10-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

  (Amendment No. 1)

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

For the fiscal year ended December 31, 2019

Commission File Number 0-21816

Infinite Group, Inc.

175 Sully’s Trail, Suite 202

Pittsford, NY 14534

(585) 385-0610

A Delaware Corporation

IRS Employer Identification Number: 52-1490422

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.001 Par Value

Common stock is quoted on the OTC Bulletin Board under the trading symbol IMCI

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

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

Large Accelerated filer ☐ Non-accelerated filer ☐ Accelerated filer ☐ Smaller reporting company ☒ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The aggregate market value of the common stock of the registrant held by non-affiliates of the registrant (based upon the closing price on the Over the Counter Bulletin Board of $.02 on June 30, 2019 the last business day of the registrant’s most recently completed second fiscal quarter) was approximately $580,000.

As of March 24, 2020, 29,061,883 shares of the registrant's common stock, $.001 par value, were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

NONE

EXPLANATORY NOTE

The sole purpose of this Amendment No. 1 to the Annual Report on Form 10-K for the quarterly period ended December 31, 2019 of Infinite Group, Inc. (the “Company”) filed with the Securities and Exchange Commission on March 30, 2020 (the “Form 10-Q”) is to include Exhibit 101 to the Form 10-Q, which contains the XBRL (eXtensible Business Reporting Language) Interactive Data File for the financial statements and notes.

No other changes have been made to the Form 10-K. This Amendment No. 1 to the Form 10-K speaks as of the original filing date of the Form 10-K, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the original Form 10-K.

1

FORWARD LOOKING STATEMENT INFORMATION

Certain statements made in this Annual Report on Form 10-K are “forward-looking statements” regarding the plans and objectives of management for future operations and market trends and expectations. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Our plans and objectives are based, in part, on assumptions involving the expansion of our business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that our assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. We undertake no obligation to revise or update publicly any forward-looking statements for any reason. Factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, the factors set forth herein under the headings “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. The terms “we”, “our”, “us”, or any derivative thereof, as used herein refer to Infinite Group, Inc., a Delaware corporation.

INFINITE GROUP, INC.
Form 10-K
TABLE OF CONTENTS
PART IV.
	Item 15.	Exhibits and Financial Statement Schedules	3
		Signatures	5

2

Item 15.Exhibits and Financial Statement Schedules

(a) The following documents are filed as part of this report:

                (1) Financial Statements – See the Index to the financial statements on page F-1.

(b) Exhibits:

Exhibit

No. Description

3.1 Certificate of Incorporation of the Company dated April 29, 1993. (1)

3.2 Certificate of Amendment of Certificate of Incorporation dated December 31, 1997. (3)

3.3 Certificate of Amendment of Certificate of Incorporation dated February 3, 1999. (4)

3.4 Certificate of Amendment of Certificate of Incorporation dated February 28, 2006. (6)

3.5 By-Laws of the Company. (1)

4.1 Specimen Stock Certificate. (1)

10.1 **2005 Stock Option Plan. (2)

10.2 **2009 Stock Option Plan. (9)

10.3 Form of Stock Option Agreement. (1)

10.4 Promissory Note dated August 13, 2003 in favor of Carle C. Conway. (5)

10.5 Promissory Note dated January 16, 2004 in favor of Carle C. Conway. (5)

10.6 Promissory Note dated March 11, 2004 in favor of Carle C. Conway. (5)

10.7 Promissory Note dated December 31, 2003 in favor of Northwest Hampton Holdings, LLC. (5)

10.8 Modification Agreement No. 3 to Promissory Notes between Northwest Hampton Holdings, LLC and the Company dated October 1, 2005. (6)

10.9 Modification Agreement No. 3 to Promissory Notes between Allan Robbins and the Company dated October 1, 2005. (6)

10.10 Modification Agreement to Promissory Notes between the Company and Carle C. Conway dated December 31, 2005. (6)

10.11 Modification Agreement to Promissory Note between Northwest Hampton Holdings, LLC and the Company dated December 6, 2005. (6)

10.12 Collateral Security Agreement between the Company and Northwest Hampton Holdings, LLC dated February 15, 2006. (6)

10.13 Collateral Security Agreement between the Company and Allan Robbins dated February 15, 2006. (6)

10.14 Purchase and Sale Agreement between the Company and Amerisource Funding, Inc. dated May 21, 2004. (7)

10.15 Account Modification Agreement between the Company and Amerisource Funding, Inc. dated August 5, 2005. (7)

10.16 Promissory Note dated June 13, 2008 in favor of Dan Cappa. (9)

3

10.17	Promissory Note between Northwest Hampton Holdings, LLC and the Company dated September 30, 2009. (10)
10.18	Modification Agreement to Promissory Notes between the Company and Carle C. Conway dated December 31, 2009. (10)
10.19	Demand Promissory Note between Allan M. Robbins and the Company dated August 13, 2010. (12)
10.20	Settlement Agreement between the Company and the PBGC, effective as of September 1, 2011. (14)
10.21	Agreement for Appointment of Trustee and Termination of Plan between the Company and the PBGC, effective as of November 1, 2011. (15)
10.22	Promissory Note in favor of the PBGC dated October 17, 2011. (15)
10.23	Modification Agreement to Promissory notes between the Company and Carle C. Conway dated December 31, 2012. (16)
10.24	Line of Credit Note Agreement between the Company and Donald W. Reeve dated December 1, 2014. (17)
10.25	Stock Option Agreement between the Company and Donald W. Reeve dated September 5, 2013. (18)
10.26	Stock Option Agreement between the Company and Donald W. Reeve dated December 1, 2014. (17)
10.27	Software Assets Purchase Agreement between the Company and UberScan, LLC and Christopher B. Karr and Duane Pfeiffer. (18) #
10.28	Promissory Note and Security Agreement between the Company and UberScan, LLC. (18)
10.29	Modification Agreement to Promissory Notes between the Company and Carle C. Conway dated December 31, 2014. (18)
10.30	Promissory Note between Andrew Hoyen and the Company dated February 12, 2015. (18)
10.31	Amendment to Promissory Note between the Company and Dan Cappa dated August 24, 2015. (19)
10.32	Amendment to Promissory Note between the Company and UberScan, LLC dated October 6, 2015. (19)
10.33	Amendment to Promissory Note between the Company and Allan Robbins dated December 31, 2015 (23)
10.34	Amendment to Promissory Note between the Company and Northwest Hampton Holdings, LLC dated December 31, 2015 (23)
10.35	Promissory Note between the Company and James Leonardo Managing Member of a Limited Liability Corporation to be formed dated March 14, 2016 (23)
10.36	Modification Agreement to Line of Credit Agreement between the Company and Donald W. Reeve dated September 30,2016 (20)
10.37	Stock Option Agreement between the Company and Donald W. Reeve dated September 30, 2016. (20)
10.38	Line of Credit and Note Agreement between the Company and Andrew Hoyen dated July 18, 2017 (21)
10.39	Stock option agreement between the Company and Andrew Hoyen dated July 18, 2017 for 400,000 common shares (21)
10.40	Stock option agreement between the Company and Andrew Hoyen dated July 18, 2017 for 100,000 common shares (21)
10.41	Line of Credit and Note Agreement between the Company and Harry Hoyen dated September 21, 2017 (22)
10.42	Amendment to Promissory Note between the Company and Allan Robbins dated November 30, 2016 (23)
10.43	Amendment to Promissory Note between the Company and Northwest Hampton Holdings, LLC dated December 8, 2016 (23)
10.44	Modification #1 to Line of Credit Note and Agreement between Harry Hoyen and the Company dated December 28, 2017.  (23)
10.45	Stock option agreement between the Company and Harry Hoyen dated December 28, 2017 for 400,000 common shares.  (23)
10.46	Note Payable Agreement between the Company and Harry A. Hoyen III IRA dated May 7, 2019 (24)
10.47	Stock option agreement between the Company and Harry A. Hoyen III dated May 14, 2019 (24)
10.48	**2019 Stock Option Plan (25)
10.49	Stock option agreement between the Company and Andrew Hoyen dated December 10, 2019. *
10.50	Stock Option Agreement between the Company and Donald W. Reeve dated December 23, 2019. *
10.51	Stock Option Agreement between the Company and James Villa dated December 23, 2019. *
10.52	Stock option agreement between the Company and Andrew Hoyen dated December 23, 2019. *
31.1	Chief Executive Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002. *
31.2	Chief Financial Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002. *
32.1	Chief Executive Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002. *
32.2	Chief Financial Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002. *

101.INS XBRL Instance Document. *
101.SCH	XBRL Taxonomy Extension Schema Document. *
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document. *
101.LAB	XBRL Taxonomy Extension Label Linkbase Document. *
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document. *
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document. *

* Filed as an exhibit hereto.

**Management contract or compensatory plan or arrangement.

# Portions of this exhibit have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omitted portions have been filed separately with the SEC.

(1) Previously filed as an exhibit to the Company's Registration Statement on Form S-1 (File #33- 61856) and incorporated herein by reference.

(2) Incorporated by reference to Appendix II of the Company's DEF14A filed on February 1, 2006.

(3) Incorporated by reference to the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1997.

(4) Incorporated by reference to the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1998.

(5) Incorporated by reference to the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2002.

(6) Incorporated by reference to the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2005.

(7) Incorporated by reference to the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2006.

(8) Incorporated by reference to the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2007.

(9) Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2008.

(10) Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009.

(11) Incorporated by reference to the Company's Quarter Report on Form 10-Q for the quarterly period ended June 30, 2010.

(12) Incorporated by reference to the Company's Quarter Report on Form 10-Q for the quarterly period ended September 30, 2010.

4

(13) Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

(14) Incorporated by reference to the Company's Current Report on Form 8-K filed on September 12, 2011.

(15) Incorporated by reference to the Company's Current Report on Form 8-K filed on November 7, 2011.

(16) Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

(17) Incorporated by reference to the Company's Current Report on Form 8-K filed on December 4, 2014.

(18) Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

(19) Incorporated by reference to the Company's Quarter Report on Form 10-Q for the quarterly period ended September 30, 2015.

(20) Incorporated by reference to the Company's Quarter Report on Form 10-Q for the quarterly period ended September 30, 2016.

(21) Incorporated by reference to the Company's Quarter Report on Form 10-Q for the quarterly period ended June 30, 2017.

(22) Incorporated by reference to the Company's Quarter Report on Form 10-Q for the quarterly period ended September 30, 2017.

(23) Incorporated by reference to the Company's Current report on Form 10-K for the fiscal year ended December 31, 2017.

(24) Incorporated by reference to the Company's Current Report on Form 8-K filed on May 16, 2019.

(25) Incorporated by reference to the Company's Current Report on Form 8-K filed on August 22, 2019.

Information required by schedules called for under Regulation S-X is either not applicable or is included in the financial statements or notes thereto.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Infinite Group, Inc.
Date: March 31, 2020	By:	/s/ James Villa
		James Villa
		Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ James Villa
James Villa	Chief Executive Officer and President (Principal Executive Officer)	March 31, 2020
/s/ Richard Glickman
Richard Glickman	VP Finance and Chief Accounting Officer	March 31, 2020
	(Principal Financial and Accounting Officer)
/s/ Andrew Hoyen
Andrew Hoyen	Chief Operating Officer and Director	March 31, 2020
/s/ Donald W. Reeve
Donald W. Reeve	Chairman of the Board	March 31, 2020

5

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, James Villa, certify that:

1. 

I have reviewed this amended annual report on Form 10-K/A of Infinite Group, Inc.;

2. 

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. 

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 31, 2020

                                                       /s/ James Villa

-----------------------------------

James Villa

Chief Executive Officer

(Principal Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Richard Glickman, certify that:

1. 

I have reviewed this amended annual report on Form 10-K/A of Infinite Group, Inc.;

2. 

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. 

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 31, 2020

/s/ Richard Glickman

-----------------------------------

Richard Glickman

VP Finance and Chief Accounting Officer

(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Amended Annual Report of Infinite Group, Inc. (the “Company”) on Form 10-K/A for the fiscal year ending December 31, 2019 as filed with the Securities and Exchange Commission (“SEC”) on the date hereof (the "Report"), I, James Villa, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

Dated: March 31, 2020

__/s/ James Villa_____

James Villa

Chief Executive Officer

(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Ameneded Annual Report of Infinite Group, Inc. (the "Company") on Form 10-K/A for the fiscal year ending December 31, 2019 as filed with the Securities and Exchange Commission (“SEC”) on the date hereof (the "Report"), I, Richard Glickman, VP Finance and Chief Accounting Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

Dated: March 31, 2020

__/s/ Richard Glickman____________

Richard Glickman

VP Finance and Chief Accounting Officer

(Principal Financial and Accounting Officer)

XML

EMPLOYEE RETIREMENT PLANS (Details Narrative) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Retirement Benefits [Abstract]
Defined contribution plan, accrued liability	$ 254,348	$ 244,423

XML

STOCKHOLDERS' DEFICIENCY (Details Narrative) - $ / shares	Dec. 31, 2019	Dec. 31, 2018
Stockholders' Equity Note [Abstract]
Preferred stock, par or stated value per share	$ .01	$ .01
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0

XML

INCOME TAXES (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Deferred:
Federal	$ 49,000	$ 158,000
State	6,000	170,000
Deferred income tax expense (benefit)	55,000	328,000
Change in valuation allowance	(55,000)	(328,000)
Income tax expense (benefit)	$ 0	$ 0

XML

NOTES PAYABLE - CURRENT (Tables)

12 Months Ended

Dec. 31, 2019

Notes Payable, Current [Abstract]

Notes payable

	December 31,
	2019		2018
Demand note payable, 10%, secured by Software (A)	$	12,500	$	12,500
Demand note payable to former director, 10%, unsecured		30,000		30,000
Convertible demand note payable to former director, 12%, unsecured (B)		40,000		40,000
Convertible notes payable, 6% (C)		150,000		150,000
Convertible term note payable, 7%, secured (D)		100,000		100,000
	$	332,500	$	332,500

(A) Demand Note payable, 10%, secured by Software - During 2015, the Company issued a note in connection with the purchase of Software.

(B) Convertible demand note payable to former director, 12%, unsecured - At December 31, 2019 and 2018, the Company was obligated for $40,000 with interest at 12%. The note is unsecured and the principal is convertible at the option of the holder into shares of common stock at $.11 per share.

(C) Convertible notes payable, 6%, maturity date of December 31, 2016 - At December 31, 2019, the Company was obligated to unrelated third parties for $150,000 ($150,000 - 2018) (“The Notes”). The principal is unsecured and convertible at the option of the holders into shares of common stock at $.05 per share. The Notes bear interest at 6.0% at December 31, 2019 (6.0% - 2018). The Notes are convertible into shares of common stock subject to the following limitations. The Notes are not convertible to the extent that shares of common stock issuable upon the proposed conversion would result in a change in control of the Company which would limit the use of its net operating loss carryforwards; provided, however if the Company closes a transaction with another third party or parties that results in a change of control which will limit the use of its net operating loss carryforwards, then the foregoing limitation shall lapse. Prior to any conversion by a requesting note holder, each note holder holding a note which is then convertible into 5% or more of the Company’s common stock shall be entitled to participate on a pari passu basis with the requesting note holder and upon any such participation the requesting note holder shall proportionately adjust his conversion request such that, in the aggregate, a change of control, which will limit the use of the Company’s net operating loss carryforwards, does not occur.

(D) Convertible term note payable, 7%, secured, maturity date of October 4, 2016 - The note bears interest at the rate of 7% per annum, payable monthly, and is secured by a subordinate lien on all the Company’s assets. The note's principal is convertible at the option of the holder into shares of the Company’s common stock at $.10 per share, which was the price of the Company's common stock on the closing date of the agreement.

Notes payable - related parties

	December 31,
	2019		2018
Demand notes payable to officer and director, 6%, unsecured	$	38,000	$	82,000
Demand note payable to director, 6%, unsecured		20,000		20,000
	$	58,000	$	102,000

XML

SUBSEQUENT EVENT

12 Months Ended

Dec. 31, 2019

Subsequent Events [Abstract]

SUBSEQUENT EVENT

In December 2019, a novel strain of coronavirus was reported in Wuhan, Hubei province, China. In the first several months of 2020, the virus, SARS-CoV-2, and resulting disease, COVID-19, spread to the United States, including New York State, the geographic location in which the Company’s headquarters operates. On March 21, 2020, New York Governor Andrew Cuomo issued an Executive Order entitled “New York State on PAUSE” (Policy that Assures Uniform Safety for Everyone) (the “Order”), pursuant to which, all non-essential employees (as defined by the State) must stay at home starting March 22, 2020 through April 19, 2020. The Company was deemed essential. On March 25, 2020, Colorado Governor Jared Polis announced an executive order for Coloradans to stay at home in order to help prevent the spread of coronavirus. The stay-at-home order went into effect Thursday, March 26, 2020 at 6 a.m. and will last through Saturday, April 11, 2020.

Beginning March 16, 2020, prior to the Order, most of the Company’s New York employees began temporarily working remotely to ensure the safety and well-being of our employees and their families. The Colorado employees began working remotely on March 26, 2020. The Company’s technology infrastructure, for some time, has been set up to handle offsite seamless operations to address alternative disaster recovery disruption. As a result, all employees will continue to work remotely unless they report needing sick leave or family leave pursuant to regulated benefits.

XML

LEASE (Tables)

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Supplemental operating lease information

	December 31, 2019
Right of use asset – lease, net	$	195,441
Operating lease liability - short-term	$	74,373
Operating lease liability - long-term		122,605
Total operating lease liability	$	196,978
Discount rate - operating lease		6.0	%

XML

INCOME TAXES

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

The components of income tax expense (benefit) consists of the following:

	December 31,
	2019			2018
Deferred:
Federal	$	49,000		$	158,000
State		6,000			170,000
		55,000			328,000
Change in valuation allowance		(55,000	)		(328,000	)
	$	0		$	0

At December 31, 2019, the Company had federal net operating loss carryforwards of approximately $7,300,000 ($7,600,000 - 2018) and various state net operating loss carryforwards of approximately $3,200,000 ($3,400,000 - 2018) which expire from 2020 through 2039.  These carryforwards exclude federal net operating loss carryforwards from inactive subsidiaries and net operating loss carryforwards from states that the Company does not presently operate in.  Utilization of the net operating loss carryforwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. The annual limitation may result in the expiration of the net operating loss carryforwards before utilization.

At December 31, 2019, a net deferred tax asset, representing the future benefit attributed primarily to the available net operating loss carryforwards and defined benefit plan expenses in the amount of approximately $1,943,000 ($1,998,000 - 2018), had been fully offset by a valuation allowance because management believes that the statutory limitations on utilization of the operating losses and concerns over achieving profitable operations diminish the Company’s ability to demonstrate that it is more likely than not that these future benefits will be realized before they expire.

The following is a summary of the Company's temporary differences and carryforwards which give rise to deferred tax assets and liabilities.

	December 31,
	2019			2018
Deferred tax assets (liabilities):
Net operating loss carryforwards	$	1,650,000		$	1,707,000
Defined benefit pension liability		60,000			60,000
Operating Lease ROU		(48,000	)		0
Operating Lease Liability		48,000			0
Reserves and accrued expenses payable		233,000			231,000
Gross deferred tax asset		1,943,000			1,998,000
Deferred tax asset valuation allowance		(1,943,000	)		(1,998,000	)
Net deferred tax asset	$	0		$	0

The differences between the U.S. statutory federal income tax rate and the effective income tax rate in the accompanying statements of operations are as follows:

	December 31,
	2019			2018
Statutory U.S. federal tax rate		21.0	%		21.0	%
Change in valuation allowance		(115.6	)		(886.4	)
Net operating loss carryforward expiration		71.5			315.0
State taxes		12.8			458.4
Expired stock-based compensation		3.1			7.6
Note receivable reserve		0.0			77.7
Other permanent non-deductible items		7.2			6.7
Effective income tax rate		0.0	%		0.0	%

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NOTES PAYABLE - CURRENT

12 Months Ended

Dec. 31, 2019

Notes Payable, Current [Abstract]

NOTES PAYABLE - CURRENT

Notes payable consist of:

	December 31,
	2019		2018
Demand note payable, 10%, secured by Software (A)	$	12,500	$	12,500
Demand note payable to former director, 10%, unsecured		30,000		30,000
Convertible demand note payable to former director, 12%, unsecured (B)		40,000		40,000
Convertible notes payable, 6% (C)		150,000		150,000
Convertible term note payable, 7%, secured (D)		100,000		100,000
	$	332,500	$	332,500

(A) Demand Note payable, 10%, secured by Software - During 2015, the Company issued a note in connection with the purchase of Software.

(B) Convertible demand note payable to former director, 12%, unsecured - At December 31, 2019 and 2018, the Company was obligated for $40,000 with interest at 12%. The note is unsecured and the principal is convertible at the option of the holder into shares of common stock at $.11 per share.

(C) Convertible notes payable, 6%, maturity date of December 31, 2016 - At December 31, 2019, the Company was obligated to unrelated third parties for $150,000 ($150,000 - 2018) (“The Notes”). The principal is unsecured and convertible at the option of the holders into shares of common stock at $.05 per share. The Notes bear interest at 6.0% at December 31, 2019 (6.0% - 2018). The Notes are convertible into shares of common stock subject to the following limitations. The Notes are not convertible to the extent that shares of common stock issuable upon the proposed conversion would result in a change in control of the Company which would limit the use of its net operating loss carryforwards; provided, however if the Company closes a transaction with another third party or parties that results in a change of control which will limit the use of its net operating loss carryforwards, then the foregoing limitation shall lapse. Prior to any conversion by a requesting note holder, each note holder holding a note which is then convertible into 5% or more of the Company’s common stock shall be entitled to participate on a pari passu basis with the requesting note holder and upon any such participation the requesting note holder shall proportionately adjust his conversion request such that, in the aggregate, a change of control, which will limit the use of the Company’s net operating loss carryforwards, does not occur.

(D) Convertible term note payable, 7%, secured, maturity date of October 4, 2016 - The note bears interest at the rate of 7% per annum, payable monthly, and is secured by a subordinate lien on all the Company’s assets. The note's principal is convertible at the option of the holder into shares of the Company’s common stock at $.10 per share, which was the price of the Company's common stock on the closing date of the agreement.

Notes payable - related parties consist of:

	December 31,
	2019		2018
Demand notes payable to officer and director, 6%, unsecured	$	38,000	$	82,000
Demand note payable to director, 6%, unsecured		20,000		20,000
	$	58,000	$	102,000

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LONG-TERM OBLIGATIONS (Details 1) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Notes payable - related parties	$ 906,935	$ 719,665
Less deferred financing costs	0	7,360
Total	906,935	712,305
Less current maturities	512,935	34,350
Notes payable - related parties, excluding current maturities	394,000	677,955
Note Payable - Related Party 1
Notes payable - related parties	200,000	0
Note Payable - Related Party 2
Notes payable - related parties	155,300	155,300
Note Payable - Related Party 3
Notes payable - related parties	366,635	379,365
Note Payable - Related Party 4
Notes payable - related parties	25,000	25,000
Note Payable - Related Party 5
Notes payable - related parties	90,000	90,000
Note Payable - Related Party 6
Notes payable - related parties	$ 70,000	$ 70,000

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Accounting Policies [Abstract]
Net income	$ 47,977	$ 37,000
Basic and diluted net income per share	$ 0.00	$ .00
Weighted average common shares outstanding - basic	29,061,883	29,061,883
Weighted average comon shares outstanding - diluted	29,811,883	29,061,883
Anti-dilutive shares excluded from net loss per share	29,195,736	28,952,076

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LOAN FEES (Details Narrative) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Loan Fees
Deferred origination fees, gross	$ 52,220	$ 52,220
Accumulated amortization expenses	(39,110)	(25,195)
Deferred origination fees, net carrying value	$ 13,110	$ 27,025

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LEASE (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Leases [Abstract]
Right of use asset - lease, net	$ 195,441	$ 0
Operating lease liability - short-term	74,373	0
Operating lease liability - long-term	122,605	$ 0
Total operating lease liability	$ 196,978
Discount rate - operating lease	6.00%

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STATEMENTS OF OPERATIONS - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Income Statement [Abstract]
Sales	$ 7,094,279	$ 6,370,336
Cost of sales	4,422,533	4,158,408
Gross profit	2,671,746	2,211,928
Costs and expenses:
General and administrative	1,334,051	1,084,260
Selling	1,008,558	917,975
Total costs and expenses	2,342,609	2,002,235
Operating income	329,137	209,693
Other income - (see Note 6 and Note 7)	0	83,250
Interest expense:
Related parties	(89,079)	(61,923)
Other	(192,081)	(194,020)
Total interest expense	(281,160)	(255,943)
Net income	$ 47,977	$ 37,000
Net income/loss per share - basic and diluted	$ 0.00	$ .00
Weighted average shares outstanding - basic	29,061,883	29,061,883
Weighted average shares outstanding - diluted	29,811,883	29,061,883

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MANAGEMENT PLANS

12 Months Ended

Dec. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

MANAGEMENT PLANS

The Company reported operating income of $329,137 in 2019 and $209,693 in 2018, net income of $47,977 in 2019 and $37,000 in 2018, and stockholders’ deficiencies of $3,907,310 and $4,000,094 at December 31, 2019 and 2018, respectively. Accordingly and due to current working capital deficit of approximately $3.3 million, there is substantial doubt about the Company’s ability to continue as a going concern within one year of issuance of the financial statements.

The Company’s mission is to drive shareholder value by developing and bringing to market automated, cost effective, and innovative cybersecurity technologies. The Company’s strategy is to build its business by designing, developing, and marketing IT security-based products and solutions that fill technology gaps in cybersecurity.

The Company brought one product to market and intends to bring other proprietary products and solutions to market through a channel of partners and distributors. The products and solutions are designed to simplify the security needs in customer and partner environments, with a focus on Small and Medium-Sized Enterprises (SMEs). The Company enables its partners by providing recurring revenue-based business models that use its automated plug and play solutions. Products may be sold as standalone solutions or integrated into existing environments to further automate the management of security and related IT functions. The Company’s ability to succeed depends on how successful it is in differentiating itself in the market at a time when competition in these markets is on the rise. The Company works with its partner, Webroot, to increase its base of channel partners and to increase sales of Webroot’s cloud-based endpoint security solution, with the objective of growing its recurring revenue model.

The Company’s cybersecurity services business is conducted within its professional services organization (PSO). The Company provides services and technical resources to support both its channel partners and end customers. The Company’s goal is to expand on these services throughout the United States via its growing partner network and salesperson team.

The Company is working to expand its managed services business with its current federal enterprise customer and its customers.

Nodeware® - In May 2016, the Company filed a provisional patent application for its proprietary product, Nodeware.  In May 2017, the Company filed a utility patent application for Nodeware. The patent application is ready for examination by the U.S. patent application examiner. The Company launched Nodeware in November 2016. Nodeware is an automated vulnerability management and network security scanning solution that enhances security by proactively identifying, monitoring, and addressing potential vulnerabilities on networks, creating a safeguard against hackers and ransomware with simplicity and affordability. Customers have the option to purchase Nodeware to accommodate the varying network needs of their organizations. Nodeware provides a value-based solution designed for SMEs with single subnet or several subnets as well as accommodating larger organizations with more advanced network needs.

Nodeware assesses vulnerabilities in a computer network using scanning technology to capture a comprehensive view of the security exposure of a network infrastructure. Users receive alerts and view network information through a proprietary dashboard. Continuous and automated internal scanning and external on demand scanning are available within this offering.

Nodeware continues to release upgrades with the most recent one in August 2019. This upgrade provides a next generation of the Platform. The new platform’s features include integration of a new, cutting-edge scanning engine, a new reporting engine to easily access reports within the Dashboard, allowing users to securely archive every report and retrieve them instantly and greater technology enhancements around device identification and fingerprinting. Another new feature added to Nodeware was on-demand report generation, which enables IGI’s channel partners to easily pull reports for customers and run reports simultaneously for better cybersecurity management.

Nodeware creates an opportunity for resellers, including managed service providers, managed security service providers, distributors, and value-added resellers. The Company sells Nodeware in the commercial sector through its channel partners and agents.

Technology and Product Development - The Company’s goal is to position its products and solutions to enable vertical integration with other solutions. The Company has a technology and product development strategy aligned with its business strategy.

Cybersecurity Services - The Company provides cybersecurity consulting services to channel partners and direct customers across different vertical markets (banking, healthcare, manufacturing, etc.). Its cybersecurity projects use Nodeware to create a living document that a customer can use to go forward on a path of continuous improvement for its overall IT security. The Company validates overall network security with the goal of maintaining the integrity of confidential client information, preserving the continuity of services, and minimizing potential data damage from attempted threats and incidents. The Company has also started a Managed Detection & Response (MDR) program. This MDR solution includes preparation & consultation, detection and analysis, containment & eradication, and incident response all in one program. It includes 24 by 7 monitoring at the Company’s Security Operations Center.

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 2019, the Company borrowed $200,000 from a related party under the terms of a note payable. At December 31, 2019, the Company had $300,000 available under this financing agreements. During 2018, the Company borrowed $90,000 from related parties under the terms of demand notes.

During 2017, the Company originated lines of credit with related parties totaling $175,000 and borrowed $140,000. During 2018, the Company borrowed an additional $20,000. At December 31, 2019, the Company had approximately $15,000 available under these financing agreements.

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, however substantial doubt about the Company’s ability to continue as a going concern has not been alleviated. 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.

The Company plans to evaluate alternatives which may include renegotiating the terms of the notes, seeking conversion of the notes to shares of common stock and seeking funds to repay the notes. The Company continues to evaluate repayment of our notes payable based on its cash flow.

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EMPLOYEE RETIREMENT PLANS

12 Months Ended

Dec. 31, 2019

Retirement Benefits [Abstract]

EMPLOYEE RETIREMENT PLANS

Simple IRA Plan - Through December 31, 2012, the Company offered a simple IRA plan as a retirement plan for eligible employees who earned at least $5,000 of annual compensation. Eligible employees could elect to contribute a percentage of their compensation up to a maximum of $11,500. The accrued liability for the simple IRA plan, including interest, was $254,348 and $244,423, as of December 31, 2019 and 2018, respectively.

401(k) Plan - Effective January 1, 2013, the Company began offering a defined contribution 401(k) plan in place of the simple IRA plan. For 2019, 401(k) employee contribution limits are $19,000 plus a catch-up contribution for those over age 50 of $6,000. The Company can elect to make a discretionary contribution to the Plan. No discretionary contribution was approved for 2019 or 2018.

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LONG-TERM OBLIGATIONS

12 Months Ended

Dec. 31, 2019

Long-term Debt, Unclassified [Abstract]

LONG-TERM OBLIGATIONS

Notes Payable - Other - Term notes payable - other consist of:

	December 31,
	2019		2018
2016 note payable, 6%, unsecured, due December 31, 2021 (A)	$	500,000	$	500,000
Convertible note payable, 6%, due January 1, 2020 (B)		264,000		264,000
Note payable, 10%, secured, due January 1, 2018 (C)		265,000		265,000
Convertible term note payable,12%, secured, due August 31, 2018 (D)		175,000		175,000
Term note payable - PBGC, 6%, secured (E)		246,000		246,000
		1,450,000		1,450,000
Less: deferred financing costs		13,110		19,665
		1,436,890		1,430,335
Less: current maturities		950,000		686,000
	$	486,890	$	744,335

(A) 2016 note payable, 6%, unsecured, due December 31, 2021 - On March 14, 2016, the Company entered into an unsecured financing agreement with a third-party lender. At December 31, 2016, the Company was obligated for $500,000. Borrowings bear interest at 6% with interest payments due quarterly. Principal is due on December 31, 2021. Principal and interest may become immediately due and payable upon the occurrence of customary events of default. 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 based upon the closing bid quotation of its common stock on the OTC Bulletin Board on that date. These deferred financing costs are recorded as a reduction of the principal owed and are amortized over the life of the debt. The balance of the note payable was $467,225 at December 31, 2016 consisting of principal due of $500,000 offset by deferred financing costs of $32,775. As of December 31, 2019, the balance was $486,890 (2018 - $480,335). The lender has piggy back registration rights for these shares. The Company’s Chief Executive Officer and President agreed to guarantee the loan obligations if he is no longer an “affiliate” of the Company as defined by Securities and Exchange Commission rules.

(B) Convertible note payable, 6%, due January 1, 2020 - This note has the same terms as item (C) of Note 6 except it matures on January 1, 2020 and has not been extended.

(C) Note payable, 10%, secured, due January 1, 2018 - During the years ended December 31, 2004 and 2003, the Company issued secured notes payable aggregating $265,000. These borrowings bear interest at 10% and were due, as modified on January 1, 2018. This note has not been further extended. The notes are secured by a first lien on accounts receivable that are not otherwise used by the Company as collateral for other borrowings and by a second lien on accounts receivable.

(D) Convertible term note payable, 12%, secured, due August 31, 2018 - The Company entered into a secured loan agreement during 2008 for working capital. The loan bears interest at 12%, which is payable monthly and was due, as modified on August 31, 2018 for an aggregate of $175,000. During 2009, the note was modified for its conversion into common shares at $.25 per share, which was the closing price of the Company’s common stock on the date of the modification. The note is secured by a subordinate lien on all assets of the Company.

(E) Term note payable - PBGC, 6%, secured - On October 17, 2011, in accordance with of the Settlement Agreement dated September 6, 2011 (the “Settlement Agreement”), the Company issued a secured promissory note in favor of the Pension Benefit Guaranty Corporation (the “PBGC”) for $300,000 bearing interest at 6% per annum due in scheduled quarterly payments over a seven-year period with a balloon payment of $219,000 due on September 15, 2018.

Notes Payable - Related Parties

Notes payable - related parties consist of:

	December 31,
	2019		2018
Note payable, up to $500,000, 7.5%, due August 31, 2026 (A)	$	200,000		0
Convertible notes payable, 6% (B)		155,300	$	155,300
Note payable, $400,000 line of credit, 8.35%, unsecured (C)		366,635		379,365
Convertible note payable, 7%, due March 31, 2021 (D)		25,000		25,000
Note payable, $100,000 line of credit, 6%, unsecured (E)		90,000		90,000
Note payable, $75,000 line of credit, 6%, unsecured (F)		70,000		70,000
		906,935		719,665
Less deferred financing costs		0		7,360
		906,935		712,305
Less current maturities		512,935		34,350
	$	394,000	$	677,955

(A) Note payable of up to $500,000, 7.5%, due August 31, 2026 - On May 7, 2019, the Company entered into a note payable agreement for up to $500,000 with a related party. The note has an interest rate of 7.5% and is due on August 31, 2026. The Company borrowed $200,000 during the year ended December 31, 2019, which remains outstanding as of December 31, 2019. As consideration for providing this financing, the Company granted a stock option to purchase a total of 2,500,000 common shares at an exercise price of $.02 and recorded interest expense of $14,250 using the Black-Scholes option pricing model to determine the estimated fair value of the option.

(B) Convertible notes payable, 6% - The Company has various notes payable to related parties totaling $155,300 of which $146,300 matured on January 1, 2020 and $9,000 matures on January 1, 2021. The notes that matured on January 1, 2020 were not extended and are past due. Principal and accrued interest are convertible at the option of the holder into shares of common stock at $.05 per share. The notes bear interest at 6.75% at December 31, 2019. The rate is adjusted annually, on January 1st of each year, to the prime rate in effect on December 31st of the immediately preceding year, plus one and one quarter percent, and in no event, shall the interest rate be less than 6% per annum. The rate effective as of January 1, 2020 was 6.00%.

The Company executed collateral security agreements with the note holders providing for a subordinate security interest in all the Company’s assets. Generally, upon notice, prior to the note maturity date, the Company can prepay all or a portion of the outstanding notes.

The Notes are convertible into shares of common stock subject to the following limitations: The Notes are not convertible to the extent that shares of common stock issuable upon the proposed conversion would result in a change in control of the Company which would limit the use of its net operating loss carryforwards; provided, however, if the Company closes a transaction with another third party or parties that results in a change of control which will limit the use of its net operating loss carryforwards, then the foregoing limitation shall lapse. Prior to any conversion by a requesting note holder, each note holder holding a note which is then convertible into 5% or more of the Company’s common stock shall be entitled to participate on a pari passu basis with the requesting note holder and upon any such participation the requesting note holder shall proportionately adjust his conversion request such that, in the aggregate, a change of control, which will limit the use of the Company’s net operating loss carryforwards, does not occur.

(C) Note payable, $400,000 line of credit, 8.35%, unsecured - On December 1, 2014, the Company entered into an unsecured line of credit financing agreement with a member of its Board. The LOC Agreement provides for working capital of up to $400,000 through January 1, 2020. This agreement was not extended and is past due. The Company is required to provide the lender with a report stating the use of proceeds for each pending draw under the line of credit. Borrowings of $100,000 or more bear interest at the prime rate plus 2.85% (effective rate of 7.60% at December 31, 2019). Principal and interest are due monthly using an amortization schedule that requires payments of $8,000 annually and a balloon payment of the remaining balance at maturity. The balance of the note payable was $366,635 at December 31, 2019 ($372,005 - 2018) consisting of principal due of $366,635 ($379,365 - 2018) offset by deferred financing costs of $0 ($7,360 – 2018).

(D) Convertible note payable, 7%, due March 31, 2021 - On February 12, 2015, the Company borrowed $25,000 from a Company officer. The note is unsecured and matured on March 31, 2018 with principal convertible at the option of the holder into shares of common stock at $.10 per share. In 2019, the Company officer extended the due date to March 31, 2021.

(E) Note payable, $100,000 line of credit, 6%, unsecured - On July 18, 2017, the Company entered into an unsecured line of credit financing agreement with an officer and member of its Board. The LOC Agreement provides for working capital of up to $100,000 with interest at 6% due quarterly through July 1, 2022. In consideration for providing the financing, the lender was granted an option to purchase 400,000 shares of common stock at $.04 per share. The option expires on July 17, 2022.

(F) Note payable, $75,000 line of credit, 6%, unsecured - On September 21, 2017, the Company entered into an unsecured line of credit financing agreement with a related party. The LOC Agreement provides for working capital of up to $75,000 with interest at 6% due quarterly through January 2, 2023. In consideration for providing the financing, the lender was granted an option to purchase 400,000 shares of common stock at $.04 per share. The option expires on January 2, 2023.

Long-Term Obligations

As of December 31, 2019, minimum future annual payments of long-term obligations and amortization of deferred financing costs are as follows:

	Annual		Annual
	Payments		Amortization		Net
Due Prior to 2020	$	698,020	$	0	$	698,020
2020		764,915		0		764,915
2021		624,000		13,110		610,890
2022		0		0		0
2023		70,000		0		70,000
2024		0		0		0
2025		0		0		0
2026		200,000		0		200,000
Total long-term obligations	$	2,356,935	$	13,110	$	2,343,825

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Sales	$ 7,094,279	$ 6,370,336
Managed Support Services
Sales	4,986,217	4,922,061
Cybersecurity Projects and Software
Sales	1,569,972	1,177,769
Other IT Consulting Services
Sales	$ 538,090	$ 270,506

XML

PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Property, Plant and Equipment [Abstract]
Depreciation	$ 4,567	$ 10,267

XML

LONG-TERM OBLIGATIONS (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Long-term debt	$ 1,450,000	$ 1,450,000
Less deferred financing costs	13,110	19,665
Total	1,436,890	1,430,335
Less current maturities	950,000	686,000
Long-term debt, excluding current maturities	486,890	744,335
Notes Payable - Other 1
Long-term debt	500,000	500,000
Notes Payable - Other 2
Long-term debt	264,000	264,000
Notes Payable - Other 3
Long-term debt	265,000	265,000
Notes Payable - Other 4
Long-term debt	175,000	175,000
Notes Payable - Other 5
Long-term debt	$ 246,000	$ 246,000

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RELATED PARTY ACCRUED INTEREST PAYABLE (Details Narrative) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Related Party Transactions [Abstract]
Accrued interest payable, related parties, current	$ 157,067	$ 148,703

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounts Receivable - Credit is granted to substantially all customers throughout the United States. The Company carries its accounts receivable at invoice amount, less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts, based on a history of past write-offs and collections and current credit conditions. The Company’s policy is to not accrue interest on past due receivables. Management determined that an allowance of $17,455 for doubtful accounts was reasonably stated at December 31, 2019 ($22,000 – 2018).

Concentration of Credit Risk - Financial instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in financial institutions. The cash accounts occasionally exceed the federally insured deposit amount; however, management does not anticipate nonperformance by financial institutions. Management reviews the financial viability of these institutions on a periodic basis.

Loan Origination Fees - The Company capitalizes the costs of loan origination fees and amortizes the fees as interest expense over the contractual life of each agreement and show as a reduction of the debt.

Sale of Certain Accounts Receivable - The Company has available a financing line with a financial institution (the Purchaser). In connection with this line of credit, the Company adopted FASB ASC 860 “Transfers and Servicing”. FASB ASC 860 provides consistent standards for distinguishing transfers of financial assets that are sales from transfers that are secured borrowings. The Company has a factoring line with the Purchaser which enables the Company to sell selected accounts receivable invoices to the Purchaser with full recourse against the Company.

These transactions qualify for a sale of assets since (1) the Company has transferred all of its right, title and interest in the selected accounts receivable invoices to the financial institution, (2) the Purchaser may pledge, sell or transfer the selected accounts receivable invoices, and (3) the Company has no effective control over the selected accounts receivable invoices since it is not entitled to or obligated to repurchase or redeem the invoices before their maturity and it does not have the ability to unilaterally cause the Purchaser to return the invoices. Under FASB ASC 860, after a transfer of financial assets, an entity recognizes the financial and servicing assets it controls and the liabilities it has incurred, derecognizes financial assets when control has been surrendered, and derecognizes liabilities when extinguished.

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 of the transaction and less any anticipated future loss in the value of the retained asset. The retained amount is equal to 10% of the total accounts receivable invoice sold to the Purchaser. The fee is charged at prime plus 3.6% (effective rate of 8.35% at December 31, 2019) 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 year ended December 31, 2019, the Company sold approximately $4,742,933 ($5,181,140 - 2018) of its accounts receivable to the Purchaser.  As of December 31, 2019, $324,125 ($363,213 - 2018) of these receivables remained outstanding.  Additionally, as of December 31, 2019, the Company had $67,000 available under the financing line with the financial institution ($0 - 2018).  After deducting estimated fees and advances from the Purchaser, the net receivable from the Purchaser amounted to $32,412 at December 31, 2019 ($36,321 - 2018) and is included in accounts receivable in the accompanying balance sheets as of that date. 

There were no gains or losses on the sale of the accounts receivable because all were collected. The cost associated with the financing line was approximately $53,600 for the year ended December 31, 2019 ($53,600 - 2018). These financing line fees are classified on the statements of operations as interest expense.

Property and Equipment - Property and equipment are recorded at cost and are depreciated over their estimated useful lives for financial statement purposes. The cost of improvements to leased properties is amortized over the shorter of the lease term or the life of the improvement. Maintenance and repairs are charged to expense as incurred while improvements are capitalized.

Capitalization of Software for Resale - The Company capitalizes the software development costs for software to be sold, leased, or otherwise marketed. Capitalization begins upon the establishment of technological feasibility of a new product or enhancements to an existing product, which is generally the completion of a working prototype that has been certified as having no critical bugs and is a release candidate. Costs incurred after the enhancement has reached technological feasibility and before it is released in the market are capitalized and are primarily labor costs related to coding and testing. Amortization begins once the software is ready for its intended use, generally based on the pattern in which the economic benefits will be consumed. Costs associated with major upgrade releases begin amortization in the month after release. The amortization period is three years. As of December 31, 2019, there is $194,215 of costs capitalized and $9,539 of accumulated amortization ($0 in 2018). During the year ended December 31, 2019 there was $9,539 of amortization expense recorded ($0 in 2018). Future amortization is expected to be $184,676 at a rate of $58,092, $64,738, $55,500 and $6,646 for the years 2020, 2021, 2022 and 2023, respectively. Costs incurred prior to reaching technological feasibility are expensed as incurred. Labor amounts expensed related to these development costs amounted to approximately $58,000 and $182,000 during the year ended December 31, 2019 and 2018, respectively.

Accounting for the Impairment or Disposal of Long-Lived Assets - The Company follows provisions of FASB ASC 360 “Property, Plant and Equipment” in accounting for the impairment of disposal of long-lived assets. This standard specifies, among other things, that long-lived assets are to be reviewed for potential impairment whenever events or circumstances indicate that the carrying amounts may not be recoverable. The Company determined that there was no impairment of long-lived assets during 2019 and 2018.

Revenue Recognition - Effective January 1, 2018, the Company adopted Topic 606 using the modified retrospective approach and applied the guidance to those contracts which were not completed as of January 1, 2018. Adoption of Topic 606 did not impact the timing of revenue recognition in the Company’s financial statements for the current or prior periods. Accordingly, no adjustments have been made to opening retained earnings or prior period amounts.

The Company’s revenues are generated under both time and material and fixed price agreements.  Managed Support services revenue is recognized when the associated costs are incurred, which coincides with the consulting services being provided.  Time and materials service agreements are based on hours worked and are billed at agreed upon hourly rates for the respective position plus other billable direct costs.  Fixed price service agreements are based on a fixed amount of periodic billings for recurring services of a similar nature performed according to the contractual arrangements with clients. These agreements are arrangements for monthly or weekly support services. Under both types of agreements, the delivery of services occurs when an employee works on a specific project or assignment as stated in the contract or purchase order.  Based on historical experience, the Company believes that collection is reasonably assured.

The Company sells licenses of Nodeware and third-party software, principally Webroot. Substantially all customers are invoiced monthly at fixed rates for license fees and revenue is recognized over time.

The Company sells VMware software and service credits. Sales are recorded upon receipt of the software or credits by the customer. The Company does not take title to the software or credits. Accordingly, the Company accounts for these as agent sales and reduces its sales amount by the related cost of sales.

   The Company’s total revenue recognized from contracts from customers was comprised of three major services: Managed support services, Cybersecurity projects and software and Other IT consulting services. The categories depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. There were no material unsatisfied performance obligations at December 31, 2019 or 2018 for contracts with an expected original duration of more than one year. The following table summarizes the revenue recognized by the major services:

	Years Ended December 31,
	2019		2018
Managed support services	$	4,986,217	$	4,922,061
Cybersecurity projects and software		1,569,972		1,177,769
Other IT consulting services		538,090		270,506
Total sales	$	7,094,279	$	6,370,336

Managed support services

Managed support services consist of revenue primarily from our subcontracts for services to its end clients, principally a major establishment of the U.S. Government for which we manage one of the nation’s largest physical and virtual Microsoft Windows environments.

● We generate revenue primarily from these subcontracts through fixed price service and support agreements.  Revenues are earned and billed weekly and are generally paid within 45 days. The revenues are recognized at time of service.

Cyber security projects and software

Cyber security projects and software revenue includes the selling of licenses of Nodeware™ and third-party software, principally Webroot™ as well as performing cybersecurity assessments, testing and consulting as a vCISO (Virtual Chief Information Security Officer).

● Nodeware™ and Webroot™ software offerings consist of fees generated from the use of the respective software by our customers. Revenue is recognized on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Substantially all customers are billed in the month of the service and is cancellable upon notice per the respective agreements.  Substantially all payments are electronically billed, and the billed amounts are paid to the Company instantaneously via an online payment platform. If payments are made in advance, revenues related to the term associated with our software licenses is recognized ratably over the contractual period.

● Some of our customers have the option to purchase additional subscription and support services at a stated price. These options generally do not provide a material right as they are priced at our standalone selling price.

● Cybersecurity assessments, testing and vCISO services are considered distinct performance obligations when sold stand alone or with other products. These contracts generally have terms of one year or less. For substantially all these contracts, revenue is recognized when the specific performance obligation is satisfied.  If the contract has multiple performance obligations, the revenue is recognized when the performance obligations are satisfied. Depending on the nature of the service, the amounts recognized are either based on an allocation of the transaction price to each performance obligation based on a relative standalone selling price of the products sold.

● In substantially all agreements, a 50% to 75% down payment is required before work is initiated. Down payments received are deferred until revenue is recognized. For the year ended December 31, 2019, we recognized revenue of $17,497 that was included in the accrued expenses-other liability balance at the beginning of the period presented. Deferred revenue that will be realized during the succeeding 12-month period is $168,824, and the remaining deferred revenue of $10,000 is scheduled to be realized in 2022.

Other IT consulting services

Other IT consulting services consists of services such as project management and general IT consulting services. 

● We generate revenue via fixed price service agreements.  These are based on periodic billings of a fixed dollar amount for recurring services of a similar nature performed according to the contractual arrangements with clients.  The revenues are recognized at time of service.

Based on historical experience, the Company believes that collection is reasonably assured.

During 2019, sales to one client, including sales under subcontracts for services to several entities, accounted for 62.6% of total sales (69.7% - 2018) and 22.1% of accounts receivable at December 31, 2019 (10.5% - 2018).

Sales and Cost of Sales - The Company designates certain sales of third party software and project credits as agent sales where the Company does not have the performance obligation to deliver the software or credits to the end user. Accordingly, cost of sales is recorded as a reduction of sales and only the gross profit is included in sales in the accompanying statements of operations. For the years ended December 31, 2019 and 2018, the Company designated agent sales of $238,136 and $488,314, respectively. The related accounts receivables and accounts payable are recorded on a gross basis in the accompanying balance sheets.

Stock Options - The Company recognizes compensation expense related to stock-based payments at the grant date fair value of the awards. The Company uses the Black-Scholes option pricing model to determine the estimated fair value of the awards.

Income Taxes - The Company accounts for income tax expense in accordance with FASB ASC 740 “Income Taxes.” Deferred taxes are provided on an asset and liability method whereby deferred tax assets are recognized for deductible temporary differences, operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

The Company periodically reviews tax positions taken to determine if it is more likely than not that the position would be sustained upon examination. The Company did not have any material unrecognized tax benefit at December 31, 2019 or 2018. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in tax expense. During the years ended December 31, 2019 and 2018, the Company recognized no interest and penalties.

The Company files U.S. federal tax returns and tax returns in various states. The tax years 2016 through 2019 remain open to examination by the taxing jurisdictions to which the Company is subject.

Fair Value of Financial Instruments - The Company has determined the fair value of debt and other financial instruments using a valuation hierarchy. The hierarchy, which prioritizes the inputs used in measuring fair value, consists of three levels.

Level 1 uses observable inputs such as quoted prices in active markets;

Level 2 uses inputs other than quoted prices in active markets that are either directly or indirectly observable; and

Level 3 is defined as unobservable inputs in which little or no market data exist and requires the Company to develop its own assumptions.

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The carrying amounts of cash, accounts receivable and accounts payable and accrued expenses are reasonable estimates of their fair value due to their short maturity. Based on the borrowing rates currently available to the Company for loans similar to its term debt and notes payable, the fair value approximates the carrying amounts.

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 options and notes assumed to be exercised. In a loss year, the calculation for basic and diluted earnings per share is 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 as of December 31, 2019 and 2018:

	Years ended December 31,
	2019		2018
Numerator for basic and diluted net income per share:
Net income	$	47,977	$	37,000
Basic and diluted net income per share	$	0.00	$	0.00
Weighted average common shares outstanding
Basic shares		29,061,883		29,061,883
Diluted shares		29,811,883		29,061,883
Anti-dilutive shares excluded from net income per share		29,195,736		28,952,076

Certain common shares issuable under stock options and convertible notes payable have been omitted from the diluted net income (loss) per share calculation because their inclusion is considered anti-dilutive because the exercise or conversion prices were greater than the average market price of the common shares or their inclusion would have been anti-dilutive.

Reclassifications - The Company reclassifies amounts in its prior year financial statements to conform to the current year’s presentation.

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Leases - 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 new standard requires entities to recognize a liability for their lease obligations and a corresponding right-of-use asset, initially measured at the present value of the lease payments. Subsequent accounting depends on whether the agreement is deemed to be a financing or operating lease. For operating leases, a lessee recognizes its total lease expense as an operating expense over the lease term. The ASU requires that assets and liabilities be presented and disclosed separately, and the liabilities must be classified appropriately as current and noncurrent. The ASU further requires additional disclosure of certain qualitative and quantitative information related to lease agreements. The ASU was effective for the Company beginning on January 1, 2019, at which time we adopted the new standard using the modified retrospective approach as of the date of adoption.

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STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Common Stock
Beginning balance, shares	29,061,883	29,061,883
Beginning balance, amount	$ 29,061	$ 29,061
Net income
Ending balance, shares	29,061,883	29,061,883
Ending balance, amount	$ 29,061	$ 29,061
Additional Paid-in Capital
Beginning balance, amount	30,593,366	30,591,896
Stock based compensation	44,807	1,470
Net income
Ending balance, amount	30,638,173	30,593,366
Accumulated Deficit
Beginning balance, amount	(34,622,521)	(34,659,521)
Net income	47,977	37,000
Ending balance, amount	(34,574,544)	(34,622,521)
Beginning balance, amount	(4,000,094)	(4,038,564)
Stock based compensation	44,807	1,470
Net income	47,977	37,000
Ending balance, amount	$ (3,907,310)	$ (4,000,094)

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2019	Mar. 24, 2020	Jun. 30, 2019
Document And Entity Information
Entity Registrant Name	INFINITE GROUP INC
Entity Central Index Key	0000884650
Document Type	10-K/A
Document Period End Date	Dec. 31, 2019
Amendment Flag	true
Amendment Description	For the purposes of filing XBRL.
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Shell Company	false
Entity Interactive Data Current	Yes
Entity Incorporation, State or Country Code	DE
Entity File Number	0-21816
Entity Common Stock, Shares Outstanding		29,061,883
Entity Public Float			$ 580,000
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2019

XML

LONG-TERM OBLIGATIONS (Details 2)	Dec. 31, 2019 USD ($)
Due Prior to 2020	$ 698,020
2020	764,915
2021	610,890
2022	0
2023	70,000
2024	0
2025	0
2026	200,000
Total long-term obligations	2,343,825
Annual Payments
Due Prior to 2020	698,020
2020	764,915
2021	624,000
2022	0
2023	70,000
2024	0
2025	0
2026	200,000
Total long-term obligations	2,356,935
Annual Amortization
Due Prior to 2020	0
2020	0
2021	13,110
2022	0
2023	0
2024	0
2025	0
2026	0
Total long-term obligations	$ 13,110

XML

Disclosure - STOCK OPTION PLANS AND AGREEMENTS (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Share-based Payment Arrangement [Abstract]
Total unrecognized compensation cost	$ 0
Weighted average fair value of options granted	$ .03	$ 0.01

XML

INCOME TAXES (Details Narrative) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Deferred tax assets, valuation allowance	$ 1,943,000	$ 1,998,000
Federal
Operating loss carryforwards	7,300,000	7,600,000
State
Operating loss carryforwards	$ 3,200,000	$ 3,400,000

XML

MANAGEMENT PLANS (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Operating income	$ 329,137	$ 209,693
Net income	47,977	37,000
Stockholders' deficiency	$ (3,907,310)	$ (4,000,094)	$ (4,038,564)

XML

LONG-TERM OBLIGATIONS (Tables)

12 Months Ended

Dec. 31, 2019

Long-term Debt, Unclassified [Abstract]

Notes payable - other

	December 31,
	2019		2018
2016 note payable, 6%, unsecured, due December 31, 2021 (A)	$	500,000	$	500,000
Convertible note payable, 6%, due January 1, 2020 (B)		264,000		264,000
Note payable, 10%, secured, due January 1, 2018 (C)		265,000		265,000
Convertible term note payable,12%, secured, due August 31, 2018 (D)		175,000		175,000
Term note payable - PBGC, 6%, secured (E)		246,000		246,000
		1,450,000		1,450,000
Less: deferred financing costs		13,110		19,665
		1,436,890		1,430,335
Less: current maturities		950,000		686,000
	$	486,890	$	744,335

(A) 2016 note payable, 6%, unsecured, due December 31, 2021 - On March 14, 2016, the Company entered into an unsecured financing agreement with a third-party lender. At December 31, 2016, the Company was obligated for $500,000. Borrowings bear interest at 6% with interest payments due quarterly. Principal is due on December 31, 2021. Principal and interest may become immediately due and payable upon the occurrence of customary events of default. 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 based upon the closing bid quotation of its common stock on the OTC Bulletin Board on that date. These deferred financing costs are recorded as a reduction of the principal owed and are amortized over the life of the debt. The balance of the note payable was $467,225 at December 31, 2016 consisting of principal due of $500,000 offset by deferred financing costs of $32,775. As of December 31, 2019, the balance was $486,890 (2018 - $480,335). The lender has piggy back registration rights for these shares. The Company’s Chief Executive Officer and President agreed to guarantee the loan obligations if he is no longer an “affiliate” of the Company as defined by Securities and Exchange Commission rules.

(B) Convertible note payable, 6%, due January 1, 2020 - This note has the same terms as item (C) of Note 6 except it matures on January 1, 2020 and has not been extended.

(C) Note payable, 10%, secured, due January 1, 2018 - During the years ended December 31, 2004 and 2003, the Company issued secured notes payable aggregating $265,000. These borrowings bear interest at 10% and were due, as modified on January 1, 2018. This note has not been further extended. The notes are secured by a first lien on accounts receivable that are not otherwise used by the Company as collateral for other borrowings and by a second lien on accounts receivable.

(D) Convertible term note payable, 12%, secured, due August 31, 2018 - The Company entered into a secured loan agreement during 2008 for working capital. The loan bears interest at 12%, which is payable monthly and was due, as modified on August 31, 2018 for an aggregate of $175,000. During 2009, the note was modified for its conversion into common shares at $.25 per share, which was the closing price of the Company’s common stock on the date of the modification. The note is secured by a subordinate lien on all assets of the Company.

(E) Term note payable - PBGC, 6%, secured - On October 17, 2011, in accordance with of the Settlement Agreement dated September 6, 2011 (the “Settlement Agreement”), the Company issued a secured promissory note in favor of the Pension Benefit Guaranty Corporation (the “PBGC”) for $300,000 bearing interest at 6% per annum due in scheduled quarterly payments over a seven-year period with a balloon payment of $219,000 due on September 15, 2018.

Notes payable - related parties

	December 31,
	2019		2018
Note payable, up to $500,000, 7.5%, due August 31, 2026 (A)	$	200,000		0
Convertible notes payable, 6% (B)		155,300	$	155,300
Note payable, $400,000 line of credit, 8.35%, unsecured (C)		366,635		379,365
Convertible note payable, 7%, due March 31, 2021 (D)		25,000		25,000
Note payable, $100,000 line of credit, 6%, unsecured (E)		90,000		90,000
Note payable, $75,000 line of credit, 6%, unsecured (F)		70,000		70,000
		906,935		719,665
Less deferred financing costs		0		7,360
		906,935		712,305
Less current maturities		512,935		34,350
	$	394,000	$	677,955

(A) Note payable of up to $500,000, 7.5%, due August 31, 2026 - On May 7, 2019, the Company entered into a note payable agreement for up to $500,000 with a related party. The note has an interest rate of 7.5% and is due on August 31, 2026. The Company borrowed $200,000 during the year ended December 31, 2019, which remains outstanding as of December 31, 2019. As consideration for providing this financing, the Company granted a stock option to purchase a total of 2,500,000 common shares at an exercise price of $.02 and recorded interest expense of $14,250 using the Black-Scholes option pricing model to determine the estimated fair value of the option.

(B) Convertible notes payable, 6% - The Company has various notes payable to related parties totaling $155,300 of which $146,300 matured on January 1, 2020 and $9,000 matures on January 1, 2021. The notes that matured on January 1, 2020 were not extended and are past due. Principal and accrued interest are convertible at the option of the holder into shares of common stock at $.05 per share. The notes bear interest at 6.75% at December 31, 2019. The rate is adjusted annually, on January 1st of each year, to the prime rate in effect on December 31st of the immediately preceding year, plus one and one quarter percent, and in no event, shall the interest rate be less than 6% per annum. The rate effective as of January 1, 2020 was 6.00%.

The Company executed collateral security agreements with the note holders providing for a subordinate security interest in all the Company’s assets. Generally, upon notice, prior to the note maturity date, the Company can prepay all or a portion of the outstanding notes.

The Notes are convertible into shares of common stock subject to the following limitations: The Notes are not convertible to the extent that shares of common stock issuable upon the proposed conversion would result in a change in control of the Company which would limit the use of its net operating loss carryforwards; provided, however, if the Company closes a transaction with another third party or parties that results in a change of control which will limit the use of its net operating loss carryforwards, then the foregoing limitation shall lapse. Prior to any conversion by a requesting note holder, each note holder holding a note which is then convertible into 5% or more of the Company’s common stock shall be entitled to participate on a pari passu basis with the requesting note holder and upon any such participation the requesting note holder shall proportionately adjust his conversion request such that, in the aggregate, a change of control, which will limit the use of the Company’s net operating loss carryforwards, does not occur.

(C) Note payable, $400,000 line of credit, 8.35%, unsecured - On December 1, 2014, the Company entered into an unsecured line of credit financing agreement with a member of its Board. The LOC Agreement provides for working capital of up to $400,000 through January 1, 2020. This agreement was not extended and is past due. The Company is required to provide the lender with a report stating the use of proceeds for each pending draw under the line of credit. Borrowings of $100,000 or more bear interest at the prime rate plus 2.85% (effective rate of 7.60% at December 31, 2019). Principal and interest are due monthly using an amortization schedule that requires payments of $8,000 annually and a balloon payment of the remaining balance at maturity. The balance of the note payable was $366,635 at December 31, 2019 ($372,005 - 2018) consisting of principal due of $366,635 ($379,365 - 2018) offset by deferred financing costs of $0 ($7,360 – 2018).

(D) Convertible note payable, 7%, due March 31, 2021 - On February 12, 2015, the Company borrowed $25,000 from a Company officer. The note is unsecured and matured on March 31, 2018 with principal convertible at the option of the holder into shares of common stock at $.10 per share. In 2019, the Company officer extended the due date to March 31, 2021.

(E) Note payable, $100,000 line of credit, 6%, unsecured - On July 18, 2017, the Company entered into an unsecured line of credit financing agreement with an officer and member of its Board. The LOC Agreement provides for working capital of up to $100,000 with interest at 6% due quarterly through July 1, 2022. In consideration for providing the financing, the lender was granted an option to purchase 400,000 shares of common stock at $.04 per share. The option expires on July 17, 2022.

(F) Note payable, $75,000 line of credit, 6%, unsecured - On September 21, 2017, the Company entered into an unsecured line of credit financing agreement with a related party. The LOC Agreement provides for working capital of up to $75,000 with interest at 6% due quarterly through January 2, 2023. In consideration for providing the financing, the lender was granted an option to purchase 400,000 shares of common stock at $.04 per share. The option expires on January 2, 2023.

Long-term obligations

	Annual		Annual
	Payments		Amortization		Net
Due Prior to 2020	$	698,020	$	0	$	698,020
2020		764,915		0		764,915
2021		624,000		13,110		610,890
2022		0		0		0
2023		70,000		0		70,000
2024		0		0		0
2025		0		0		0
2026		200,000		0		200,000
Total long-term obligations	$	2,356,935	$	13,110	$	2,343,825

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Accounts Receivable

Accounts Receivable - Credit is granted to substantially all customers throughout the United States. The Company carries its accounts receivable at invoice amount, less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts, based on a history of past write-offs and collections and current credit conditions. The Company’s policy is to not accrue interest on past due receivables. Management determined that an allowance of $17,455 for doubtful accounts was reasonably stated at December 31, 2019 ($22,000 – 2018).

Concentration of Credit Risk

Concentration of Credit Risk - Financial instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in financial institutions. The cash accounts occasionally exceed the federally insured deposit amount; however, management does not anticipate nonperformance by financial institutions. Management reviews the financial viability of these institutions on a periodic basis.

Loan Origination Fees

Loan Origination Fees - The Company capitalizes the costs of loan origination fees and amortizes the fees as interest expense over the contractual life of each agreement and show as a reduction of the debt.

Sale of Certain Accounts Receivable

Sale of Certain Accounts Receivable - The Company has available a financing line with a financial institution (the Purchaser). In connection with this line of credit, the Company adopted FASB ASC 860 “Transfers and Servicing”. FASB ASC 860 provides consistent standards for distinguishing transfers of financial assets that are sales from transfers that are secured borrowings. The Company has a factoring line with the Purchaser which enables the Company to sell selected accounts receivable invoices to the Purchaser with full recourse against the Company.

These transactions qualify for a sale of assets since (1) the Company has transferred all of its right, title and interest in the selected accounts receivable invoices to the financial institution, (2) the Purchaser may pledge, sell or transfer the selected accounts receivable invoices, and (3) the Company has no effective control over the selected accounts receivable invoices since it is not entitled to or obligated to repurchase or redeem the invoices before their maturity and it does not have the ability to unilaterally cause the Purchaser to return the invoices. Under FASB ASC 860, after a transfer of financial assets, an entity recognizes the financial and servicing assets it controls and the liabilities it has incurred, derecognizes financial assets when control has been surrendered, and derecognizes liabilities when extinguished.

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 of the transaction and less any anticipated future loss in the value of the retained asset. The retained amount is equal to 10% of the total accounts receivable invoice sold to the Purchaser. The fee is charged at prime plus 3.6% (effective rate of 8.35% at December 31, 2019) 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 year ended December 31, 2019, the Company sold approximately $4,742,933 ($5,181,140 - 2018) of its accounts receivable to the Purchaser.  As of December 31, 2019, $324,125 ($363,213 - 2018) of these receivables remained outstanding.  Additionally, as of December 31, 2019, the Company had $67,000 available under the financing line with the financial institution ($0 - 2018).  After deducting estimated fees and advances from the Purchaser, the net receivable from the Purchaser amounted to $32,412 at December 31, 2019 ($36,321 - 2018) and is included in accounts receivable in the accompanying balance sheets as of that date. 

There were no gains or losses on the sale of the accounts receivable because all were collected. The cost associated with the financing line was approximately $53,600 for the year ended December 31, 2019 ($53,600 - 2018). These financing line fees are classified on the statements of operations as interest expense.

Property and Equipment

Property and Equipment - Property and equipment are recorded at cost and are depreciated over their estimated useful lives for financial statement purposes. The cost of improvements to leased properties is amortized over the shorter of the lease term or the life of the improvement. Maintenance and repairs are charged to expense as incurred while improvements are capitalized.

Capitalization of Software for Resale

Capitalization of Software for Resale - The Company capitalizes the software development costs for software to be sold, leased, or otherwise marketed. Capitalization begins upon the establishment of technological feasibility of a new product or enhancements to an existing product, which is generally the completion of a working prototype that has been certified as having no critical bugs and is a release candidate. Costs incurred after the enhancement has reached technological feasibility and before it is released in the market are capitalized and are primarily labor costs related to coding and testing. Amortization begins once the software is ready for its intended use, generally based on the pattern in which the economic benefits will be consumed. Costs associated with major upgrade releases begin amortization in the month after release. The amortization period is three years. As of December 31, 2019, there is $194,215 of costs capitalized and $9,539 of accumulated amortization ($0 in 2018). During the year ended December 31, 2019 there was $9,539 of amortization expense recorded ($0 in 2018). Future amortization is expected to be $184,676 at a rate of $58,092, $64,738, $55,500 and $6,646 for the years 2020, 2021, 2022 and 2023, respectively. Costs incurred prior to reaching technological feasibility are expensed as incurred. Labor amounts expensed related to these development costs amounted to approximately $58,000 and $182,000 during the year ended December 31, 2019 and 2018, respectively.

Accounting for the Impairment or Disposal of Long-Lived Assets

Accounting for the Impairment or Disposal of Long-Lived Assets - The Company follows provisions of FASB ASC 360 “Property, Plant and Equipment” in accounting for the impairment of disposal of long-lived assets. This standard specifies, among other things, that long-lived assets are to be reviewed for potential impairment whenever events or circumstances indicate that the carrying amounts may not be recoverable. The Company determined that there was no impairment of long-lived assets during 2019 and 2018.

Revenue Recognition

Revenue Recognition - Effective January 1, 2018, the Company adopted Topic 606 using the modified retrospective approach and applied the guidance to those contracts which were not completed as of January 1, 2018. Adoption of Topic 606 did not impact the timing of revenue recognition in the Company’s financial statements for the current or prior periods. Accordingly, no adjustments have been made to opening retained earnings or prior period amounts.

The Company’s revenues are generated under both time and material and fixed price agreements.  Managed Support services revenue is recognized when the associated costs are incurred, which coincides with the consulting services being provided.  Time and materials service agreements are based on hours worked and are billed at agreed upon hourly rates for the respective position plus other billable direct costs.  Fixed price service agreements are based on a fixed amount of periodic billings for recurring services of a similar nature performed according to the contractual arrangements with clients. These agreements are arrangements for monthly or weekly support services. Under both types of agreements, the delivery of services occurs when an employee works on a specific project or assignment as stated in the contract or purchase order.  Based on historical experience, the Company believes that collection is reasonably assured.

The Company sells licenses of Nodeware and third-party software, principally Webroot. Substantially all customers are invoiced monthly at fixed rates for license fees and revenue is recognized over time.

The Company sells VMware software and service credits. Sales are recorded upon receipt of the software or credits by the customer. The Company does not take title to the software or credits. Accordingly, the Company accounts for these as agent sales and reduces its sales amount by the related cost of sales.

   The Company’s total revenue recognized from contracts from customers was comprised of three major services: Managed support services, Cybersecurity projects and software and Other IT consulting services. The categories depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. There were no material unsatisfied performance obligations at December 31, 2019 or 2018 for contracts with an expected original duration of more than one year. The following table summarizes the revenue recognized by the major services:

	Years Ended December 31,
	2019		2018
Managed support services	$	4,986,217	$	4,922,061
Cybersecurity projects and software		1,569,972		1,177,769
Other IT consulting services		538,090		270,506
Total sales	$	7,094,279	$	6,370,336

Managed support services

Managed support services consist of revenue primarily from our subcontracts for services to its end clients, principally a major establishment of the U.S. Government for which we manage one of the nation’s largest physical and virtual Microsoft Windows environments.

● We generate revenue primarily from these subcontracts through fixed price service and support agreements.  Revenues are earned and billed weekly and are generally paid within 45 days. The revenues are recognized at time of service.

Cyber security projects and software

Cyber security projects and software revenue includes the selling of licenses of Nodeware™ and third-party software, principally Webroot™ as well as performing cybersecurity assessments, testing and consulting as a vCISO (Virtual Chief Information Security Officer).

● Nodeware™ and Webroot™ software offerings consist of fees generated from the use of the respective software by our customers. Revenue is recognized on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Substantially all customers are billed in the month of the service and is cancellable upon notice per the respective agreements.  Substantially all payments are electronically billed, and the billed amounts are paid to the Company instantaneously via an online payment platform. If payments are made in advance, revenues related to the term associated with our software licenses is recognized ratably over the contractual period.

● Some of our customers have the option to purchase additional subscription and support services at a stated price. These options generally do not provide a material right as they are priced at our standalone selling price.

● Cybersecurity assessments, testing and vCISO services are considered distinct performance obligations when sold stand alone or with other products. These contracts generally have terms of one year or less. For substantially all these contracts, revenue is recognized when the specific performance obligation is satisfied.  If the contract has multiple performance obligations, the revenue is recognized when the performance obligations are satisfied. Depending on the nature of the service, the amounts recognized are either based on an allocation of the transaction price to each performance obligation based on a relative standalone selling price of the products sold.

● In substantially all agreements, a 50% to 75% down payment is required before work is initiated. Down payments received are deferred until revenue is recognized. For the year ended December 31, 2019, we recognized revenue of $17,497 that was included in the accrued expenses-other liability balance at the beginning of the period presented. Deferred revenue that will be realized during the succeeding 12-month period is $168,824, and the remaining deferred revenue of $10,000 is scheduled to be realized in 2022.

Other IT consulting services

Other IT consulting services consists of services such as project management and general IT consulting services. 

● We generate revenue via fixed price service agreements.  These are based on periodic billings of a fixed dollar amount for recurring services of a similar nature performed according to the contractual arrangements with clients.  The revenues are recognized at time of service.

Based on historical experience, the Company believes that collection is reasonably assured.

During 2019, sales to one client, including sales under subcontracts for services to several entities, accounted for 62.6% of total sales (69.7% - 2018) and 22.1% of accounts receivable at December 31, 2019 (10.5% - 2018).

Sales and Cost of Sales

Sales and Cost of Sales - The Company designates certain sales of third party software and project credits as agent sales where the Company does not have the performance obligation to deliver the software or credits to the end user. Accordingly, cost of sales is recorded as a reduction of sales and only the gross profit is included in sales in the accompanying statements of operations. For the years ended December 31, 2019 and 2018, the Company designated agent sales of $238,136 and $488,314, respectively. The related accounts receivables and accounts payable are recorded on a gross basis in the accompanying balance sheets.

Stock Options

Stock Options - The Company recognizes compensation expense related to stock-based payments at the grant date fair value of the awards. The Company uses the Black-Scholes option pricing model to determine the estimated fair value of the awards.

Income Taxes

Income Taxes - The Company accounts for income tax expense in accordance with FASB ASC 740 “Income Taxes.” Deferred taxes are provided on an asset and liability method whereby deferred tax assets are recognized for deductible temporary differences, operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

The Company periodically reviews tax positions taken to determine if it is more likely than not that the position would be sustained upon examination. The Company did not have any material unrecognized tax benefit at December 31, 2019 or 2018. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in tax expense. During the years ended December 31, 2019 and 2018, the Company recognized no interest and penalties.

The Company files U.S. federal tax returns and tax returns in various states. The tax years 2016 through 2019 remain open to examination by the taxing jurisdictions to which the Company is subject.

Fair Value of Financial Instruments

Fair Value of Financial Instruments - The Company has determined the fair value of debt and other financial instruments using a valuation hierarchy. The hierarchy, which prioritizes the inputs used in measuring fair value, consists of three levels.

Level 1 uses observable inputs such as quoted prices in active markets;

Level 2 uses inputs other than quoted prices in active markets that are either directly or indirectly observable; and

Level 3 is defined as unobservable inputs in which little or no market data exist and requires the Company to develop its own assumptions.

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The carrying amounts of cash, accounts receivable and accounts payable and accrued expenses are reasonable estimates of their fair value due to their short maturity. Based on the borrowing rates currently available to the Company for loans similar to its term debt and notes payable, the fair value approximates the carrying amounts.

Earnings Per Share

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 options and notes assumed to be exercised. In a loss year, the calculation for basic and diluted earnings per share is 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 as of December 31, 2019 and 2018:

	Years ended December 31,
	2019		2018
Numerator for basic and diluted net income per share:
Net income	$	47,977	$	37,000
Basic and diluted net income per share	$	0.00	$	0.00
Weighted average common shares outstanding
Basic shares		29,061,883		29,061,883
Diluted shares		29,811,883		29,061,883
Anti-dilutive shares excluded from net income per share		29,195,736		28,952,076

Certain common shares issuable under stock options and convertible notes payable have been omitted from the diluted net income (loss) per share calculation because their inclusion is considered anti-dilutive because the exercise or conversion prices were greater than the average market price of the common shares or their inclusion would have been anti-dilutive.

Reclassifications

Reclassifications - The Company reclassifies amounts in its prior year financial statements to conform to the current year’s presentation.

Use of Estimates

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Leases

Leases - 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 new standard requires entities to recognize a liability for their lease obligations and a corresponding right-of-use asset, initially measured at the present value of the lease payments. Subsequent accounting depends on whether the agreement is deemed to be a financing or operating lease. For operating leases, a lessee recognizes its total lease expense as an operating expense over the lease term. The ASU requires that assets and liabilities be presented and disclosed separately, and the liabilities must be classified appropriately as current and noncurrent. The ASU further requires additional disclosure of certain qualitative and quantitative information related to lease agreements. The ASU was effective for the Company beginning on January 1, 2019, at which time we adopted the new standard using the modified retrospective approach as of the date of adoption.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Allowance for doubtful accounts receivable	$ 17,455	$ 22,000
Capitalized computer software, gross	194,215	0
Capitalized computer software accumulated amortization	(9,539)	0
Amortization of capitalized costs	9,539	0
Development expense	58,000	182,000
Agent sales	$ 238,136	$ 488,314
Customer A | Sales
Concentration risk	62.60%	69.70%
Customer A | Accounts Receivable
Concentration risk	22.10%	10.50%

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NOTES PAYABLE - CURRENT (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Notes payable, current	$ 332,500	$ 332,500
Note Payable 1
Notes payable, current	12,500	12,500
Note Payable 2
Notes payable, current	30,000	30,000
Note Payable 3
Notes payable, current	40,000	40,000
Note Payable 4
Notes payable, current	150,000	150,000
Note Payable 5
Notes payable, current	$ 100,000	$ 100,000

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STOCK OPTION PLANS AND AGREEMENTS

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

STOCK OPTION PLANS AND AGREEMENTS

The Company grants stock options to its key employees and independent service providers as it deems appropriate. Options expire from five to ten years after the grant date.

Option Agreements - The Company's Board approved stock option agreements with consultants and a member of the Board of which options for an aggregate of 500,000 common shares are outstanding at December 31, 2019 with an average exercise price of $.15 per share. At December 31, 2019, options for 500,000 shares are vested. Options for 938,000 shares were forfeited unvested in January 2019.

Loan Fees - On May 7, 2019, the Company entered into a note payable agreement for up to $500,000 with a related party. The note has an interest rate of 7.5% and is due on August 31, 2026. The Company borrowed $200,000 which remains outstanding as of December 31, 2019. As consideration for providing this financing, the Company granted a stock option to purchase a total of 2,500,000 common shares at an exercise price of $.02 and recorded interest expense of $14,250 using the Black-Scholes option pricing model to determine the estimated fair value of the option.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model based on the following assumptions. Volatility is based on the Company’s historical volatility. The expected life of the options was determined using the simplified method for plain vanilla options as stated in FASB ASC 718 to improve the accuracy of this assumption while simplifying record keeping requirements until more detailed information about the Company’s exercise behavior is available. The risk-free rate for the life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

The following assumptions were used for the years ended December 31, 2019 and 2018.

	2019			2018
Risk free interest rate		1.38% to 2.55%			2.86% to 2.95%
Expected dividend yield		0	%		0	%
Expected stock price volatility		100	%		100	%
Expected life of options		2.75 to 3.90 years			2.75 years

The following is a summary of stock option activity, including qualified and non-qualified options for the years ended December 31, 2019 and 2018:

	Number of Options Outstanding			Weighted Average Exercise Price		Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at December 31, 2017		8,031,000		$	0.10
Granted		300,000		$	0.02
Expired		(411,000	)	$	0.26
Outstanding at December 31, 2018		7,920,000		$	0.09
Granted		4,203,500		$	0.03
Expired		(275,000	)	$	0.07
Forfeited		(938,000	)	$	0.23
Outstanding at December 31, 2019		10,910,500		$	0.05	4.1 years	$	165,600
Vested or expected to vest and exercisable at December 31, 2019		10,910,500		$	0.05	4.1 years	$	165,600

At December 31, 2019, there was $0 of total unrecognized compensation cost related to outstanding non-vested options.

The weighted average fair value of options granted was $.03 and $.01 per share for the years ended December 31, 2019 and 2018, respectively. The exercise price for all options granted equaled or exceeded the market value of the Company’s common stock on the date of grant.

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LOAN FEES

12 Months Ended

Dec. 31, 2019

Loan Fees

LOAN FEES

On December 1, 2014, the Company entered into an unsecured line of credit financing agreement with a member of its Board. The Company paid an origination fee consisting of (i) 600,000 shares of its common stock valued at $30,000 and (ii) an immediately exercisable option to purchase 600,000 shares of its common stock at an exercise price of $.05 valued at $23,400 using the Black-Scholes option-pricing model, which was fully expensed through December 31, 2017. On September 30, 2016, the note maturity date was extended from December 31, 2017 to January 1, 2020. This note has not been extended as of the date of this filing. As consideration for extending the maturity date, the Company granted the lender an option to purchase 800,000 common shares at $.04 per share with an estimated fair value of $14,720 using the Black-Scholes option-pricing model, which is being amortized ratably over the period January 1, 2018 through December 31, 2019.

On March 14, 2016, the Company entered into an unsecured financing agreement with a third-party lender (“2016 Note Payable”). In consideration for providing the financing, the Company paid the lender a fee consisting of 2,500,000 shares of its common stock valued at $37,500 on the date of the agreement based upon the closing bid quotation of its common stock on the OTC Bulletin Board on that date. These deferred financing fees are being amortized ratably through 2021.

On July 18, 2017, the Company entered into an unsecured line of credit financing agreement with an officer and member of its Board. In consideration for providing the financing, the lender was granted an option to purchase 400,000 shares of common stock at $.04 per share with an estimated fair value of $9,960 using the Black-Scholes option-pricing model. The option expires on July 17, 2022.

On September 21, 2017, the Company entered into an unsecured line of credit financing agreement with a related party. In consideration for providing the financing, the lender was granted an option to purchase 400,000 shares of common stock at $.04 per share with an estimated fair value of $4,080 using the Black-Scholes option-pricing model. The option expires on January 2, 2023.

The unamortized deferred financing costs are recorded as a reduction of the principal owed and are expensed over the life of the debt or the extension period. At December 31, 2019, the Company has deferred financing costs of $52,220 less accumulated amortization expenses of $39,110 ($25,195 - 2018) with a net carrying value of $13,110 ($27,025 - 2018). These amounts are shown as a reduction to the debt. See Note 7.

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RELATED PARTY ACCRUED INTEREST PAYABLE

12 Months Ended

Dec. 31, 2019

Related Party Transactions [Abstract]

RELATED PARTY ACCRUED INTEREST PAYABLE

Accrued Interest Payable - Included in accrued interest payable is accrued interest payable to related parties of $157,067 at December 31, 2019 ($148,703 - 2018).

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BASIS OF PRESENTATION & BUSINESS

12 Months Ended

Dec. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION & BUSINESS

The accompanying financial statements consist of the financial statements of Infinite Group, Inc. (the Company).

The Company operates in one segment, the field of information technology (IT) consulting services, with all operations based in the United States. The primary consulting services are in the cybersecurity and VMWare support services. There were no significant sales from customers in foreign countries during 2019 and 2018. All assets are located in the United States.

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BALANCE SHEETS (Parenthetical) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Allowances for accounts receivable	$ 17,455	$ 22,000
Common stock, par value	$ 0.001	$ .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

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STOCK OPTION PLANS AND AGREEMENTS (Details)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Expected dividend yield		0.00%
Expected stock price volatility		100.00%
Expected life of options		2 years 9 months
Minimum
Risk-free interest rate	1.38%	2.86%
Expected life of options	2 years 9 months
Maximum
Risk-free interest rate	2.55%	2.95%
Expected dividend yield	0.00%
Expected stock price volatility	100.00%
Expected life of options	3 years 10 months 24 days

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INCOME TAXES (Details 1) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Deferred tax assets (liabilities):
Net operating loss carryforwards	$ 1,650,000	$ 1,707,000
Defined benefit pension liability	60,000	60,000
Operating lease ROU	(48,000)	0
Operating lease liability	48,000	0
Reserves and accrued expenses payable	233,000	231,000
Gross deferred tax asset	1,943,000	1,998,000
Deferred tax asset valuation allowance	(1,943,000)	(1,998,000)
Net deferred tax asset	$ 0	$ 0

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Components of income tax expense (benefit)

	December 31,
	2019			2018
Deferred:
Federal	$	49,000		$	158,000
State		6,000			170,000
		55,000			328,000
Change in valuation allowance		(55,000	)		(328,000	)
	$	0		$	0

Deferred tax assets and liabilities

	December 31,
	2019			2018
Deferred tax assets (liabilities):
Net operating loss carryforwards	$	1,650,000		$	1,707,000
Defined benefit pension liability		60,000			60,000
Operating Lease ROU		(48,000	)		0
Operating Lease Liability		48,000			0
Reserves and accrued expenses payable		233,000			231,000
Gross deferred tax asset		1,943,000			1,998,000
Deferred tax asset valuation allowance		(1,943,000	)		(1,998,000	)
Net deferred tax asset	$	0		$	0

Effective income tax rate reconciliation

	December 31,
	2019			2018
Statutory U.S. federal tax rate		21.0	%		21.0	%
Change in valuation allowance		(115.6	)		(886.4	)
Net operating loss carryforward expiration		71.5			315.0
State taxes		12.8			458.4
Expired stock-based compensation		3.1			7.6
Note receivable reserve		0.0			77.7
Other permanent non-deductible items		7.2			6.7
Effective income tax rate		0.0	%		0.0	%

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PROPERTY AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

Property and equipment

		December 31,
	Depreciable Lives	2019			2018
Software	3 years	$	34,934		$	34,934
Equipment	3 to 10 years		131,719			129,774
Furniture and fixtures	5 to 7 years		17,735			17,735
			184,388			182,443
Accumulated depreciation			(178,473	)		(173,816	)
		$	5,915		$	8,627

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STOCK OPTION PLANS AND AGREEMENTS (Details 1) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Share-based Payment Arrangement [Abstract]
Number of options outstanding, beginning	7,920,000	8,031,000
Number of options granted	4,203,500	300,000
Number of options expired	(275,000)	(411,000)
Number of options forfeited	(938,000)
Number of options outstanding, ending	10,910,500	7,920,000
Number of options vested or expected to vest	10,910,500
Weighted average exercise price outstanding, beginning	$ 0.09	$ .10
Weighted average exercise price granted	.03	0.02
Weighted average exercise price expired	.07	0.26
Weighted average exercise price forfeited	.23
Weighted average exercise price outstanding, ending	.05	$ 0.09
Weighted average exercise price vested or expected to vest	$ .05
Weighted-average remaining contractual term outstanding	4 years 1 month 6 days
Weighted-average remaining contractual term vested or expected to vest	4 years 1 month 6 days
Aggregate intrinsic value outstanding	$ 165,600
Aggregate intrinsic value vested or expected to vest	$ 165,600

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INCOME TAXES (Details 2)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Income Tax Disclosure [Abstract]
Statutory U.S. federal tax rate	21.00%	21.00%
Change in valuation allowance	(115.60%)	(886.40%)
Net operating loss carryforward expiration	71.50%	315.00%
State income taxes	12.80%	458.40%
Expired stock-based compensation	3.10%	7.60%
Note receivable reserve	0.00%	77.70%
Other permanent non-deductible items	7.20%	6.70%
Effective income tax rate	0.00%	0.00%

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STOCK OPTION PLANS AND AGREEMENTS (Tables)

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Stock option valuation assumptions

	2019			2018
Risk free interest rate		1.38% to 2.55%			2.86% to 2.95%
Expected dividend yield		0	%		0	%
Expected stock price volatility		100	%		100	%
Expected life of options		2.75 to 3.90 years			2.75 years

Stock options activity

	Number of Options Outstanding			Weighted Average Exercise Price		Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at December 31, 2017		8,031,000		$	0.10
Granted		300,000		$	0.02
Expired		(411,000	)	$	0.26
Outstanding at December 31, 2018		7,920,000		$	0.09
Granted		4,203,500		$	0.03
Expired		(275,000	)	$	0.07
Forfeited		(938,000	)	$	0.23
Outstanding at December 31, 2019		10,910,500		$	0.05	4.1 years	$	165,600
Vested or expected to vest and exercisable at December 31, 2019		10,910,500		$	0.05	4.1 years	$	165,600

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Disaggregation of revenue

	Years Ended December 31,
	2019		2018
Managed support services	$	4,986,217	$	4,922,061
Cybersecurity projects and software		1,569,972		1,177,769
Other IT consulting services		538,090		270,506
Total sales	$	7,094,279	$	6,370,336

Earnings per share, basic and diluted

	Years ended December 31,
	2019		2018
Numerator for basic and diluted net income per share:
Net income	$	47,977	$	37,000
Basic and diluted net income per share	$	0.00	$	0.00
Weighted average common shares outstanding
Basic shares		29,061,883		29,061,883
Diluted shares		29,811,883		29,061,883
Anti-dilutive shares excluded from net income per share		29,195,736		28,952,076

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PROPERTY AND EQUIPMENT (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Property, plant and equipment, gross	$ 184,388	$ 182,443
Accumulated depreciation	(178,473)	(173,816)
Property and equipment, net	5,915	8,627
Software
Property, plant and equipment, gross	$ 34,934	34,934
Depreciable lives	3 years
Equipment
Property, plant and equipment, gross	$ 131,719	129,774
Equipment | Minimum
Depreciable lives	3 years
Equipment | Maximum
Depreciable lives	10 years
Furniture and Fixtures
Property, plant and equipment, gross	$ 17,735	$ 17,735
Furniture and Fixtures | Minimum
Depreciable lives	5 years
Furniture and Fixtures | Maximum
Depreciable lives	7 years

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NOTES PAYABLE - CURRENT (Details 1) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Notes payable, related parties, current	$ 58,000	$ 102,000
Note Payable - Related Party 1
Notes payable, related parties, current	38,000	82,000
Note Payable - Related Party 2
Notes payable, related parties, current	$ 20,000	$ 20,000

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LEASE

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

LEASE

Beginning on August 1, 2016, the Company leases its headquarters facility under an operating lease agreement that expires on June 30, 2022. The Company has the right to terminate the lease upon six months prior notice after three years of occupancy. Rent expense is $80,000 annually during the first year of the lease term and increases by 1.5% annually thereafter.

Upon adoption of the ASU on January 1, 2019, the Company recognized a right-of-use asset of $265,825 and a lease liability of $265,825 related to the existing office lease that is classified as an operating lease.

Supplemental balance sheet information related to the operating lease was as follows: 

	December 31, 2019
Right of use asset – lease, net	$	195,441
Operating lease liability - short-term	$	74,373
Operating lease liability - long-term		122,605
Total operating lease liability	$	196,978
Discount rate - operating lease		6.0	%

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STOCKHOLDERS' DEFICIENCY

12 Months Ended

Dec. 31, 2019

Stockholders' Equity Note [Abstract]

STOCKHOLDERS' DEFICIENCY

Preferred Stock - The Company’s certificate of incorporation authorizes its Board to issue up to 1,000,000 shares of preferred stock. The stock is issuable in series that may vary as to certain rights and preferences, as determined upon issuance, and has a par value of $.01 per share. As of December 31, 2019, and 2018, there were no preferred shares issued or outstanding.

2005 Plan - The Company’s Board and stockholders approved a stock option plans adopted in 2005, which has authority to grant options to purchase up to an aggregate of 990,000 common shares at December 31, 2019 (1,030,000 - 2018).

2009 Plan - During 2009, the Company’s Board approved the 2009 stock option plan, which grants options to purchase up to an aggregate of 4,000,000 common shares of which 3,000 common shares are available for grant at December 31, 2019 (348,000 - 2018). Options issued to date are nonqualified since the Company has decided not to seek stockholder approval of the 2009 Plan.

2019 Plan - During 2019, the Company’s Board approved the 2019 stock option plan, which grants options to purchase up to an aggregate of 1,500,000 common shares of which 141,500 common shares are available for grant at December 31, 2019. Options issued to date are nonqualified since the Company has decided not to seek stockholder approval of the 2019 Plan.

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PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

Property and equipment consists of:

		December 31,
	Depreciable Lives	2019			2018
Software	3 years	$	34,934		$	34,934
Equipment	3 to 10 years		131,719			129,774
Furniture and fixtures	5 to 7 years		17,735			17,735
			184,388			182,443
Accumulated depreciation			(178,473	)		(173,816	)
		$	5,915		$	8,627

Depreciation expense was $4,567 and $10,267 for the years ended December 31, 2019 and 2018, respectively.

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STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Cash flows from operating activities:
Net income	$ 47,977	$ 37,000
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Stock based compensation	44,807	1,470
Depreciation and amortization	29,648	24,183
Bad debt recovery	0	(8,000)
Gain on settlement of debt	0	(83,250)
(Increase) decrease in assets:
Accounts receivable	(146,102)	201,107
Prepaid expenses and other current assets	(62,649)	1,419
Increase (decrease) in liabilities:
Accounts payable	(149,759)	(497,395)
Accrued expenses and other current liabilities	255,725	183,807
Accrued retirement	9,925	9,537
Net cash provided by (used in) operating activities	29,572	(130,122)
Cash flows from investing activities:
Purchases of property and equipment	(1,945)	(546)
Capitalization of software development costs	(194,215)	0
Net cash used in investing activities	(196,160)	(546)
Cash flows from financing activities:
Proceeds from note payable - related parties	200,000	90,000
Repayments of notes payable - related parties	(56,730)	(3,350)
Net cash provided by financing activities	143,270	86,650
Net decrease in cash	(23,318)	(44,018)
Cash - beginning of year	29,716	73,734
Cash - end of year	6,398	29,716
Supplemental Disclosures of Cash Flow Information:
Cash payments for interest	152,908	121,522
Cash payments for income taxes	$ 0	$ 0

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BALANCE SHEETS - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Current assets:
Cash	$ 6,398	$ 29,716
Accounts receivable, net of allowances of $17,455 and $22,000 as of December 31, 2019 and 2018, respectively	432,289	286,187
Prepaid expenses and other current assets	65,285	2,906
Total current assets	503,972	318,809
Right of use asset - operating lease, net	195,441	0
Property and equipment, net	5,915	8,627
Software, net	184,676	0
Deposits	6,937	6,667
Total assets	896,941	334,103
Current liabilities:
Accounts payable	217,777	367,536
Accrued payroll	218,352	218,328
Accrued interest payable	939,440	839,189
Accrued retirement	254,348	244,423
Accrued expenses - other and other current liabilities	243,031	87,581
Current maturities of long-term obligations	950,000	686,000
Operating lease liability - short-term	74,373	0
Current maturities of long-term obligations - related parties	512,935	34,350
Note payable	332,500	332,500
Notes payable - related parties	58,000	102,000
Total current liabilities	3,800,756	2,911,907
Notes payable:
Other	486,890	744,335
Related parties	394,000	677,955
Operating lease liability - long-term	122,605	0
Total liabilities	4,804,251	4,334,197
Commitments and contingencies
Stockholders' deficiency:
Common stock, $.001 par value, 60,000,000 shares authorized; issued and outstanding: 29,061,883 shares	29,061	29,061
Additional paid-in capital	30,638,173	30,593,366
Accumulated deficit	(34,574,544)	(34,622,521)
Total stockholders' deficiency	(3,907,310)	(4,000,094)
Total liabilities and stockholders' deficiency	$ 896,941	$ 334,103