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, 2003

                        Commission File Number 001-32300

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

             Delaware                                    13-4100476
             --------                                    ----------
   (State or other jurisdiction                        (I.R.S. Employer
 of incorporation or organization)                  Identification No.)

                           595 Blossom Rd., Suite 309
                            Rochester, New York 14610
                           --------------------------
                     (Address of principal executive office)

                                 (585) 654-5525
                (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 |_| No |X|

Number of shares  outstanding of each of the issuer's  classes of common equity,
as of the latest  practicable  date: As of July 15, 2005,  there were 19,206,965
shares of common stock outstanding.

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


<PAGE>

                              INFINITE GROUP, INC.
                               FORM 10-QSB REPORT

                                 March 31, 2003

                                TABLE OF CONTENTS
                                                                            PAGE
PART I - FINANCIAL INFORMATION

   Item 1.  Consolidated Financial Statements

            Balance Sheets -March 31, 2003 (unaudited) and December 31, 2002   3

            Statements of Operations- (unaudited) for the three
            month periods ended March 31, 2003 and 2002                        4

            Statements  of Cash  Flows-  (unaudited)  for the three  month
            periods ended March 31, 2003 and 2002                              5

            Notes to Consolidated Financial Statements                         6

   Item 2.  Management's Discussion and Analysis of Financial Condition
            and Results of Operations                                         12

   Item 3.  Controls and Procedures                                           16

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                                   18

   Item 4.  Submission of Matters to a Vote of Security Holders               18

   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" within the meaning of Section 21E of the Securities
and Exchange Act of 1934  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.  The terms
"we", "our", "us", or any derivative  thereof,  as used herein refer to Infinite
Group, Inc., a Delaware corporation..


                                       2
<PAGE>

                                             PART I
                                      FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

INFINITE GROUP, INC.

<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
                                                                      MARCH 31,     DECEMBER 31,
                                                                        2003            2002
------------------------------------------------------------------------------------------------
<S>                                                                 <C>             <C>
ASSETS                                                               (UNAUDITED)
CURRENT ASSETS:
   Cash                                                             $     74,477    $     36,459
   Restricted cash                                                        42,809          25,118
   Accounts receivable, net of allowance                                 883,094         923,043
   Inventories                                                            68,802         127,792
   Other current assets                                                   42,473          42,767
   Assets of discontinued operations                                     312,950         943,683
                                                                    ------------    ------------
       Total current assets                                            1,424,605       2,098,862

PROPERTY AND EQUIPMENT, NET                                            2,913,933       3,042,587

OTHER ASSETS:
   Note receivable                                                        73,897          73,897
   Intangible assets, net                                                 58,634          60,225
                                                                    ------------    ------------
       Total other assets                                                132,531         134,122
                                                                    ------------    ------------
 Total assets                                                       $  4,471,069    $  5,275,571
                                                                    ============    ============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
   Notes payable:
     Bank                                                           $    418,087    $    428,276
      Other                                                               30,000              --
      Related parties                                                     33,906          83,906
   Accounts payable                                                    1,358,673       1,317,136
   Accrued expenses                                                      671,385         691,332
   Current maturities of long-term obligations                         2,500,468       2,551,295
   Liabilities of discontinued operations                                891,399       1,400,203
                                                                    ------------    ------------
        Total current liabilities                                      5,903,918       6,472,148

LONG-TERM OBLIGATIONS
   Notes payable-related parties                                         125,000              --
   Accrued pension expense                                             2,166,918       2,159,152
                                                                    ------------    ------------
                                                                       8,195,836       8,631,309
                                                                    ------------    ------------
Commitments and contingencies

STOCKHOLDERS' DEFICIENCY:
   Common stock, $.001 par value, 20,000,000 shares authorized;
      6,314,077 (6,314,077 in 2002) shares issued and outstanding          6,314           6,314
   Additional paid-in capital                                         27,817,820      27,817,820
   Accumulated deficit                                               (28,492,281)    (28,081,158)
   Accumulated other comprehensive loss                               (3,056,620)     (3,098,705)
                                                                    ------------    ------------
    Total stockholders' deficiency                                    (3,724,767)     (3,355,729)
                                                                    ------------    ------------
Total liabilities and stockholders' deficiency                      $  4,471,069    $  5,275,571
                                                                    ============    ============
See notes to consolidated financial statements
</TABLE>


                                               3
<PAGE>

<TABLE>
<CAPTION>

INFINITE GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS- (UNAUDITED)

                                                              THREE MONTHS ENDED
                                                                   MARCH 31,
------------------------------------------------------------------------------------
                                                             2003            2002
------------------------------------------------------------------------------------
<S>                                                       <C>            <C>
                                                                        (As Restated)

SALES                                                     $ 1,413,248    $ 1,771,941
Cost of goods and services                                  1,044,308      1,450,656
                                                          -----------    -----------
GROSS PROFIT                                                  368,940        321,285

Costs and expenses:
   General and administrative                                 459,259        569,100
   Depreciation and amortization                              162,512        198,095
   Selling                                                     48,500         80,487
   Research and development                                     1,932          1,816
                                                          -----------    -----------
                                                              672,203        849,498
                                                          -----------    -----------
OPERATING LOSS                                               (303,263)      (528,213)
Other income (expense):
   Interest expense:
       Related parties                                         (1,481)        (4,572)
       Others                                                 (37,520)       (76,451)
   Gain on disposition of assets                                   --        137,417
   Other                                                        2,911             --
   Interest income                                                 55            402
                                                          -----------    -----------
          Total other income (expense)                        (36,035)        56,796
                                                          -----------    -----------
Loss from continuing operations
       before income tax expense                             (339,298)      (471,417)
Income tax expense                                               (200)        (3,750)
                                                          -----------    -----------
LOSS FROM CONTINUING OPERATIONS                              (339,498)      (475,167)
Income (loss) from discontinued operations,
(including  $60,366 gain on disposal in 2002)                 (71,625)        75,012
                                                          -----------    -----------
   Net loss                                               $  (411,123)   $  (400,155)
                                                          ===========    ===========
Net loss per share -basic:
  Loss from continuing operations                         $      (.05)   $      (.08)
  Income (loss) from discontinued operations                     (.01)           .01
                                                          -----------    -----------
   Net loss                                               $      (.06)   $      (.07)
                                                          ===========    ===========
   Weighted average number of shares outstanding- basic     6,314,077      5,524,561

Net income (loss) per share-diluted:
  Income (loss) from discontinued operations              $      (.01)   $       .01
                                                          ===========    ===========
Weighted average number of shares outstanding-diluted       6,314,077      5,785,416
                                                          ===========    ===========
</TABLE>

See notes to consolidated financial statements.


                                       4
<PAGE>

<TABLE>
<CAPTION>

INFINITE GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS- (UNAUDITED)

                                                                                          THREE MONTHS ENDED
                                                                                              MARCH 31,
----------------------------------------------------------------------------------------------------------------
                                                                                         2003           2002
----------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>            <C>
                                                                                                    (As Restated)
OPERATING ACTIVITIES:
   Net (loss)                                                                         $  (411,123)   $  (400,155)
      Adjustments to reconcile net loss to net cash provided by
        (used in) operating activities:
      (Income) loss from discontinued operations                                           71,625        (75,012)
       Depreciation and amortization                                                      162,512        198,095
       Amortization of discount on note payable                                                --          6,552
       Expenses satisfied via issuance of common stock                                         --         51,333
       (Gain) loss on disposition of assets                                                    --       (137,416)
       (Increase) decrease in:
                Accounts receivable, net                                                   39,951        497,085
                Other current assets                                                          294            826
                Inventories                                                                58,990        (41,245)
                Prepaid pension cost                                                           --         15,000
     Increase (decrease) in:
        Accounts payable and accrued expenses                                              21,591       (303,503)
        Accrued pension obligations                                                        49,851             --
                                                                                      -----------    -----------
   NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES OF CONTINUING OPERATIONS            (6,309)      (188,440)
   NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES OF DISCONTINUED OPERATIONS          50,302       (345,495)
                                                                                      -----------    -----------
   NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                                     43,993       (533,935)
                                                                                      -----------    -----------
INVESTING ACTIVITIES:
   Increase in restricted funds                                                           (17,691)       (47,105)
    Purchase of property and equipment                                                    (32,268)       (25,134)
    Proceeds from sale of property and equipment                                               --        270,000
                                                                                      -----------    -----------
   NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES OF CONTINUING OPERATIONS           (49,959)       197,761
   NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES OF DISCONTINUED OPERATIONS              --        990,602
                                                                                      -----------    -----------
   NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                    (49,959)     1,188,363

FINANCING ACTIVITIES:
   Net repayments of bank notes payable                                                   (10,189)       (11,820)
   Repayment of notes payable- related parties                                            (20,000)       (23,000)
   Proceeds from issuance of notes payable, net of costs                                       --        911,000
   Proceeds from issuance of long term obligations-related parties                        125,000             --
   Repayment of long-term obligations                                                     (50,827)      (114,668)
   Proceeds of common stock, net of costs                                                      --        156,132
                                                                                      -----------    -----------
   NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES OF CONTINUING OPERATIONS            43,984        917,644
   NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES OF DISCONTINUED OPERATIONS              --     (1,498,134)
                                                                                      -----------    -----------
   NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                                     43,984       (580,490)
                                                                                      -----------    -----------
NET INCREASE (DECREASE) IN CASH                                                            38,018         73,938
Cash  - beginning of period                                                                36,459         73,802
                                                                                      -----------    -----------
Cash  - end of period                                                                 $    74,477    $   147,740
                                                                                      ===========    ===========
Supplemental disclosure:
   Interest                                                                           $   (38,341)   $   (81,023)
                                                                                      ===========    ===========
   Income taxes                                                                       $      (200)   $    (3,750)
                                                                                      ===========    ===========
</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 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 United  States of  America  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,  2002 and the  notes  thereto
included in the  Company's  Annual  Report on Form 10-KSB  filed with the United
States Securities and Exchange  Commission.  Results of consolidated  operations
for the three month period ended March 31,2003 are not necessarily indicative of
the operating results that may be expected for the year ended December 31, 2003.
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 audited consolidated  financial statements
present  a  summary  of  significant  accounting  policies.  The  most  critical
accounting policies follow.

REVENUE RECOGNITION

In 2002 we generated  substantially  all of our revenue from  traditional  laser
manufacturing services, which included welding, machining, cutting, drilling and
engraving.  These  services  related to processes  performed  on the  customers'
parts. The services were performed based upon terms specified and agreed upon by
both parties prior to  commencement.  Revenues  relating to these  services were
recognized  at the  point  that  the  completed  product  was  delivered  to the
customer.

In 2003 we generated revenue from our traditional laser  manufacturing  services
and beginning in the second quarter of 2003, we commenced  providing services in
the field of information  technology  (IT)  consulting  services  through our IT
Services Group.

STOCK-BASED COMPENSATION

We disclose the pro forma  compensation  cost relating to stock options  granted
under employee  stock option plans,  based on the fair value of those options at
the date of grant.  This  valuation is determined  utilizing the  Black-Scholes,
option-pricing  model, which takes into account certain  assumptions,  including
the expected life of the option and the expected  stock  volatility and dividend
yield over this life.  These  assumptions  are made based on past experience and
expected future  results.  In the event the actual  performance  varies from the
estimated amounts, the value of these options may be misstated.


                                       6
<PAGE>

EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS

In June 2001, the FASB issued Statement of Financial Accounting Standards (SFAS)
No.  141,  "Business  Combinations,"  and  SFAS No.  142,  "Goodwill  and  Other
Intangible  Assets." Under these new standards,  all acquisitions  subsequent to
June 30, 2001 must be  accounted  for under the purchase  method of  accounting.

SFAS No. 142 requires that goodwill be tested  annually for  impairment  using a
two-step process.  The first step was to identify a potential impairment and, in
transition,  this step must be measured as of the  beginning of the fiscal year.
The second  step of the  goodwill  impairment  test  measures  the amount of the
impairment  loss (measured as of the beginning of the year of the adoption),  if
any, and must be completed by the end of our fiscal year.  Any  impairment  loss
resulting from the transitional impairment tests are reflected as the cumulative
effect of a change in accounting principle.

We adopted the  provisions  of SFAS No. 142 in our first quarter ended March 31,
2002.  Goodwill in the amount of $88,769 at December  31,  2001,  relates to the
Laser Fare (LF) and Mound  subsidiaries.  Subsequent  to December 31, 2001,  the
assets of Mound were disposed of and  operations  were ceased,  resulting in the
write-down of goodwill  amounting to $17,584.  In addition the goodwill relating
to Laser Fare,  amounting to $71,185 was written off at December  31,  2002.  We
have  allocated  the other  intangible  assets  to their  reporting  units.  The
remaining  useful  lives of the other  intangibles  have been  evaluated  and no
changes will be made.

SFAS No. 141 also  requires  that upon  adoption  of SFAS No.  142,  the Company
reclassify  the carrying  amounts of certain  intangibles  assets into or out of
goodwill,  based upon certain criteria.  We did not have any  reclassifications.
SFAS No. 142  supersedes APB No. 17,  "Intangible  Assets," and is effective for
fiscal years beginning after December 15, 2001. SFAS No. 142 primarily addresses
the accounting for goodwill and  intangible  assets  subsequent to their initial
recognition.  The  provisions  of SFAS No.  142  prohibit  the  amortization  of
goodwill and  indefinite-lived  intangible  assets;  require  that  goodwill and
indefinite-lived  intangible  assets be tested annually for  impairment,  and in
interim  periods if certain events occur  indicating  that the carrying value of
goodwill and / or  indefinite-lived  intangible assets may be impaired;  require
that reporting units be identified for the purpose of assessing potential future
impairments of goodwill;  and removes the 40-year limitation on the amortization
period of  intangible  assets that have finite lives.

In August 2001, the FASB issued SFAS No. 143,  "Accounting for Asset  Retirement
Obligations"  (SFAS  143).  SFAS  143  establishes   accounting   standards  for
recognition  and  measurement  of a liability for the costs of asset  retirement
obligations.  Under SFAS 143, the costs of retiring an asset will be recorded as
a liability  when the  retirement  obligation  arises,  and will be amortized to
expense over the life of the related asset.

In August 2001, the Financial  Accounting  Standards Board issued  Statement No.
144 (SFAS  144),  "Accounting  for the  Impairment  or  Disposal  of  Long-Lived
Assets", which provides guidance in the accounting for impairment of disposal of
long-lived  assets.  For long-lived asset to be held and used, the new rules are
similar to previous guidance,  which required the recognition of impairment when
the  undiscounted  cash  flows  will  not  recover  the  carrying  amount.   The
computation  of  fair  value  now  removes  goodwill  from   consideration   and
incorporates a probability-weighted cash flow estimation approach. Additionally,
assets  qualifying  for  discontinued  operations  treatment  have been expanded
beyond the former  major line of  business  or class of  customer  approach.  We
adopted the provisions of SFAS 144 in fiscal 2001 and utilized this guidance for
the disposal of the Plastics Group.  Accordingly,  the assets and liabilities of
the discontinued  operations are reflected as gross amounts, rather than net, in
the accompanying  balance sheet in accordance with SFAS 144. There was no impact
from the adoption of this standard on its impairment tests of long-lived  assets
or its accounting for discontinued operations.


                                       7
<PAGE>

In April 2002,  the FASB issued SFAS 145  "Rescission  of SFAS No. 4, 44 and 64,
"Amendment of SFAS No.13, and Technical Corrections".  SFAS No. 145, among other
things, amends SFAS No. 4 and SFAS No. 64, to require that gains and losses from
the   extinguishments   of  debt  generally  be  classified   within  continuing
operations.  The  provisions  of SFAS No. 145 are  effective  for  fiscal  years
beginning  after May 15, 2002 and early  application  is  encouraged.  We do not
believe that the adoption of SFAS No. 145 will have a significant  impact on our
financial statements.

In June 2002, the FASB issued SFAS 146,  "Accounting  for Costs  Associated with
Exit or  Disposal  Activities."  SFAS 146  replaces  Emerging  Issues Task Force
("EITF") Issue 94-3,  "Liability  Recognition for Certain  Employee  Termination
Benefits and Other Costs to Exit an Activity".  This standard requires companies
to recognize  costs  associated  with exit or disposal  activities when they are
incurred  rather than at the date of a commitment  to an exit or disposal  plan.
This statement is effective for exit or disposal  activities  that are initiated
after  December  31,  2002.  We do not believe that the adoption of SFAS No. 146
will have a significant impact on our financial statements.

In February  2003,  the FASB issued  SFAS No. 148,  "Accounting  for Stock Based
Compensation: A Comparison of FASB Statement No. 123, Accounting for Stock-Based
Compensation,   and  Its  Related  Interpretations,   and  IASB  Proposed  IFRS,
Share-based  Payments." SFAS 148 amends SFAS 123 to provide  alternative methods
of  transition  for an entity that  voluntarily  changes to the fair value based
method of accounting for stock-based employee  compensation.  It also amends the
disclosure  provisions of that Statement to require  prominent  disclosure about
the effects on reported net income of an entity's  accounting  policy  decisions
with respect to stock-based compensation.  The statement also amends APB Opinion
No. 28, "Interim Financial Reporting", to require disclosure about those effects
in interim financial  information.  We have chosen not to voluntarily  change to
the fair value based method of accounting for stock-based employee  compensation
but have  adopted  the  disclosure  rules under SFAS 148.

NOTE 3. DISCONTINUED OPERATIONS AND RECLASSIFICATIONS

The statements of operations and cash flows for the three months ended March 31,
2002 have been  restated  to  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 and for LF,
which was sold 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.  The  termination  of the contract had a detrimental  effect on the
development of our technology. During 2002, all of our Photonics Group employees
were  released  and  the  operations  of the  Photonics  Group  ceased.  We also
determined  that our Photonics  Group  patents and property and  equipment  were
impaired,  and consequently  recorded impairment losses in the fourth quarter of
2002 of approximately $468,000 and $148,000 respectively,  which was included in
loss on disposal of  discontinued  operations in the  consolidated  statement of
operations for the year ended December 31, 2002.

On  December  31,  2003,  the  Company  and LF  entered  into an asset  purchase
agreement  with LFI,  Inc.  ("LFI")  relating to the  purchase by LFI of certain
assets and the  assumption  of certain  liabilities  of LF relating to the laser
engraving and medical products  manufacturing and assembly businesses of LF (the
"Purchase  Agreement").  The  principals  of LFI  are  former  employees  of LF,
including the former  chairman and chief executive  officer of the Company.  The
purchase price for the assets was assumed  liabilities of LF and/or the Company.
On December 31, 2004,  the Company  completed the sale of the remaining  assets,
including  the  assumption  of  certain  liabilities,  to an  affiliate  of LFI,
relating to all the remaining laser businesses of LF. The purchase price was the
assumed liabilities of LF plus the issuance of several notes by the buyer to LF.


                                       8
<PAGE>

LF recorded a loss on sale of approximately  $99,000 for the year ended December
31, 2003. LF  reclassified  the operating  assets and  liabilities to assets and
liabilities  held for sale at December 31, 2003. The balances of the assets held
for sale at  December  31,  2003 was  $2,919,154  with  related  liabilities  of
$781,847. During the year ended December 31, 2004, LF had income from operations
of  approximately  $494,000 (loss from  operations of $417,000 in 2003) which is
included in loss from discontinued operations.

In accordance  with FASB 144, the disposal of the  Photonics and Laser  segments
have been accounted for as a disposal of business segments and accordingly,  the
assets  and  liabilities  for IP and LF have  been  segregated  from  continuing
operations in the  accompanying  consolidated  balance  sheets and classified as
assets of  discontinued  operations  and  assets  held for sale.  The  operating
results  for  both  segments  are  segregated   and  reported  as   discontinued
operations.

      The  following  is a summary of  financial  position at March 31, 2003 and
December 31, 2002 and results of operations for the three months ended March 31,
2003  and  2002  for the  disposed  Photonics  (IP)  and  Plastics  (O&W and EP)
segments:


FINANCIAL POSITION                        MARCH 31,    DECEMBER 31,
                                             2003          2002
                                          ----------   ----------
Current assets and total assets of
 discontinued operations                  $  312,950   $  943,683
                                          ==========   ==========

Liabilities of discontinued operations:
    Accounts payable and accrued
     expenses                             $  886,399   $1,395,203
    Unsecured note payable                     5,000        5,000
                                          ----------   ----------

    Total liabilities of discontinued
     operations                           $  891,399   $1,400,203
                                          ==========   ==========


                                             THREE MONTHS ENDED
                                                  MARCH 31,
                                          -----------------------
RESULTS OF OPERATIONS                        2003         2002
                                          ----------   ----------

Revenue from discontinued operations      $  133,428   $  435,182
                                          ==========   ==========

Income (loss) from discontinued
 operations                               $  (71,625)  $   14,646

Gain on disposal of discontinued
 operations                                       --       60,366
                                          ----------   ----------

Net income (loss) from discontinued
 operations                               $  (71,625)  $   75,012
                                          ==========   ==========

Certain other amounts in the 2002 financial statements have been reclassified to
conform with the 2003 financial statement presentation.


                                       9
<PAGE>

NOTE 4. STOCK OPTION PLANS

      As of March  31,  2003 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 2,340,000 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 options
including  the exercise  price,  expiration  date,  number of shares and vesting
provisions.

      A summary of all stock  option  activity  for the three months ended March
31, 2003 is as follows:

                                                                  WEIGHTED
                                        NUMBER      EXERCISE       AVERAGE
                                      OF OPTIONS      PRICE     EXERCISE PRICE
                                      ----------  -----------   --------------
Outstanding at December 31, 2002         300,581  $1.38-$5.50   $         1.64
                                                  ===========   ==============
Options issued                           100,000  $       .15   $          .15
                                                   ==========   ==============
Options expired                         (217,477) $1.38-$5.50   $        1 .53
                                      ----------   ==========   ==============
Outstanding at March 31, 2003            183,104  $ .15-$2.50   $          .96
                                      ==========  ===========   ==============
Exercisable at March 31, 2003             83,104  $.15-$ 2.50   $         1.93
                                      ==========  ===========   ==============

The Company has adopted the disclosure-only provisions of Statement of Financial
Accounting Standards (SFAS) No. 123 -"Accounting for Stock-Based Compensation, "
and, accordingly,  does not recognize  compensation cost for stock option grants
under fixed awards. If the Company had elected to recognize  compensation  costs
based on the fair value of the options  granted at grant date as  prescribed  by
SFAS No.123,  net loss and loss per share from continuing  operations would have
increased as follows:

                                             THREE MONTHS ENDED
                                                  MARCH 31,
RESULTS OF OPERATIONS                     -----------------------
                                             2003         2002
                                          ----------   ----------

Net loss-as reported (000's)              $     (411)  $     (400)

Total stock based employee compensation
 expense determined employee compensation
 expense determined under the fair value
 method for all awards (000's)            $        7   $       69
                                          ----------   ----------
Net Loss- pro forma (000's)               $     (418)  $     (469)
                                          ==========   ==========

Loss per share as reported                $     (.06)  $     (.07)
                                          ==========   ==========
Loss per share pro forma                  $     (.06)  $     (.08)
                                          ==========   ==========

NOTE  5.  BUSINESS SEGMENTS

Prior to 2002,  the Company's  business were  organized,  managed and internally
reported as three segments.  The segments are determined based on differences in
products,  production  processes and internal  reporting.  During the year ended
December 31, 2001, the Company  approved of a plan to discontinue the operations
of the Plastics Group. 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.


                                       10
<PAGE>

During the fourth  quarter of the year ended  December  31,  2003,  the  Company
approved the sale of the assets and certain  liabilities of its Laser Fare, Inc.
subsidiary, referred to as the Laser Group. As a result, in accordance with FASB
144, the  disposal of the  Plastics,  Photonics,  and Laser  segments  have been
accounted for as disposals of business segments and accordingly,  the respective
assets  (liabilities)  have  been  segregated  from  continuing  operations  and
classified as assets of  discontinued  operations and the operating  results for
all three segments are 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 United States.
Revenues from customers in foreign countries are minimal.  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 periods ended March 31, 2003 and 2002, respectively,  is set
forth as follows:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
                         Plastics   Photonics                 IT Services   Unallocated
                           Group      Group     Laser Group      Group       Corporate    Consolidated
------------------------------------------------------------------------------------------------------
<S>                      <C>        <C>         <C>           <C>           <C>           <C>
Three Months ended March 31, 2003
Sales to unaffiliated    $     --   $      --   $ 1,412,045   $     1,203   $        --   $  1,413,248
------------------------------------------------------------------------------------------------------
Operating loss           $     --   $      --   $  (121,047)  $  (182,216)  $        --   $   (303,263)
------------------------------------------------------------------------------------------------------
Income (loss)  from
discontinued operations  $     --   $ (71,625)  $        --   $        --   $        --   $    (71,625)
------------------------------------------------------------------------------------------------------

Three Months ended March 31, 2002
------------------------------------------------------------------------------------------------------
Sales to unaffiliated
customers                $     --   $      --   $ 1,771,941   $        --   $        --   $  1,771,941
------------------------------------------------------------------------------------------------------
Operating loss, including
corporate overhead
allocation               $     --   $      --   $  (371,272)  $        --   $  (156,941)  $   (528,213)
------------------------------------------------------------------------------------------------------
Income  (loss) from
discontinued operations,
including corporate
overhead calculations    $ 92,549   $  15,359   $        --   $        --   $   (32,896)  $     75,012
------------------------------------------------------------------------------------------------------
</TABLE>

NOTE 6. SUPPLEMENTAL CASH FLOW INFORMATION-

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

                                                         THREE MONTHS ENDED
                                                               MARCH 31,
                                                      -------------------------
                                                         2003           2002
                                                      -----------    ----------
Notes receivable issued in connection with
the sale of assets                                    $        --    $  150,000
                                                      ===========    ==========
Value of detachable common stock warrants
issued with long-term obligations                     $        --    $   78,628
                                                      ===========    ==========
Common stock warrants issued as satisfaction
of accounts payable                                   $        --    $   58,826
                                                      ===========    ==========


                                       11
<PAGE>

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. 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.

As of March 31, 2003, all  outstanding  stock options and warrants have not been
considered  common stock  equivalents  because their assumed  exercise  would be
anti-dilutive.

The following table sets forth the computation of basic and diluted earnings per
share as of March 31, 2003:

Numerator:
     Income available to common stockholders
      from discontinued operations                                   $   75,012
                                                                     ==========
     Weighted average shares outstanding                              5,524,561
                                                                     ==========
Denominator for diluted income per share:
     Weighted average shares outstanding                              5,524,561
     Common stock options and stock warrants                            260,855
                                                                     ----------

     Weighted average shares and conversions                          5,785,416
                                                                     ==========

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS

On January 3, 2003, our former president and chief executive  officer,  Clifford
G. Brockmyre II, resigned and was replaced by Michael S. Smith, one of our board
members. At the same time, we moved our corporate headquarters from Rhode Island
to Rochester,  New York. On May 6, 2003, Dr. Allan Robbins and Paul Delmore were
appointed to fill two existing vacancies on our board. Mr. Brockmyre remained on
our board of  directors  until  October 30, 2003 at which time he  resigned.  On
March 15, 2004, Brian Corridan resigned from our board.

In the fourth  quarter of 2003,  we decided to dispose of our Laser  Fare,  Inc.
subsidiary  (LF) and to  restructure  our  business.  We sold a  portion  of the
business of LF (primarily the medical and engraving business) as of December 31,
2003 and the remaining  business as of December 31, 2004,  although we continued
to operate the business during the disposal process.

The purchase  price for the assets  consisted of LFI's  assumption of certain of
our liabilities in the aggregate amount of approximately  $358,000.  On December
31, 2004, we sold the remaining assets of LF to Rolben  Acquisition  Corporation
(Rolben),  a company  affiliated  with LFI. The purchase price for the remaining
assets consisted of Rolben's  assumption of substantially all of the liabilities
of LF  and  the  delivery  of  promissory  notes  in  the  aggregate  amount  of
approximately  $2.1  million.  Because  certain  required  consents were not yet
obtained at December 31, 2004, we remained  obligated under several notes to UPS
Capital  Business  Credit  (UPS)  and the  Rhode  Island  Industrial  Facilities
Corporation (RIIFC) in the same amounts as the notes from Rolben,


                                       12
<PAGE>

During the second quarter of 2003, we commenced  providing services in the field
of  information  technology  (IT)  consulting  services  through our IT Services
Group.  We 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 meeting the client's exact needs.

RESULTS OF OPERATIONS

COMPARISON OF THREE MONTHS ENDED MARCH 31, 2003 AND 2002

We commenced the  operations of our IT services  Group in the second  quarter of
2003. The following  results  include the operations of our Laser Group for 2002
and 2003 and our IT Services Group  beginning in 2003.  The trends  suggested by
this table are not indicative of future operating results due to our decision to
sell the business of our Laser Group and focus on our IT Services Group.

<TABLE>
<CAPTION>
                                                                 Three Months Ended March 31,

                                                          As a %                            As a %
                                                          of Net              2002         of Net     Increase
                                                 2003    Revenues         (As Restated)   Revenues   (Decrease)
                                             ----------- --------         -----------     --------   ---------
<S>                                          <C>         <C>              <C>             <C>        <C>
Sales                                        $ 1,413,248    100.0%        $ 1,771,941        100.0%      (20.2)%
Cost of sales                                  1,044,308     73.9           1,450,656         81.9       (28.0)
                                             --------------------         ------------------------   ---------
Gross profit                                     368,940     26.1             321,285         18.1        14.8
                                             --------------------         ------------------------   ---------
General and administrative                       459,259     32.5             569,100         32.1       (19.3)
Depreciation and amortization                    162,512     11.5             198,095         11.2       (18.0)
Selling                                           48,500      3.4              80,487          4.5       (39.7)
Research and development                           1,932      0.1               1,816          0.1          --
                                             --------------------         ------------------------   ---------
Total operating expenses                         672,203     47.6             849,498         47.9       (20.9)
                                             --------------------         ------------------------   ---------
Operating loss                                  (303,263)   (21.5)           (528,213)       (29.8)      (42.6)
Other income (expense) and income taxes, net     (36,235)    (2.6)             53,046          3.0      (168.3)
                                             --------------------         ------------------------   ---------
Income (loss) from continuing operations        (339,498)   (24.0)           (475,167)       (26.8)      (28.6)
Income (loss) from discontinued operations       (71,625)    (5.1)             75,012          4.2      (195.5)
                                             --------------------         ------------------------   ---------
Net loss                                     $  (411,123)   (29.1)%       $  (400,155)       (22.6)%       2.7%
                                             =====================        ========================   =========
</TABLE>

      SALES

Sales for the three months ended March 31, 2003 decreased  $358,693  compared to
net sales for the three months ended March 31, 2002.  Sales were $1,412,045 from
LF and $1,203 from IT Services  Group for the three months ended March 31, 2003.
Sales of $1,771,941  were from LF for the three months ended March 31, 2002. The
sales  from the IT  Services  Group are a result of our new  strategy  which was
implemented in 2003.  Sales from LF declined by $359,896 in the 2003 period from
the 2002 period due to reductions in customer orders.

On October 30, 2002, we received a notice of termination of our DARPA  contract.
The contract was terminated  for the U.S.  Government's  convenience.  The DARPA
contract had provided  substantially  all of the revenue of our Photonics Group.
As a result, we have terminated this line of business and have accounted for the
Photonics  Group as a disposal of  discontinued  operations in the  accompanying
financial statements.  Accordingly,  the statements of operations and cash flows
for 2002 have been restated to reflect the operations of the Photonics  Group in
income (loss) from discontinued operations.

                                       13
<PAGE>

      COST OF SALES AND GROSS PROFIT

Cost of sales represents the cost of labor, materials and overhead related to LF
and the cost of  employee  services  related to the IT Services  Group.  Cost of
sales was  $1,044,308  for LF and $0 for IT Services  Group for the three months
ended March 31,  2003.  Gross  profit was $367,736 or 26.0% for LF for the three
months ended March 31, 2003.

Cost of sales was  $1,450,656  for LF for the three  months ended March 30, 2002
and resulted in a gross profit of $321,285 or 18.1%.  Gross profit increased for
LF due to personnel and other expense  reductions which were implemented  during
2003 that  reduced  cost of sales as a percent of sales from 81.9% for the three
months ended March 31, 2002 to 73.9% for the three months ended March 31, 2003.

      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,  and  office  expenses.   General  and
administrative expenses in the first quarter of 2003 decreased in absolute terms
and remained  relatively  unchanged as a percentage of net revenues  compared to
the  first  quarter  of  2002.  The  decrease  was  due  to  the  relocation  of
administrative  offices from Rhode Island to Rochester,  New York in 2003 and an
associated  reduction in employee  related  expenses as we  implemented  our new
strategies.  We also  realized  reductions  in our  professional  fees and other
operating expenses. We anticipate that general and administrative  expenses will
decrease as a percent of revenues as we  continue  to  transition  our  business
strategy.  However,  we expect increases in accounting and legal expenses due to
our focus on completing  audits of our financial  statements  and related public
information filings.

General  and  administrative  expense  includes  expenses of the Osley & Whitney
defined benefit  retirement plan of  approximately  $50,000 and income of $8,720
for the three months ended March 31, 2003 and 2002, respectively.

      DEPRECIATION AND AMORTIZATION

Depreciation and amortization  expense  decreased by $35,583 in the three months
ended  March  31,  2003  compared  to the three  months  ended  March  31,  2002
principally due to the write off or disposition of assets in connection with the
relocation  of  our  corporate  headquarters  to  Rochester,  New  York.  We are
operating our new corporate headquarters with less capital equipment.

      SELLING EXPENSES

For the three  months  ended  March 31,  2003 we  incurred  selling  expenses of
$48,500.  Selling  expense at LF  decreased  $31,987 for the three  months ended
March 30, 2003 compared to $80,487 for the three months ended March 30, 2002 due
to a decrease in sales activity.

      RESEARCH AND DEVELOPMENT

For the three months ended March 31, 2003 we incurred  research and  development
expenses  at LF of $1,932  compared to $1,816 at LF for the three  months  ended
March 30, 2002. This amount was relatively unchanged.


                                       14
<PAGE>

      LOSS FROM OPERATIONS

For the three  months  ended  March 31,  2003 our  operating  loss was  $303,263
compared to a $528,213 loss from  operations in the  comparable  period of 2002.
This is  primarily  attributable  to our focus on our new IT Services  Group and
reductions in general and administrative and selling expenses.

      OTHER EXPENSES

Other  income  and  expense   consists   principally  of  interest   expense  on
indebtedness  for the three months ended March 31,  2003.  Interest  expense was
$39,000 for the three  months  ended March 31, 2003  compared to $81,023 for the
three months ended March 31, 2002.  The decrease in our net interest  expense is
due  primarily to repayment of notes payable as a result of the  termination  of
our DARPA  contract in 2002 and the continued  amortization  of notes payable of
LF.

      INCOME (LOSS) FROM DISCONTINUED OPERATIONS

We recorded a loss from discontinued  operations of $71,625 for the three months
ended March 31, 2003  compared to income of $75,012 for the three  months  ended
March 31, 2002.  The  operations of the Plastics  Group and the Photonics  Group
were  reclassified  as  discontinued   operations  and  loss  from  discontinued
operations  of $71,625 was  recorded in the first  quarter of 2003 and income of
$75,012 in first quarter of 2002.

      NET LOSS

For the three months ended March 31, 2003, we recorded a net loss of $411,123 or
(.06) per share  consisting  of a loss of  $399,498  or  $(.05)  per share  from
continuing  operations and $(.01) per share from discontinued  operations.  This
compares to a net loss of $400,155 or (.07) per share  consisting of a loss from
continuing  operations  of  $475,167 or $(.08) per share and $.01 per share from
discontinued  operations  for  the  three  months  ended  March  31,  2002.  The
improvement in loss from operations is attributable to reductions in general and
administrative  and selling expenses.  Our net loss was relatively  unchanged at
$411,123  and  $400,155  for the three  months  ended  March  31,  2003 and 2002
respectively.

      LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2003 we had  unrestricted  cash  $74,477,  substantially  all of
which was held by LF for its working  capital needs.  We expect minimal  capital
expenditures for LF.

At March 31, 2003 we had a working  capital  deficit of $4,479,313  ($3,900,864)
after  eliminating the assets and liabilities of our  discontinued  operations).
Approximately  $2,500,000  of this  deficit  is  caused  by bank  loan  covenant
violations  resulting  in the  classification  of all  related  debt with  these
financial institutions being classified as current liabilities.

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


                                       15
<PAGE>

RISK FACTORS

You should  consider  the risk  factors  included  in our Annual  Report on Form
10-KSB 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.

ITEM 3.  CONTROLS AND PROCEDURES

Evaluation of  Disclosure  Controls and  Procedures.  Our  management,  with the
participation  of the chief executive  officer and the 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 the chief  financial  officer  concluded  that, as of the
Evaluation Date, our disclosure controls and procedures are effective, providing
them with  material  information  relating  to the  company  as  required  to be
disclosed in the reports we file or submit under the Exchange Act.

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


                                       16
<PAGE>

                                     PART II

                                OTHER INFORMATION

ITEM 1:  LEGAL PROCEEDINGS.

We are 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 assert 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 allege 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.  In the action,  we seek
compensatory damages in the amount of $500,000 plus statutory interest, punitive
damages  as well as an award of  attorney's  fees and  costs.  One of  Spectra's
counterclaims  was  dismissed by the court in response to our motion for summary
judgment.  The trial was completed in February 2005. The jury returned a verdict
and a judgment was entered in our favor in the amount of approximately $600,000.
We have  filed a notice of appeal  with  respect to the  damages  portion of the
verdict.  On June 1, 2005,  Spectra  voluntarily  dismissed  with  prejudice its
remaining  pending  counterclaim  against  us.  We have  entered  into an escrow
agreement  with  the  defendants  pursuant  to  which   approximately   $600,000
representing  the amount of the judgment has been  deposited.  Withdrawal of the
funds will be permitted only upon the date that judgment in the matter becomes a
final,  non-appealable  decision,  or earlier upon the written  agreement of all
parties.

We are the  respondent in an arbitration  proceeding  filed on December 10, 2002
captioned J. Terrence Feeley v. Infinite Group, Inc. Claimant, a former employee
and former  member of our board of directors,  alleges that the parties  entered
into  a  consulting  agreement  dated  June  27,  2002  relative  to  the  early
termination of claimant's employment requiring certain cash payments to be made.
Claimant  alleges that we have failed or refused to make such cash  payments and
have  breached  the  agreement  and seeks all monies  owed to him,  said  amount
alleged to be approximately  $130,000. We answered the claim by admitting that a
letter  agreement was entered into but denied all of the remaining  allegations.
We also filed a counterclaim in the arbitration  proceeding.  We filed a related
claim against Mr. Feeley in the Superior  Court,  State of Rhode Island on March
5,  2003.  We  claim  that he  breached  certain  provisions  of his  employment
agreement,  breached  fiduciary  duties  he  owed  to us  and  violated  several
provisions of the June 27, 2002 letter agreement.  We seek compensatory  damages
in amounts to be shown at trial, and preliminary and permanent injunctive relief
and other relief as may be appropriate.

Mr.  Feeley's  arbitration  claims are pending  before the American  Arbitration
Association  and an arbitrator  selected by the parties.  Our claims against Mr.
Feeley are pending in the Rhode Island  Superior  Court. In January of 2004, the
parties agreed to stay  arbitration  proceedings and to mediate all the disputes
under procedures  available  through the Superior Court. To date,  neither party
has initiated mediation proceedings.

Other than the foregoing  proceeding,  we are not a party to any material  legal
proceeding.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

RECENT SALES OF UNREGISTERED SECURITIES

None.


                                       17
<PAGE>

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

The  Company's LF subsidiary  had a $1,250,000  bank term  promissory  note that
required  monthly  principal and interest  payments  amounting to  approximately
$13,000  through  February  2011. The  outstanding  balance as of March 31, 2003
amounted to $849,347 and bore  interest at the bank's prime rate plus 1.0%.  All
the assets of LF and the guarantee of the Company secured the note. We continued
to be in  violation  of certain  loan  covenants.  These  violations  related to
exceeding  certain  levels of the ratio of debt to  intangible  net  worth,  not
meeting the minimum  current ratio or the working  capital ratio,  and exceeding
capital expenditure limits.  Accordingly,  the entire outstanding portion of the
note has been classified as current.

The  Company's LF subsidiary  had a $1,260,000  bank term  promissory  note that
required  monthly  principal and interest  payments  amounting to  approximately
$13,000  through  December  2014. The  outstanding  balance as of March 31, 2003
amounted to $1,093,703  and bore interest at the bank's prime rate plus .75%. We
continued to be in violation of certain  covenants  under the term of this note.
Accordingly,  the entire outstanding  portion of the note has been classified as
current.

The  Company's LF  subsidiary  was  obligated  under a capital  lease for the LF
operating facility. The lease provided for monthly payments to an escrow account
in  amounts  sufficient  to allow  for the  repayment  of the  principal  of the
underlying  tax-exempt  bonds together with interest at 7.25% through June 2012.
The  outstanding  balance as of March 31,  2003  amounted  to  $520,000.  Annual
payments  of  principal  were  $35,000  for fiscal  2003 and  increase by $5,000
annually through June 2012. Under the terms of this capital lease facility,  the
Company was prohibited from paying dividends or making other cash distributions.
According to the terms of the lease agreement, the Company is required to comply
with certain  covenants.  We  continued  to be in violation of these  covenants.
Accordingly,  the  entire  outstanding  portion  of  this  obligation  has  been
classified as current.

The  aggregate  amount of the  aforementioned  notes  payable and capital  lease
obligations classified as current liabilities was $2,463,050 at March 31, 2003.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

        NONE.

ITEM 5. OTHER INFORMATION.

        NONE.

ITEM 6. EXHIBITS.

a.    Exhibits:

      Exhibit No.       Description
      -----------       --------------------------------------------------------
         31.1           Certification  of  Chief  Executive  Officer  and  Chief
                        Financial   Officer  pursuant  to  Section  302  of  the
                        Sarbanes-Oxley Act of 2002.

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


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<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: July 26, 2005                          /s/ Michael S. Smith
                                             -----------------------------------
                                             Chief Executive Officer

Date: July 26, 2005                          /s/ Michael S. Smith
                                             -----------------------------------
                                             Chief Financial Officer
                                             (Principal Financial Officer)


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