FORM 10-QSB

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington D.C. 20549

(Mark One)

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

                    For the Fiscal Year Ended March 31, 2001
                                       OR

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

For the transition period from __________ to __________

Commission File Number 0-21816

                              INFINITE GROUP, INC.
                              --------------------
             (Exact name of registrant as specified in its charter)

               Delaware                                  52-1490422
   -------------------------------         ------------------------------------
   (State or other jurisdiction of         (I.R.S. Employer Identification No.)
    incorporation or organization)

       2364 Post Road, Warwick, RI                         02886
 ----------------------------------------                ----------
 (Address of principal executive offices)                (Zip Code)

Issuer's telephone number                              (401) 738-5777

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 |X| No |_|

As of May 11, 2001 there were 4,012,272 shares of the registrant's common stock,
par value $0.001 per share, outstanding.

      Transitional Small Business Disclosure Format: Yes |_| No |X|


                                       1
<PAGE>

                              INFINITE GROUP, INC.

                                   Form 10-QSB

                                      INDEX

                                                                            Page
                                                                            ----
PART I.  Unaudited Consolidated Financial Statements

Item 1.  Consolidated Balance Sheets

         March 31, 2001 and December 31, 2000  ................................2

         Consolidated Statements of Operations - Three Months
         Ended March 31, 2001 and 2000.........................................3

         Consolidated Statements of Cash Flows - Three Months
         Ended March 31, 2001 and 2000.........................................4

         Notes to Consolidated Financial Statements............................5

Item 2.  Management's Discussion and Analysis of Financial
         Conditions and Results of Operations..................................8

PART II. OTHER INFORMATION

Items
         Item 4...............................................................16

SIGNATURES....................................................................16


                                       1
<PAGE>

                              INFINITE GROUP, INC.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                   March 31,       December 31,
                                                                     2001              2000
                                                                     ----              ----
                                                                 (Unaudited)
<S>                                                              <C>               <C>
ASSETS
Current assets:
  Cash and cash equivalents                                      $    202,668      $    185,901
  Restricted funds                                                    134,587            85,735
  Accounts receivable, net of allowance                             1,989,099         1,827.275
  Inventories                                                         708,960           482,585
  Advance - stockholder                                                50,249            50,249
  Other current assets                                                117,052           104,003
                                                                 ------------      ------------
          Total current assets                                      3,202,615         2,735,748

Property and equipment, net                                         7,139,934         7,169,794

Other assets:
  Preferred stock investment                                          295,000           295,000
  Prepaid pension costs                                               716,326           726,326
  Intangible assets, net                                              447,733           416,002
  Cash surrender value of officer life insurance                           --            30,464
                                                                 ------------      ------------
          Total other assets                                        1,459,059         1,467,792
                                                                 ------------      ------------

                                                                 $ 11,801,608      $ 11,373,334
                                                                 ============      ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Notes payable:
    Bank                                                         $    999,837      $    945,695
    Stockholders                                                      138,946            48,946
  Accounts payable and accrued liabilities                          2,952,607         2,475,853
  Current maturities of long-term obligations                         827,703         3,037,365
  Current maturities of long term obligations - stockholder            61,752            55,911
                                                                 ------------      ------------
          Total current liabilities                                 4,980,845         6,563,770

Long term obligations                                               4,290,277         2,134,934

Long term obligations - stockholder                                   787,930           787,514

Stockholders' equity
  Common stock, $.001 par value, 20,000,000
   shares authorized 3,604,549 and 3,542,049
   shares issued; 3,563,995 and 3,450,113
   shares outstanding; 31,250 and 93,750
   shares subscribed                                                    3,636             3,636
  Additional paid-in capital                                       22,653,410        22,653,410
  Accumulated deficit                                             (20,750,606)      (20,352,590)
                                                                 ------------      ------------
                                                                    1,906,440         2,304,456
  Less:
    Treasury stock, 40,554 and 91,936 shares, at cost                (101,384)         (229,840)
    Common stock subscription receivable                              (62,500)         (187,500)
                                                                 ------------      ------------
           Total stockholders' equity                               1,742,556         1,887,116
                                                                 ------------      ------------

                                                                 $ 11,801,608      $ 11,373,334
                                                                 ============      ============
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.


                                       2
<PAGE>

                               INFINITE GROUP INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                                    Three Months Ended March 31,
                                                      2001              2000
                                                      ----              ----

Sales                                             $ 3,409,742       $ 3,290,826
Cost of goods sold                                  2,380,487         2,199,810
                                                  -----------       -----------
Gross profit                                        1,029,255         1,091,016

Costs and expenses
     Research and development                         191,744           239,411
     General and administrative expenses              571,073           626,906
     Selling expenses                                 179,483           180,875
     Depreciation and amortization                    265,637           272,097
                                                  -----------       -----------
          Total costs and expenses                  1,207,937         1,319,289

Operating loss                                       (178,682)         (228,273)

Other income (expense)
     Interest expense:
         Stockholder                                  (31,099)          (24,127)
         Other                                       (171,632)         (134,202)
     Loss on dispositions of assets                        --           (68,074)
     Other income (expense)                             2,220            (1,853)
                                                  -----------       -----------
          Total other income (expense)               (200,511)         (228,256)
                                                  -----------       -----------

Net loss                                          $  (379,193)      $  (456,529)
                                                  ===========       ===========

Net loss per share - basic:                       $     (0.11)      $     (0.19)
                                                  ===========       ===========

Weighted average number of common
  shares outstanding-basic and diluted              3,503,670         2,368,529
                                                  ===========       ===========

     See accompanying notes to unaudited consolidated financial statements.


                                       3
<PAGE>

                              INFINITE GROUP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                     Three Months Ended March 31,
                                                                     ----------------------------
                                                                         2001           2000
                                                                         ----           ----
<S>                                                                   <C>            <C>
Cash flows from operating activities:
      Net loss                                                        $(379,193)     $(456,520)
      Adjustments to reconcile net loss to net cash used
       in operating activities:
           Depreciation and amortization                                265,637        272,097
           Loss on disposition of assets                                     --         68,074
           Amortization of discount on note payable                       8,656          9,584
           Asset write down and allowances                                   --          6,652
           Changes in assets and liabilities:
                   (Increase) decrease in assets:
                           Accounts receivable                         (161,824)      (154,628)
                           Other current assets                         (13,049)        32,814
                           Inventories                                 (226,375)        44,216
                           Prepaid pension cost                          10,000             --
                    Increase (decrease) in liabilities:
                           Accounts payable and accrued liabilities     476,754          7,985
                                                                      ---------      ---------
           Net cash used in operating activities                        (19,394)      (169,735)
                                                                      ---------      ---------

Cash flows from investing activities:
      Purchase of property and equipment                               (227,033)       (91,206)
      Proceeds from the sale of property and equipment                       --        122,900
      Investment in preferred stock                                          --        (45,000)
      Purchase of intangible assets                                     (48,517)            --
      Proceeds from cancellation of officer life insurance policy        30,464             --
                                                                      ---------      ---------
           Net cash used in investing activities                       (245,086)       (13,306)
                                                                      ---------      ---------

Cash flows from financing activities:
      Net borrowings of notes payable                                   144,142        289,371
      Repayments of long-term obligations                               (54,319)      (206,028)
      Repayments of long-term obligations - stockholder                  (2,399)        (3,863)
      Proceeds from the issuance of common stock, net of expenses       117,675             --
      Collection of stock subscription receivable                       125,000             --
      Increase in restricted funds, net                                 (48,852)       (51,559)
                                                                      ---------      ---------
           Net cash provided by financing activities                    281,247         27,021
                                                                      ---------      ---------

Net increase (decrease) in cash and cash equivalents                     16,767       (155,120)

Cash and cash equivalents - beginning of period                         185,901        328,094
                                                                      ---------      ---------

Cash and cash equivalents - end of period                             $ 202,668      $ 172,974
                                                                      =========      =========
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.


                                       4
<PAGE>

                              INFINITE GROUP, INC.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

================================================================================

NOTE 1. - BASIS OF PRESENTATION

      The accompanying financial statements of Infinite Group, Inc. (the
"Company") have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-QSB. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three-month period ended March 31, 2001 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 2001. For further information, refer to the Company's Annual
Report on Form 10-KSB for the year ended December 31, 2000, which includes
audited financial statements and footnotes as of and for the years ended
December 31, 2000 and 1999.

NOTE 2. - RECLASSIFICATIONS

      Certain amounts in the 2000 financial statements have been reclassified to
conform with the 2001 financial statement presentation.

NOTE 3. - NOTES PAYABLE

      During the quarter ended March 31, 2001, the Company issued an unsecured
short-term note payable to its president in the amount of $10,000. The note
bears interest at the rate of 10% and remains unpaid as of March 31, 2001.

      During the quarter ended March 31, 2001, the Company issued short-term
notes payable to two stockholders, aggregating $80,000. The notes bear interest
at the rate of 10% and remain unpaid as of March 31, 2001. Subsequent to March
31, 2001, one stockholder agreed to accept 25,486 shares of the Company's common
stock in full satisfaction of a note payable and accrued interest, aggregating
$50,972.

      At December 31, 2000, the Company was in violation of certain bank debt
covenants on term loans outstanding at its Laser Fare subsidiary. Consequently,
the associated debt was classified as a current liability at December 31, 2000.
Subsequent to the filing of the Company's Annual Report on Form 10-KSB for the
year ended December 31, 2000, the Company received a bank waiver of the debt
covenant violations that existed at December 31, 2000. Accordingly, in the March
31, 2001 financial statements the debt has been reclassified in accordance with
the required maturities per the term loan agreements.

      In April 2001, the Company received notice that it was in default on a
principal and interest payment due April 16, 2001 in the amount of $342,240
which is owed to a former shareholder of Osley & Whitney. The notice states that
the full outstanding principal and interest balance of $618,240 is due and
payable. The Company is currently in discussions with the noteholder to
negotiate payment terms on the outstanding balance.


NOTE 4. - STOCKHOLDERS' EQUITY

      During the quarter ended March 31, 2001, the Company issued from treasury
25,000 shares of common stock to an accredited investor at a price of $2.00 per
share, resulting in proceeds of $50,000. The Company also issued from treasury
21,737 shares of common stock in accordance with the equity line of credit
agreement resulting in proceeds of $50,474, net of expenses of $12,026. In
addition, various employees exercised stock options with exercise prices ranging
from $1.50 to $2.50 per share, resulting in the issuance of 4,645 shares of
common stock from treasury and proceeds of $9,160. The original cost of the
above shares issued from treasury exceeded the proceeds from issuances by
$18,823 in aggregate, which was charged to accumulated deficit.


                                       5
<PAGE>

NOTE 5. - BUSINESS SEGMENTS

      The Company's businesses are organized, managed and internally reported as
two segments. The segments are determined based on differences in products,
production processes and internal reporting. All of the segments of the Company
operate entirely within the United States. Revenues from customers in foreign
countries are minimal. Transactions between reportable segments are recorded at
cost. The Company relies on intersegment cooperation and management does not
represent that these segments, if operated independently, would report the
results shown.

      A summary of selected consolidated information for the Company's industry
segments during the periods ended March 31, 2001 and March 31, 2000,
respectively, is set forth as follows:

<TABLE>
<CAPTION>
                                           Laser and
                                           Photonics         Plastics         Unallocated
                                             Group             Group           Corporate        Consolidated
                                             -----             -----           ---------        ------------
<S>                                       <C>               <C>               <C>               <C>
Three Months Ended March 31, 2001

Sales to unaffiliated customers           $  2,069,383      $  1,340,359      $         --      $  3,409,742
                                          ============      ============      ============      ============
Operating income (loss)                   $     81,958      $   (324,438)     $     63,798      $   (178,682)
                                          ============      ============      ============      ============
Three Months Ended March 31, 2000

Sales to unaffiliated customers           $  1,697,581      $  1,593,245      $         --      $  3,290,826
                                          ============      ============      ============      ============
Operating income (loss)                   $    (64,803)     $     23,422      $   (186,892)     $   (228,273)
                                          ============      ============      ============      ============
</TABLE>


                                       6
<PAGE>

NOTE 6. - SUBSEQUENT INFORMATION

      The Company is required to meet certain minimum financial conditions in
order to maintain NASDAQ Small Cap market listing. In November 2000, the Company
received notification from NASDAQ that it no longer met the minimum $2 million
net tangible asset criteria for continued listing. Pursuant to the terms of an
extension agreement with NASDAQ to demonstrate compliance with the minimum net
tangible asset test as of April 30, 2001, the Company is providing the following
unaudited balance sheet prepared by management as of March 31, 2001 with
estimated proforma adjustments reflecting certain transactions from March 31,
2001 through April 30, 2001.

<TABLE>
<CAPTION>
                                                                 Unaudited
                                                March 31,         Proforma                   April 30,
      ASSETS                                      2001           Adjustments                   2001
                                                  ----           -----------                   ----
      <S>                                     <C>               <C>                        <C>
      Current assets                          $  3,202,615      $    250,923(3)            $  3,453,538
      Fixed assets, net                          7,139,934           (85,000)(4)              7,054,934
      Goodwill                                     110,226            (3,000)(4)                107,226
      Other long term assets                     1,348,833                                    1,348,833
                                              ------------                                 ------------
               Total assets                   $ 11,801,608                                 $ 11,964,531
                                              ============                                 ============

      LIABILITIES AND
            STOCKHOLDERS' EQUITY

      Current liabilities                     $  4,980,845      $     12,000(4)            $  4,992,845
      Long term liabilities                      5,078,207          (567,161)(1)(2)           4,511,046
                                              ------------                                 ------------
               Total liabilities                10,059,052                                    9,503,891

      Common stock                                   3,636               420(1)(2)(3)             4,056
      Paid-in capital                           22,653,410           817,664(1)(2)(3)        23,471,074
      Accumulated deficit                      (20,750,606)         (100,000)(4)            (20,850,606)
                                              ------------                                 ------------
                                                 1,906,440                                    2,624,524
      Less:
           Treasury stock                         (101,384)                                    (101,384)
           Subscription receivable                 (62,500)                                     (62,500)
                                              ------------                                 ------------
               Total stockholders' equity        1,742,556                                    2,460,640
                                              ------------                                 ------------
               Total liabilities and
                stockholders' equity          $ 11,801,608                                 $ 11,964,531
                                              ============                                 ============
</TABLE>

      Description of proforma adjustments:

            (1)   Release from capital lease obligation and related accrued
                  interest aggregating to $448,831 due to the Company's
                  president. The Company's president contributed equipment owned
                  by him to the Company in exchange for 225,000 shares of common
                  stock. This equipment was subject to a lease accounted for as
                  a capital lease. As a result, no further payments are due
                  under the lease.


                                       7
<PAGE>

NOTE 6. - SUBSEQUENT INFORMATION (CONTINUED)

            (2)   Conversion of notes payable and related accrued interest to
                  former Osley and Whitney, Inc. shareholders (aggregating
                  $118,330), into 63,963 shares of common stock.

            (3)   Proceeds of $250,923 from the issuance of 131,514 shares of
                  common stock to various individual investors in private
                  placement transactions.

            (4)   The Company's operations for the month of April 2001 are
                  estimated to result in a loss of $100,000, which includes an
                  estimated $88,000 of depreciation and amortization expense.

        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
                             RESULTS OF OPERATIONS

                           FORWARD-LOOKING STATEMENTS

Certain statements made in this Quarterly Report on Form 10-QSB are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 regarding the plans and objectives of management
for future operations. You can identify these forward-looking statements by our
use of the words "believes," "anticipates," "plans," "expects," "may," "will,"
"intends," "estimates" and similar expressions, whether in the negative or
affirmative. Such statements involve known and unknown risks, uncertainties and
other factors that may cause actual results, performance or achievements of the
Company 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 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 its 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.
Factors that could cause actual results to differ materially from those
expressed or implied by forward -looking statements include, but are not limited
to, the factors set forth in "Certain Factors That May Affect Future Growth,"
under Part I, Item 1, of the Company's Annual Report on Form 10-KSB for the year
ended December 31, 2000 as filed with the Securities and Exchange Commission. In
light of the significant uncertainties inherent in the forward-looking
statements included herein particularly in view of our early stage operations,
the inclusion of such information should not be regarded by us or any other
person that the objectives and plans of the Company will be achieved.

OUR BUSINESS

      Our business has two segments, the Laser and Photonics Group and the
Plastics Group. We sell products and services in the fields of material
processing, advanced manufacturing methods, high productivity production mold
building and laser-application technology. We have approximately 140 employees.

      Our Laser and Photonics Group, comprised of Laser Fare (Smithfield, RI),
Mound Laser & Photonics Center (Miamisburg, OH), MetaTek, Inc. (Albuquerque, NM)
and the Advanced Technology Group (Narragansett, RI), provides comprehensive
laser-based materials processing services to leading manufacturers. During the
quarter ended March 31, 2001, we formed Infinite Photonics, Inc., which is
charged with developing the manufacturing and marketing of our proprietary GCSEL
laser diodes.

      Our Plastics Group, comprised of Osley & Whitney/ ExpressTool (Westfield,
MA), Materials &


                                       8
<PAGE>

Manufacturing Technologies (West Kingston, RI) and Express Pattern (Buffalo
Grove, IL), provides rapid prototyping services and proprietary mold building
services.

      Since the Company's acquisition of LF in 1994 and MLPC in 1998, the
Company's operations have primarily consisted of contract research and
development for applied photonics, advanced laser and photonics technologies,
and traditional laser welding, machining, drilling and engraving manufacturing
services. In addition, MLPC and LF's Advanced Technology (ATG) divisions
specialize in applied photonics research for governmental and commercial
customers, if the research is reasonably expected to result in a commercially
viable product for an Infinite unit. To meet aerospace and medical device
customer needs, Laser Fare is certified for overhaul and repair by the Federal
Aviation Administration (FAA No. LQFR37K), and as a Contract Manufacturer (Type
E) by the Food and Drug Administration (FDA No. 1287338).

      One of our research projects conducted with Hasbro, Inc. resulted in the
formation of ExpressTool (ET) in 1996, which began the Plastics Group. As a
result of that research, ET was formed for the purpose of commercializing the
technology developed in business areas unrelated to Hasbro's operations. In
April 1999, we acquired Osley & Whitney (O&W), a 50-year-old moldbuilder and we
integrated ET into the production process at O&W. We formed Express Pattern (EP)
in April 1999 to allow customers' design engineers to produce rapid prototype
parts.

      During 2000, ATG completed initial prototype testing of proprietary
grating coupled surface emitting laser (GCSEL) diode technology and furthered
initial patent applications on the technology. Shortly after year-end, the
Company formed Infinite Photonics, Inc. to begin commercialization of the
technology for telecommunications and other applications.

      We continue to experience operating losses in 2001, due primarily to
delays at LF in the receipt of materials for aerospace and jet engine parts.
Falling demand for plastic products due to the rapid increase in petroleum
prices in 2000, resulted in reduced demand for our injection molds and O&W/EP
profitability suffered. These losses resulted in reductions in cash flow,
increased borrowings from banks and an increased negative working capital
position. Management is focused on our two primary lines of business and is
actively pursuing additional capital through the equity line of credit
agreement, private equity sources, strategic alliances, venture capital and
investment banking sources.

      During 2001, our management continues to investigate and implement
strategies aimed at developing the applied photonics segment of our business.
These included LF-ATG expending approximately $0.2 million in funds for research
and development of GCSEL technology, and high temperature superconductor
applications initially developed by LF-ATG. We are currently involved in
discussions with Fortune 500 companies, which would provide funding and
additional revenue sources for the formation of strategic partnerships. In March
2000, we formed a strategic alliance with Cutting Edge Optronics, Inc., a
subsidiary of TRW, for prototype and pilot manufacture of our GCSEL laser
diodes. In May 2001, we were notified that the Defense Advanced Research
Projects Agency (DARPA) had awarded us a one-year $1.0 Million contract in
support of our proprietary GCSEL development.

      We were incorporated under the laws of the state of Delaware on October
14, 1986. On January 7, 1998, we changed our name from Infinite Machines Corp.
to Infinite Group, Inc. Our principal executive offices are located at 2364 Post
Road, Warwick, RI 02886 and our facsimile number is (401) 738-6180. Our
subsidiaries are located in Rhode Island, Massachusetts, New Mexico, Ohio and
Illinois. We maintain sites on the World Wide Web at www.infinite-group.com,
www.laserfare.com, www.infinitephotonics.com, www.expresstool.com and
www.expresspattern.com. Information contained on any of our websites do not
constitute a part of this Form 10-QSB.


                                       9
<PAGE>

RECENT DEVELOPMENT

The Equity Line of Credit Agreement

      On November 20, 2000 we entered into an equity line of credit agreement
with Cockfield Holdings Limited. The purpose of the equity line of credit is to
provide us with a source of funding for our current activities and for the
development of our current and planned products. The equity line of credit
agreement establishes what is sometimes referred to as an equity drawdown
facility. Under the equity line of credit agreement we have the right to sell to
Cockfield up to 3,000,000 shares of our common stock.

      Under the equity line of credit agreement, Cockfield has agreed to
purchase up to 3,000,000 shares of our common stock during the 36-month period
following the effective date of the registration statement. During this 36-month
period, we may request a drawdown under the equity line of credit by selling
shares of our common stock to Cockfield, and Cockfield will be obligated to
purchase the shares we put to them. The minimum amount we can draw down at any
one time is $200,000. The maximum amount we can draw down at any one time will
be determined at the time of the drawdown request under a formula contained in
the equity line of credit agreement, but cannot be more than $5,000,000. We may
request a drawdown once every 20 trading days, although we are under no
obligation to request any drawdowns.

      In order to exercise our drawdown rights under the equity line of credit
agreement, we must have an effective registration statement on file with the
Securities and Exchange Commission registering the resale of the shares of our
common stock that may be sold to Cockfield. We must also give at least 20
business days advance notice to Cockfield of the date on which we intend to
exercise a particular put right and we must indicate the maximum number of
shares of our common stock that we intend to sell to Cockfield. At our option,
we may also designate a maximum dollar amount of our common stock that we will
sell under the put and/or a minimum purchase price per share at which Cockfield
may purchase shares under the put. The maximum amount may not to exceed the
lesser of a) $5,000,000 or b) fifteen percent (15%) of the weighted average
price of our common stock during the 20 trading days immediately prior to the
put date, multiplied by the total trading volume of our common stock during the
20 trading days immediately prior to that date.

      During the 20 trading days following a drawdown request, we will calculate
the number of shares we will sell to Cockfield and the price per share. The
purchase price per share of common stock will be at a discount to the daily
volume weighted average price of our common stock during the 20 trading days
immediately following the drawdown date. On each of the 20 trading days during
the calculation period, the number of shares to be purchased by Cockfield will
be determined by dividing 1/20th of the drawdown amount by the purchase price on
each trading day. If we designate a minimum purchase price in our drawdown
request and the daily volume weighted average price for our common stock on any
trading day during the 20 trading day calculation period is below the minimum
threshold price, and Cockfield elects not to purchase shares at the minimum
threshold price, then the drawdown amount will be reduced by 1/20th.

      For each share of our common stock, Cockfield will pay us 87.5% of the
volume-weighted market price for a share of our common stock during the 20-day
trading period following the exercise of a put. The percentage will increase to
90% if we move our principal market to the Nasdaq National Market or to 91% if
we move our principal market to the New York Stock Exchange. It will decrease to
84% if our common stock is delisted from the Nasdaq SmallCap Market. Market
price is defined as the volume weighted average price for our common stock (as
reported by Bloomberg Financial LP using its VAP function) on its principal
market during the pricing period. The pricing period is defined as the 20 day
trading period immediately prior to the day we exercise our put right.


                                       10
<PAGE>

      Cockfield will pay for the shares on the 22nd trading day following the
drawdown request. We will receive the purchase price less a brokerage fee
payable to Jesup & Lamont ranging between 4.25% and 4.75% of the aggregate
purchase price, depending on the dollar volume of the transaction. Jesup &
Lamont is the placement agent that introduced Cockfield to us and is a
registered broker-dealer.

      At the closing of each drawdown, we will also grant Cockfield warrants to
purchase a number of shares of our common stock equal to 33% of the number of
shares purchased by Cockfield at the closing of the drawdown. These unit
warrants will expire one day after they are granted and will have an exercise
price equal to the weighted average of the purchase price of a share of our
common stock purchased at the closing of each drawdown. The 3,000,000 shares
available under the equity line of credit will be reduced by the number of
shares issued as a result of the exercise of these unit warrants.

      The equity line of credit agreement prevents us from drawing down funds
and issuing the corresponding shares of common stock to Cockfield if the
issuance would result in Cockfield beneficially owning more than 9.9% of our
then outstanding shares of common stock. In addition, the listing requirements
of the Nasdaq SmallCap Market prohibit us from issuing 20% or more of our issued
and outstanding shares of common stock in a single transaction at a price less
than the greater of market value or book value unless we get stockholder
approval. At our annual meeting held on March 22, 2001, our stockholders
approved the issuance of the shares of our common stock contemplated by the
equity line of credit agreement.

      As consideration for establishing the equity line of credit, we granted
Cockfield warrants to purchase up to 200,000 shares of our common stock. As
consideration for the services rendered by Jesup & Lamont as placement agent in
connection with the equity line of credit, we granted Jesup & Lamont warrants to
purchase up to 100,000 shares of our common stock. These warrants, covering
300,000 shares of our common stock, are exercisable at any time prior to
November 20, 2003, for $3.135 per share.

      On February 8, 2001, we issued a drawdown notice to Cockfield. This notice
offered to sell up to $250,000 of our common stock to Cockfield based on the
formula in the stock purchase agreement, during the 20 trading day period
beginning on February 9, 2001 and ending on March 9, 2001, but at not less than
$3.00 per share. During this period, Cockfield purchased a total of 21,737
shares of our common stock at an average net purchase price of $2.8753 per
share. These purchases resulted in aggregate proceeds of $62,500 being paid and
released from escrow to us by Cockfield. Jesup & Lamont Securities Corporation
received $2,969 as a placement fee in connection with this draw.

THE LASER AND PHOTONICS GROUP

      Our Laser Fare (LF) subsidiary is primarily engaged in contract laser
material processing; however it also develops new applications for industrial
lasers. Laser Fare has 23 high-powered computer controlled lasers that are
capable of performing a wide variety of manufacturing with multi-axis
manipulation. Laser Fare also manufactures stents and complete assemblies for
selective medical product companies. Approximately 75% of Laser Fare's sales
come from customers in the medical device, aerospace and power generation
industries. Customers include General Electric, United Technologies, Honeywell,
Polaroid, Stryker Medical and Dey Laboratories. Through Laser Fare we also
provide a variety of value-added services, that include assembly, heat treating,
coating, testing and inspection. We quote orders through traditional sales
methods as well as through our Web site at www.laserfare.com. Laser Fare is
certified for overhaul and repair by the Federal Aviation Administration (FAA
No. LQFR37K), and as a Contract Manufacturer (Type E) by the Food and Drug
Administration (FDA No. 1287338).


                                       11
<PAGE>

      Our Mound Laser and Photonics Center (MLPC) subsidiary specializes in
laser applications, photonics applications and materials processing, and
provides services within industry, government and education sectors. The midwest
location, a region long known for its expertise in materials and material
science, gives us a platform for growth into the automotive, aerospace, tool and
die and other local industries. Specialized services include growth of thin
films by pulsed laser deposition, application of lasers to chemistry and
photochemistry, spectroscopy, and applied optics. MLPC has applied for a
provisional patent on pulsed laser deposition. The combination of Laser Fare's
expertise in materials processing and MLPC's expertise in laser and photonics
applications creates a synergistic atmosphere for the advancement of laser
materials processing and the development and commercialization of new
laser-based technology.

      In June 2000, our MLPC subsidiary was awarded a $100,000 Phase 1 Small
Business Innovative Research (SBIR) contract from the Air Force Research
Laboratory (AFRL). The SBIR is for work on the laser deposition of High
Temperature Superconductors (HTS). The work is based on recent developments at
our MLPC subsidiary in laser micromachining and fabrication technology. AFRL's
Materials and Manufacturing Directorate (AFRL/ML) possesses novel HTS process
technology and has developed complementary substrate preparation technology.

      Our Advanced Technology Group (ATG) conducts research and development
programs for industrial and government sponsors. ATG has recently been awarded
several contracts and subcontracts sponsored by the Defense Advanced Research
Project Agency (DARPA). DARPA is the central research and development
organization for the Department of Defense. It manages and directs selected
basic and applied research and development projects for the Department of
Defense, and pursues research and technology where risk and payoff are both very
high and where success may provide dramatic advances for traditional military
roles and missions and dual-use commercial applications. As it effects ATG,
these programs have been focused on laser driven direct write technologies.
Laser direct technologies enable cost-effective manufacturing of engineered
components without the use of expensive tooling by directly depositing materials
on substrates with laser energy. Active and passive devices for electronic and
photonic applications can be manufactured this way as well as a wide variety of
sensors, Micro Electro Mechanical Systems ("MEMS") and actuators. These
technologies have applications across a broad range of industries that utilize
electronic and photonic materials (including telecommunications, automotive and
consumer electronics).

      ATG has a consulting arrangement with Tensegra Inc. of Cambridge, MA.
Tensagra is creating technologies using synthetic biomimetic materials with the
mechanical responsiveness of living cells and tissues and applying these
technologies to medical, industrial and military applications. Our Advanced
Technology Group will utilize Laser Fare's and ExpressTool's proprietary
techniques to fabricate structures for Tensegra.

      Triton Systems of Chelmsford, MA contracts with our Advanced Technology
Group to laser fabricate aerospace components from metal matrix composite
materials. These are strong lightweight materials that are used in aerospace
engines.

      In May 2000, our Advanced Technology Group was awarded a contract from
MIOX Corporation in support of their award from DARPA for small portable water
purification system that can be carried by a soldier in the field. The system
will provide filtered, desalinated, and disinfected water in sufficient quantity
to supply a single soldier, from natural water sources, including saltwater. We
will apply our knowledge of classical manufacturing and additive direct write
techniques to enable the cost effective manufacturing of these devices.

      In June 2000, ATG was awarded a contract from the State University of New
York (SUNY) at Stony


                                       12
<PAGE>

Brook in support of their award from DARPA for thermally sprayed direct write
sensors. The Center for Thermal Spray Technology at SUNY-Stony Brook is a
National Science Foundation Materials Research Science and Engineering Center.
The Center conducts both basic and applied research in thermal spray materials
and processes and has a broad base of industrial support. It is recognized as a
world leader in thermal spray technology. This high energy direct write approach
will create a new family of sensors and sensor enabled MEMS that will be able to
function in harsher environments than today's devices. Our successful completion
of this work will open new markets for these devices ranging from aerospace and
automotive to telecommunications.

THE PLASTICS GROUP

      In April 1999, we acquired 100% of the outstanding capital stock of Osley
& Whitney, Inc. (O&W), a privately held Massachusetts corporation, from its
stockholders for approximately $1.5 million payable in cash and notes. O&W is a
fifty-year-old plastic injection moldbuilding company located in Westfield, MA
with approximately 54 employees. It serves a blue-ribbon clientele of
automotive, automotive aftermarket, consumer sporting goods, and office machine
companies including Polaroid, Pitney-Bowes, Hardigg Industries, and others, from
its 21,500-sq. ft. manufacturing facility. Our proprietary mold fabrication and
conformal cooling technologies lower the cost of molded parts, increase molding
capacity and provide shorter delivery times over conventional constructed molds.
This compliments our established expertise in the moldbuilding industry. O&W has
achieved preferred vendor status with Pitney Bowes, Hardigg Industries and
others.

      ExpressTool (ET) was integrated into our Westfield facility and separate
facilities in Warwick, RI were closed to reduce cost and improve productivity.
The ExpressTool process incorporates its conformal cooling and proprietary
thermal management for high production injection mold tooling to allow molds
used in the plastic fabrication industries to cool and eject parts up to 75%
faster than traditional molds. ET accepts 3-D design computer files directly
over the Internet from our customers who use such software as AutoCad, Pro-E,
Solidworks and Cadkey. ExpressTool is shipping mold inserts to such customers as
Cheeseborough Pond, 3M and GE Plastics among others. In April 1999, we formed
Express Pattern (EP) located in Buffalo Grove, IL to expand our midwest presence
and provide plastic rapid prototyping services to the metal casting industries.
Express Pattern ships plastic prototype parts to Allen-Bradley, Paradigm,
Rolls-Royce Allison, Motorola, Hewlett-Packard and others. In addition to
quotations and prototype part production from traditional blueprints, EP
provides direct interface (including uploads over the internet) from customer
CAD software (such as AutoCad, Pro-E and others) to our stereolithography
systems and equipment. Express Pattern also provides similar services to our
other subsidiaries.

      Also in April 1999, we acquired 100% of the outstanding stock of Materials
& Manufacturing Technologies, Inc. (MMT) of West Kingston, Rhode Island in
exchange for 20,000 shares of Infinite Group common stock. MMT has received a
patent, number 5,427,987, from the United States patent office on its work in
zirconium diboride materials. MMT has an exclusive licensing arrangement with
Texas A&M University (with rights to sub-license) for use of patents and
intellectual property owned by Texas A&M in the area of electrodes and parts
made from zirconium diboride/cooper (Zyrkon(TM)) composites. Zyrkon(TM)
composite electrodes have been shown to be superior to copper, tungsten/copper
and graphite electrodes in electrical discharge machining applications. In
addition, parts made from Zyrkon(TM) exhibit excellent abrasion resistance and
resistance to wear by electric arcs as well as high thermal conductivity and a
relatively low coefficient of thermal expansion. These properties indicate that
Zyrkon(TM) can be used to replace current material systems in applications as
varied as injection mold tooling, spot-welding, waste remediation electrodes,
high-current switches and heat sinks. The acquisition provides us with the
ability to take advantage of these material systems in our areas of expertise as
well as providing us with the ability to


                                       13
<PAGE>

address new markets.

LIQUIDITY AND CAPITAL RESOURCES

      The Company has financed its product development activities through a
series of private placements of debt and equity securities. As of March 31,
2001, we had cash and cash equivalents of approximately $202,668 available for
our working capital needs and planned capital asset expenditures.

      While the majority of the revenues realized as of March 31, 2001 were
attributed to our LF and O&W operations, we anticipate improved revenue from our
other divisions and positive results from additional expense containment
measures that have been implemented. We anticipate that our equity line of
credit, as well as other strategies for raising additional working capital
through debt and/or equity transactions will provide improved liquidity. In the
first quarter of 2001, $250,469 of proceeds were received from the sale of
equity comprised of (a) two installment payments under the subscription
agreement totaling $ 137,969, with interest, (b) a drawdown under the equity
line with Cockfield of $62,500, and (c) a private placement of $50,000.
Additional private placements of $250,000 and conversion of a capital lease
obligation to our principal shareholder of $448,830 to stockholders' equity was
completed in early April 2001.

      As of March 31, 2001, we had a working capital deficit of $1,778,230. In
conjunction with our on-going business expansion program, we are pursuing
alternative sources of funding from conventional banking institutions as well as
exploring the availability of government funds in the form of revenue bonds for
the purchase of equipment and facilities, among others. There is no assurance,
however, that our current resources will be adequate to fund our current
operations and business expansion or that we will be successful in raising
additional working capital. Our failure to raise necessary working capital could
force us to curtail operations, which would have a material adverse effect on
our financial condition and results of operations.

      Risk of Nasdaq Delisting. Our common stock is currently traded on the
Nasdaq SmallCap Market. In order to maintain this listing, we are required to
meet certain requirements relating to our stock price and our net tangible
assets. If we fail to meet these requirements, our stock could be delisted. We
have received a series of letters from Nasdaq that we failed to satisfy the
minimum net tangible asset listing requirements for the SmallCap Market. As a
result of private placement transactions consummated after December 31, 2000,
and after March 31, 2001, we believe we are currently in compliance with the net
tangible asset requirement. However, we cannot assure you that Nasdaq will agree
or that we will continue to satisfy the Nasdaq SmallCap Market listing
requirements. If our stock is delisted, it will trade on the OTC Bulletin Board
or in the "pink sheets" maintained by the National Quotation Bureau
Incorporated. As a consequence of such delisting, an investor could find it more
difficult to dispose of or to obtain accurate quotations as to the market value
of our securities. Among other consequences, delisting from Nasdaq may cause a
decline in the stock price and difficulty in obtaining future financing.

                              Results of Operations

Laser and photonics group

      Revenues from our laser material processing, value added services,
advanced technology consulting and laser and photonics services for the quarter
ended March 31, 2001 were $2,069,383, ($1,697,581 at March 31, 2000) with a
gross profit for the period of $860,381 ($642,967 at March 31, 2000).


                                       14
<PAGE>

Plastics group

      Revenues from our plastic moldbuiding, conformal cooling and proprietary
thermal management of high production injection mold tooling, plastic rapid
prototyping services and electrodes and parts made from zirconium
diboride/copper (Zykron(TM)) composites for quarter ended March 31, 2001 were
$1,340,359, ($1,593,245 at March 31, 2000) with a gross profit for the period of
$168,874 ($448,049 at March 31, 2000).

Three Months Ended March 31, 2001 Compared to Three Months Ended March 31, 2000

      Consolidated revenues for the three months ended March 31, 2001 were
$3,409,742, on cost of sales of $2,380,487, resulting in a gross profit of
$1,029,255 for the quarter. Consolidated revenues for the three months ended
March 31, 2000 were $3,290,826 on cost of sales of $2,199,810, resulting in a
gross profit of $1,091,016. The increase of $118,916 or 3.6% in consolidated
revenues for the quarter ended March 31,2001, compared to the quarter ended
March 31, 2000, was due to a general increase in a general increase in revenues
associated with the Laser Group.

      Research and development expenses were $191,744 for the three months ended
March 31, 2001 as compared to $239,411 for the three months ended March 31,
2000. The decrease of $47,667 or 19.9%, was primarily attributed to cost
containment for research and development efforts in our plastics group, as
separate Express Tool facilities were integrated into our O&W Westfield
operations.

      General and administrative expenses were $571,073 for the three months
ended March 31, 2001 as compared to $626,906 for the three months ended March
31, 2000. The decrease of $55,833, or 8.9%, was primarily attributed to
executive and administrative salary reductions throughout the company.

      Selling expenses were $179,483 for the three months ended March 31, 2001
as compared to $180,875 for the three months ended March 31, 2000.

      Depreciation and amortization expense totaled $265,637 for the three
months ended March 31, 2001 as compared to $272,097 for the three months ended
March 31, 2000.

      Interest expense was $202,731 for the three months ended March 31, 2001 as
compared to $158,329 for the three months ended March 31, 2000. The increase of
$44,402, or 28%, was due to interest paid on the note payable to our president,
and debt obligations related to the O&W acquisition.

      The loss from operations was $379,193 for the three months ended March 31,
2001 as compared to a loss of $456,529 for the three months ended March 31,
2000. The decrease of $77,336, or 16.9%, was primarily attributed to cost
containment throughout the company.


                                       15
<PAGE>

Part II - Other information

Item 4. Submission Of Matters To A Vote Of Security Holders

      On March 22, 2001, we held our annual meeting of stockholders pursuant to
notice. At such meeting, the following directors were elected to hold office
until the 2001 annual meeting of stockholders or until their successors are duly
elected and qualified: Clifford G. Brockmyre II, Michael S. Smith, J. Terence
Feeley, William G. Lyons III, and Brian Q. Corridan (2,837,497 votes in favor
and 35,216 against). Further, the proposal to approve the issuance of up to
3,300,000 under the equity line of credit agreement was approved (1,598,831
votes in favor and 57,848 votes against) and the appointment of McGladrey &
Pullen, LLP, as our auditors for the 2000 fiscal year was ratified (2,860,517
votes in favor and 31,080 votes against).

SIGNATURES

      In accordance with the requirements of the Exchange Act, the Registrant
has caused this report to be signed on its behalf by the undersigned, thereto
duly authorized.

May 14, 2001

                                                INFINITE GROUP, INC.


                                                By: /s/ Clifford G. Brockmyre
                                                    ----------------------------
                                                Clifford G. Brockmyre, President
                                                And Chief Executive Officer


                                                By: /s/ Bruce J. Garreau
                                                    ----------------------------
                                                Bruce J. Garreau
                                                Chief Financial Officer
                                                (principal accounting officer)


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