKHOLDERS’ DEFICIENCY
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Current
liabilities:
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Accounts
payable
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$331,753
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$346,701
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Accrued
payroll
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332,861
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219,454
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Accrued interest
payable
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694,006
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671,437
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Accrued
retirement
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227,978
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225,720
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Accrued expenses -
other
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67,700
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81,754
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Current maturities
of long-term obligations
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1,080,999
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836,999
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Current maturities
of long-term obligations - related party
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25,000
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0
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Notes
payable
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362,500
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368,279
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Total current
liabilities
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3,122,797
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2,750,344
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Long-term
obligations:
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Notes
payable:
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Other
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907,864
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1,150,225
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Related
parties
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511,647
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534,326
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Total
liabilities
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4,542,308
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4,434,895
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Commitments
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Stockholders'
deficiency:
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Common stock, $.001
par value, 60,000,000 shares authorized; 29,061,883 shares issued
and outstanding
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29,061
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29,061
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Additional paid-in
capital
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30,569,738
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30,562,618
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Accumulated
deficit
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(34,779,672)
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(34,584,521)
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Total
stockholders’ deficiency
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(4,180,873)
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(3,992,842)
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Total liabilities
and stockholders’ deficiency
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$361,435
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$442,053
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See
notes to unaudited financial statements.
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INFINITE
GROUP, INC.
STATEMENTS
OF OPERATIONS (Unaudited)
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Three
Months Ended March 31,
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2017
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2016
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Sales
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$1,647,028
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$1,863,762
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Cost of
sales
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1,168,531
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1,384,599
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Gross
profit
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478,497
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479,163
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Costs
and expenses:
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General and
administrative
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296,804
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359,881
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Selling
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317,054
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222,481
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Total costs and
expenses
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613,858
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582,362
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Operating
loss
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(135,361)
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(103,199)
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Interest
expense:
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Related
parties
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(13,049)
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(14,438)
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Other
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(46,741)
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(48,369)
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Total interest
expense
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(59,790)
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(62,807)
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Net
loss
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$(195,151)
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$(166,006)
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Net
loss per share – basic and diluted
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$(.01)
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$(.01)
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Weighted
average shares outstanding – basic and diluted
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29,061,883
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26,561,883
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See
notes to unaudited financial statements.
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INFINITE
GROUP, INC.
STATEMENTS
OF CASH FLOWS (Unaudited)
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Three
Months Ended March 31,
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2017
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2016
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Cash
flows from operating activities:
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Net
loss
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$(195,151)
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$(166,006)
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Adjustments to
reconcile net loss to net cash
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(used)
provided by operating activities:
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Stock based
compensation
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7,120
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6,764
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Depreciation and
amortization
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35,771
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19,473
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(Increase) decrease
in assets:
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Accounts
receivable
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38,698
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(56,651)
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Prepaid expenses
and other assets
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(55)
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3,725
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Increase (decrease)
in liabilities:
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Accounts
payable
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(14,948)
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66,810
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Accrued
expenses
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121,922
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139,151
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Accrued
retirement
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2,258
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2,169
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Net
cash (used) provided by operating activities
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(4,385)
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15,435
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Cash
flows from investing activities:
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Purchases of
property and equipment
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(1,506)
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(1,750)
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Net
cash used by investing activities
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(1,506)
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(1,750)
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Cash
flows from financing activities:
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Repayments of notes
payable - related parties
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(2,010)
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(9,671)
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Repayments of notes
payable - other
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(5,779)
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(10,000)
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Net
cash used by financing activities
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(7,789)
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(19,671)
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Net
decrease in cash
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(13,680)
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(5,986)
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Cash - beginning of
period
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42,436
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13,510
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Cash
- end of period
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$28,756
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$7,524
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Supplemental
Disclosures of Cash Flow Information:
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Cash payments for
interest
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$30,242
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$33,559
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See
notes to unaudited financial statements.
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Three
Months Ended March 31,
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2017
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2016
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Numerator for basic
and diluted net loss per share:
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Net
loss
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$(195,151)
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$(166,006)
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Denominator for
basic and diluted net loss per share:
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Weighted average
common shares outstanding
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29,061,883
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26,561,883
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Basic and diluted
net loss per share
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$(.01)
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$(.01)
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Anti-dilutive
shares excluded from net loss share calculation
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28,470,795
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28,339,229
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2017
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2016
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Risk-free interest
rate
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1.50%
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1.07%
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Expected dividend
yield
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0%
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0%
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Expected stock
price volatility
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100%
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100%
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Expected life of
options
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2.75
years
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2.50
years
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Number of Options Outstanding
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Weighted Average Exercise Price
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Remaining Contractual Term
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Aggregate Intrinsic Value
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Outstanding at
December 31, 2016
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8,583,000
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$.12
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Granted
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150,000
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$.045
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Expired
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(22,500)
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$.26
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Forfeited
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(12,500)
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$.04
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Outstanding at
March 31, 2017
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8,698,000
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$.12
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4.0
years
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$2,700
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At March 31,
2017:
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Vested or expected
to vest
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6,310,000
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$.09
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5.1
years
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$2,700
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Exercisable
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6,110,000
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$.09
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5.1
years
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$2,700
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●
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design,
develop and market solutions and products that solve and simplify
network cybersecurity needs of small and medium sized enterprises
(SMEs), government agencies, and certain large commercial
enterprises. We are a master distributor for Webroot, a cloud based
security platform solution, where we market to and provide support
for over 350 reseller partners across North America;
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●
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provide
level 2 Microsoft and Hewlett Packard server and software-based
managed services supporting enterprise customers through our
partnership with Hewlett Packard Enterprise Company (HPE);
and
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●
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are an
Enterprise Level sales and professional services partner with
VMware selling virtualization licenses and solutions, and providing
virtualization services support to commercial and government
customers including the New York State and Local Government and
Education (SLED) entities and the New York State OGS (Office of
General Services). These activities take place in our professional
services organization (PSO).
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Three Months Ended
March 31,
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2017
vs. 2016
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As a
% of
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As a
% of
|
Amount
of
|
%
Increase
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2017
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Sales
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2016
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Sales
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Change
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(Decrease)
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Sales
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$1,647,028
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100.0%
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$1,863,762
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100.0%
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$(216,734)
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(11.6)%
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Cost of
sales
|
1,168,531
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70.9
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1,384,599
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74.3
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(216,068)
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(15.6)
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Gross
profit
|
478,497
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29.1
|
479,163
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25.7
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(666)
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(0.1)
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General and
administrative
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296,804
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18.0
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359,881
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19.3
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(63,077)
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(17.5)
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Selling
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317,054
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19.3
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222,481
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11.9
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94,573
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42.5
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Total costs and
expenses
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613,858
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37.3
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582,362
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31.2
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31,496
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5.4
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Operating
loss
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(135,361)
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(8.2)
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(103,199)
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(5.5)
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32,162
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31.2
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Interest
expense
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(59,790)
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(3.6)
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(62,807)
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(3.4)
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(3,017)
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(4.8)
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Net
loss
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$(195,151)
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(11.8)%
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$(166,006)
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(8.9)%
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$(29,145)
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17.6%
|
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Net loss per share
- basic and diluted
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$(.01)
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$(.01)
|
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$.00
|
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Three Months Ended March 31,
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2017
|
2016
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Net cash (used)
provided by operating activities
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$(4,385)
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$15,435
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Net cash used by
investing activities
|
(1,506)
|
(1,750)
|
Net cash used by
financing activities
|
(7,789)
|
(19,671)
|
Net decrease in
cash
|
$(13,680)
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$(5,986)
|
|
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Infinite Group, Inc.
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Date: May 15,
2017
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By:
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/s/ James
Villa
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James
Villa
|
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Chief
Executive Offier
(Principal
Executive Officer)
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Date: May 15,
2017
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By:
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/s/ James
Witzel
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James
Witzel
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Chief
Financial Officer
(Principal
Financial Officer)
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INDEX TO EXHIBITS
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Exhibit No.
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Description
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31.1
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Chief Executive Officer
Certification pursuant to section 302 of the Sarbanes-Oxley Act of
2002. *
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31.2
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Chief Financial Officer
Certification pursuant to section 302 of the Sarbanes-Oxley Act of
2002. *
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32.1
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Chief Executive Officer
Certification pursuant to section 906 of the Sarbanes-Oxley Act of
2002. *
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32.2
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Chief Financial Officer
Certification pursuant to section 906 of the Sarbanes-Oxley Act of
2002. *
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101.INS
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XBRL Instance
Document.*
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101.SCH
|
XBRL Taxonomy Extension
Schema Document.*
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101.CAL
|
XBRL Taxonomy Extension
Calculation Linkbase Document.*
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101.LAB
|
XBRL Taxonomy Extension
Label Linkbase Document.*
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101.PRE
|
XBRL Taxonomy Extension
Presentation Linkbase Document.*
|
101.DEF
|
XBRL Taxonomy Extension
Definition Linkbase Document.*
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Document And Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
May 15, 2017 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | INFINITE GROUP INC | |
Entity Central Index Key | 0000884650 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | IMCI | |
Entity Common Stock, Shares Outstanding | 29,061,883 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2017 |
Consolidated Balance Sheets (Parenthetical) (Unaudited) - USD ($) |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Consolidated Balance Sheets [Parenthetical] [Abstract] | ||
Allowances for accounts receivable (in dollars) | $ 70,000 | $ 70,000 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 29,061,883 | 29,061,883 |
Common stock, shares outstanding | 29,061,883 | 29,061,883 |
Consolidated Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Income Statement [Abstract] | ||
Sales | $ 1,647,028 | $ 1,863,762 |
Cost of sales | 1,168,531 | 1,384,599 |
Gross profit | 478,497 | 479,163 |
Costs and expenses: | ||
General and administrative | 296,804 | 359,881 |
Selling | 317,054 | 222,481 |
Total costs and expenses | 613,858 | 582,362 |
Operating loss | (135,361) | (103,199) |
Interest expense: | ||
Related parties | (13,049) | (14,438) |
Other | (46,741) | (48,369) |
Total interest expense | (59,790) | (62,807) |
Net loss | $ (195,151) | $ (166,006) |
Net loss per share - basic and diluted | $ (.01) | $ (.01) |
Weighted average shares outstanding - basic and diluted | 29,061,883 | 26,561,883 |
1. Basis of Presentation |
3 Months Ended |
---|---|
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The accompanying unaudited financial statements of Infinite Group, Inc. (“Infinite Group, Inc.” or the “Company”) included herein have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (U.S.) ("GAAP") for interim financial information and with instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature. The December 31, 2016 balance sheet has been derived from the audited financial statements at that date, but does not include all disclosures required by GAAP. The accompanying unaudited financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 filed with the U.S. Securities and Exchange Commission (SEC). Results of operations for the three months ended March 31, 2017 are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2017. |
2. Management Plans - Capital Resources |
3 Months Ended |
---|---|
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Management Plans - Capital Resources | The Company reported net losses of $325,000 in 2016 and $195,191 and $166,006 for the three months ended March 31, 2017 and 2016, respectively, and stockholders’ deficiencies of $4,180,873 and $3,992,842 at March 31, 2017 and December 31, 2016, respectively. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern.
Continue to Improve Operations and Capital Resources
The Company's goal is to increase sales and generate cash flow from operations on a consistent basis. The Company uses a formal financial review and budgeting process as a tool for improvement that has aided expense reduction and internal performance. The Company’s business plans require improving the results of its operations in future periods.
During 2016, the Company raised $500,000 of additional working capital to build the infrastructure to market its new Nodeware cybersecurity product. In consideration for providing the financing, the Company paid the lender a fee of 2,500,000 shares of its common stock valued at $37,500 on the date of the agreement.
On September 30, 2016, the Company extended the scheduled maturity of its $400,000 unsecured line of credit financing agreement (the “LOC Agreement”) with a member of its board of directors (“Board”) from December 31, 2017 to January 1, 2020. The Company also extended the maturity dates of notes payable of $146,300 and $264,000 from January 1, 2017 to January 1, 2020.
In August 2016, the Company completed a revised financing agreement with its financial institution resulting in a reduction of its financing rate and an increase in its advance rate.
The Company believes the capital resources available under its factoring line of credit, cash from additional related party and third party loans and cash generated by improving the results of its operations provide sources to fund its ongoing operations and to support the internal growth of the Company. Although the Company has no assurances, the Company believes that related parties, who have previously provided working capital, and third parties will continue to provide working capital loans on similar terms, as in the past, as may be necessary to fund its on-going operations for at least the next 12 months. If the Company experiences significant growth in its sales, the Company believes that this may require it to increase its financing line, finance additional accounts receivable, or obtain additional working capital from other sources to support its sales growth.
|
3. Summary of Significant Accounting Policies |
3 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||
Accounting Policies [Abstract] | |||||||
Summary of Significant Accounting Policies | There are several accounting policies that the Company believes are significant to the presentation of its financial statements. These policies require management to make complex or subjective judgments about matters that are inherently uncertain. Note 3 to the Company’s audited financial statements for the year ended December 31, 2016 presents a summary of significant accounting policies as included in the Company's Annual Report on Form 10-K as filed with the SEC.
Reclassifications - The Company reclassifies amounts in its financial statements to comply with recently adopted accounting pronouncements.
Fair Value of Financial Instruments - The carrying amounts reported in the balance sheets for cash, accounts receivable, accounts payable, and accrued expenses approximate fair value because of the immediate short-term maturity of these financial instruments. The carrying value of notes payable and convertible notes payable approximates the fair value based on rates currently available from financial institutions and various lenders.
Recent Accounting Pronouncements Not Yet Adopted - In May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606) which provides new accounting guidance on revenue from contracts with customers. The guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated guidance will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. This guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2017 and will be required to be applied retrospectively. Additional ASUs have been issued to amend or clarify this ASU as follows:
The Company does not believe this guidance will have a material effect on the Company’s financial statements when adopted.
In February 2016, the FASB issued amended guidance for lease arrangements to increase transparency and comparability by providing additional information to users of financial statements regarding an entity's leasing activities. The revised guidance seeks to achieve this objective by requiring reporting entities to recognize lease assets and lease liabilities on the balance sheet for substantially all lease arrangements. The guidance, which is required to be adopted in the first quarter of 2019, will be applied on a modified retrospective basis beginning with the earliest period presented. Early adoption is permitted. The Company is evaluating the effect that this standard will have on its financial statements and related disclosures. |
4. Sale of Certain Accounts Receivable |
3 Months Ended |
---|---|
Mar. 31, 2017 | |
Sale of Certain Accounts Receivable [Abstract] | |
Sale of Certain Accounts Receivable | The Company has available a financing line with a financial institution (the Purchaser), which enables the Company to sell accounts receivable to the Purchaser with full recourse against the Company. Pursuant to the provisions of FASB ASC 860, the Company reflects the transactions as a sale of assets and establishes an accounts receivable from the Purchaser for the retained amount less the costs and fees of the transaction and less any anticipated future loss in the value of the retained asset.
Through August 28, 2016, the retained amount was equal to 15% of the total accounts receivable invoice sold to the Purchaser. The fee was charged at prime plus 4% against the average daily outstanding balance of funds advanced. On August 29, 2016, the Company completed a revised financing agreement with the Purchaser. The retained amount was revised to 10% of the total accounts receivable invoice sold to the Purchaser. The fee is charged at prime plus 3.6% (effective rate of 7.6% at March 31, 2017) against the average daily outstanding balance of funds advanced. The estimated future loss reserve for each receivable included in the estimated value of the retained asset is based on the payment history of the accounts receivable customer and is included in the allowance for doubtful accounts, if any. As collateral, the Company granted the Purchaser a first priority interest in accounts receivable and a blanket lien, which may be junior to other creditors, on all other assets.
The financing line provides the Company the ability to finance up to $2,000,000 of selected accounts receivable invoices, which includes a sublimit for one of the Company’s customers of $1,500,000. During the three months ended March 31, 2017, the Company sold approximately $1,242,000 ($1,541,000 - March 31, 2016) of its accounts receivable to the Purchaser. As of March 31, 2017, approximately $380,000 ($328,000 - December 31, 2016) of these receivables remained outstanding. Additionally, as of March 31, 2017, the Company had approximately $157,000 available under the financing line with the financial institution ($143,000 – December 31, 2016). After deducting estimated fees, allowance for bad debts and advances from the Purchaser, the net receivable from the Purchaser amounted to $38,009, at March 31, 2017 ($31,462 – December 31, 2016), and is included in accounts receivable in the accompanying balance sheets.
There were no gains or losses on the sale of the accounts receivable because all were collected. The cost associated with the financing line totaled $11,208 for the three months ended March 31, 2017 ($20,603 - March 31, 2016). These financing line fees are classified on the statements of operations as interest expense.
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5. Earnings Per Share |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Basic earnings per share is based on the weighted average number of common shares outstanding during the periods presented. Diluted earnings per share is based on the weighted average number of common shares outstanding, as well as dilutive potential common shares which, in the Company’s case, comprise shares issuable under convertible notes payable and stock options. The treasury stock method is used to calculate dilutive shares, which reduces the gross number of dilutive shares by the number of shares purchasable from the proceeds of the options and warrants assumed to be exercised. In a loss period, the calculation for basic and diluted earnings per share is considered to be the same, as the impact of potential common shares is anti-dilutive.
The following table sets forth the computation of basic and diluted loss per share for the three months ended:
Certain common shares issuable under stock options and convertible notes payable have been omitted from the diluted net loss per share calculation because their inclusion is considered anti-dilutive because the exercise prices were greater than the average market price of the common shares or their inclusion would have been anti-dilutive.
|
6. Software Purchase |
3 Months Ended |
---|---|
Mar. 31, 2017 | |
Research and Development [Abstract] | |
Software Purchase | On February 6, 2015, the Company purchased all rights to cyber security network vulnerability assessment reporting software (the “Software”). Under the purchase agreement, the Company agreed to pay the Seller the base purchase price of $180,000, of which $100,000 was paid in cash at the closing and the remaining $80,000 of which was paid by delivery at the closing of the Company’s secured promissory note. As security for its obligations under the promissory note, the Company granted the Seller a security interest in the Software. After April 7, 2015, the note accrues interest at 10% per annum. The remaining balance of $20,000 was payable on the note on June 30, 2016 but was not paid then although the balance was subsequently reduced during 2016 by $7,500. To date, the Seller has not taken any action to collect the amount past due on the note or to enforce the security interest in the Software. At March 31, 2017, the total principal amount payable under the note is $12,500 with accrued interest payable of $7,523 ($7,215 at December 31, 2016). The asset cost of $180,000 is amortized over its estimated useful life. The remaining balance at March 31, 2017 is $78,750 ($105,000 at December 31, 2016). Amortization expense over the next nine months is expected to be $78,750.
Under the purchase agreement, in addition to the base purchase price, the Company also agreed to pay the Seller a percentage of the licensing fees paid to the Company for certain periods of time. The Company has no plans to license this software and accordingly there were no royalties earned or payable the three months ended March 31, 2017 and 2016. |
7. Notes Payable - Related Parties |
3 Months Ended |
---|---|
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Notes Payable - Related Parties |
The balance of the note payable to a member of the Company’s board of directors was $384,055 at March 31, 2017 ($386,065 at December 31, 2016). Principal and interest are paid monthly using an amortization schedule requiring annual principal payments of approximately $8,000 with all remaining outstanding amounts due on January 1, 2020. The current portion of approximately $8,000 is offset by the current portion of deferred financing costs of approximately $8,000. The effective rate of interest was 6.85% at March 31, 2017.
A 7% note payable of $25,000 due to a related party matures on March 31, 2018 and is classified as a current liability in the accompanying balance sheet at March 31, 2017. |
8. Stock Option Plans and Agreements |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Option Plans and Agreements | The Company has approved stock options plans and agreements covering up to an aggregate of 9,786,000 shares of common stock. Such options may be designated at the time of grant as either incentive stock options or nonqualified stock options. Stock based compensation consists of charges for stock option awards to employees, directors and consultants.
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The following assumptions were used for the three months ended March 31, 2017 and 2016:
The Company recorded expense for options issued to employees and independent service providers of $7,120 and $6,764 for the three months ended March 31, 2017 and 2016, respectively.
At March 31, 2017, there was approximately $10,700 of total unrecognized compensation cost related to non-vested options. That cost is expected to be recognized over a weighted average period of approximately one year. The total fair value of shares that vested during the three months ended March 31, 2017 was approximately $4,000.
A summary of all stock option activity for the three months ended March 31, 2017 follows:
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9. Related Party Accounts Receivable and Accrued Interest Payable |
3 Months Ended |
---|---|
Mar. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Accounts Receivable and Accrued Interest Payable | Accrued Interest Payable - Included in accrued interest payable is accrued interest payable to related parties of $83,910 at March 31, 2017 ($81,347 - December 31, 2016). |
3. Summary of Significant Accounting Policies (Policies) |
3 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||
Summary Of Significant Accounting Policies Policies | |||||||
Reclassifications | The Company reclassifies amounts in its financial statements to comply with recently adopted accounting pronouncements. |
||||||
Fair Value of Financial Instruments | The carrying amounts reported in the balance sheets for cash, accounts receivable, accounts payable, and accrued expenses approximate fair value because of the immediate short-term maturity of these financial instruments. The carrying value of notes payable and convertible notes payable approximates the fair value based on rates currently available from financial institutions and various lenders. |
||||||
Recent Accounting Pronouncements Not Yet Adopted | In May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606) which provides new accounting guidance on revenue from contracts with customers. The guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated guidance will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. This guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2017 and will be required to be applied retrospectively. Additional ASUs have been issued to amend or clarify this ASU as follows:
The Company does not believe this guidance will have a material effect on the Company’s financial statements when adopted.
In February 2016, the FASB issued amended guidance for lease arrangements to increase transparency and comparability by providing additional information to users of financial statements regarding an entity's leasing activities. The revised guidance seeks to achieve this objective by requiring reporting entities to recognize lease assets and lease liabilities on the balance sheet for substantially all lease arrangements. The guidance, which is required to be adopted in the first quarter of 2019, will be applied on a modified retrospective basis beginning with the earliest period presented. Early adoption is permitted. The Company is evaluating the effect that this standard will have on its financial statements and related disclosures. |
5. Earnings Per Share (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted |
|
8. Stock Option Plans and Agreements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Stock Options, Activity |
|
2. Management Plans - Capital Resources (Details Narrative) - USD ($) |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Management Plans - Capital Resources Details Narrative | |||
Operating loss | $ (135,361) | $ (103,199) | |
Net loss | (195,151) | $ (166,006) | $ (325,000) |
Stockholders' deficiency | $ (4,180,873) | $ (3,992,842) |
5. Earnings Per Share (Details) - USD ($) |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Numerator for basic and diluted net loss per share: | |||
Net loss | $ (195,151) | $ (166,006) | $ (325,000) |
Denominator for basic and diluted net loss per share: | |||
Weighted average shares outstanding - basic and diluted | 29,061,883 | 26,561,883 | |
Net loss per share - basic and diluted | $ (.01) | $ (.01) | |
Anti-dilutive shares excluded from net loss per share calculation | 28,470,795 | 28,339,229 |
8. Stock Option Plans and Agreements (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Risk-free interest rate | 1.50% | 1.07% |
Expected dividend yield | 0.00% | 0.00% |
Expected stock price volatility | 100.00% | 100.00% |
Expected life of options | 2 years 9 months | 2 years 6 months |
9. Related Party Accounts Receivable and Accrued Interest Payable (Details Narrative) - USD ($) |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Related Party Accounts Receivable And Accrued Interest Payable Details Narrative | ||
Interest Payable, Related Parties | $ 83,910 | $ 81,347 |
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