UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2006

                         Commission File Number 0-21816

                               INFINITE GROUP INC.
        (Exact name of small business issuer as specified in its charter)

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

                               60 Office Park Way
                            Pittsford, New York 14534
                            -------------------------
                     (Address of principal executive office)

                                 (585) 385-0610
                (Issuer's telephone number, including area code)

Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period  that the issuer was  required  to file such  reports),  and (2) has been
subject to such filing requirements for the past 90 days.
                                  Yes |X| No|_|

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).  Yes |_| No [X]

Number of shares  outstanding of each of the issuer's  classes of common equity,
as of the latest  practicable  date: As of May 11, 2006,  there were  20,034,965
shares of common stock outstanding.

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

                                       1
<PAGE>

                               INFINITE GROUP INC.
                               FORM 10-QSB REPORT

                               Infinite Group Inc.

                             TABLE OF CONTENTS                              PAGE

PART I - FINANCIAL INFORMATION

   Item 1.  Consolidated Financial Statements

            Balance Sheet - March 31, 2006 (unaudited) and December 31,
            2005 (audited)                                                     3

            Statements of Operations - (unaudited) for the three
            month periods ended March 31, 2006 and 2005                        4

            Statements of Cash Flows - (unaudited) for the three month
            periods ended March 31, 2006 and 2005                              5

            Notes to Consolidated Financial Statements                         6

   Item 2.  Management's Discussion and Analysis of Financial
            Conditions and Results of Operations                              10

   Item 3.  Controls and Procedures                                           17

PART II - OTHER INFORMATION

   Item 1.  Legal Proceedings                                                 17

   Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds       17

   Item 3.  Defaults Upon Senior Securities                                   17

   Item 4.  Submission of Matters to a Vote of Security Holders               17

   Item 5.  Other Information                                                 18

   Item 6.  Exhibits                                                          18

SIGNATURES                                                                    19

                           FORWARD-LOOKING STATEMENTS

      Certain  statements  made in this  Quarterly  Report  on Form  10-QSB  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 continued
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.  The terms "we",  "our",  "us", or any derivative  thereof,  as used
herein  refer  to  Infinite  Group  Inc.,  a  Delaware   corporation,   and  its
predecessors.

                                       2
<PAGE>

                                     PART I
                              FINANCIAL INFORMATION
Item 1.  Financial Statements

INFINITE GROUP, INC.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
                                                        March 31,     December 31,
                                                          2006           2005
----------------------------------------------------------------------------------
ASSETS                                                 (Unaudited)     (Audited)
<S>                                                   <C>             <C>
Current assets:
   Cash                                               $    162,160    $    109,090
   Accounts receivable, net of allowance
     of $53,000 ($53,000 - 2005)                           801,204         875,538
   Notes receivable, current portion                         4,932           4,746
   Inventories                                              26,677          24,664
   Prepaid expenses and other current assets                67,889          49,516
                                                      ------------    ------------
       Total current assets                              1,062,862       1,063,554

Property and equipment, net                                187,373         190,520

Software development costs, net                            204,633         207,348

Other assets:
  Notes receivable                                          77,137          78,439
  Deposits                                                  16,703          16,703
                                                      ------------    ------------
         Total other assets                                 93,840          95,142
                                                      ------------    ------------
Total assets                                          $  1,548,708    $  1,556,564
                                                      ============    ============

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
   Note payable                                             30,000          30,000
   Accounts payable                                        341,792         412,100
   Accrued pension                                         180,647         152,050
   Accrued payroll                                         264,598         186,863
   Accrued interest payable                                120,774         118,913
   Accrued expenses-other                                   60,270          60,977
   Current maturities of long-term obligations-bank         12,723          12,778
                                                      ------------    ------------
      Total current liabilities                          1,010,804         973,681

Long-term obligations:
   Bank notes payable                                       47,449          50,600
   Notes payable-related parties                         1,260,124       1,260,124
   Accrued pension expense                               2,435,312       2,405,612
                                                      ------------    ------------
Total liabilities                                        4,753,689       4,690,017
                                                      ------------    ------------

Commitments and contingencies

Stockholders' deficiency:
   Common stock, $.001 par value, 60,000,000
     (20,000,000 - 2005) shares authorized;
     19,856,881 (19,856,881 - 2005) shares issued
     and outstanding                                        19,857          19,857
   Additional paid-in capital                           28,552,616      28,523,334
   Common stock, 178,084 shares authorized,
     not issued (175,084 - 2005)                            56,448          56,028
   Accumulated deficit                                 (28,787,047)    (28,685,817)
   Accumulated other comprehensive loss                 (3,046,855)     (3,046,855)
                                                      ------------    ------------
  Total stockholders' deficiency                        (3,204,981)     (3,133,453)
                                                      ------------    ------------
Total liabilities and stockholders' deficiency        $  1,548,708    $  1,556,564
                                                      ============    ============
</TABLE>

See notes to consolidated financial statements.

                                       3
<PAGE>

INFINITE GROUP, INC.
Consolidated Statements of Operations (Unaudited)

                                                        Three Months Ended
                                                            March 31,
                                                  ----------------------------
                                                        2006           2005
------------------------------------------------------------------------------

Sales                                             $  1,623,436    $  2,124,727
Cost of services                                     1,305,859       1,514,881
                                                  ------------    ------------
Gross profit                                           317,577         609,846
                                                  ------------    ------------

Costs and expenses:
   General and administrative                          373,238         356,391
   Selling                                             412,534             894
   Research and development                             68,122          71,681
   Depreciation and amortization                        13,039          11,181
                                                  ------------    ------------
        Total costs and expenses                       866,933         440,147
                                                  ------------    ------------
Operating income  (loss)                              (549,356)        169,699
                                                  ------------    ------------

Other income (expense):
       Interest income                                     268          34,062
       Interest expense:
           Related parties                             (29,296)        (21,857)
           Other                                       (13,634)        (66,994)
                                                  ------------    ------------
                  Total interest expense
                                                       (42,930)        (88,851)
       Other income-settlement of litigation           498,088              --
                                                  ------------    ------------
       Total other income (expense)                    455,426         (54,789)
                                                  ------------    ------------
Income (loss) from continuing operations before
        income tax expense                             (93,930)        114,910
Income tax expense                                      (7,300)         (1,300)
                                                  ------------    ------------
Income (loss) from continuing operations              (101,230)        113,610
Discontinued operations:
        Income from discontinued operations                 --           7,254
                                                  ------------    ------------

 Net income (loss)                                $   (101,230)   $    120,864
                                                  ============    ============

Net income (loss) per share-basic:
  Income (loss) from continuing operations        $       (.01)   $        .01
  Income (loss) from discontinued operations               .00             .00
                                                  ------------    ------------
   Net income (loss)                              $       (.01)   $        .01
                                                  ============    ============

Net income (loss) per share-diluted:
   Income (loss) from continuing operations       $       (.01)   $        .01
   Income from discontinued operations                     .00             .00
                                                  ------------    ------------
     Net income (loss)                            $       (.01)   $        .01
                                                  ============    ============

 Weighted average number of shares outstanding:
   Basic                                            19,856,881      18,611,354
                                                  ============    ============
   Diluted                                          19,856,881      19,846,464
                                                  ============    ============

See notes to consolidated financial statements.

                                       4
<PAGE>

INFINITE GROUP, INC.
Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
                                                            Three Months Ended
                                                                March 31,
                                                          ----------------------
                                                            2006         2005
--------------------------------------------------------------------------------
<S>                                                       <C>          <C>
Operating activities:
  Net income (loss)                                       $(101,230)   $ 120,864
  Adjustments to reconcile net income (loss) to net
    cash provided by (used in) operating activities:
       Income from discontinued operations                       --       (7,254)
       Common stock options and warrants expensed            29,282           --
       Depreciation and amortization                         13,039       11,181
      (Increase) decrease in assets:
              Accounts receivable                            74,334     (492,547)
               Inventories                                   (2,013)          --
              Other current assets                          (18,373)      (3,250)
       Increase (decrease) in liabilities:
              Accounts payable                              (70,308)     (72,893)
              Accrued expenses                               78,889       70,929
              Accrued pension obligations                    58,297       53,744
                                                          ---------    ---------
Net cash provided by (used in) operating activities          61,917     (319,226)
                                                          ---------    ---------

Investing activities:
   Purchase of property and equipment                        (7,177)     (40,132)
   Proceeds from notes receivable                             1,116       73,052
   Increase in restricted funds                                  --      (11,250)
                                                          ---------    ---------
Net cash provided by (used in) investing activities          (6,061)      21,670
                                                          ---------    ---------

Financing activities:
   Net repayments of bank notes payable                      (3,206)     (21,071)
   Proceeds from exercise of stock options                      420           --
   Proceeds from short-term notes payable-other                  --      214,292
   Repayment of long-term obligations                            --      (43,786)
   Proceeds from issuance of common stock, net of costs          --       80,000
                                                          ---------    ---------
Net cash provided by (used in) financing activities          (2,786)     229,435
                                                          ---------    ---------
Net increase (decrease) in cash                              53,070      (68,121)
Cash - beginning of period                                  109,090       97,297
                                                          ---------    ---------
Cash - end of period                                      $ 162,160    $  29,176
                                                          =========    =========

Supplemental disclosure:
   Cash paid for:
     Interest                                             $  43,770    $  58,256
                                                          =========    =========
     Income taxes                                         $   7,300    $   1,300
                                                          =========    =========
</TABLE>

See notes to consolidated financial statements.

                                       5
<PAGE>

INFINITE GROUP INC.

Notes to Consolidated Financial Statements-(Unaudited)
------------------------------------------------------

Note 1. Basis of Presentation

The accompanying  unaudited  consolidated financial statements of Infinite Group
Inc.  ("Infinite  Group  Inc." or the  "Company"),  included  herein  have  been
prepared by the  Company in  accordance  with  accounting  principles  generally
accepted  in  the  United  States  of  America  (U.S.)  for  interim   financial
information  and with  instructions  to Form  10-QSB.  Accordingly,  they do not
include all of the information and footnotes  required by accounting  principles
generally accepted in the U.S. for complete financial statements. In the opinion
of management, all adjustments considered necessary for a fair presentation have
been  included.  All such  adjustments  are of a normal  recurring  nature.  The
accompanying  unaudited  consolidated  financial  statements  should  be read in
conjunction with the Company's  audited  consolidated  financial  statements and
footnotes for the year ended December 31, 2005 and the notes thereto included in
the Company's  Annual report on Form 10-KSB filed with the U.S.  Securities  and
Exchange  Commission.  Results of  consolidated  operations  for the three month
period  ended March 31, 2006 are not  necessarily  indicative  of the  operating
results  that may be  expected  for the  year  ending  December  31,  2006.  The
consolidated financial statements herein include the accounts of the Company and
its  wholly  owned  subsidiaries.   All  material   inter-company  accounts  and
transactions have been eliminated.

Note 2. Summary of Significant Accounting Policies

Critical Accounting Policies and Estimates

There are several  accounting  policies that we believe are  significant  to the
presentation of our consolidated  financial  statements.  These policies require
management  to make  complex or  subjective  judgments  about  matters  that are
inherently  uncertain.  Note 3 to our  December  31, 2005  audited  consolidated
financial statements presents a summary of significant  accounting policies.

The Company  reclassified certain prior year amounts to conform with the current
year's presentation

Note 3. Discontinued Operations and Reclassifications

The statements of operations and cash flows for the three months ended March 31,
2005 account for the discontinued  operations of the Photonics Group, consisting
of Infinite  Photonics,  Inc.  (IPI),  which business was suspended in 2002 as a
result of the loss of the DARPA contract as discussed below.

On October 30, 2002,  IPI received a Notice of Termination of its DARPA contract
for  the  government's   convenience  under  the  contract  provisions  entitled
Termination,  Federal Acquisition  Regulation (FAR) 52.249.6. The DARPA contract
had provided  substantially  all of the revenue of the  Photonics  Group.  As of
December 31, 2004, the contract termination process was substantially  complete.
We have  been  reimbursed  for  substantially  all  costs  associated  with  the
termination.

In  accordance  with FASB 144,  the disposal of the  Photonics  segment has been
accounted for as a disposal of a business segment and accordingly, the operating
results  are  segregated  and  reported  as   discontinued   operations  in  the
accompanying consolidated statements of operations and cash flows and consist of
income from  discontinued  operations of $7,254 for the three months ended March
31, 2005.

                                       6
<PAGE>

Note 4. Stock Option Plans

As of March 31, 2006 the Company's Stock Option Plans (the "Plan")  provided for
the grant of incentive or non-qualified stock options for the purchase of common
stock for up to 5,626,500 shares to employees,  directors and  consultants.  The
Plan is administered by the compensation  committee established by the Company's
board of  directors,  which  determines  the terms of the options  including the
exercise price, expiration date, number of shares, and vesting provisions.

In December 2004,  the Financial  Accounting  Standards  Board issued SFAS 123R,
Share-Based Payment ("SFAS 123R"). SFAS 123R supersedes SFAS 123, Accounting for
Stock Based Compensation, and Accounting Principles Board Opinion 25, Accounting
for Stock Issued to Employees ("APB 25) and its related implementation guidance.
On January 1, 2006,  we adopted the  provisions  of SFAS 123R using the modified
prospective  transition  method.  Under this method,  the Company is required to
record compensation expense for all stock based awards granted after the date of
adoption and for the unvested  portion of previously  granted awards that remain
outstanding  as of  the  beginning  of  the  adoption.  Prior  period  financial
statements have not been restated. Under SFAS 123R, compensation expense related
to stock based  payments is recorded over the requisite  service period based on
the grant date fair value of the awards.

Prior to the adoption of SFAS 123R,  the Company  accounted  for employee  stock
options using the intrinsic value method in accordance with APB 25. Accordingly,
no compensation  expense was recognized for stock options issued to employees as
long as the  exercise  price is greater than or equal to the market value of the
common  stock at the date of grant.  In  accordance  with SFAS 123,  the Company
disclosed the summary of pro forma effects to reported net income or net loss as
if the  Company had elected to  recognize  compensation  costs based on the fair
value of the awards at the grant date.

The  compensation  cost that has been charged against income for options granted
under the plans was  $23,585 for the  three-months  ended  March 31,  2006.  The
impact of this expense was to increase basic and diluted net loss per share from
$(.00) to $(.01) for the three months ended March 31, 2006. The adoption of SFAS
123R  did  not  have an  impact  on  cash  flows  from  operating  or  financing
activities.  A deduction is not allowed for income tax purposes until the option
are exercised.  The amount of this deduction will be the difference  between the
fair value of the Company's  common stock and the exercise  price at the date of
exercise.  Accordingly,  there is a deferred tax asset recorded  related for the
tax effect of the financial  statement expense  recorded.  The tax effect of the
income  tax  deduction  in excess of the  financial  statement  expense  will be
recorded as an increase to additional paid-in capital. Due to the uncertainty of
the Company's  ability to generate  sufficient  taxable  income in the future to
utilize  the tax  benefits of the options  granted,  the Company has  recorded a
valuation allowance to reduce its gross deferred tax asset to zero. As a result,
for the three months ended March 31, 2006, there is no income tax expense impact
from recording the fair value of options granted.

The Company uses  volatility  of 100% when  computing the value of stock options
and warrants.  This is based on a  combination  of both  historical  and implied
volatility  since the  historical  volatility  has trended  downward  especially
during the period from July 2005,  when the Company  brought  current its public
information in filings with the SEC. In addition, the Company's volume of shares
traded has increased in the past several  months which the Company  believes has
provided more liquidity and less volatility than was previously experienced. The
expected  dividend yield is zero percent and the expected life on the options is
ten years.  The risk-free  rate for periods within the  contractual  life of the
option is based on the U.S. Treasury yield curve in effect at the time of grant.
The Company  recorded  expense of $23,585 for employee  stock options and $5,697
for options and warrant  issued to independent  service  providers for the three
months ended March 31, 2006.

                                       7
<PAGE>

(A) summary of all stock  option  activity  for the three months ended March 31,
2006 follows:

<TABLE>
<CAPTION>
                                                  Weighted       Weighted-
                                                   Average        Average         Aggregate
                                    Number of     Exercise       Remaining        Intrinsic
                                     Options        Price     Contractual Term      Value
                                   ----------    ----------   ----------------   ----------
<S>                                <C>           <C>          <C>                <C>
Outstanding at December 31, 2005    4,020,900    $      .16
                                                 ==========

Options issued                        260,000    $      .25
                                                 ==========

Options expired                      (912,900)   $      .15
                                                 ==========

Options exercised                      (3,000)   $      .14
                                   ----------    ==========

Outstanding at March 31, 2006       3,365,000    $      .18          8.4 years   $  818,990
                                   ==========    ==========   ================   ==========

Exercisable at March 31, 2006       3,146,334    $      .17          8.3 years   $  784,790
                                   ==========    ==========   ================   ==========
</TABLE>

The weighted average fair value of options granted during the three-month period
ended March 31, 2006 was approximately  $.23 ($.08 during the three months ended
March 31, 2005). The total intrinsic value of options exercised during the three
months  ended March 31, 2006 was $480 and no options were  exercised  during the
three months  ended March 31,  2005.

A summary of the status of nonvested stock option activity for the three months
ended March 31, 2006 follows:

                                             Weighted Average
                                                Fair Value
        Nonvested Shares          Shares      at Grant Date
------------------------------   --------    ----------------
Nonvested at December 31, 2005     50,666    $            .20
Granted                           260,000                 .23
Vested                            (86,667)                .23
Forfeited                          (5,333)                .30
                                 --------
Nonvested at March 31, 2006       218,666    $            .22
                                 ========

At March  31,  2006,  there  was  approximately  $51,000  of total  unrecognized
compensation  cost related to non-vested  options  granted under the plan.  That
cost is expected to be recognized  over a weighted  average period of 1.7 years.
The total fair value of shares  vested  during the three  months ended March 31,
2006 was  approximately  $20,000.

Prior to 2006, the Company had adopted the disclosure-only provisions of
Statement of Financial Accounting Standards (SFAS) No. 123 -"Accounting for
Stock-Based Compensation, " and, accordingly the financial statements for the
three months ended March 31, 2005 have not been restated. Had compensation
expense for employee stock options granted under the plan been determined based
on the fair value at the grant date consistent with SFAS 123R, the Company's pro
forma net income and loss per share from continuing operations would have
increased as follows for the three months ended March 31, 2005.

Results of Operations                                             2005
                                                                 ------

Net income -as reported (000's)                                  $  121
Total stock based employee compensation expense determined
      under the fair value method for all awards (000's)            128
                                                                 ------

Net (loss) - pro forma (000's)                                   $   (7)
                                                                 ======

Income per share as reported - basic and diluted                 $  .01
                                                                 ======
Loss per share pro forma - basic and diluted                     $ (.00)
                                                                 ======

                                       8
<PAGE>

Note 5. Business Segments

Prior to 2002,  the Company's  business was  organized,  managed and  internally
reported as three segments.  The segments are determined based on differences in
products, production processes and internal reporting. During the fourth quarter
of 2002, the Company's contract with DARPA was terminated and as a result of the
termination, management decided to suspend the activities of the Photonics Group
in 2002 and liquidate the remaining assets. As a result, in accordance with FASB
144, the disposal of the Photonics  segment has been accounted for as a disposal
of a business segment and accordingly the operating  results were segregated and
reported as discontinued operations.

Beginning in 2003, the Company revised its business strategy and began operating
its newly formed IT Services Group.

All of the segments of the Company  operate  entirely within the U.S. There were
no revenues  from  customers  in foreign  countries  during  2005 and 2006.  The
Company relies on  inter-segment  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 three months ended March 31, 2006 and 2005, respectively, is
set forth as follows.

<TABLE>
<CAPTION>
------------------------------------------   ----------------   ------------------    ------------
                                              Photonics Group    IT Services Group    Consolidated
------------------------------------------   ----------------   ------------------    ------------
<S>                                          <C>                <C>                   <C>
Three Months ended March 31, 2006
------------------------------------------   ----------------   ------------------    ------------
Sales to unaffiliated customers              $             --   $        1,623,436    $  1,623,436
------------------------------------------   ----------------   ------------------    ------------
Operating loss                               $             --   $         (549,356)   $   (549,356)
------------------------------------------   ----------------   ------------------    ------------
Income from discontinued operations          $             --   $               --    $         --
------------------------------------------   ----------------   ------------------    ------------

Three Months ended March 31, 2005
------------------------------------------   ----------------   ------------------    ------------
Sales to unaffiliated customers                            --   $        2,124,727    $  2,124,727
------------------------------------------   ----------------   ------------------    ------------
Operating income                                           --   $          169,699    $    169,699
------------------------------------------   ----------------   ------------------    ------------
Income from discontinued operations          $          7,254   $               --    $      7,254
------------------------------------------   ----------------   ------------------    ------------
</TABLE>

Note 6. Supplemental Cash Flow Information

Non-cash investing and financing transactions, including non-monetary exchanges,
consist of the  conversion  of $2,250 of accounts  payable to common  during the
three months ended March 31, 2005.

Note 7. Earnings Per Share

Basic income per share is based on the weighted  average number of common shares
outstanding during the periods  presented.  Diluted income 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 the stock options and stock  warrants.  Stock options with exercise prices
that exceeded the average fair market value of the Company's common stock had an
antidilutive  effect  and  therefore,  were  excluded  from the  computation  of
earnings  per share.  The treasury  stock  method is used to calculate  dilutive
shares,  which  reduces  the gross  number of  dilutive  shares by the number of
shares purchasable from the proceeds of the options assumed to be exercise. In a
loss  year,  the  calculation  for  basic  and  diluted  earnings  per  share is
considered  to be  the  same,  as the  impact  of  potential  common  shares  is
anti-dilutive.

                                       9
<PAGE>

The following table sets forth the computation of basic and diluted earnings per
share as of March 31, 2005:

Numerator:
       Income available to common stockholders
        from continuing operations               $   113,610
                                                 ===========

       Weighted average shares outstanding        18,611,354
                                                 ===========

Denominator for diluted income per share:
       Weighted average shares outstanding        18,611,354
       Common stock options and stock warrants     1,235,110
                                                 -----------

       Weighted average shares and conversions    19,846,464
                                                 ===========

For the three months ended March 31, 2006, the Company had  19,856,881  weighted
average  shares of its common stock  outstanding.  If the Company had  generated
earnings  during the three months ended March 31, 2006,  1,705,113  common stock
equivalent  shares  would  have  been  added  to  the  weighted  average  shares
outstanding.  These  additional  shares represent the assumed exercise of common
stock options and warrants  whose exercise price is less than the average of the
Company's  stock during the period.  The proceeds of the exercise are assumed to
be used to purchase  common shares for treasury and the  incremental  shares are
added to the weighted verge shares outstanding.


Item 2. Management's Discussion and Analysis or Plan of Operations

Overview

Beginning in the second quarter of 2003 we commenced  operations in the field of
information technology (IT) consulting services and biometric technology, and we
opened an office in the  Washington  DC  metropolitan  area.  In March 2006,  we
opened  a  regional  office  in  Jackson,  Mississippi  with  the  objective  of
developing  new  business in that area of the U.S. We now provide  business  and
technology integration and systems support primarily to U.S. government clients.
We  focus on  aligning  business  processes  with  technology  for  delivery  of
solutions  to meet our  clients'  exact needs and  providing  expert  management
services to the lifecycle of technology-based projects.

We sold or closed our prior  businesses  on or before  December 31, 2004. We are
now  solely  focused  in the  fields of IT  consulting  services  and  biometric
technology.

The following  discussion relates to the businesses that were sold or closed and
the current effect on our operations and financial position.

Osley & Whitney, Inc. Retirement Plan

Since our sale of Osley & Whitney,  Inc.  (O&W) in 2002,  we have  remained  the
sponsor of the O&W Retirement  Plan. At March 31, 2005, the O&W defined  benefit
pension plan had an accrued  pension  obligation  liability of $2,435,312 and an
accumulated  other  comprehensive  loss of  $3,046,855  which we  recorded  as a
reduction of  stockholders'  equity.  The market value of plan assets  increased
from  $3,315,524  at December  31, 2005 to  $3,432,232  at March 31,  2006.  The
increase was comprised of an investment  return of $220,746 offset by payment of
benefits of $101,174 and expenses  paid of $2,866  during the three months ended
March 31, 2006.

We were required to contribute  amounts in 2004,  2005 and 2006 and are required
to make  contributions  in future years to fund the deficiency.  We did not make
contribution  during  2004  and  2006 and we  currently  do not  have the  funds
available to make the required  contributions  which currently  approximate $1.4
million.  During 2005, we made contributions of $6,439 and 500,000 shares of our
common stock,  which were valued on the contribution  date at $175,000 using the
closing  market  price.   We  recorded   defined   benefit  pension  expense  of
approximately  $45,000 and $75,000 for the three months ended March 31, 2006 and
2005,  respectively.  In March  2005,  we  filed a  funding  waiver  application
requesting  waivers of the minimum  funding  standard  for the 2005 plan year of
$513,551 and for the 2004 plan year of $979,328 (which  includes  quarterly cash
disbursements aggregating approximately $455,000 for the year ended December 31,
2004  and  unfunded  prior  year  amounts).   We  recently  provided  additional
information for consideration in connection with our waiver application.  We are
also implementing strategies to improve the plan's performance.

                                       10
<PAGE>

IT Consulting and Biometric Strategy

Our  IT  services  include  strategic  staffing,  program  management,   project
management,  network services, technical engineering,  software development, and
enterprise  resource  planning.  Beginning in 2003, we have entered into several
subcontract  agreements  with a number  of prime  contractors  to  several  U.S.
government agencies.

In December 2003, we were awarded a Federal Supply Schedule Contract by the U.S.
General Services  Administration (GSA) for IT consulting services.  Having a GSA
Contract  allows us to compete for and secure prime contracts with all executive
agencies of the U.S.  Government  as well as other  national  and  international
organizations. We have one prime contract under GSA.

In 2003, we entered into a License  Agreement  with  Ultra-Scan  Corporation,  a
privately  held  technology  company  headquartered  in Buffalo,  New York.  The
License  Agreement  gives  us the  ability  to  use,  market  and  sell  certain
proprietary   fingerprint   recognition   technology.   We  have  completed  the
development  of  an  access  control   terminal  and  related   software  called
Touch-Thru(TM)  incorporating that technology. We intend to market and sell that
product beginning in 2006 in a variety of industries and markets,  including the
federal,  state and local  government,  health care, travel and general security
and access control.

Future Trends

We believe that our  operations,  as  currently  structured,  together  with our
current financial  resources,  will result in improved financial  performance in
future years.

There is no assurance,  that our current  resources will be adequate to fund the
liabilities for the O&W retirement  plan or 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.

                                       11
<PAGE>

Results of Operations

Comparison of the three months ended March 31, 2006 and 2005

The following  table  compares our  statement of  operations  data for the three
months ended March 31, 2006 and 2005.  We  commenced  the  operations  of our IT
Services Group in the second quarter of 2003. The trends suggested by this table
are not indicative of future operating results due to the relatively short track
record  that  we  have  in  focusing  on  the IT  Services  Group.  The  Company
reclassified  certain  prior year  amounts to conform  with the  current  year's
presentation.

<TABLE>
<CAPTION>
                                                             Three Months Ended March 31,
                                      ----------------------------------------------------------------------------
                                                     As a % of Net                    As a % of Net     Increase
                                          2006         Revenues           2005          Revenues       (Decrease)
                                      -----------    -------------     -----------    -------------    -----------
<S>                                   <C>            <C>               <C>            <C>              <C>
Sales                                 $ 1,623,436            100.0%    $ 2,124,727            100.0%         (23.6)%
Cost of services                        1,305,859             80.4       1,514,881             71.3          (13.8)
                                      -----------    -------------     -----------    -------------    -----------
Gross profit                              317,577             19.6         609,846             28.7          (47.9)
                                      -----------    -------------     -----------    -------------    -----------
General and administrative                373,238             23.0         356,391             16.8            4.7
Selling                                   412,534             25.4             894              0.0       46,044.7
Research and development                   68,122              4.2          71,681              3.4           (5.0)
Depreciation and amortization              13,039              0.8          11,181              0.5           16.6
                                      -----------    -------------     -----------    -------------    -----------
Total operating expenses                  866,933             53.4         440,147             20.7           97.0
                                      -----------    -------------     -----------    -------------    -----------
Operating income (loss)                  (549,356)           (33.8)        169,699              8.0         (423.7)
Interest expense, net                     (42,662)            (2.6)        (54,789)            (2.6)         (22.1)
Other income                              498,088             30.7              --              0.0
Income tax expense                         (7,300)            (0.4)         (1,300)            (0.1)         461.5
                                      -----------    -------------     -----------    -------------    -----------
Income from continuing operations        (101,230)            (6.2)        113,610              5.3         (189.1)
Income from discontinued operations            --              0.0           7,254              0.3         (100.0)
                                      -----------    -------------     -----------    -------------    -----------

Net income (loss)                     $  (101,230)            (6.2)%   $   120,864            5.7 %         (183.8)%
                                      ===========    =============     ===========    =============    ===========

Net income (loss) per share-basic     $      (.01)                     $       .01
                                      ===========                      ===========
Net income (loss) per share-diluted   $      (.01)                     $       .01
                                      ===========                      ===========
</TABLE>




      Sales

Sales for the three  months  ended  March 31,  2006  decreased  by  $501,291  to
$1,623,436  as  compared to sales for the three  months  ended March 31, 2005 of
$2,124,727.  In March 2006,  one of our  subcontracts  for  services to the U.S.
government  ended when required  additional  funds were not approved.  We earned
approximately  $2.2 million or 26% of our revenue from this  subcontract  during
the year ended December 31, 2005. One other subcontract had staffing reductions.
Due to the nature of certain of our contracts,  contract terminations occur when
projects  are  completed  or when  appropriations  of  funds  are  used  and new
appropriations are not approved. We have submitted proposals and have identified
opportunities  for other new  contracts to replace sales that do not continue in
the ordinary course of business, as well as to increase our sales.

When we experience  contract  terminations  or  reductions in customer  staffing
requirements,   we  attempt  to  identify  other  revenue   generating   project
opportunities  with our existing  prime  contractors or others to redeploy those
employees  who are no longer  providing  billable  services.  In March 2006,  in
response to the termination of the contract  discussed  above, we placed several
formerly billable employees on unpaid leave, realigned positions of our business
development  staff, and redirected our selling and marketing  activities towards
those  opportunities  that heighten the  probability of increased sales in 2006,
while preserving our long term business development initiatives. We are focusing
on a Tactical  Program that seeks to grow business  with existing  clients and a
Strategic Program that aligns us with major  procurement  activity for long term
growth.

We are actively  pursuing  opportunities to develop  additional sales in new and
existing target  markets.  In March 2006 we opened a regional office in Jackson,
Mississippi,  and hired a new business  development employee to pursue state and
local government  business  opportunities  within the Gulf Coast region. We also
retained  a lobbying  firm to assist us in that  effort.  Moreover,  we are also
channeling  energies towards forming  alliances with large systems  integrators,
who are mandated by federal policy to direct  defined  percentages of their work
to small  business  subcontractors.  In addition,  we are  currently  working on
proposals  for  contract  awards that we believe  will  enhance our posture as a
government contractor.

                                       12
<PAGE>

Early   successes  in  our  2006   initiatives  are  evident  in  the  preferred
relationships  we have earned with several  large  systems  integrators  and one
major  product  house.  In addition,  we are a member of one of only seven teams
that won the U.S. Army's recent Strategic Services Sourcing (S3) Government-Wide
Acquisition  Contract.  Under our agreement  with the prime  contractor,  we are
identified as a primary Earned Value Management resource,  as well as a provider
of network and software  services.  However,  although our future  prospects are
robust, the lengthy government financing and procurement processes may result in
temporary operating losses until revenue increases to support our infrastructure
and provides consistent profitability.

      Cost of Services and Gross Profit

Cost of  services  represents  the cost of employee  services  related to the IT
Services  Group.  Cost of services for the three months ended March 31, 2006 was
$1,305,859  or 80.4% of sales as compared to  $1,514,881  or 71.3% for the three
months ended March 31, 2005. Gross profit was $317,577 or 19.6% of sales for the
three months ended March 31, 2006 compared to $609,846 or 28.7% of sales for the
three  months  ended March 31,  2005.  The  decrease in gross profit is due to a
change  in  the  mix of our  business  resulting  from  the  termination  of one
contract,  a  reduction  in  staffing  for  another  contract,  and the costs of
employees who did not generate  billable revenue after contract  reductions.  In
addition,  we  recorded  $14,093  of  expense  (.8% of net sales) as a result of
adopting  SFAS 123R.  Although  our  objective  is to maintain an overall  gross
margin of  approximately  30%, in the future we may submit bids on new work with
lower gross  profit  margins to generate  opportunities  for  long-term,  larger
volume contracts and more stable sales.

      General and Administrative Expenses

General  and   administrative   expenses  include  corporate  overhead  such  as
compensation  and  benefits  for  administrative  and finance  personnel,  rent,
insurance,  professional  fees,  travel,  O&W pension plan  expense,  and office
expenses.  General and administrative  expenses for the three months ended March
31, 2006  increased  by $16,847 or 4.7% to $373,238.  As a percentage  of sales,
general  and  administrative  expense  was 23% for 2006 and 16.8% for 2005;  the
principal  change in this  statistic was due to a decline in sales for the three
months ended March 31, 2006 compared to 2005.

General and administrative expenses include increases in legal expenses for 2005
of approximately $25,000 due to administering our contracts.

General and administrative expenses include expenses (including pension expense,
professional  services,  waiver  application  filing fees,  and interest  costs)
associated  with the Osley & Whitney  defined  benefit  retirement  plan.  These
expenses  decreased by approximately  $30,000 to  approximately  $45,000 for the
three  months  ended March 31, 2006  compared to  approximately  $75,000 for the
three months ended March 31, 2005. The reduction was  principally  due to filing
fees and  professional  fees incurred in 2005 in connection  with  preparing the
request for waiver of the  minimum  funding  standard  for the 2005 plan year of
$513,551 and for the 2004 plan year of $979,328.

We  anticipate  that the  amount of general  and  administrative  expenses  will
increase as we continue to implement our business  strategy and incur travel and
other expenses associated with managing a larger business.  We expect that legal
and  accounting  expenses for auditing and  Securities  and Exchange  Commission
reporting and  compliance  will decrease in the future since our public  filings
for several years were brought current in July 2005.  However, we may experience
an  increase  in other  legal  fees due to the  growth of our  business  and the
associated volume of new contracts and contract administration.

      Selling Expenses

For the three  months  ended  March 31,  2006 we  incurred  selling  expenses of
$412,534  associated with growing the business in our IT Services Group compared
to $894 for the three  months  ended  March 31,  2005.  Beginning  in the second
quarter of 2005, we added new  employees and changed the work  assignment of one
employee and added sales  consultants to focus on generating new sales leads and
new contract opportunities. Selling expenses consist of our business development
staff including salaries, benefits, sales consultants, and travel expenses. As a
result of the termination of one  subcontract  during the first quarter of 2006,
we reduced certain salaried selling positions resulting in expense reductions of
approximately  $20,000 per month,  which will be fully realized beginning in the
second  quarter of 2006.  We expect to add  additional  sales  personnel  in the
future as sales increase or as specific new sales opportunities are realized.

                                       13
<PAGE>

      Research and Development

For the three months  ended March 31, 2006 we  continued  to incur  research and
development expenses related to our biometrics applications and recorded $68,122
of expense  compared to $71,681 for the three months ended March 31, 2005. These
expenses  are  principally  related  to the  development  of an  access  control
terminal  and  related  software  called   TouchThru(TM).   TouchThru(TM)  is  a
self-contained   terminal  enabling  physical  access  control  using  biometric
identification.  It incorporates  fingerprint  matching technology licensed from
Ultra-Scan  Corporation,  a private technology company headquartered in Buffalo,
New York.  TouchThru(TM) will be the first biometric product we introduce and we
intend to market and sell that product  beginning in 2006. We plan to market and
sell  TouchThru(TM)  in a variety  of  industries  and  markets,  including  the
federal,  state and local government,  health care, travel and general security,
and access control.

      Depreciation and Amortization

Depreciation  and  amortization  expense  increased by $1,858 to $13,039 for the
three months ended March 31, 2006 compared to $11,181 for the three months ended
March 31, 2005. We have continued to acquire  office  equipment such as personal
computers as we hire additional  personnel.  We relocated our  Washington,  D.C.
regional  office in the third  quarter of 2005 and  acquired  additional  office
equipment.  The  increase  is due to  depreciation  and  amortization  of  these
recently acquired assets.

      Income (Loss) From Operations

For the three  months  ended March 31, 2006 our  operating  loss was  $(549,356)
compared to  operating  income of $169,699  for the three months ended March 31,
2005;  a  reduction  of  $719,055.  This is  principally  attributable  to three
factors.  First,  our sales  declined  from  $2,124,727 in 2005 to $1,623,436 in
2006, a decrease of $501,291; second, our gross profit declined by $292,269; and
third, our selling expenses increased by $411,640.

      Interest Expense

Net  interest  expense  was $42,622  for the three  months  ended March 31, 2006
compared to $54,789 for 2005. The reduction of $12,127 is  principally  due to a
reduction in factoring  fees of  approximately  $21,000 offset by an increase in
related  party  borrowings  and  additional  interest  expense of  approximately
$9,000.  Proceeds from accounts  receivable  collections and a legal  settlement
were used for working capital purposes,  which reduced the volume of third party
financings in 2006.

      Other Income

The Company was the plaintiff in a lawsuit filed in the Superior Court, State of
Rhode Island on August 13, 1999  captioned  Infinite  Group,  Inc.  vs.  Spectra
Science  Corporation and Nabil Lawandy. In the action, the Company asserted that
by fraud and in breach of  fiduciary  duties  owed,  Spectra and its  president,
Nabil Lawandy,  caused the Company to sell to Spectra shares of Spectra's Series
A Preferred  stock at a substantial  discount to fair market value.  The Company
alleged   that  in  entering   into  the   transaction   it  relied  on  various
representations  made by Spectra and Mr. Lawandy,  which were untrue at the time
they were made.  The trial was completed in February 2005, and the jury returned
a verdict in favor of the Company in the amount of approximately  $600,000.  The
Company  appealed the amount of the verdict and entered  into a settlement  with
the  defendants in January  2006. As a result the Company  received and recorded
other  income of  approximately  $498,088,  net of legal  fees and  expenses  of
$164,412, in the first quarter of 2006.

      Income Taxes

Income tax  expense was $7,300 and $1,300 for the three  months  ended March 31,
2006 and 2005,  respectively,  consisting  of estimated  federal  minimum tax of
$2,000 in 2006 and state taxes.

                                       14
<PAGE>

      Income (loss) from Discontinued Operations

The  financial  statements  for 2005 reflect  management's  decision to sell the
assets,  certain  liabilities  and  businesses of LF and IPI.  Accordingly,  the
operating results were classified as income (loss) from discontinued  operations
in 2005. We recorded  income from  discontinued  operations of $7,254 in 2005 as
the remaining assets and liabilities of the sold businesses were resolved.

      Net Income

For the three months ended March 31, 2006,  we recorded a net loss of $(101,230)
or $(.01) per share. For the three months ended March 31, 2005, this compares to
net income  from  continuing  operations  of  $113,610 or $.01 per share and net
income  of  $120,864  or $.01  per  share  (the  difference  of  $7,254  is from
discontinued operations).

The  decrease in net income of $222,094 is  attributable  to a decrease in gross
profit of $292,269 and an increase in selling  expenses of $411,640,  which were
substantially  offset by other income of $498,088.  We also recorded  expense of
$23,585 as a result of adopting  SFAS 123R in 2006 and expense of $5,697 in 2006
as a result of warrants and stock options issued to consultants.

      Stock-Based Compensation

In December 2004,  the Financial  Accounting  Standards  Board issued SFAS 123R,
Share-Based Payment ("SFAS 123R"). SFAS 123R supersedes SFAS 123, Accounting for
Stock Based Compensation, and Accounting Principles Board Opinion 25, Accounting
for Stock Issued to Employees ("APB 25) and its related implementation guidance.
On January 1, 2006,  we adopted the  provisions  of SFAS 123R using the modified
prospective  transition  method.  Under this  method,  we are required to record
compensation  expense  for all  stock  based  awards  granted  after the date of
adoption and for the unvested  portion of previously  granted awards that remain
outstanding  as of the  beginning of the  adoption  and prior  period  financial
statements have not been restated. Under SFAS 123R, compensation expense related
to stock based  payments is recorded over the requisite  service period based on
the grant date fair value of the awards.

Prior to the adoption of SFAS 123R,  we accounted  for  employee  stock  options
using the intrinsic  value method in  accordance  with APB 25.  Accordingly,  no
compensation  expense was  recognized  for stock options  issued to employees as
long as the  exercise  price is greater than or equal to the market value of the
common  stock at the date of grant.  In  accordance  with SFAS 123,  the Company
disclosed the summary of pro forma effects to reported net income or net loss as
if we had elected to recognize compensation costs based on the fair value of the
awards at the grant date.

Our board of directors and stockholders have approved stock options plans, which
have  authority  to grant  options to purchase up to an  aggregate  of 5,626,500
shares at March 31, 2006. Such options may be designated at the time of grant as
either incentive stock options or nonqualified stock options.

The  compensation  cost that has been charged against income for options granted
to  employees  under the plan was $23,585 for the  three-months  ended March 31,
2006.  The impact of this expense was to increase basic and diluted net loss per
shares from $(.00) to $(.01) for the three  months  ended  March 31,  2006.  The
adoption  of SFAS 123R did not have an impact on cash  flows from  operating  or
financing  activities.  A deduction is not allowed for income tax purposes until
the option are  exercised.  The amount of this  deduction will be the difference
between the fair value of the Company's  common stock and the exercise  price at
the date of  exercise.  Accordingly,  there is a  deferred  tax  asset  recorded
related for the tax effect of the financial statement expense recorded.  The tax
effect of the income tax deduction in excess of the financial  statement expense
will be  recorded  as an  increase to  additional  paid-in  capital.  Due to the
uncertainty of our ability to generate  sufficient  taxable income in the future
to utilize the tax benefits of the options granted, we have recorded a valuation
allowance to reduce gross  deferred tax asset to zero. As a result for the three
months  ended  March  31,  2006,  there is no income  tax  expense  impact  from
recording the fair value of options granted.

We  recorded  expense of  $23,585  for  employee  stock  options  and $5,697 for
warrants  and stock  options  issued to  consultants  for the three months ended
March 31, 2006.



                                       15
<PAGE>

Liquidity and Capital Resources

At March 31, 2006,  we had cash of $162,160  available  for our working  capital
needs and planned capital asset expenditures.

At March 31, 2006, we had working capital of approximately $52,000 and a current
ratio of 1.05.  At December  31, 2005 we had  working  capital of  approximately
$90,000.  Our  objective  is  to  improve  our  working  capital  position  from
profitable  operations.  If we incur  operating  losses  or net  losses,  we may
experience  working  capital  shortages that impair our business  operations and
growth  strategy.  Presently,  we  have  sufficient  cash  flow  and  short-term
financing  sources,  secured by accounts  receivable,  to pay our  payrolls  and
recurring invoices on a timely basis.

We have financed the activity of our new IT Services  Group through the issuance
of notes payable to third parties and to related parties,  private placements of
common stock and financing of our accounts receivable.

We  established  in 2004 a  financing  line of up to  $800,000  with a financial
institution that allows us to sell selected accounts  receivable invoices to the
financial  institution with full recourse against the company. We pay fees based
on the length of time that the invoice remains unpaid. At March 31, 2006, we had
approximately  $520,000 of availability  under this line and could finance up to
another  approximately  $250,000 based on selected accounts  receivable at March
31, 2006.

We have used our common stock to provide  compensation to certain  employees and
consultants  and to fund  liabilities.  During the three  months ended March 31,
2006 we issued  options to  acquire  100,000  shares of our  common  stock to an
investment  banking group and warrants to acquire  50,000 shares of common stock
to a firm that is assisting us in generating new sales.

We were  required  to  contribute  amounts  in  2004,  2005  and 2006 to the O&W
Retirement Plan and are required to make  contributions  in future years to fund
the  deficiency.  We did not  make  contribution  during  2004  and  2006 and we
currently do not have the funds available to make required  contributions  which
currently approximate $1.4 million. During 2005, we made contributions of $6,439
and 500,000  shares of our common stock,  which were valued on the  contribution
date at $175,000 using the closing  market price.  We recorded  defined  benefit
pension expense of approximately  $45,000 and $75,000 for the three months ended
March 31, 2006 and 2005, respectively.  In March 2005, we filed a funding waiver
application requesting waivers of the minimum funding standard for the 2005 plan
year of  $513,551  and for the  2004  plan  year  of  $979,328  (which  includes
quarterly cash  disbursements  aggregating  approximately  $455,000 for the year
ended December 31, 2004 and unfunded prior year amounts).  We recently  provided
additional   information  for   consideration  in  connection  with  our  waiver
application.   We  are  also  implementing  strategies  to  improve  the  plan's
performance.

We have financed the activity of our new IT Services  Group through the issuance
of notes  payable to related  parties,  private  placements  of common stock and
issuance of stock options and  warrants.  We also have a line of credit which we
use to  provide  cash from the  financing  of our  accounts  receivable.  In the
future,  we may issue  additional debt or equity  securities to satisfy our cash
needs.  Any debt incurred or issued may be secured or  unsecured,  at a fixed or
variable  interest  rates and may contain  other terms and  conditions  that our
board of directors  deems prudent.  Any sales of equity  securities may be at or
below current market prices.  We cannot assure you that we will be successful in
generating sufficient capital to adequately fund our liquidity needs.


Risk Factors

You should  consider  the risk  factors  included  in our Annual  Report on Form
10-KSB for the year ended  December 31, 2005 in evaluating  our business and us.
Additional risks and uncertainties not presently known to us, which we currently
deem  immaterial  or that are similar to those faced by other  companies  in our
industry or business in general, such as competitive conditions, may also impair
our business operations. If any of the results of the risks occur, our business,
financial  condition,  or results of operations  could be  materially  adversely
affected.

                                       16
<PAGE>

Item 3. Controls and Procedures

Evaluation of  Disclosure  Controls and  Procedures.  Our  management,  with the
participation  of the  chief  executive  officer  and chief  financial  officer,
carried out an evaluation of the  effectiveness of our "disclosure  controls and
procedures"  (as defined in the  Securities  Exchange Act of 1934 (the "Exchange
Act") Rules  13a-15(e) and  15-d-15(e))  as of the end of the period  covered by
this report  (the  "Evaluation  Date").  Based upon that  evaluation,  the chief
executive  officer  and  chief  financial  officer  concluded  that,  as of  the
Evaluation Date, our disclosure  controls and procedures are effective to ensure
that  information  required to be disclosed by us in the reports that we file or
submit  under  the  Exchange  Act (i) is  recorded,  processed,  summarized  and
reported,  within the time  periods  specified  in the SEC's rules and forms and
(ii) is accumulated  and  communicated  to our  management,  including our chief
executive and chief financial officers, as appropriate to allow timely decisions
regarding required disclosure.

Changes in Internal Control over Financial  Reporting.  There were no changes in
our internal  controls over financial  reporting that occurred during our fiscal
first  quarter  that  has  materially  affected,  or  is  reasonably  likely  to
materially affect, our internal control over financial reporting.


                                    PART II
                               OTHER INFORMATION

Item 1. Legal Proceedings

We are not presently involved in any material legal proceedings.

We were the plaintiff in a lawsuit filed in the Superior  Court,  State of Rhode
Island on August 13, 1999 captioned  Infinite  Group,  Inc. vs. Spectra  Science
Corporation and Nabil Lawandy.  In the action,  we asserted that by fraud and in
breach of  fiduciary  duties owed,  Spectra and its  president,  Nabil  Lawandy,
caused us to sell to Spectra shares of Spectra's  Series A Preferred  stock at a
substantial  discount to fair market value. We alleged that in entering into the
transaction  we  relied  on  various  representations  made by  Spectra  and Mr.
Lawandy,  which were untrue at the time they were made.  The trial was completed
in February  2005, and the jury returned a verdict in our favor in the amount of
approximately  $600,000.  We appealed the amount of the verdict and settled with
the  defendants  in January  2006.  As a result,  in the quarter ended March 31,
2006, we received and recorded  other income of $498,088,  net of legal fees and
expenses of $169,412, in the first quarter of 2006.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

For a period of one year beginning January 1, 2006, we have engaged the services
of an  investment  banking  group on a  non-exclusive  basis to  provide  advice
concerning financial planning,  corporate  organization and structure,  business
combinations, and related services. In connection wiht the engagement, we issued
them a warrant to acquire 100,000 shares of common stock exercisable at $.50 per
share and  expiring on December  31,  2010.  In  addition,  we agreed to provide
additional   compensation   contingent  upon  closing  a  business   combination
introduced by the investment banking group. No principal underwriter was used.

Item 3. Defaults Upon Senior Securities

      None.

Item 4. Submission of Matters to a Vote of Security Holders

Our Annual  Meeting of  Stockholders  was held on February 28, 2006.  There were
present at the  meeting,  either in person or by proxy,  holders  of  15,032,176
common  shares.  Stockholders  re-elected the three  directors  nominated in our
February 1, 2006 Proxy  Statement,  to serve for  one-year  terms,  each to hold
office until his successor is duly elected and qualified.

                                       17
<PAGE>

At the Annual Meeting, the stockholders also:

o     approved our 2005 Stock Option Plan;
o     approved an amendment to our certificate of  incorporation to increase the
      number of shares of authorized common stock from 20,000,000 to 60,000,000;
      and
o     ratified the  appointment  of Freed Maxick &  Battaglia,  CPAs,  PC as our
      independent auditors for the fiscal years 2002, 2003, 2004 and 2005.

Results of stockholder voting follow:

Election of Directors     For        Withheld
---------------------  ----------   ----------

Michael S. Smith       14,475,991      556,185
Paul J. Delmore        14,475,991      556,185
Allan M. Robbins       14,475,991      556,185
                       ==========   ==========

<TABLE>
<CAPTION>
                                                                                         Broker
                                                     For       Against      Abstain    Non-Votes
                                                 ----------   ----------   ---------   ---------
<S>                                               <C>          <C>             <C>     <C>
Approval of our
2005 Stock Option Plan                            9,645,538    1,099,743       3,600   4,282,295
                                                 ==========   ==========   =========   =========

                                                      For       Against     Abstain
                                                  ----------   ---------   ---------
Approval to amend our Certificate of
Incorporation to increase the number of shares
authorized from 20,000,000 to 60,000,000          13,882,118   1,142,713       7,345
                                                  ==========   =========   =========

                                                      For       Against     Abstain
Ratify the appointment of                         ----------   ---------   ---------
Freed Maxick & Battaglia, CPAs, PC
as our independent auditors                       14,418,301       5,440     608,435
for the fiscal years 2002, 2003, 2004 and 2005    ==========   =========   =========

</TABLE>


Item 5. Other Information.

We relocated our corporate  headquarters  to newly leased office space effective
May 1,  2006  located  at 60 Office  Park Way,  Pittsford,  New York  14534.  We
executed a three year lease for 2,942  square  feet of office  space with annual
rent of $27,820 and escalations after the first year for property tax increases.
We have two renewal  options,  each for a term of three  years,  with base rents
escalating  at 3.5% for each three year period.  We are  responsible  for paying
heating, cooling, and electric utilities.

Item 6. Exhibits and Reports on Form 8-K

a.    Exhibits:

Exhibit No.        Description
-----------        -----------

      31.1  Certification of Chief Executive Officer and pursuant to Section 302
            of the Sarbanes-Oxley Act of 2002.

      31.2  Certification of Chief Financial  Officer pursuant to Section 302 of
            the Sarbanes-Oxley Act of 2002.

      32.1  Certification of Chief Executive Officer and Chief Financial Officer
            pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

                                       18
<PAGE>

                                   SIGNATURES

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


                                             Infinite Group Inc.    (Registrant)
                                             --------------------

Date May 12, 2006                            /s/ Michael S. Smith
                                             --------------------
                                             Chief Executive Officer

Date May 12, 2006                            /s/ Michael S. Smith
                                             --------------------
                                             Chief Financial Officer
                                             (Principal Financial Officer)


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