**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**FORM
      10-Q**





(Mark
      One)





x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934 for the quarterly period ended: March 31, 2008





 ̈ TRANSITION REPORT UNDER 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
            (IRS
                Employerincorporation
                or organization)
            Identification
                No.)





60
      Office
      Park Way


Pittsford,
      New York 14534


(Address
      of principal executive offices)





(585)
      385-0610


(Registrant's
      telephone number)





(Former
      name, former address and former fiscal year,


if
      changed since last report)





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  ̈





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





Large
                Accelerated filer ̈
              Non-accelerated
                filer ̈
            
            Accelerated
                filer ̈
              Smaller
                reporting companyx





Indicate
      by check mark whether the issuer is a shell company (as defined in Rule 12b-2
      of
      the Exchange Act).


Yes  ̈ No x





Indicate
      the number of shares outstanding of each of the issuer's classes of common
      stock, as of the latest practicable date. There were a total of 24,531,632
      shares of the issuer’s common stock, par value $.001 per share, outstanding as
      of May 13, 2008.







Infinite
      Group, Inc.


Quarterly
      Report on Form 10-Q


For
      the
      Period Ended March 31, 2008





Table
      of
      Contents





PAGEPART
                I - FINANCIAL INFORMATIONItem
                1. Financial StatementsBalance
                Sheets as of March 31, 2008 (Unaudited) and December 31, 2007
                (Audited)
            3Statements
                of Operations - for the three months ended March 31, 2008 and 2007
                (Unaudited)
            4Statements
                of Cash Flows - for the three months ended March 31, 2008 and 2007
                (Unaudited)
            5Notes
                to Interim Financial Statements (Unaudited)
            6Item
                2. Management’s Discussion and Analysis of Financial Condition and Results
                of Operations
            9Item
                3. Quantitative and Qualitative Disclosures About Market
                Risk.
            15Item
                4T. Controls and Procedures
            15PART
                II - OTHER INFORMATIONItem
                1A. Risk Factors
            15Item
                2. Unregistered Sales of Equity Securities and Use of
                Proceeds
            16Item
                5. Other Information
            16Item
                6. Exhibits
            16SIGNATURES
            17




**FORWARD-LOOKING
      STATEMENTS**




Certain
      statements made in this Quarterly Report on Form 10-Q 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





**PART
      I - FINANCIAL INFORMATION**


**Item
      1. Financial Statements.**





**INFINITE
      GROUP, INC.**


**Consolidated
      Balance Sheets**


**March
                  31,**
              
              **December
                  31,****2008**
              
              **2007****ASSETS**
              
              
              **(Unaudited**)****
              
              
              (Audited)**Current
                  assets:**Cash
              
              **$**
              **63,141**
              
              $
              28,281Accounts
                  receivable, net of allowance of $35,000 ($35,000 - 2007)
              
              
              **858,331**
              
              
              669,607Prepaid
                  expenses and other current assets
              
              
              **53,596**
              
              
              59,381Total
                  current assets
              
              
              **975,068**
              
              
              757,269**Property
                  and equipment, net**
              
              
              **67,054**
              
              
              70,723**Other
                  assets**-
                  deposits
              
              
              **19,523**
              
              
              19,523Total
                  assets
              
              **$**
              **1,061,645**
              
              $
              847,515**LIABILITIES
                  AND STOCKHOLDERS’ DEFICIENCY****Current
                  liabilities:**Accounts
                  payable
              
              
              **343,231**
              
              
              299,519Accrued
                  payroll
              
              
              **388,618**
              
              
              262,453Accrued
                  interest payable
              
              
              **277,934**
              
              
              269,530Accrued
                  retirement and pension
              
              
              **2,128,098**
              
              
              2,081,508Accrued
                  expenses-other
              
              
              **58,768**
              
              
              86,197Current
                  maturities of notes payable
              
              
              **4,077**
              
              
              4,077Note
                  payable
              
              
              **30,000**
              
              
              30,000****Notes
                  payable-related parties
              
              
              **323,933**
              
              
              140,332**Total
                  current liabilities**
              
              
              **3,554,659**
              
              
              3,173,616**Long-term
                  obligations:**Notes
                  payable
              
              
              **34,716**
              
              
              29,706Notes
                  payable-related parties
              
              
              **900,624**
              
              
              1,091,624Accrued
                  pension expense
              
              
              **401,606**
              
              
              408,419Total
                  liabilities
              
              
              **4,891,605**
              
              
              4,703,365Commitments
                  and contingencies (note 5)**Stockholders’
                  deficiency:**Common
                  stock, $.001 par value, 60,000,000 shares authorized;23,931,632
                  (23,614,965 - 2007) shares issued and outstanding
              
              
              **23,931**
              
              
              23,615Additional
                  paid-in capital
              
              
              **29,463,846**
              
              
              29,386,215Accumulated
                  deficit
              
              
              **(31,090,048**
              **)**
              
              (31,037,991
              )Accumulated
                  other comprehensive loss
              
              
              **(2,227,689**
              **)**
              
              (2,227,689
              )Total
                  stockholders’ deficiency
              
              
              **(3,829,960**
              **)**
              
              (3,855,850
              )Total
                  liabilities and stockholders’ deficiency
              
              **$**
              **1,061,645**
              
              $
              847,515




See
      notes
      to consolidated financial statements.


3




**INFINITE
      GROUP, INC.**


**Consolidated
      Statements of Operations (Unaudited)**


**Three
                  Months Ended****March
                  31,****2008**
              
              **2007****Sales**
              
              **$**
              **2,466,810**
              
              $
              2,132,407Cost
                  of services
              
              
              **1,716,271**
              
              
              1,408,607**Gross
                  profit**
              
              
              **750,539**
              
              
              723,800Costs
                  and expenses:General
                  and administrative
              
              
              **258,002**
              
              
              216,212Defined
                  benefit pension plan
              
              
              **48,961**
              
              
              115,525Selling
              
              
              **407,676**
              
              
              336,598Research
                  and development
              
              
              **-**
              
              
              45,263Depreciation
              
              
              **8,954**
              
              
              9,307Total
                  costs and expenses
              
              
              **723,593**
              
              
              722,905**Operating
                  income**
              
              
              **26,946**
              
              
              895Other
                  income (expense):Interest
                  income
              
              
              **-**
              
              
              128Interest
                  expense:Related
                  parties
              
              
              **(32,353**
              **)**
              
              (35,625
              )Other
              
              
              **(46,035**
              **)**
              
              (28,975
              )Total
                  interest expense
              
              
              **(78,388**
              **)**
              
              (64,600
              )Total
                  other expense
              
              
              **(78,388**
              **)**
              
              (64,472
              )Loss
                  before income tax expense
              
              
              **(51,442**
              **)**
              
              (63,577
              )Income
                  tax expense
              
              
              **(615**
              **)**
              
              (605
              )Net
                  loss
              
              **$**
              **(52,057**
              **)**
              $
              (64,182
              )Net
                  loss per share - basic and diluted
              
              **$**
              **(.00**
              **)**
              $
              (.00
              )Weighted
                  average number of shares outstanding - basic and diluted
              
              
              **23,774,672**
              
              
              22,414,965




See
      notes
      to consolidated financial statements.


4




**INFINITE
      GROUP, INC.**


**Consolidated
      Statements of Cash Flows (Unaudited)**


**Three
                  Months Ended****March
                  31,****2008**
              
              **2007****Operating
                  activities:**Net
                  loss
              
              **$**
              **(52,057**
              **)**
              $
              (64,182
              )Adjustments
                  to reconcile net loss to net cash provided by operating
                  activities:Stock
                  based compensation
              
              
              **61,280**
              
              
              55,425Depreciation
              
              
              **8,954**
              
              
              9,307Increase
                  in assets:Accounts
                  receivable
              
              
              **(188,724**
              **)**
              
              (193,246
              )Other
                  current assets
              
              
              **(6,715**
              **)**
              
              (4,485
              )Increase
                  in liabilities:Accounts
                  payable
              
              
              **43,712**
              
              
              284Accrued
                  expenses
              
              
              **119,640**
              
              
              143,160Accrued
                  pension obligations
              
              
              **39,777**
              
              
              61,703**Net
                  cash provided by operating activities**
              
              
              **25,867**
              
              
              7,966**Investing
                  activities:**Purchase
                  of property and equipment
              
              
              **(5,285**
              **)**
              
              (3,912
              )Proceeds
                  from notes receivable
              
              
              **-**
              
              
              1,290**Net
                  cash used in investing activities**
              
              
              **(5,285**
              **)**
              
              (2,622
              )**Financing
                  activities:**Repayments
                  of notes payable
              
              
              **(990**
              **)**
              
              (3,481
              )Repayments
                  of note payable-related party
              
              
              **(1,399**
              **)**
              
              (3,923
              )Proceeds
                  from exercise of stock options
              
              
              **16,667**
              
              
              **-****Net
                  cash provided (used) by financing activities**
              
              
              **14,278**
              
              
              (7,404
              )Net
                  increase (decrease) in cash
              
              
              **34,860**
              
              
              (2,060
              )Cash
                  - beginning of period
              
              
              **28,281**
              
              
              73,786Cash
                  - end of period
              
              **$**
              **63,141**
              
              $
              71,726Supplemental
                  disclosure:Cash
                  paid for:Interest
              
              **$**
              **59,491**
              
              $
              64,734Income
                  taxes
              
              **$**
              **615**
              
              $
              605




See
      notes
      to consolidated financial statements.


5





**INFINITE
      GROUP, INC.**





NOTES
      TO
      INTERIM FINANCIAL STATEMENTS


March
      31,
      2008


(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-Q. Accordingly, they do not include all of the
      information and footnotes required by accounting principles generally accepted
      in the U.S. for complete financial statements. In the opinion of management,
      all
      adjustments considered necessary for a fair presentation have been included.
      All
      such adjustments are of a normal recurring nature. The accompanying unaudited
      consolidated financial statements should be read in conjunction with the
      Company’s audited consolidated financial statements and the notes thereto
      included in the Company’s Annual report on Form 10-KSB for the year ended
      December 31, 2007 filed with the U.S. Securities and Exchange Commission (SEC).
      Results of consolidated operations for the three months ended March 31, 2008
      are
      not necessarily indicative of the operating results that may be expected for
      the
      year ending December 31, 2008. The consolidated financial statements herein
      include the accounts of the Company and its wholly owned subsidiaries. The
      subsidiaries are inactive. All material inter-company accounts and transactions
      have been eliminated.





**Note
      2. Summary of Significant Accounting Policies**







There
      are
      several accounting policies that the Company believes are significant to the
      presentation of its consolidated financial statements. These policies require
      management to make complex or subjective judgments about matters that are
      inherently uncertain. Note 3 to the Company’s audited consolidated financial
      statements for the year ended December 31, 2007 presents a summary of
      significant accounting policies.




**Recent
      Accounting Pronouncements**




**Statement
      of Financial Accounting Standards No. 157, Fair Value
      Measurements**





Statement
      of Financial Accounting Standards No. 157, Fair Value Measurements - In
      September 2006, the FASB issued SFAS No. 157, Fair Value Measurements
      (SFAS No. 157). Among other requirements, SFAS No. 157 defines fair
      value and establishes a framework for measuring fair value and also expands
      disclosure about the use of fair value to measure assets and liabilities. The
      Company was required to adopt SFAS No. 157 on January 1, 2008. Subsequent
      to the Standard's issuance, the FASB issued an exposure draft that provides
      for
      a deferral for the implementation of SFAS 157 for non-financial assets and
      liabilities which are not measured at fair value on a recurring basis (at least
      annually) until fiscal years beginning after November 15, 2008. The
      Company is currently evaluating the impact of adopting SFAS 157.





**Financial
      Accounting Standards Board issued Statement of Financial Accounting Standards
      No. 159, The Fair Value Option for Financial Assets and Financial Liabilities
      (“SFAS No. 159”)**




In
      February 2007, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 159, The Fair Value Option for Financial
      Assets and Financial Liabilities (“SFAS No. 159”). SFAS No. 159 permits
      companies to elect to follow fair value accounting for certain financial assets
      and liabilities in an effort to mitigate volatility in earnings without having
      to apply complex hedge accounting provisions. The standard also establishes
      presentation and disclosure requirements designed to facilitate comparison
      between entities that choose different measurement attributes for similar types
      of assets and liabilities. SFAS No. 159 is effective for fiscal years beginning
      after November 15, 2007. The Company did not adopt the provisions of SFAS No.
      159 in the first quarter of 2008.


6





**Note
      3. Stock Option Plans**





The
      Company’s board of directors and stockholders has approved stock options plans
      covering up to an aggregate of 5,241,833 shares. Such options may be designated
      at the time of grant as either incentive stock options or nonqualified stock
      options.





Effective
      January 1, 2006, the Company adopted the provisions of Statement of Financial
      Accounting Standards No. 123 (revised 2004), “Share-Based Payment”, (SFAS 123R)
      using the modified prospective transition method. The Company used volatility
      of
      50% when computing the value of stock options and warrants during the three
      months ended March 31, 2008 and 2007. Each option awarded in 2008 and 2007
      has a
      ten year exercise term and a holding period of ten years was assumed. The
      expected dividend yield is zero percent and the expected life of 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
      and was 3.74% for the three months ended March 31, 2008 and ranged from 4.56%
      to
      4.76% for the three months ended March 31, 2007.





The
      Company recorded expense for options, warrants and common stock issued to
      employees and independent service providers for the three months ended March
      31,
      2008 and 2007 as follows. There was no impact on net loss per share for the
      three months ended March 31, 2008 and 2007.









2008
            
            2007Employee
                stock options
            
            $
            42,685
            
            $
            38,244Consultant
                - common stock warrants
            
            
            6,095
            
            
            17,181Consultant
                - common stock
            
            
            12,500
            
            
            **-**Total
                expense
            
            $
            61,280
            
            $
            55,425





A
      summary
      of all stock option activity for the three months ended March 31, 2008
      follows:





**Number
                of**
              **Options**
            
            **Weighted**
              **Average**
              **Exercise**
              **Price**
            
            **Weighted-**
              **Average**
              **Remaining
                Contractual**
              **Term**
            
            **Aggregate**
              **Intrinsic**
              **Value**Outstanding
                at December 31, 2007
            
            
            4,914,500
            
            $
            .27Options
                issued
            
            
            35,000
            
            $
            .77Options
                exercised
            
            
            (66,667
            )
            $
            .25Options
                expired
            
            
            (33,333
            )
            $
            .25Outstanding
                at March 31, 2008
            
            
            4,849,500
            
            $
            .28
            
            
            7.1
                years
            
            $
            1,541,060Exercisable
                at March 31, 2008
            
            
            4,260,167
            
            $
            .25
            
            
            6.9
                years
            
            $
            1,475,933





The
      weighted average fair value of options granted during the three months ended
      March 31, 2008 was approximately $.50 ($.33 during the three months ended March
      31, 2007). Options for 66,667 shares were exercised during the three months
      ended March 31, 2008 with an intrinsic value of $38,000. No options were
      exercised during the three months ended March 31, 2007.





A
      summary
      of the status of nonvested stock option activity for the three months ended
      March 31, 2008 follows:




**Nonvested
                Shares**
            
            **Shares**
            
            **Weighted Average**
              **Fair Value**
              **at Grant Date**Nonvested
                at December 31, 2007
            
            
            662,333
            
            $
            .30Granted
            
            
            35,000
            
            $
            .77Vested
            
            
            (74,667
            )
            $
            .29Forfeited
                or expired
            
            
            (33,333
            )
            $
            .25Nonvested
                at March 31, 2008
            
            
            589,333
            
            $
            .33


7





At
      March
      31, 2008, there was approximately $126,000 of total unrecognized compensation
      cost related to non-vested options. That cost is expected to be recognized
      over
      a weighted average period of approximately one year. The total fair value of
      shares vested during the three months ended March 31, 2008 was approximately
      $22,000.





**Note
      4. Earnings per Share**





Basic
      net
      income (loss) per share is based on the weighted average number of common shares
      outstanding during the periods presented. Diluted income (loss) 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 stock options, stock warrants and convertible notes payable.
      Stock options and warrants with exercise prices that exceeded the average fair
      market value of common stock had an antidilutive effect and therefore, were
      excluded from the computation of net income (loss) 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 period, the calculation for basic
      and
      diluted net loss per share is considered to be the same, as the impact of
      potential common shares is anti-dilutive.





For
      the
      three months ended March 31, 2008 and 2007, the Company had 23,774,672 and
      22,414,965 weighted average shares of its common stock outstanding,
      respectively. If the Company had generated earnings during the three months
      ended March 31, 2008 and 2007, 20,305,455 and 19,597,891 common stock
      equivalents, respectively, would have been added to the weighted average shares
      outstanding. These additional shares represent the assumed exercise of common
      stock options, warrants and convertible notes payable whose exercise price
      is
      less than the average of common stock during the period. The proceeds of the
      exercise are assumed to be used to purchase common stock for treasury and the
      incremental shares are added to the weighted average shares
      outstanding.





**Note
      5. – Employee
      Pension Plan**





Prior
      to
      December 30, 2002, the Company owned 100% of the common stock of Osley &
Whitney, Inc. (O&W). On December 30, 2002, the Company sold all of the
      O&W common stock to a third party, but continued to act as the sponsor of
      the O&W Plan. Although the Company continued to act as the sponsor of the
      O&W Plan after the sale, during 2007 it was determined that it had no legal
      obligation to do so.





During
      2007, the Company submitted information advocating this position to the
      Department of Treasury (DOT) to ascertain whether they concur or disagree with
      this determination. The DOT is presently reviewing this information. If the
      DOT
      does not concur with this position, the Company may become obligated for
      additional estimated excise taxes on accumulated unfunded O&W Plan
      contributions for the plan year ended December 31, 2006 of approximately
      $135,000, which has not been accrued because of the determination of no legal
      obligation and the Company’s belief that the likelihood is remote that it will
      be required to pay these excise taxes. Further, if the DOT does not concur
      with
      this position, the Company may be required to pay interest on these excise
      taxes
      and potentially incur additional excise taxes up to 100% of all required plan
      contributions. Such 100% excise taxes have not been assessed and no portion
      of
      this amount has been accrued at March 31, 2008 and the Company believes that
      the
      likelihood is remote that it will be required to pay these excise taxes. If
      the
      DOT does not concur with this position, the Company intends to pursue all
      appropriate further avenues to prevail its position. During 2006, the Pension
      Benefit Guarantee Corporation placed a lien on all of the Company’s assets to
      secure the contributions due to the O&W Plan. This lien is subordinate to
      liens that secure accounts receivable financing and certain notes
      payable.




At
      March
      31, 2008 the Company had accrued liabilities of $2,447,398 related to the
      O&W Plan and accumulated other comprehensive loss of $2,227,689 which was
      recorded as a reduction of stockholders’ deficiency. The market value of the
      O&W Plan assets decreased from $3,387,749 at December 31, 2007 to $3,028,972
      at March 31, 2008. The decrease was comprised of investment losses of $226,141,
      benefit payments of $108,895 and expenses paid of $23,741.





Net
      periodic pension cost recorded in the accompanying statements of operations
      includes the following components of expense (benefit) for the periods
      presented.





Three
                Months Ended
              March
                31,**2008**
            
            **2007**Interest
                cost
            
            **$**
            **74,248**
            
            **$**
            **75,872**Expected
                return on plan assets
            
            
            **(72,686**
            **)**
            
            **(68,527**
            **)**Expected
                expenses
            
            
            **16,250**
            
            
            **16,250**Actuarial
                loss
            
            
            **27,455**
            
            
            **32,563**Net
                periodic pension cost
            
            **$**
            **45,267**
            
            **$**
            **56,158**


8





**Note7.
      Supplemental Cash Flow Information**





Non-cash
      investing and financing transactions, including non-monetary exchanges, consist
      of the following:





Three
                Months Ended
              March
                31,**2008**
            
            **2007**Conversion
                of accrued interest payable to 250,000 shares of common
                stock
            
            **$**
            **12,500**
            
            **$**
            **-**





**Note
      8. Subsequent Event**





On
      April
      10, 2008, the Company issued 600,000 shares of common stock to an accredited
      investor upon conversion of $30,000 of accrued interest payable on outstanding
      notes payable in accordance with the terms of such notes.





**Item
      2. Management’s Discussion and Analysis of Financial Condition and Results of
      Operations**





**IT
      Consulting**




We
      are a
      provider of IT services to
      federal, state and local government and commercial clients. Our expertise
      includes managing leading edge operations and implementing complex programs
      in
      advanced server management, server virtualization, wireless technology, human
      capital services, enterprise architecture, and earned value management. We
      focus
      on aligning business processes with technology for delivery of solutions meeting
      our clients’ exact needs and providing expert management services to the
      lifecycle of technology-based projects. We have a business development office
      in
      the Washington,
      D.C. metropolitan area.





We
      have
      several contract vehicles that enable us to deliver a broad range of our
      services and solutions to the U.S. Government. The quality and consistency
      of
      our services and IT expertise allow us to maintain long-term relationships
      with
      our major clients.


9





**Results
      of Operations**





**Comparison
      of the Three Months ended March 31, 2008 and 2007**





The
      following table compares our statement of operations data for the three months
      ended March 31, 2008 and 2007. The trends suggested by this table are not
      indicative of future operating results.





Three
                Months Ended March 31,2008
                vs. 2007As
                a % of
            
            
            
            As
                a % of
            
            Amount
                of
            
            %
                Increase2008
            
            Sales
            
            2007
            
            Sales
            
            Change
            
            (Decrease)Sales
            
            $
            2,466,810
            
            
            100.0
            %
            $
            2,132,407
            
            
            100.0
            %
            $
            334,403
            
            
            15.7
            %Cost
                of services
            
            
            1,716,271
            
            
            69.6
            
            
            1,408,607
            
            
            66.1
            
            
            307,664
            
            
            21.8Gross
                profit
            
            
            750,539
            
            
            30.4
            
            
            723,800
            
            
            33.9
            
            
            26,739
            
            
            3.7General
                and administrative
            
            
            258,002
            
            
            10.5
            
            
            216,212
            
            
            10.1
            
            
            41,790
            
            
            19.3Defined
                benefit pension plan
            
            
            48,961
            
            
            2.0
            
            
            115,525
            
            
            5.4
            
            
            (66,564
            )
            
            (57.6
            )Selling
            
            
            407,676
            
            
            16.5
            
            
            336,598
            
            
            15.8
            
            
            71,078
            
            
            21.1Research
                and development
            
            
            -
            
            
            0.0
            
            
            45,263
            
            
            2.1
            
            
            (45,263
            )
            
            (100.0
            )Depreciation
            
            
            8,954
            
            
            0.4
            
            
            9,307
            
            
            0.4
            
            
            (353
            )
            
            (3.8
            )Total
                operating expenses
            
            
            723,593
            
            
            29.3
            
            
            722,905
            
            
            33.9
            
            
            688
            
            
            0.1Operating
                income
            
            
            26,946
            
            
            1.1
            
            
            895
            
            
            0.0
            
            
            26,051
            
            
            2,910.7Interest
                expense, net
            
            
            (78,388
            )
            
            (3.2
            )
            
            (64,472
            )
            
            (3.0
            )
            
            (13,916
            )
            
            21.6Income
                tax expense
            
            
            (615
            )
            
            (0.0
            )
            
            (605
            )
            
            (0.0
            )
            
            (10
            )
            
            1.7Net
                loss
            
            $
            (52,057
            )
            
            (2.1
            )%
            $
            (64,182
            )
            
            (3.0
            )%
            $
            12,125
            
            
            (18.9
            )%Net
                loss per share - basic and diluted
            
            $
            (.00
            )
            
            
            
            $
            (.00
            )


10





**Sales**





Sales
      for
      the three months ended March 31, 2008 were $2,466,810 as compared to sales
      for
      the three months ended March 31, 2007 of $2,132,407, an increase of $334,403
      or
      15.7%. A significant portion of the increase was a result of sales from new
      projects, including the
      next
      phase of a nationwide physical to virtual server consolidation project for
      a
      major establishment of the U.S. government .
      The
      first phase was completed during 2007 and the next phase began in the third
      quarter of 2007. We
      use
      virtualization software provided by third party vendors such as VMware, to
      enable our clients to run multiple operating systems on one physical machine
      and
      therefore a broader, richer set of business applications.





We
      are
      focusing our efforts 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 position as
      a
      government contractor.





**Cost
      of Services and Gross Profit**





Cost
      of
      services represents the cost of employee services related to our IT Services
      Group. Cost of services for the three months ended March 31, 2008 was $1,716,271
      or 69.6% of sales as compared to $1,408,607 or 66.1% for the three months ended
      March 31, 2007. Gross profit was $750,539 or 30.4% of sales for the three months
      ended March 31, 2008 compared to $723,800 or 33.9% of sales for the three months
      ended March 31, 2007. The decrease in gross profit margin is due to a change
      in
      the mix of our business resulting from new projects, which in certain instances
      are at lower gross profit margins. Although our objective is to maintain an
      overall gross margin of approximately 30%, which was accomplished for these
      three months periods, 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 executive, administrative and finance personnel, rent, insurance,
      professional fees, travel, and office expenses. **** General
      and administrative expenses for the three months ended March 31, 2008 increased
      by $41,790 or 19.3% to $258,002. As a percentage of sales, general and
      administrative expense was 10.5% for the three months ended March 31, 2008
      and
      10.1% for the same period in 2007. We reclassified expenses associated with
      the
      reassignment of an independent consultant from research and development to
      general and administrative expenses when the TouchThruTM development activities
      ended during the third quarter of 2007.





**Defined
      Benefit Pension Plan Expenses**





Defined
      benefit pension plan expenses include expenses (including pension expense,
      professional services, and interest costs) associated with the Osley &
Whitney, Inc. Retirement Plan **(** O&W
      Plan) of $48,961 for the three months ended March 31, 2008 and $115,525 for
      the
      three months ended March 31, 2007, a decrease of $66,564. During the three
      months ended March 31, 2007, we incurred legal and professional fees in
      connection with advocating our legal position, as discussed below, with the
      appropriate regulatory authorities.





**Selling
      Expenses**





For
      the
      three months ended March 31, 2008 we incurred selling expenses of $407,676
      associated with growing our IT Services Group business compared to $336,598
      for
      the three months ended March 31, 2007, an increase of $71,078. The increase
      is
      principally due to adding additional sales and business development personnel
      in
      the third quarter of 2007 to develop more new sales opportunities and to prepare
      proposals for new projects. During the three months ended March 31, 2008 and
      2007, we recorded $18,595 and $17,181 of expense for the value of warrants
      and
      common stock issued to consultants. We recorded selling expense associated
      with
      employee stock options of $15,879 and $29,229 for the three months ended March
      31, 2008 and 2007, respectively, a decrease of $13,350. We have recently begun
      to implement decreases in selling expenses principally consisting of the
      reduction of certain business personnel.


11





**Research
      and Development Expenses**





For
      the
      three months ended March 31, 2007 we recorded $45,263 of research and
      development expenses. These expenses were principally related to the development
      of an access control terminal and related software called TouchThruTM. TouchThruTM
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. During the third quarter of 2007, we terminated development activities
      and related expenses for TouchThruTM and reassigned an independent consultant
      from these development efforts to other business activities. As a result, we
      incurred no research and development expenses in 2008.




**Depreciation**





Depreciation
      expense was $8,954 and $9,307 for the three months ended March 31, 2008 and
      2007, respectively, a decrease of $353. The decrease is due to less depreciation
      of assets as they become fully depreciated.





**Operating
      Income**





For
      the
      three months ended March 31, 2008 we had operating income of $26,946, an
      improvement of $26,051 compared to $895 for the three months ended March 31,
      2007. This is principally attributable to two factors **:** first,
      our sales increased from $2,132,407 in 2007 to $2,466,810 in 2008, an increase
      of $334,403; and second, our gross profit increased by $26,739. Our operating
      expenses remained relatively unchanged with an increase of $688, which consisted
      of decreases in defined benefit pension plan expenses of $66,564 and research
      and development expenses of $45,263, which were offset in part by increases
      in
      general and administrative expenses of $41,790 and selling expenses of
      $71,078.





**Interest
      Expense**





Net
      interest expense was $78,388 for the three months ended March 31, 2008 compared
      to $64,472 for the three months ended March 31, 2007. The increase of $13,916
      is
      principally due to an increase in factoring fees of approximately $17,000 due
      to
      an increase in the volume and length of term of financings.





**Income
      Taxes**





Income
      tax expense was $615 and $605 for the three months ended March 31, 2008 and
      2007, respectively, consisting of state taxes.





**Net
      Loss**





For
      the
      three months ended March 31, 2008, ** we
      recorded a net loss of $(52,057) or $(.00) per share compared to a net loss
      of
      $(64,182) or $(.00) per share for the three months ended March 31,
      2007.





**Stock-Based
      Compensation**





In
      the
      following table, we present adjustments and pro forma amounts to reflect the
      impact that the adoption of SFAS 123R had on our financial statements including
      net loss.





The
      Company provides pro forma non-GAAP financial performance measurement data.
      Pro
      forma data is calculated by adding back to net loss non-cash compensation
      expense recorded according to “Share-Based
      Payment”, (SFAS 123(R)) which
      relates to stock options. Pro forma data is provided to investors to supplement
      the results of operations reported in accordance with GAAP. Management believes
      pro forma data is useful to help investors analyze the operating trends of
      the
      business before and after the adoption of SFAS 123(R) and to assess the relative
      underlying performance of the business. Management believes that pro forma
      data
      provides an additional tool for investors to use in comparing its financial
      results with other companies in the industry. By excluding non-cash charges
      such
      as SFAS 123(R) stock-based compensation, investors can evaluate the Company's
      operations and can compare its results on a more consistent basis to the results
      of other companies in the industry. Management also uses pro forma data to
      evaluate potential acquisitions, establish internal budgets, and evaluate
      performance of its business.


12





The
      Company considers pro forma data to be an important indicator of the Company's
      operational strength and performance of its business and a useful measure of
      the
      Company's historical and prospective operating trends. However, there are
      significant limitations to the use of pro forma data since it may exclude
      amounts that impact the Company's profitability and operating cash flows. The
      Company believes that these limitations are offset by clearly identifying the
      difference between the two measures. Consequently, pro forma data should not
      be
      considered in isolation or as a substitute for net income (loss) presented
      in
      accordance with GAAP. Pro forma data, as presented by the Company, may not
      be
      comparable with similarly named measures provided by other entities.





Three
                Months Ended March 31,2008
            
            
            
            
            
            20072008
            
            Adjustments
            
            Pro
                Forma
            
            2007
            
            Adjustments
            
            Pro
                FormaSales
            
            $
            2,466,810
            
            $
            -
            
            $
            2,466,810
            
            $
            2,132,407
            
            $
            -
            
            $
            2,132,407Cost
                of services
            
            
            1,716,271
            
            
            (22,508
            )
            
            1,693,763
            
            
            1,408,607
            
            
            (6,388
            )
            
            1,402,219Gross
                profit
            
            
            750,539
            
            
            22,508
            
            
            773,047
            
            
            723,800
            
            
            6,388
            
            
            730,188General
                and administrative
            
            
            258,002
            
            
            (4,298
            )
            
            253,704
            
            
            216,212
            
            
            (2,627
            )
            
            213,585Defined
                benefit pension plan
            
            
            48,961
            
            
            -
            
            
            48,961
            
            
            115,525
            
            
            -
            
            
            115,525Selling
            
            
            407,676
            
            
            (15,879
            )
            
            391,797
            
            
            336,598
            
            
            (29,229
            )
            
            307,369Research
                and development
            
            
            -
            
            
            -
            
            
            -
            
            
            45,263
            
            
            -
            
            
            45,263Depreciation
            
            
            8,954
            
            
            -
            
            
            8,954
            
            
            9,307
            
            
            -
            
            
            9,307Total
                operating expenses
            
            
            723,593
            
            
            (20,177
            )
            
            703,416
            
            
            722,905
            
            
            (31,856
            )
            
            691,049Operating
                income
            
            
            26,946
            
            
            42,685
            
            
            69,631
            
            
            895
            
            
            38,244
            
            
            39,139Interest
                expense, net
            
            
            (78,388
            )
            
            -
            
            
            (78,388
            )
            
            (64,472
            )
            
            -
            
            
            (64,472
            )Income
                tax expense
            
            
            (615
            )
            
            -
            
            
            (615
            )
            
            (605
            )
            
            -
            
            
            (605
            )Net
                loss
            
            $
            (52,057
            )
            $
            42,685
            
            $
            (9,372
            )
            $
            (64,182
            )
            $
            38,244
            
            $
            (25,938
            )Net
                loss per share - basic and diluted
            
            $
            (.00
            )
            $
            .00
            
            $
            (.00
            )
            $
            (.00
            )
            $
            .00
            
            $
            (.00
            )





**Liquidity
      and Capital Resources**




At
      March
      31, 2008, we had cash of $63,141 available for our working capital needs and
      planned capital asset expenditures. Our primary liquidity needs are the
      financing of working capital and capital expenditures. Our primary source of
      liquidity is cash provided by operations and our $800,000 credit facility.
      As of
      March 31, 2008, we had approximately $150,000 available under our credit
      facility. During the three months ended March 31, 2008, cash provided by
      operating activities was $25,867.




At
      March
      31, 2008, we had a working capital deficit of approximately $2.6 million and
      a
      current ratio of .27. Our objective is to improve our working capital position
      from profitable operations. The O&W Plan current liabilities have a
      significant impact on our working capital. Without the current liabilities
      of
      the O&W Plan of approximately $2.0 million, working capital would have been
      a deficit of approximately $534,000. If we incur operating losses or continue
      to
      incur net losses, we may continue to experience working capital shortages that
      impair our business operations and growth strategy. Based on current level
      of
      operations, we have sufficient cash flow and short-term financing sources,
      through sales with recourse of accounts receivable, to fund our payroll and
      accounts payable on a timely basis.




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





We
      have
      used our common stock to provide compensation to certain employees and
      consultants and to fund liabilities.





**Future
      Trends**





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





There
      is
      no assurance, that our current resources or cash flow from operations will
      be
      adequate to fund the liabilities under the O&W Plan if the DOT does not
      concur with our position or that we will be successful in raising additional
      working capital when necessary. 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.


13




**Cash
      Flows from Operating Activities**




During
      the three months ended March 31, 2008, cash provided by operations was $25,867
      compared with cash provided by operations of $7,966 for the three months ended
      March 31, 2007. Our operating cash flow is primarily affected by the overall
      profitability of our contracts, our ability to invoice and collect from our
      clients in a timely manner, and our ability to manage our vendor payments.
      We
      bill our clients weekly or monthly after services are performed, depending
      on
      the contract terms. The improvement in cash provided in 2008 was primarily
      due
      to improved operating results which reduced our operating loss for the three
      months ended March 31, 2008. Our accounts receivable increased principally
      due
      to the growth of sales in the period. The increase in liabilities is primarily
      due to increased accounts payable, accrued interest payable for related party
      notes payable and accrued pension and retirement expenses.




**Cash
      Flows from Investing Activities**




Cash
      used
      in investing activities for the three months ended March 31, 2008 was $5,285
      compared with $2,622 for the three months ended March 31, 2007. Cash used in
      investing activities was primarily for capital expenditures for computer
      hardware and software. We do not have any plans for significant capital
      expenditures in the near future.




**Cash
      Flows from Financing Activities**




Cash
      provided by financing activities was $14,278 for the three months ended March
      31, 2008 due to $16,667 from the exercise of an option for common stock offset
      by principal payments of $2,389 on notes payable. In comparison, for the three
      months ended March 31, 2007 we used cash from financing activities of $7,404
      for
      principal payments on notes payable. We anticipate that we will use
      approximately $3,100 through the end of the year for funding of long-term debt
      obligations.




**Credit
      Agreement**




We
      have a
      line of credit 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 us. We pay fees based on the length of time that the
      invoice remains unpaid. At March 31, 2008, we had approximately $150,000 of
      availability under this line and could finance up to another approximately
      $150,000 based on eligible accounts receivable.




We
      believe the capital resources available to us under our line of credit and
      cash
      from our operations are adequate to fund our ongoing operations and to support
      the internal growth we expect to achieve for at least the next 12 months.
      However, if we experience significant growth in our sales, we believe that
      this
      would require us to increase our financing line or obtain additional working
      capital from other sources to support our sales growth. We anticipate financing
      our external growth from acquisitions and our longer-term internal growth
      through one or more of the following sources: cash from operations; additional
      borrowing; issuance of equity; use of the existing revolving credit facility;
      or
      a refinancing of our credit facilities.




**Osley
      & Whitney, Inc. Retirement Plan**





As
      of
      December 31, 2004, we sold or closed all of our prior businesses. Currently,
      our
      sole business is the provision of IT consulting services. The following
      discussion of the O&W Plan relates to the business that was closed and sold
      and its current effect on our operations and financial position.





Prior
      to
      December 30, 2002, we owned 100% of the common stock of Osley & Whitney,
      Inc. (O&W). On December 30, 2002, we sold all of the O&W common stock to
      a third party, but continued to act as the sponsor of the O&W Plan. Although
      we continued to act as the sponsor of the O&W Plan after the sale, during
      2007 it was determined that we had no legal obligation to do so.





During
      2007, we submitted information advocating this position to the Department of
      Treasury (DOT) to ascertain whether they concur or disagree with this
      determination. The DOT is presently reviewing this information. If the DOT
      does
      not concur with this position, we may become obligated for additional estimated
      excise taxes on accumulated unfunded O&W Plan contributions for the plan
      year ended December 31, 2006 of approximately $135,000, which has not been
      accrued because of the determination of no legal obligation and our belief
      that
      the likelihood is remote that we will be required to pay these excise taxes.
      Further, if the DOT does not concur with this position, we may be required
      to
      pay interest on these excise taxes and potentially incur additional excise
      taxes
      up to 100% of all required plan contributions. Such 100% excise taxes have
      not
      been assessed and no portion of this amount has been accrued at March 31, 2008
      and we believe that the likelihood is remote that we will be required to pay
      these excise taxes. If the DOT does not concur with this position, we intend
      to
      pursue all appropriate further avenues to prevail on our position.


14





If
      it is
      determined that we are responsible for O&W Plan deficiencies, then we will
      be required to make contributions for deficiencies in 2004 through 2008 and
      we
      will be required to fund O&W Plan deficiencies in future periods. We did not
      make any O&W Plan contributions in 2004, 2006, 2007, or 2008. During 2005,
      we made contributions valued at approximately $181,000. We currently do not
      have
      the funds available to make the required cash contributions which currently
      approximate $1.8 million. As a result of our legal position, we do not
      anticipate making any contributions to the Plan during the year ending December
      31, 2008. We recorded defined benefit pension expense (including professional
      services and interest costs) of $48,961 and $115,525 for the three months ended
      March 31, 2008 and 2007, respectively.





During
      2006, the Pension Benefit Guarantee Corporation placed a lien on all of our
      assets to secure the contributions due to the O&W Plan. This lien is
      subordinate to liens that secure accounts receivable financing and certain
      notes
      payable.





At
      March
      31, 2008 we had accrued liabilities of $2,447,398 related to the O&W Plan
      and accumulated other comprehensive loss of $2,227,689 which was recorded as
      a
      reduction of stockholders’ deficiency.





The
      market value of the O&W Plan assets decreased from $3,387,749 at December
      31, 2007 to $3,028,972 at March 31, 2008. The decrease was comprised of
      investment losses of $226,141, benefit payments of $108,895 and expenses paid
      of
      $23,741.





**Item
      3.**  **Quantitative** a **nd
      Qualitative Disclosures About Market Risk.**





As
      a
      smaller reporting company we are not required to provide the information
      required by this Item.





**Item
      4T. Controls and Procedures.**





Evaluation
      of Disclosure Controls and Procedures. Our
      management, with the participation of our president and our 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, our
      president and our 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 president and
      our
      chief financial officer, 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 the period covered by this report that has materially affected, or is
      reasonably likely to materially affect, our internal control over financial
      reporting.





**PART
      II - OTHER INFORMATION**





**Item
      1A. Risk Factors.**





You
      should consider the risk factors included in our Annual Report on Form 10-KSB
      for the year ended December 31, 2007 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.


15





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





On
      February 21, 2008, we issued 250,000 unregistered shares of our common stock
      to
      an accredited investor upon conversion of $12,500 of accrued interest payable
      on
      outstanding notes payable in accordance with the terms of such
      notes.





On
      April
      10, 2008, we issued 600,000 unregistered shares of our common stock to an
      accredited investor upon conversion of $30,000 of accrued interest payable
      on
      outstanding notes payable in accordance with the terms of such
      notes.





These
      transactions were exempt from registration, as they were nonpublic offerings
      made pursuant to Sections 4(2) and 4(6) of the Securities Act of 1933, as
      amended. All shares issued in the transactions described hereinabove bore an
      appropriate restrictive legend.




**Item
      5.**  **Other
      Information.**





**Appointment
      of Certain Officers**





Effective
      May 12, 2008, we made changes to our management team as follows:





William
      Hogan, 47, was appointed as our vice president of operations. Previously, Mr.
      James Frost held this position and continues to serve as our chief technology
      officer. Mr. Hogan joined us in July 2004 as practice director and has provided
      IT consulting services including building and leading the implementation,
      integration and support of high technology solutions for our major client.
      Previously, Mr. Hogan was employed with Hewlett Packard, Inc. since 1997 and
      was
      North American operations manager for messaging services from 2001 until joining
      us. As our vice president of operations, Mr. Hogan will be serving at the
      pleasure of our board of directors and will be entitled to receive base
      compensation of $150,000 annually, additional performance based compensation
      as
      approved by our compensation committee, a discretionary matching contribution
      to
      our retirement plan and group health care and group life insurance benefits
      according to our standard policies.





James
      Witzel, 54, was appointed as our chief financial officer. Previously, our chief
      financial officer was Mr. Michael Smith, who continues to serve as our president
      and chief executive officer. Mr. Witzel joined us in October 2004 as finance
      manager reporting to our then chief financial officer and assisted him with
      accounting, financial reporting, financial analyses, and various special
      projects. Prior to joining us, since 2003, Mr. Witzel was a consultant providing
      accounting and management consulting services to a variety of privately held
      middle market companies. He has over 30 years of experience in accounting,
      financial reporting, and management. As our chief financial officer, Mr. Witzel
      will be serving at the pleasure of our board of directors and will be entitled
      to receive base compensation of $120,000 annually, additional performance based
      compensation as approved by our compensation committee, a discretionary matching
      contribution to our retirement plan and group health care and group life
      insurance benefits according to our standard policies.





These
      aforementioned individuals had neither any direct nor indirect interest in
      any
      transaction with us that requires disclosure under Item 404(a) of Regulation
      S-K
      prior to assuming their new positions. There is no existing family relationship
      between any of the aforementioned individuals and any of our directors or
      executive officers.





**Item
      6. Exhibits.**





Exhibit
                No.
            
            Description31.1
            
            Certification
                of President 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 President pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.32.2
            
            Certification
                of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002.


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**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.





Infinite
                Group, Inc.
              (Registrant)Date
                May 15, 2008
            /s/
                Michael S. SmithMichael
                S. SmithChief
                Executive Officer(Principal
                Executive Officer)Date
                May 15, 2008
            /s/
                James WitzelJames
                WitzelChief
                Financial Officer(Principal
                Financial Officer)


17