# EDGAR Filing Document

**Accession Number:** 0000884650
**File Stem:** 0001654954-26-000778
**Filing Date:** 2026-1
**Character Count:** 111890
**Document Hash:** 260a6d3d811f036b89d5b6e2d165dc94
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001654954-26-000778.hdr.sgml**: 20260130

**ACCESSION NUMBER**: 0001654954-26-000778

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 66

**CONFORMED PERIOD OF REPORT**: 20250331

**FILED AS OF DATE**: 20260130

**DATE AS OF CHANGE**: 20260130

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** INFINITE GROUP INC
- **CENTRAL INDEX KEY:** 0000884650
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-PREPACKAGED SOFTWARE [7372]
- **ORGANIZATION NAME:** 06 Technology
- **EIN:** 521490422
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-41542
- **FILM NUMBER:** 26584125

**BUSINESS ADDRESS:**
- **STREET 1:** 80 OFFICE PARK WAY
- **CITY:** PITTSFORD
- **STATE:** NY
- **ZIP:** 14534
- **BUSINESS PHONE:** 5853850610

**MAIL ADDRESS:**
- **STREET 1:** 80 OFFICE PARK WAY
- **CITY:** PITTSFORD
- **STATE:** NY
- **ZIP:** 14534

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** INFINITE MACHINE CORP
- **DATE OF NAME CHANGE:** 19971015

?xml version='1.0' encoding='ASCII'? igi_10q.htm

 **UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

_________________________________________

**FORM 10-Q**

_________________________________________

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

For the quarterly period ended **<u>March 31, 2025</u>**

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

For the transition period from ________ to ________

**Commission file number: <u>000-21816</u>**

_________________________________________

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| |
|:---|
| &nbsp;&nbsp;**INFINITE GROUP, INC.** |
| &nbsp;&nbsp;**(Exact name of registrant as specified in its charter)** |

---

_________________________________________

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| | |
|:---|:---|
| **Delaware** | &nbsp;&nbsp;**52-1490422** |
| &nbsp;&nbsp;(State or other jurisdiction of incorporation or organization) | &nbsp;&nbsp;(I.R.S. Employer Identification Number) |

---

---

| | |
|:---|:---|
| **175 Sully's Trail, Suite 202, Pittsford, New York** | **14534** |
| (Address of principal executive offices) | &nbsp;&nbsp;(Zip Code) |

---

**<u>(585) 385-0610</u>**

(Registrant's telephone number, including area code)

_________________________________________

Securities registered pursuant to Section 12(b) of the Act

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;**Title of each class** | &nbsp;&nbsp;**Trading Symbol** | &nbsp;&nbsp;**Name of each exchange on which registered** |
| &nbsp;&nbsp;**N/A** | &nbsp;&nbsp;**N/A** | &nbsp;&nbsp;**N/A** |

---

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 ☒&nbsp;&nbsp;&nbsp;&nbsp; No ☐

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

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

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

---

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

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

The Registrant had 521,175 shares of the issuer's common stock, par value $.001 per share, outstanding as of January 26, 2026.

**Infinite Group, Inc.**

**Quarterly Report on Form 10-Q**

**For the Period Ended March 31, 2025**

**Table of Contents**

---

| | | |
|:---|:---|:---|
| [PART I - FINANCIAL INFORMATION](#p1) | [PART I - FINANCIAL INFORMATION](#p1) | PAGE |
| [Item 1.](#i1) | [Financial Statements](#i1) | 4 |
|  | [Balance Sheets – March 31, 2025 (Unaudited) and December 31, 2024](#bs) | 4 |
|  | [Statements of Operations (Unaudited) for the three months ended March 31, 2025 and 2024](#op) | 5 |
|  | [Statements of Changes in Stockholders' Deficiency (Unaudited) for the three months ended March 31, 2025 and 2024](#eq) | 6 |
|  | [Statements of Cash Flows (Unaudited) for the three months ended March 31, 2025 and 2024](#cf) | 7 |
|  | [Notes to Financial Statements – (Unaudited)](#nt) | 8 |
| [Item 2.](#i2) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#i2) | 18 |
| [Item 3.](#i3) | [Quantitative and Qualitative Disclosures About Market Risk](#i3) | 24 |
| [Item 4.](#i4) | [Controls and Procedures](#i4) | 24 |
| [PART II - OTHER INFORMATION](#p2) | [PART II - OTHER INFORMATION](#p2) |  |
| [Item 1.](#it1) | [Legal Proceedings](#it1) | 25 |
| [Item 1A.](#it1a) | [Risk Factors](#it1a) | 25 |
| [Item 3](#it3) | [Defaults Upon Senior Securities.](#it3) | 25 |
| [Item 6.](#it6) | [Exhibits](#it6) | 25 |
| [SIGNATURES](#sg) | [SIGNATURES](#sg) | 26 |

---

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| 2 |
| *[**Table of Contents**](#toc)* |

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**FORWARD-LOOKING STATEMENTS**

Certain statements made in this Quarterly Report on Form 10-Q are "forward-looking statements." All statements other than statements of historical facts contained in this report, including among others, our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth and trends are forward-looking statements. 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 words "believe," "may," "estimate," "continue," "anticipate," "intend," "should," "plan," "could," "target," "potential," "is likely," "will," "expect" and similar expressions are intended to identify forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Our plans and objectives are based, in part, on assumptions involving the expansion of our business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the 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. Therefore, you should not rely on any of these forward-looking statements. All forward-looking statements in this report are made only as of the date hereof or as indicated and represent our views as of the date of this report. We undertake no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise, except as required by law. For a further list and description of various risks, relevant factors and uncertainties that could cause future results or events to differ materially from those expressed or implied in our forward-looking statements, see the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections in this report, our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and our other filings with the Securities and Exchange Commission (the "SEC"). The terms "IGI", the "Company", "we", "our", "us", or any derivative thereof, as used herein refer to Infinite Group, Inc., a Delaware corporation.

---

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|:---|
| 3 |
| *[**Table of Contents**](#toc)* |

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**PART I**

**FINANCIAL INFORMATION**

**Item 1. Financial Statements**

**INFINITE GROUP, INC.**

**BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
| **ASSETS** | **ASSETS** | **ASSETS** |
|  | March 31, | December 31,  |
|  | 2025 | 2024 |
|  | (Unaudited) |  |
| **Current assets:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash | $21331 | $168937 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net  | 267226 | 392746 |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 159456 | 194308 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other current assets - related parties | 65742 | 67742 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total current assets** | 513755 | 823733 |
| Right of Use Asset Operating Lease, net | 228627 | 240128 |
| Property and equipment, net | 196 | 503 |
| Software, net | 431725 | 400364 |
| Deposits | 10144 | 10144 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total assets** | $1184447 | $1474872 |
| **LIABILITIES AND STOCKHOLDERS' DEFICIENCY** | **LIABILITIES AND STOCKHOLDERS' DEFICIENCY** | **LIABILITIES AND STOCKHOLDERS' DEFICIENCY** |
| **Current liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | $1883879 | $1820726 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued payroll | 743898 | 860130 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued interest payable | 1891565 | 1780225 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued retirement | 304456 | 310352 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue | 264567 | 346655 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities | 353993 | 446352 |
| &nbsp;&nbsp;&nbsp;&nbsp;Current maturities of long-term obligations | 631473 | 641473 |
| &nbsp;&nbsp;&nbsp;&nbsp;Current maturities of long-term obligations (convertible) | 284000 | 284000 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease liability - Short-term | 46174 | 44977 |
| &nbsp;&nbsp;&nbsp;&nbsp;Current maturities of long-term obligations - related parties | 983443 | 1015914 |
| &nbsp;&nbsp;&nbsp;&nbsp;Current maturities of long-term obligations - related parties (convertible) | 171300 | 171300 |
| &nbsp;&nbsp;&nbsp;&nbsp;Notes payable, net | 1761067 | 1595018 |
| &nbsp;&nbsp;&nbsp;&nbsp;Notes payable (convertible) | 150000 | 150000 |
| &nbsp;&nbsp;&nbsp;&nbsp;Notes payable - related parties | 139000 | 139000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total current liabilities** | 9608815 | 9606122 |
| **Long-term liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Notes payable - related parties, net of current | 1871718 | 1868596 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease liability - long-term | 181702 | 193642 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total liabilities** | 11662235 | 11668360 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Commitments and contingencies** |  |  |
| **Stockholders' deficiency:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock, $0.001 par value, 60,000,000 shares authorized; 521,175 shares issued and outstanding on March 31, 2025 and December 31, 2024. | 521 | 521 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital | 32337451 | 32337451 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accumulated deficit | (42815760) | (42531460) |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total stockholders' deficiency** | (10477788) | (10193488) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total liabilities and stockholders' deficiency** | $1184447 | $1474872 |

---

See notes to unaudited financial statements.

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| 4 |
| *[**Table of Contents**](#toc)* |

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**INFINITE GROUP, INC.**

**STATEMENTS OF OPERATIONS (Unaudited)**

---

| | | |
|:---|:---|:---|
|  | Three Months Ended March 31, | Three Months Ended March 31, |
|  | 2025 | 2024 |
|  | $1683867 | $1578495 |
| Cost of revenue | 934654 | 971410 |
| **Gross profit** | 749213 | 607085 |
| **Costs and expenses:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 441030 | 451880 |
| &nbsp;&nbsp;&nbsp;&nbsp;Selling | 433938 | 408315 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total costs and expenses** | 874968 | 860195 |
| **Operating loss** | (125755) | (253110) |
| **Interest expense** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Related parties | (60002) | (25721) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other | (98543) | (196048) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total interest expense** | (158545) | (221769) |
| **Gain on partial termination of lease**  | - | 15350 |
| **Net loss**  | $(284300) | $(459529) |
| **Net loss per share – basic and diluted** | $(0.55) | $(0.88) |
| **Weighted average shares outstanding**  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**- basic and diluted** | 521175 | 521175 |

---

See notes to unaudited financial statements.

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| 5 |
| *[**Table of Contents**](#toc)* |

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**INFINITE GROUP, INC.**

**STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY (Unaudited)**

**Three Months Ended March 31, 2024 and 2023**

**Three Months Ended March 31, 2025**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Common Stock | Common Stock | | | |
|  | Shares | Amount | Additional<br>Paid-in<br>Capital |<br>Accumulated<br>Deficit |<br>Total |
| Balance - December 31, 2024 | 521175 | $521 | $32337451 | $(42531460) | $(10193488) |
| Net loss | 0 | 0 | 0 | (284300) | (284300) |
| **Balance - March 31, 2025** | **521175** | $**521** | $**32337451** | $**(42815760)** | $**(10477788)** |

---

**Three Months Ended March 31, 2024**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Common Stock | Common Stock | | | |
|  | Shares | Amount | Additional<br>Paid-in<br>Capital | <br>Accumulated<br>Deficit | <br><br>Total |
| Balance - December 31, 2023 | 521175 | $521 | $32331160 | $(40883542) | $(8551861) |
| Stock based compensation | 0 | 0 | 6291 | 0 | 6291 |
| Net loss | 0 | 0 | 0 | (459529) | (459529) |
| **Balance - March 31, 2024** | **521175** | $**521** | $**32337451** | $**(41343071)** | $**(9005099)** |

---

See notes to unaudited financial statements.

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| 6 |
| *[**Table of Contents**](#toc)* |

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**INFINITE GROUP, INC.**

**STATEMENTS OF CASH FLOWS (Unaudited)**

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| | | |
|:---|:---|:---|
|  | **Three Months Ended March 31,**  | **Three Months Ended March 31,**  |
|  | **2025** | **2024** |
| **Cash flows from operating activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss | $(284300) | $(459529) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjustments to reconcile net loss to net cash used by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock based compensation | 0 | 6291 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 48122 | 56185 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt discount | 2366 | 19043 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Bad debt recovery | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Bad debt expense | 0 | 6206 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on partial termination of lease | 0 | (15350) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase) decrease in assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | 125520 | 115632 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other assets | 36852 | (104451) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increase (decrease) in liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 63153 | 96702 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue | (82088) | (13144) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses | (97250) | 169648 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued retirement | (5896) | 2982 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash used by operating activities** | (193521) | (119785) |
| **Cash flows from investing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Capitalization of software development costs | (78418) | (53525) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash used by investing activities** | (78418) | (53525) |
| **Cash flows from financing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from notes payable | 241500 | 335500 |
| &nbsp;&nbsp;&nbsp;&nbsp;Repayments of notes payable - related parties | (29350) | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Repayments of notes payable | (87817) | (183398) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash provided by financing activities** | 124333 | 152102 |
| **Net decrease in cash** | (147606) | (21208) |
| Cash - beginning of period | 168937 | 25473 |
| **Cash - end of period** | $21331 | $4265 |
| **Supplemental Disclosures of Cash Flow Information:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash payments for interest | $39618 | $125887 |

---

See notes to unaudited financial statements.

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**INFINITE GROUP, INC.**

**<u>Notes to Financial Statements - (Unaudited)</u>**

**Note 1. Basis of Presentation**

The December 31, 2024 balance sheet has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.. The accompanying unaudited financial statements should be read in conjunction with the Company's audited financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 filed with the U.S. Securities and Exchange Commission (SEC). Results of operations for the three months ended March 31, 2025 are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2025.

**Note 2. Going Concern**

The Company reported net losses of $284,300 and $459,529 for the three months ended March 31, 2025 and 2024, respectively, and stockholders' deficiencies of $10,477,788 and $10,193,488 at March 31, 2025 and December 31, 2024, respectively. The Company has a working capital deficit of approximately $9.1 million at March 31, 2025. Additionally, the Company has recurring losses from operations and has limited cash resources to fund its operations.

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

The Company's goal is to increase sales and generate cash flow from operations on a consistent basis. The Company's business plans require improving the results of its operations in future periods. The Company has renegotiated the terms of certain obligations, using operational cash flow to pay down balances and extending terms, and has obtained and may continue to seek additional financing through debt or equity issuances.

The Company plans to issue stock, restructure certain debt obligations and anticipates significant growth of business, although there can be no assurance that such plans will be successfully implemented or that such growth will be achieved.

The Company believes the capital resources generated by operations, together with cash available under its factoring line of credit and from additional related partiy and third-party loans, if available, may provide sources to fund its ongoing operations and to support the internal growth of the Company although there can be no assurance that such resources will be sufficient or that additional financing will be available on acceptable terms or at all.. The Company may need to extend existing debt agreements in order to provide resources for other purposes. If the Company experiences significant growth in its sales, the Company believes that this may require it to increase its financing line, finance additional accounts receivable, or obtain additional working capital from other sources to support its sales growth.

The Company plans to continue to evaluate alternatives which may include continuing to renegotiate the terms of other notes, seeking conversion of the notes to shares of common stock and seeking additional funds to repay the notes, although there can be no assurance that noteholders will agree to such conversions or that additional funds will be available.. The Company continues to evaluate repayment of our remaining notes payable based on its cash flow.

As a result, there is substantial doubt about the Company's ability to continue as a going concern for a period of at least twelve months from the date these financial statements are issued. The accompanying financial statements have been prepared assuming the Company will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty.

**Note 3. Summary of Significant Accounting Policies**

There are several accounting policies that the Company believes are significant to the presentation of its 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 financial statements for the year ended December 31, 2024 presents a summary of significant accounting policies as included in the Company's Annual Report on Form 10-K as filed with the SEC.

**Reclassifications** – It is the Company's policy to reclassify prior year amounts to conform with the current year presentation.

**Fair Value of Financial Instruments** - The carrying amounts reported in the balance sheets for cash, accounts receivable, accounts payable, and accrued expenses approximate fair value because of the immediate short-term maturity of these financial instruments. The carrying value of notes payable and convertible notes payable approximates the fair value based on rates currently available from financial institutions and various lenders.

**Cash and Cash Equivalents -** The Company's cash balance consists solely of deposits held at major financial institutions. The Company does not hold any cash equivalents as of March 31, 2025 or December 31, 2024.

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As of March 31, 2025, cash was held in the following amounts:

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| | | |
|:---|:---|:---|
| **Category** | **March 31, 2025** | **December 31, 2024** |
| Cash in bank accounts | $21331 | $168937 |
| **Total cash and cash equivalents** | $**21331** | $**168937** |

---

The Company maintains its cash balances with a high-quality financial institution.

The Company does not have any restricted cash as of March 31, 2025.

**ASM Technologies Division LLC** - On January 1, 2025, the Company was admitted as the initial member with 100% of the membership interests in ASM Technologies Division LLC, a Delaware limited liability company. The Company formed this entity to operate the manages services operations. The financial results of these operations are included in these financial statements.

**Revenue from contracts with customers** 

The Company's total revenue recognized from contracts with customers was comprised of three major services: Managed support services, Cybersecurity projects, and Software. The categories depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. There were no material unsatisfied performance obligations at March 31, 2025 or 2024, respectively for contracts with an expected original duration of more than one year. The Company has elected to apply the practical expedient in ASC 606-10-50-14 and does not disclose information about remaining performance obligations for contracts that have original expected durations of one year or less. The following table summarizes the revenue recognized by the major services:

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| | | |
|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** |
|  | **March 31,** | **March 31,** |
|  | **2025** | **2024** |
| Managed support services | $1085542 | $1074096 |
| Cybersecurity projects | 227808 | 185596 |
| Software | 360517 | 318803 |
| Total Revenue | $1673867 | $1578495 |

---

*Managed support services*

Managed support services consist of revenue primarily from the Company's subcontracts with Peraton for services to its end clients, principally a major establishment of the U.S. Government for which the Company manages one of the nation's largest physical and virtual Microsoft Windows environments.

We generate revenue primarily from these subcontracts through fixed-price service and support agreements. Revenues are earned and billed weekly and are generally paid within 45 days. Revenue is recognized over time as services are performed in accordance with ASC 606.

*Cybersecurity projects*

Cybersecurity projects includes performing cybersecurity assessments, testing and consulting as a CISO (Chief Information Security Officer).

Cybersecurity assessments and testing services are considered distinct performance obligations when sold standalone or with other products. These contracts generally have terms of one year or less. For substantially all these contracts, revenue is recognized when the specific performance obligation is satisfied. If the contract has multiple performance obligations, the revenue is allocated to each performance obligation and recognized as each performance obligation is satisfied. Depending on the nature of the service, the amounts recognized are based on an allocation of the transaction price to each performance obligation using the relative standalone selling price method in accordance with ASC 606.

In substantially all agreements, a down payment of 50% to 75% is required before work is initiated. Down payments received are deferred until revenue is earned. Upon completion of the performance obligation, the remaining balance is due within 30 days.

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*Software*

Software revenue includes the selling of licenses of Nodeware® and third-party software, principally Webroot™.

Nodeware and Webroot software offerings consist of fees generated from the use of the respective software by our customers. Revenue is recognized on a ratable basis over the contract term beginning on the date that our service is made available to the customer. For Webroot, substantially all customers are billed in the month of service and the service is cancellable upon notice per the respective agreements. The majority of Webroot billing is electronic, and approximately half of those billed amounts are paid to the Company instantaneously via an online payment platform. For Nodeware, billings generally occur annually or monthly in advance of services for clients with recurring subscriptions. In some instances, billing occurs monthly in arrears based on actual consumption in the prior month. For payments made in advance, revenue related to the term associated with our software licenses is recognized ratably over the contractual period.

We generate revenue via fixed-price service agreements. These are based on periodic billings of a fixed dollar amount for recurring services of a similar nature performed according to the contractual arrangements with clients. Revenue is recognized as services are performed in accordance with ASC 606.

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

**Capitalization of Software for Resale** -The Company capitalizes the software development costs for software to be sold, leased, or otherwise marketed in accordance with ASC 985-20. Capitalization begins upon the establishment of technological feasibility of a new product or enhancements to an existing product, which is generally the completion of a working prototype that has been certified as having no critical bugs and is a release candidate. Costs incurred after the enhancement has reached technological feasibility and before it is released in the market are capitalized and are primarily labor costs related to coding and testing. Amortization begins once the software is ready for its intended use, generally based on the pattern in which the economic benefits will be consumed. Costs associated with major upgrade releases begin amortization in the month after release. The amortization period is three years. See Note 5 for further disclosure regarding capitalization of software for resale.

**Leases -** At contract inception, the Company determines whether the arrangement is or contains a lease and determines the lease classification in accordance with ASC 842. The lease term is determined based on the non-cancellable term of the lease adjusted to the extent optional renewal terms and termination rights are reasonably certain. Lease expense is recognized evenly over the lease term. Variable lease payments are recognized as period costs. The present value of remaining lease payments is recognized as a liability on the balance sheet with a corresponding right-of-use asset adjusted for prepaid or accrued lease payments. The Company uses its incremental borrowing rate for the discount rate, unless the interest rate implicit in the lease contract is readily determinable. The Company has adopted the practical expedients to not separate non-lease components from lease components and to not present short-term leases on the balance sheet. See Note 10 for further disclosure regarding lease accounting.

**Income Taxes** – The Company recorded no income tax expense for the three ended March 31, 2025. The effective tax rate for the periods presented was 0%, which differs from the U.S. federal statutory rate primarily due to the Company's loss before income taxes and the corresponding full valuation allowance maintained against its net deferred tax assets.

The Company has incurred significant operating losses since inception and continues to maintain a full valuation allowance against its deferred tax assets because management has concluded that it is more likely than not that these assets will not be realized based on the weight of available evidence.

As of March 31, 2025, the Company had approximately $9.0 million of federal and state net operating loss carryforwards. The federal NOLs generated after 2017 may be carried forward indefinitely. Utilization of NOLs may be subject to annual limitations under Sections 382 and 383 of the Internal Revenue Code if the Company experiences an ownership change as defined in those sections.

No material uncertain tax positions have been recorded as of March 31, 2025, and the Company does not anticipate significant changes to its unrecognized tax benefits within the next twelve months.

**Use of Estimates** - The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Significant estimates and assumptions used in the preparation of these financial statements include, but are not limited to:

· Revenue recognition, including the determination of standalone selling prices, allocation of transaction consideration to performance obligations, and estimates of variable consideration for usage based or incentive-based fees.

· Allowance for credit losses on accounts receivable and contract assets.

· Capitalized software development costs, including the determination of technological feasibility and expected economic life.

· Stock based compensation, including the fair value of equity awards and expected forfeiture rates.

· Fair value measurements for financial instruments, including embedded derivatives or contingent consideration, when applicable.

· Income taxes, including the valuation of deferred tax assets and liabilities and the assessment of uncertain tax positions.

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Management bases its estimates on historical experience, current business and economic conditions, and other relevant factors. Estimates and assumptions are reviewed periodically, and the effects of revisions are recorded in the period in which they are determined.

**Recently Issued Accounting Pronouncements** - In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, Segment Reporting (Topic 280). The amendments in this ASU require disclosures, on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating decision maker (CODM), as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. This ASU requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss. Public entities will be required to provide all annual disclosures currently required by Topic 280 in interim periods, and entities with a single reportable segment are required to provide all the disclosures required by the amendments in the update and existing segment disclosures in Topic 280. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective adoption. Early adoption was permitted. The Company adopted this standard with our fiscal 2024 annual filing. The Company has a single segment. See Note 13.

In December 2023, the FASB issued ASU 2023-09, *Income Taxes (Topic 740)*. The amendments in this ASU are intended to enhance the transparency of income tax information by updating income tax disclosure requirements. The guidance is effective for public entities for annual periods beginning after December 15, 2024, and early adoption is permitted. The amendments in this ASU should be applied on a prospective basis; however, retrospective application is permitted. The Company will adopt this standard with our fiscal 2025 annual filing. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.

**Note 4. Concentrations of Risk and Significant Customers**

**Concentrations of Credit Risk -** The Company is a developer and provider of cloud based cybersecurity software and related cybersecurity consulting, advisory and managed information security solutions. Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company maintains its cash deposits with a high quality financial institution.

The Company's accounts receivable is derived from customers located primarily in the United States. Credit risk is mitigated through monitoring of customer financial condition, and the use of contractual billing and collection terms customary in the SaaS industry. For most services agreements, the Company requires down payments of at least 50%.

**Significant Customer Concentration -** During the three months ended March 31, 2025, one customer accounted for approximately 65% of total revenue. As of March 31, 2025 (68% for the three months ended March 31, 2024), this same customer represented approximately 44% of the Company's accounts receivable balance (47% at December 31, 2024).

The loss of this customer or delays in payment could have a material adverse effect on the Company's business, financial condition, and results of operations. Management continues to monitor the financial condition and creditworthiness of this customer and believes that the receivable balance is collectible based on current information.

**Supplier and Operational Risk -** The Company relies on third party cloud infrastructure providers to deliver its SaaS platform. Any disruption, capacity constraint, or service degradation at these providers could adversely impact the Company's ability to serve customers. The Company believes alternative providers are available; however, transitioning services could result in temporary service interruptions and increased costs.

**Industry and Geographic Risk** - The Company operates in the cybersecurity industry, which is characterized by rapid technological change, evolving threat landscapes, and increasing regulatory requirements. These factors may impact customer purchasing patterns and the Company's ability to maintain or grow revenue. No geographic region outside the United States accounted for more than 10% of revenue during the three months ended March 31, 2025.

**Note 5. Sale of Certain Accounts Receivable**

The Company has available a financing line with a financial institution (the "Purchaser"), which enables the Company to sell accounts receivable to the Purchaser with full recourse. Pursuant to the provisions of FASB ASC 860, the Company reflects the transactions as a sale of assets and establishes an accounts receivable from the Purchaser for the retained amount less the costs and fees of the transaction and less any anticipated future loss in the value of the retained asset.

The retained amount is 10% of the total accounts receivable invoice sold to the Purchaser. The fee is charged at the prime rate plus 3.6% (effective rate of 11.10% at March 31, 2025) on the average daily outstanding balance of funds advanced. The estimated future loss reserve for each receivable included in the estimated value of the retained asset is based on the payment history of the accounts receivable customer and is included in the allowance for doubtful accounts, if any. As collateral, the Company granted the Purchaser a first priority interest in accounts receivable and a blanket lien, which may be junior to other creditors, on all other assets.

The financing line provides the Company with the ability to finance up to $2,000,000 of selected accounts receivable, which includes a sublimit of $1,500,000 for one of the Company's customers. During the three months ended March 31, 2025, the Company sold approximately $986,000 ($1,146,000 – March 31, 2024) of its accounts receivable to the Purchaser. As of March 31, 2025, approximately $228,000 ($420,000 - December 31, 2024) of these receivables remained outstanding. Additionally, as of March 31, 2025, the Company had $70,000 available under the financing line with the Purchaser ($151,000 at December 31, 2024). After deducting estimated fees, allowance for credit losses and advances from the Purchaser, the net receivable from the Purchaser amounted to approximately $23,000 at March 31, 2025 ($33,000 at December 31, 2024) and is included in accounts receivable in the accompanying balance sheets.

There were no gains or losses on the sale of the accounts receivable because all were collected. The cost associated with the financing line totaled $8,682 for the three months ended March 31, 2025 ($18,833 – March 31, 2024). These financing line fees are classified on the statements of operations as interest expense.

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**Note 6**. **Capitalization of Software for Resale**

As of March 31, 2025, there was $1,377,637 of costs capitalized ($1,129,219 as of December 31, 2024) and $945,913 of accumulated amortization ($898,855 as of December 31, 2024). During the three months ended March 31, 2025, there was $47,057 of amortization expense recorded ($53,792 in 2024). Costs incurred prior to reaching technological feasibility are expensed as incurred. During the three months ended March 31, 2025, there was approximately $21,100 of labor amounts expensed related to these development costs ($14,800 in 2024).

**Note 7. Deferred Revenue and Performance Obligations**

*Deferred Revenue*

Deferred revenue, which is a contract liability, consists primarily of payments received and accounts receivable recorded in advance of revenue recognition under the Company's contracts with customers and is recognized as the revenue recognition criteria are met.

Revenue recognized during the three months ended March 31, 2025 and 2024, that was included in the deferred revenue balances at the beginning of the respective periods, was approximately $144,900 and $166,100, respectively.

*Transaction Price Allocated to the Remaining Performance Obligations*

Transaction price allocated to the remaining performance obligations represents all future, non-cancelable contracted revenue that has not yet been recognized, inclusive of deferred revenue that has been invoiced and non-cancelable amounts that will be invoiced and recognized as revenue in future periods.

As of March 31, 2025, total remaining non-cancelable performance obligations under the Company's contracts with customers was approximately $263,000. The Company expects to recognize all of this revenue over the next 12 months.

**Note 8. Debt Obligations**

**Revised Financing Arrangement** - On March 10, 2025, the Company received funding from a loan agreement with Stripe and Celtic Bank. The loan amount was $241,500 plus a fixed fee of $23,667. The repayment amount of $265,167 will be repaid at a repayment rate of 30% of the Company's receivables automatically withheld by Stripe. There is no financing percentage. The repayment start date was March 17, 2025, with a minimum payment amount of $29,463 over every 60-day period. The final repayment date is September 8, 2026, if the total repayment amount is not paid as of that date. This loan agreement also eliminates the remaining balance of $30,090 from the previous Stripe loan dated June 4, 2024, as the remaining balance was rolled into this new loan. At March 31, 2025, the balance of this revised financing arrangement was $258,067.

**Obligations in Default** – As of March 31, 2025, the Company is in default with the Mast Hill financing arrangements dated November 3, 2021, February 15, 2022, May 31, 2022, November 23, 2022, and February 2, 2023. Per the arrangements, the Company has accrued approximately $55,000 and $217,000 in default and penalty interest expense during the three months ended March 31, 2025 and 2024, respectively.

The Company is in default with four third parties' notes from 2003 and 2004. The Company has accrued approximately $8,900 of interest expense for these notes during the three months ended March 31, 2024 and 2025.

The Company is in default with a note with a related party from 2024. The Company has accrued approximately $37,600 of interest expense for these notes during the three months ended March 31, 2025.

The Company is working to resolve these defaults. Continued default may result in acceleration of amounts due, additional penalties, legal action, or other adverse consequences that could materially harm the Company's financial condition and operations.

**Note 9. Earnings/(loss) per Share**

Basic earnings per share is based on the weighted average number of common shares outstanding during the periods presented. Diluted earnings per share is based on the weighted average number of common shares outstanding, as well as dilutive potential common shares which, in the Company's case, comprise shares issuable under convertible notes payable and stock options. The treasury stock method is used to calculate dilutive shares, which reduces the gross number of dilutive shares by the number of shares purchasable from the proceeds of the options and warrants assumed to be exercised. In a loss period, 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.

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The following table sets forth the computation of basic and diluted net loss per share for the three months ended:

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|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
|  | **2025** | **2024** |
| Numerator for basic and diluted net loss per share: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss | $**(284300)** | $(459529) |
| Basic and diluted net loss per share | $**(0.55)** | $(0.88) |
| Weighted average common shares outstanding |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic and diluted shares | **521175** | 521175 |
| Anti-dilutive shares excluded from net loss per share calculation | **419492** | 453876 |

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

**Note 10. Stock Option Plans, Warrants and Agreements**

At the annual meeting of stockholders of the Company held on January 26, 2022; the Company's stockholders voted to approve the Company's 2021 Equity Incentive Plan (the "2021 Plan"). The maximum number of shares of Common Stock available for grant and issuance under the 2021 Plan will be (a) 60,000, plus (b) any shares of Common Stock that are subject to options granted under the Prior Plans that expire, are forfeited or canceled or terminate for any other reason without the issuance of shares under the Prior Plans on or after January 26, 2022, plus (c) any shares of Common Stock that are subject to options granted under the Prior Plans that are used to pay the exercise price of an option or withheld to satisfy the tax withholding obligations related to any option under the Prior Plans on or after January 26, 2022.

The Company has approved stock options plans and agreements covering up to an aggregate of 194,907 shares of common stock. Such options may be designated at the time of grant as either incentive stock options or nonqualified stock options. Stock based compensation consists of charges for stock option awards to employees, directors and consultants. Stock options generally vest immediately and expire ten years from the grant date. Stock-based compensation expense is usually recognized upon issuance and is based on the grant-date fair value of the awards.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model.

No options were granted for the three months ended March 31, 2025, or the three months ended March 31, 2024.

No options vested during the three months ended March 31, 2025 or the three months ended March 31, 2024.

A summary of all stock option activity for the three months ended March 31, 2025 follows:

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|:---|:---|:---|:---|:---|
|  | **Number of**<br>**Options**<br>**Outstanding** | **Weighted**<br>**Average**<br>**Exercise Price** | **Remaining**<br>**Contractual**<br>**Term** | **Aggregate**<br>**Intrinsic**<br>**Value** |
| Outstanding at December 31, 2024 | 110209 | $2.67 |  |  |
| Expired | (801) | 3.75 |  |  |
| Outstanding at March 31, 2025 | 109408 | $2.66 | 2.2 years | $0 |
| At March 31, 2025- vested or expected to vest | 109408 | $2.66 | 2.2 years | $0 |
| Exercisable | 109408 | $2.66 | 2.2 years | $0 |

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A summary of all stock option activity for the three months ended March 31, 2024 follows:

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|:---|:---|:---|:---|:---|
|  | &nbsp;&nbsp;**Number of**<br>&nbsp;&nbsp;**Options**<br>&nbsp;&nbsp;**Outstanding** | **Weighted**<br>**Average**<br>&nbsp;&nbsp;**Exercise Price** | &nbsp;&nbsp;**Remaining**<br>&nbsp;&nbsp;**Contractual**<br>&nbsp;&nbsp;**Term** | &nbsp;&nbsp;**Aggregate**<br>&nbsp;&nbsp;**Intrinsic**<br>&nbsp;&nbsp;**Value** |
| Outstanding at December 31, 2023 | 157631 | $3.23 |  |  |
| Expired | (9801) | 8.59 |  |  |
| Outstanding at March 31, 2024 | 147830 | $2.87 | 2.5 years | $0 |
| At March 31, 2024- vested or expected to vest | 147830 | $2.87 | 2.5 years | $0 |
| Exercisable | 147830 | $2.87 | 2.5 years | $0 |

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There were no warrant issuances, exercises, expirations, or other changes during the three months ended March 31, 2025. The warrants outstanding as of March 31, 2025 are unchanged from those disclosed in the Company's Annual Report on Form 10 K for the year ended December 31, 2024.

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**Note 11. Lease**

Beginning on June 1, 2022, the Company leases its headquarters facility under an operating lease agreement that expires on May 31, 2029.

On January 9, 2024, the Company renegotiated the lease agreement which resulted in a partial termination of the lease. The lease reduced the rentable square footage from 7,194 square feet to 3,400 square feet.

Rent due was $5,052 per month from February 1, 2024 to June 30, 2024, The subsequent annual lease amount was $61,778, and increases by 2.0% annually thereafter.

Upon entering the lease amendment, the Company adjusted the right-of-use asset from $555,149 to $280,520 and the lease liability from $565,828 to $275,850 in the three months ended March 31, 2024. A non-operating gain of $15,350 was recorded.

Supplemental balance sheet information related to the lease on March 31, 2025 and December 31, 2024 is as follows:

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| <br>**Description** | <br>**Classification** | &nbsp;&nbsp;&nbsp;&nbsp;**March 31,**<br>**2025** | **December 31,**<br>**2024** |
| Right of Use Asset – Lease, net | Other assets (non-current) | $**228627** | $240128 |
| Operating Lease liability – Short-term | Accrued liabilities | **46174** | 44977 |
| Operating Lease liability – Long-term | Other long-term liabilities | **181702** | 193642 |
| Total operating lease liability |  | $**227876** | $238618 |
| Discount rate – operating lease |  | 8.0% | 8.0% |

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**Note 12. Related Party**

As of March 31, 2025, the Company had the following other assets - related-parties:

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|:---|:---|:---|
| | **Other current assets** | **Other current assets** |
| <br>**Related Party** | **3/31/2026** | **12/31/2025** |
| CEO | 84602 | 86602 |
| President | (18860) | (18860) |
| Total | 65742 | 67742 |

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As of March 31, 2025, the Company had the following related-party debt outstanding:

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|:---|:---|:---|:---|:---|:---|
| | | **Principal Outstanding** | **Principal Outstanding** | | |
| <br>**Related Party** | <br>**Instrument** | **March 31, 2025** | **December 31, 2024** | <br>**Interest Rate** | <br>**Maturity Date** |
| Chief Executive Officer | Convertible Note | $146300 | $146300 | 6.0% | 1/1/2024 |
| President | Convertible Note | 25000 | 25000 | 6.0% | 6/30/2023 |
| President | Line of Credit | 90000 | 90000 | 7.0% | 7/31/2023 |
| President | Demand Note | 25000 | 25000 | 6.0% | Demand |
| President | Demand Note | 12000 | 12000 | 6.0% | Demand |
| Chief Executive Officer | Demand Note | 12000 | 12000 | 6.0% | Demand |
| Board Member | Note Payable | 328000 | 328000 | 6.0% | 1/1/2024 |
| Board Member | Note Payable | 40000 | 40000 | 6.0% | 1/1/2023 |
| Relative of Executive | Note Payable  | 1868160 | 1897510 | 8.0% | 8/5/2028 |
| Relative of Executive | Line of Credit  | 499000 | 499000 | 7.5% | 8/31/2026 |
| Relative of Executive | Line of Credit  | 70000 | 70000 | 6.0% | 1/1/2023 |
| Vice President | Demand Note  | 50000 | 50000 | 6.0% | Demand |

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Included in accrued interest payable at March 31, 2025 is amounts due to related parties of approximately $535,000 ($467,000 at December 31, 2024).

**Note 13. Commitments and Contingencies**

**Non-cancelable Purchase Obligations** - In the normal course of business, the Company enters into non-cancelable purchase commitments with various third parties to purchase products and services such as cloud infrastructure capacity, subscription-based cloud service arrangements, technology equipment, corporate and marketing events and consulting services.

**Legal Matters** - From time to time, the Company is involved in legal proceedings, claims, and regulatory matters arising in the ordinary course of business. The Company accrues a liability for loss contingencies when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. For matters where a loss is reasonably possible but not probable, or where the amount of loss cannot be reasonably estimated, the Company discloses the nature of the contingency but does not record a liability.

As of March 31, 2025, the Company is not a party to any legal proceedings that, individually or in the aggregate, are expected to have a material adverse effect on its financial position, results of operations, or cash flows. No accrual for loss contingencies has been recorded.

**Note 14. Segment Information**

The Company operates as a single business segment focused on the development and sales of cybersecurity software and the related cybersecurity consulting, advisory, and managed information security services. The determination of a single business segment is consistent with the financial information regularly reviewed by our Chief Executive Officer, the chief operating decision maker ("CODM"), in assessing segment performance and deciding how to allocate resources on a company basis. The accounting policies of the segment are the same as those described in the summary of significant accounting policies.

The CODM measures segment profit and loss by net loss as reported in the statement of operations. The CODM uses net loss to monitor budget and forecast versus actual results to assess segment performance and to allocate resources across the organization. The measure of segment assets is reported on the balance sheet as total assets.

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The following table summarizes segment revenue, segment loss, and significant segment expenses regularly reported to the CODM during the 3 months ended March 31, 2025 and 2024:

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|  | For the 3 months ended March 31,  | For the 3 months ended March 31,  |
|  | 2025 | 2024 |
| Sales | 1683867 | 1578495 |
| Less (a): |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Employee expenses (b) | 1320672 | 1357960 |
| &nbsp;&nbsp;&nbsp;&nbsp;Software and equipment | 181123 | 210988 |
| &nbsp;&nbsp;&nbsp;&nbsp;Sales and marketing expenses (c) | 126323 | 103321 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other professional services (d) | 85162 | 66095 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other operating expenses (e) | 96342 | 93241 |
| Loss from operations | (125755) | (253110) |
| Reconcilation to net income |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Other income (f) |  | 15350 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest income (expense), net | (158545) | (221769) |
| Reconcilation to net income | (284300) | (459529) |

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(a) The significant expense categories align with the information provided to the CODM.

(b) Employee expenses include salaries, benefits and commissions

(c) Sales and marketing expenses include sales, marketing and partner commission expenses.

(d) Other professional services include legal and accounting expenses.

(e) Other operating expenses include depreciation and amortization expenses of $47,364, fees and other taxes of $9,825, rent of $20,014 and other expenses. In 2024, depreciation and amortization expense was $55,073, fees and other taxes were $3,578, and rent was $22,511.

Other income from 2024 represents other income due to a partial termination of the lease adjustment of $15,350

**Note 15. Subsequent Events**

On March 12, 2025, Infinite Group, Inc. (the "Company") entered into an Asset Purchase Agreement (this "Agreement") with Opti9 Technologies LLC, a Delaware limited liability company ("Buyer") for the sale of assets related to the division of business known as the Ace Server Management division. Under this division the Company provides IT managed infrastructure services, to a US government agency as a subcontractor to Peraton Enterprise Solutions LLC (f/k/a Perspecta Enterprise Solutions LLC ("Peraton"))

The purchase price was $7,500,000 plus the assumption of liabilities under the contract with Peraton going forward, and subject to customary adjustments prior to closing. The purchase price was to be funded by immediately available funds at the closing. The Agreement contemplated payment of a number of third-party creditors which proceeds will be applied at the closing.

The closing was expected to take place in June 2025. The closing of the transaction was subject to customary conditions, including, among other things, (i) approval by the Company's stockholders; (ii) consent of Peraton; (iii) consent of a number of the Company's debtholders; (iv) no temporary or permanent judgment issued by any governmental entity of competent jurisdiction or law or other legal restraint or prohibition preventing or prohibiting the consummation shall be in effect; (v) that no event or circumstance with a material adverse effect on the Ace server management business division shall have occurred; and, (vi) other customary conditions for a transaction of this nature.

The Agreement contained representations, warranties and covenants of the parties customary for a transaction of this type, including a 4 year non-competition covenant from competing with the Buyer in providing services to the U.S. government agency that was subject of the Peraton subcontract, and providing 24x7x365 Windows and/or Linux operating system and hardware support and monitoring services to other parties.

Concurrently with the execution of the Agreement, certain stockholders were to enter into voting agreements (the "Voting Agreements") with Buyer. Pursuant to the terms of the Voting Agreements, these stockholders were to agree to vote their shares in favor of the transaction and the Company's upcoming stockholders meeting, to not solicit any other acquisition proposals and to vote their shares against any competing acquisition proposals. The shares subject to the Voting Agreements comprised approximately 28% of all outstanding shares. The Voting Agreements would terminate in certain circumstances, including upon termination of the Agreement.

The Company planned to present the transaction for the sale of these assets for approval at its upcoming annual meeting of stockholders tentatively scheduled for June 4, 2025.

On April 22, 2025, the Company received verbal communication from Peraton that the ASM contract was to be cancelled for convenience on May 17, 2025.

On May 8, 2025, the Company received a request in writing to answer an RFP that would retain certain employees of the Company that previously provided service under the ASM contract and would move the Company to a time and materials subcontract with Peraton serving the US government agency.

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During April and May 2025, the Company executed layoffs constituting a material reduction in the workforce because of this change. During 2025, the Company received task orders and executed time and materials subcontracts with Peraton to retain certain employees serving the US Government agency.

On July 31, 2025, the Company received a notice of termination of the Asset Purchase Agreement.

On August 15, 2025, the Company received funding from Business Loan and Security Agreement with WebBank. The funding provided was $150,000 with a fixed fee of $3,000. A payment plan of $2,558 per week for 78 weeks effective August 21, 2025. The effective interest rate of the agreement is 42.6%.

On September 23, 2025, the Company received funding from a business installment loan with OnDeck Capital, LLC. The funding provided was $200,000 with a fixed fee of $5,000. A payment plan of $3,844 per week for 78 weeks effective September 30, 2025. The effective interest rate of the agreement is 61.6%.

On October 27, 2025, the Company borrowed $50,000 from the Company's President's brother, Harry Hoyen (the "Lender"), pursuant to the amended and restated loan and security agreement, dated as of August 16, 2024, by and between the Company and the Lender.

On October 31, 2025, the Company borrowed $90,000 from the Company's President's brother, Harry Hoyen via a demand note.

On November 12, 2025, the Company received funding from a loan agreement with Stripe and Celtic Bank. The loan amount was $244,034 plus a fixed fee of $25,623. The repayment amount of $269,657 will be repaid at a repayment rate of 30% of the Company's receivables automatically withheld by Stripe. There is no financing percentage. The repayment start date was November 17, 2025, with a minimum payment amount of $29,962 over every 60-day period. The final repayment date is May 11, 2027, if total repayment amount is not paid as of that date. This loan agreement also eliminates the remaining balance of $64,833 from the previous Stripe loan dated March 11, 2025, as the remaining balance was rolled into this new loan.

On December 19, 2025, the Company borrowed $50,000 from the Company's President's brother, Harry Hoyen via a demand note.

On December 31, 2025, the Company borrowed $100,000 from the Company's Charman, Donald Reeve via a promissory note.

On January 28, 2026, the Company received funding from a Standard Merchant Cash Advance Agreement with Fiji SPV LLC. The funding provided was $150,000 with a fixed fee of $7,500. A payment plan of $6,574 per week for 34 weeks effective February 4, 2026. The effective interest rate of the agreement is 116%.

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

This discussion contains forward-looking statements, the accuracy of which involves risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons including, but not limited to, those discussed under the heading "Forward Looking Statements" above and elsewhere in this report. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our financial statements and the notes thereto appearing elsewhere in this report.

**Overview**

**Our Business**

Headquartered in Pittsford, New York, Infinite Group is a developer of cybersecurity software and related cybersecurity consulting, advisory, and managed information security services. We principally sell our software and services through indirect channels such as Managed Service Providers ("MSPs"), Managed Security Services Providers ("MSSPs"), agents and distributors and government contractors, whom we refer to collectively as our channel partners. We also sell directly to end customers.

We believe our ability to succeed depends on how successful we are in differentiating ourselves in the cybersecurity market at a time when competition and consolidation in these markets are on the rise. Our strategy to differentiate our cybersecurity software and services from our competitors is to combine customized software and professional services, and grow our business by designing, developing, and marketing cybersecurity software-as-a-service ("SaaS") solutions that can be deployed in myriad environments. Software and services are initially developed in our wholly-owned subsidiary, IGI CyberLabs ("CyberLabs"), to fill technology gaps we identify, and then we bring these software and services to market through our existing channel partner and customer relationships. Our software and services are designed to simplify and manage the security needs of our customers and channel partners in a variety of environments. We focus on the small and medium-sized enterprises market. We support our channel partners by providing recurring-revenue business models for both services and through our cybersecurity SaaS solutions. Products may be sold as standalone solutions or integrated into existing environments to further automate the management of cybersecurity and related IT functions.

As part of these software and service offerings we:

Internally developed and brought to market Nodeware®, a patented SaaS solution that automates network asset identification, and cybersecurity vulnerability management and monitoring. Nodeware simply and affordably enhances security by proactively identifying, monitoring, and addressing potential cybersecurity vulnerabilities on networks, which creates enhanced security to safeguard against hackers and ransomware. Nodeware provides an economical solution for small and medium-sized enterprises as compared to more costly solutions focused on enterprise-sized customers and is designed to accommodate the varying network needs of our end customers' organizations and networks. Nodeware's flexibility allows it to span from a single network to several subnetworks, as well as accommodating larger, more complex organizations with more advanced network needs. Nodeware is sold as a SaaS solution and continuously releases enhancements, updates, and upgrades to stay current with security needs and changes in the market. Nodeware is also designed to be integrated into other technology platforms. We primarily sell Nodeware through our channel partners, with a small percentage being sold directly to end customers. We intend to continue to develop our intellectual property to serve as the core to our proprietary software and services. In addition to our proprietary software and services we also act as a master distributor for other cybersecurity software, principally Webroot a cloud-based endpoint security platform solution, where we market to and provide support for over 135 channel partners across North America;

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Provide cybersecurity consulting and advisory services to channel partners and direct customers across different markets, including banking, manufacturing, supply chain, and technology. As part of our consulting and advisory services, we are contracted to support existing information technology and executive teams at both the customer and channel partner level and provide security leadership and guidance. We validate overall corporate and infrastructure cybersecurity with the goal of maintaining and securing the integrity of confidential client information, preserving the continuity of services, and minimizing potential data damage from threats and incidents; and

Provide managed support services related to information security, principally as a subcontractor for Peraton, a large information technology provider and U.S. government contractor, by providing in-depth troubleshooting, backend analysis, and technical and security support, commonly referred to as Level 2 support, for mission critical technical infrastructure from the server level to the end user interface application in a critical government environment.

**Business Strategy**

We have a threefold business strategy composed of:

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| providing differentiated cybersecurity software and services to small to mid-sized enterprises who lack the internal resources to focus on cybersecurity related matters by combining customized software and professional services; |
| designing, developing, and marketing cybersecurity SaaS solutions, including Nodeware; and |
| identifying other cybersecurity companies to acquire as part of a strategic roll-up strategy. |

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We believe our ability to succeed depends on how successful we are in differentiating ourselves in the market at a time when competition and consolidation in these markets is on the rise.

Our software and services are designed to simplify the security needs of our customers and channel partners, with a focus on the small to mid-sized enterprises, and we believe our ability to integrate our product and service offerings differentiates them from our competitors. In addition, we support our channel partners by providing recurring -revenue business models for both services and our cybersecurity SaaS solutions.

Cybersecurity is a constantly evolving field, so we devote significant efforts in developing proprietary software and services to meet our customer and channel partners' evolving needs. These efforts have resulted in the development of our patented and patent-pending Nodeware solution. We expect to continue to make significant investments in developing other intellectual property to serve as the core to other proprietary software and services.

Historically, a significant portion of our revenues has been derived through our managed support services, however, we believe our cybersecurity SaaS solutions, including Nodeware, present an opportunity for significant growth. We believe that Nodeware's ability to be deployed across a wide variety of networks and the ability to integrate it into existing and new cybersecurity solutions, will allow us to significantly grow this segment of our business. Similarly, we believe Nodeware's SaaS recurring revenue business model and its flexibility as a standalone or integrated solution makes it an attractive part of our channel partners' portfolio of products. Accordingly, in 2023 we made significant investments in IGI and CyberLabs sales and marketing to grow our team of cybersecurity sales and technical consultants. As a result, we believe we are seeing the pipeline growth expected from focused efforts, which we anticipate will convert to revenue growth in 2024.

We believe the market for cybersecurity services for small and medium-sized enterprises is fragmented and does not currently meet the needs of this customer base. The market is fragmented and is beginning to consolidate, which is why we are seeking to strategically acquire other cybersecurity technology and services companies.

The following sections define specific components of our business strategy.

***Nodeware®***

In May 2016, we filed a provisional patent application for our proprietary product, Nodeware and launched it commercially in November 2016. In May 2017, we filed a utility patent application for Nodeware.

U.S. Patent No. 10,999,307, was issued on May 4, 2021, for NETWORK ASSESSMENT SYSTEMS AND METHODS THEREOF [U.S. Patent Application Serial No. 15/600,297, filed May 19, 2017, claiming priority of U.S. Provisional Patent Application Serial No. 62/338,904, filed May 19, 2016.

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Nodeware is an automated asset identification and vulnerability management and monitoring solution that enhances security by proactively identifying, monitoring, and addressing potential vulnerabilities on both internal and external facing networks, creating a safeguard against malicious intent to exploit known problems in a customer's network with simplicity and affordability. Nodeware assesses vulnerabilities in a computer network using scanning technology to capture a comprehensive view of the security exposure of a network infrastructure. Users receive alerts and view network information through a proprietary, web enabled dashboard. Continuous and automated internal scanning and external on demand scanning are components of this offering.

The Cloud based SaaS platform has an agile and continuous development process that is flexible to react to customer and market needs. In December 2019, we filed a second provisional patent application and in December 2020 we filed the subsequent action on the institutional patent on the Nodeware platform. In 2020 and 2021, we created many new feature updates and improvements to the platform in response to COVID-19 needs and impact such as a downloadable Windows executable version along with Windows, Mac, and Linux Agents that could be downloaded to a remote PC or server. A number of enhancements related to data management, threat intelligence, and user functionality were part of the 2020/21 continued evolution of Nodeware.

Nodeware creates an opportunity for resellers, including managed service providers, managed security service providers, distributors, and value-added resellers to use a product that provides greater visibility into the network security of an organization. We sell Nodeware in the commercial sector through channel partners and agents. Since 2018, we have continued to expand our channel of direct resellers, which now includes Telarus, SYNNEX, and Staples.

In June 2021, we created IGI CyberLabs, LLC, a wholly owned subsidiary to support our Nodeware solution and continued software development. Cyberlabs' overarching mission is to drive sales of our Nodeware Cloud security platform, which will drive monthly and annualized recurring revenue. CyberLabs will also drive product and platform enhancements in Nodeware and continue to enhance our rapid scale Go-to-Market capabilities. Additionally, CyberLabs is chartered with development of cloud and SaaS cybersecurity related products that will be brought to market through our growing channel relationships.

In May 2024, the Company formed Nodeware Inc. in the state of Nevada. It is a wholly owned subsidiary to support the Company's Nodeware solution. Nodeware, Inc. was established to take over the operations of CyberLabs.

***Intellectual Property***

We believe that our intellectual property is an asset that will contribute to the growth and profitability of our business. We rely on a combination of patented, patent-pending and confidentiality procedures, trademarks and contractual provisions to establish and protect our intellectual property rights in the United States and abroad. We intend to rely on both registration and common law protection for our trademarks.

In May 2016, we filed a provisional patent application for our proprietary product, Nodeware, and launched it commercially in November 2016. In May 2017, we filed a utility patent application for Nodeware: U.S. Patent No. 10,999,307, was issued on May 4, 2021, for NETWORK ASSESSMENT SYSTEMS AND METHODS THEREOF U.S. Patent Application Serial No. 15/600,297, filed May 19, 2017, claiming priority of U.S. Provisional Patent Application Serial No. 62/338,904, filed May 19, 2016. The patent term is twenty years from the earliest effective filing date (May 19, 2017), subject to any patent term adjustments or extensions granted by the USPTO. Therefore, the expiration date of the subject patent, absent any adjustments or extensions, is May 19, 2037.

In December 2019, we filed a second provisional patent application and in December 2020 we filed the subsequent action on the patent on Nodeware. In 2020 and 2021, we created updates and improvements to the platform in response to COVID-19 needs and impact such as a downloadable Windows executable version along with Windows, Mac, and Linux Agents that could be downloaded to a remote PC or server. A number of enhancements related to data management, threat intelligence, and user functionality were part of these updates.

The efforts we have taken to protect our intellectual property may not be sufficient or effective. As a result of this uncertainty and overall significance to the financial statements, these costs have been expensed.

The U.S. patent system permits the filing of provisional and non-provisional patent applications. A non-provisional patent application is examined by the United States Patent and Trademark Office and can mature into a patent once that office determines that the claimed invention meets the standards for patentability.

Our current patent and trademark portfolio consists of a patent for the Nodeware solution and process for scanning for vulnerabilities and a pending patent covering the methodologies associated with identifying and cataloging the assets on or across any physical or cloud network, together with a registered trademark for the "Nodeware" name and other trademarks and tradenames associated with our company and products. We intend to continue to work to enhance our intellectual property position on the Nodeware solution and in other appropriate cybersecurity technology we generate.

***Technology and Product Development***

Our goal is to position our products and solutions to enable vertical and other Application Programming Interface (API) based integration, with other industry solutions. We have a technology and product development strategy aligned with our business strategy. We continue to identify other technical partners in the cybersecurity market to integrate Nodeware into, through either API or full stack integration.

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***Cybersecurity Services***

We provide cybersecurity consulting services that include incident response, security awareness training, risk management, IT governance and compliance, security assessment services, PenLogic™ penetration testing services, and Chief Information Security Officer Team as a Service (CISOTaaS™) offerings to channel partners and direct customers across different vertical markets (banking, supply chain, manufacturing, healthcare, legal, etc.) in North America. Our cybersecurity projects leverage different technology platforms and processes such as Nodeware to create a living document that a customer can use to go forward on a path of continuous improvement for its overall Information security. We support both internal and external organizations with our cybersecurity overlay that allows us to stay agnostic in the process, especially for compliance while enabling the IT organization to address the issues discovered. We validate overall network security with the goal of maintaining the integrity of confidential client information, preserving the continuity of services, and minimizing potential data damage from attempted threats and incidents. We continue to enhance our cybersecurity services when opportunities materialize and as the market evolves.

**Results of Operations**

**Comparison of the Three Months Ended March 31, 2025 and 2024**

The following table compares our statements of operations data for the three months ended March 31, 2024 and 2023. The trends suggested by this table are not indicative of future operating results.

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|  | Three Months Ended March 31, | Three Months Ended March 31, | Three Months Ended March 31, | Three Months Ended March 31, | Three Months Ended March 31, | Three Months Ended March 31, |
|  | 2025 |<br>As a % of<br>Sales | 2024 |<br>As a % of<br>Sales | 2025 vs 2024<br>Amount of<br>Change |% Increase<br>(Decrease) |
| Sales | $1683867 | 100.0% | $1578495 | 100.0% | $105372 | 6.7% |
| Cost of sales | 934654 | 55.5 | 971410 | 61.5 | (36756) | (3.8) |
| Gross profit | 749213 | 44.5 | 607085 | 38.5 | 142128 | 23.4 |
| General and administrative | 441030 | 26.2 | 451880 | 28.6 | (10850) | (2.4) |
| Selling | 433938 | 25.8 | 408315 | 25.9 | 25623 | 6.3 |
| Total cost and expenses | 874968 | 52 | 860195 | 54.5 | 14773 | 1.7 |
| Operating loss | (125755) | (7.5) | (253110) | (16.0) | 127355 | (50.3) |
| Interest expense (net) | (158545) | (9.4) | (221769) | (14.0) | 63224 | (28.5) |
| Other income | - | - | 15350 | 1 | (15350) | - |
| Net loss | $(284300) | (16.9)% | $(459529) | (29.1)% | $175229 | 38.1% |
| Net loss per share - basic and diluted | $(0.55) |  | $(0.88) |  | $0.33 |  |

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**Sales** 

Our managed support service sales increased by 2% from $1,074,096 during the three months ended March 31, 2024 to $1,095,542 during the corresponding period of 2025. Managed support service sales comprised approximately 65% of our sales in three months ended March 31, 2025, and approximately 68% for the same period in 2024. The increase in our managed support service sales during the three months ended March 31, 2025 was due to the addition of a project by Perspecta.

Our cybersecurity projects sales increased by 23% from $185,596 during the three months ended March 31, 2024 to $227,808 during the corresponding period of 2025. The increase in our cybersecurity projects sales during the three months ended March 31, 2025 was due to more projects being completed in 2024.

Software sales, which includes the selling of licenses of Nodeware and third-party software Webroot, increased by 13% from the three months ended March 31, 2024 to the same period in 2025. Sales for the period in 2024 were $318,803 and increased by $41,714 to $360,517 for the same period in 2025. The increase was primarily attributable to improving sales of Nodeware, and slightly offset by decreasing sales of Webroot. We expect this trend to continue throughout 2025 as we focus our resources on Nodeware.

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**Cost of Sales and Gross Profit**

Cost of sales principally represents compensation expense for our employees. Cost of sales decreased by 3.8% to $934,654 during the three months ended March 31, 2025 from $971,410 during the corresponding period of 2024. The change in cost of sales during the three months ended March 31, 2025 from 2024 was primarily due to a decrease in software and equipment costs supporting our software sales and cybersecurity projects of approximately $30,000.

Our gross profit increased by $142,128 from the three months ended March 31, 2024 to 2025. The increase was primarily due to the increase in sales referenced above.

**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 of $441,030 for the three months ended March 31, 2025 decreased approximately 2% from $451,880 for the same quarter of 2024. The decrease was primarily due to the reduction in salaries and benefits from 2024 to 2025 by approximately $21,000, offset by an increase in legal and accounting fees from 2024 to 2025 by approximately $13,000,

**Selling Expenses**

Selling expenses of $433,938 for the three months ended March 31, 2025 increased approximately 6% from $408,315 for the same quarter of 2024. The increase was primarily due to an increase in marketing spending by about $13,000.

**Operating Loss**

For the three months ended March 31, 2025 and March 31, 2024, operating loss was $125,755 and $253,110, respectively, for an improvement in the loss by $127,355. The improvement in our operating loss from the previous year is principally attributable to the increase in gross profit and reduction of general and administrative expenses partially offset by the increase of selling expenses of approximately $25,600 for the three months ended March 31, 2025 as compared to 2024.

**Interest Expense**

Net interest expense of $158,545 for the three months ended March 31, 2025 decreased 29% from expense of $221,769 for the same quarter of 2024. The decrease in interest expense is primarily attributable to the elimination of the MCA loans in the second half of 2024.

**Other Income**

For the three months ended March 31, 2024, we had $15,350 of other income. This was due to the accounting for the partial termination of our office lease in January 2024.

**Net Loss**

For the three months ended March 31, 2025 and March 31, 2024, net loss was $284,300 and $459,529, respectively, a decrease in the loss by $175,229. The decrease in net loss was primarily due to the increase in gross profit, reduction of general and administrative expenses, and decrease in interest expense.

**Liquidity and Capital Resources**

At March 31, 2025, we had cash of $21,331 available for working capital needs and planned capital asset expenditures. At March 31, 2025, we had a working capital deficit of approximately $9.1 million and a current ratio of 0.05.

During 2025, our primary sources of liquidity is cash provided by collections of accounts receivable and our factoring line of credit and short term loans. We maintain an accounts receivable financing line of credit with an independent financial institution that allows us to sell selected accounts receivable invoices to the financial institution with full recourse against us in the amount of $2,000,000, including a sublimit for one major client of $1,500,000. This provides us with the cash needed to finance certain of our on-going costs and expenses. At March 31, 2025, based on eligible accounts receivable, we had $70,000 available under this arrangement. We expect sales during 2025 to generate additional accounts receivable eligible for factoring, that will support our operations. We pay fees based on the length of time that the invoice remains unpaid.

We entered into one loan agreement in the three month period ended March 31, 2025.

On March 10, 2025, we received funding from a loan agreement with Stripe and Celtic Bank. The loan amount was $241,500 plus a fixed fee of $23,667. The repayment amount of $265,167 will be repaid at a repayment rate of 30% of our receivables automatically withheld by Stripe. There is no financing percentage. The repayment start date was March 17, 2025, with a minimum payment amount of $29,463 over every 60-day period. The final repayment date is September 8, 2026, if the total repayment amount is not paid as of that date. This loan agreement also eliminates the remaining balance of $30,090 from the previous Stripe loan dated June 4, 2024, as the remaining balance was rolled into this new loan.

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At March 31, 2025, we had current notes payable of $139,000 to related parties. $40,000 of this debt was due on January 1, 2023. The remaining $99,000 are in the form of demand notes with an interest rate of 6%.

At March 31, 2025, we have current notes payable of approximately $1,911,000 to third parties, which includes convertible notes payable of approximately $150,000. Also included is $12,500 in principal amount of a note payable that was due on June 30, 2016 which has not been paid. This note was issued in payment of software we purchased in February 2016 and is secured by a security interest in the software. To date, the holder has not taken any action to collect the amount past due on this note or to enforce the security interest in the software. The Company has accrued interest on this note of approximately $253,000 as of March 31, 2025.

Also included in the current notes payable to third parties at March 31, 2025, are five bridge loans with Mast Hill Fund, L.P., for an aggregate principal amount of $1,510,877. The bridge loans were entered into on November 3, 2021, February 15, 2022, May 27, 2022, November 23, 2022, and February 2, 2023, with maturity dates of November 3, 2022, February 15, 2023, May 27, 2023, November 23, 2023, and February 2, 2024, respectively.. All five loans bear interest at 8% and are subject to a 12% default interest rate as well as a 15% penalty in the event of a .default. We used the proceeds from the bridge loans to substantially enhance our marketing of CyberLabs' Nodeware solution, in order to significantly increase its growth.

Notes payable to third parties at March 31, 2025, also includes a loan balance with Celtic Bank for $257,543. This loan does not bear interest, and instead incurred a one-time fee of $23,667 at origination. The payments consist of 30% of the Company's receivables processed through Stripe, Inc.'s payment processing platform.

During the first quarter of 2025, there was one transaction to deferred note costs. This was the $23,667 associated with the Stripe loan. At March 31, 2025, the unamortized balance of the deferred note costs for all notes payable to third parties approximately $21,300. See Notes 5 and 6 of the 2024 Audited Financial Statements for more information.

We entered into unsecured lines of credit financing agreements (the "LOC Agreements") with two related parties in previous years. The LOC Agreements provide for working capital of up to $100,000 through July 31, 2022 and $75,000 through January 2, 2023. At March 31, 2025, we had approximately $15,000 of availability under the LOC Agreements.

During 2021, we issued demand notes to three board members for $79,000 in total. The demand notes bear a 6% interest rate. $49,000 is outstanding as of March 31, 2025.

We have $915,473 of current maturities of long-term obligations to third parties. This is comprised of various notes including long-term notes to third parties of $265,000 due on January 1, 2018 (plus accrued interest of approximately $307,000), $284,000 due January 1, 2024, $116,473 due on August 24, 2024, and $250,000 due on September 30, 2025.

At March 31, 2025, we have $1,154,743 of current maturities of long-term obligations to related parties. $270,000 was due on January 1, 2023, $25,000 was due June 30, 2023, $90,000 was due on July 31, 2023, $274,300 was due January 1, 2024, and $495,443 due before March 31, 2026.&nbsp;&nbsp;&nbsp;&nbsp;

We plan to renegotiate the terms of the various notes payable, seek funds to repay the notes or use a combination of both alternatives. We cannot provide assurance that we will be able to repay current notes payable or obtain extensions of maturity dates for long-term notes payable when they mature or that we will be able to repay or otherwise refinance the notes at their scheduled maturities.

We have a note payable agreement for up to $500,000 with a related party. The note has an interest rate of 7.5% and is due on August 31, 2026. The balance is $499,000 at March 31, 2025.

The following table sets forth our cash flow information for the periods presented:

&nbsp;&nbsp;&nbsp;&nbsp;

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|  | **&nbsp;&nbsp;&nbsp;&nbsp; Three Months Ended March 31,** | **&nbsp;&nbsp;&nbsp;&nbsp; Three Months Ended March 31,** |
|  | **2025** | **2024** |
| Net cash used by operating activities | $(193521) | $(119785) |
| Net cash used by investing activities | (78418) | (53525) |
| Net cash provided by financing activities | 124333 | 152102 |
| Net decrease in cash | $(147606) | $(21208) |

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**Cash Flows Used by Operating Activities**

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 as well as collect down payments depending on the contract terms. Our net loss of $284,300 for the three months ended March 31, 2025 was offset in part by non-cash expenses and credits of $50,488. In addition, our net loss was further offset by a decrease in accounts receivable and other assets of $162,372, an decrease in accrued payroll, deferred revenue and other expenses payable of $185,234 and an increase in accounts payable of $63,153 resulting in cash used by operating activities of $193,521.

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We continue to invest in our marketing of Nodeware to our IT channel partners who resell to their customers. We are making investments in our cyber security team for penetration testing, CISOTaaS and other services. Due to the lengthy lead times typically needed to generate these new sales, we expect a delay before realizing a return from our sales and marketing efforts, of one or more quarters. As a result, we may continue to experience operating income or operating losses from these resource expenditures until sufficient sales are generated. We expect to fund the cost for the new expenditures from our operating cash flows, a potential equity raise and incremental borrowings, as needed.

**Cash Flows Used by Investing Activities**

In the quarters ended March 31, 2025 and 2024, we incurred capital expenditures for computer hardware as well as software development labor for the enhancements to Nodeware of $78,418 and $53,525, respectively. We expect to continue to invest in computer hardware and software to update our technology to support the growth of our business. We do not anticipate our continued investment to be significant in these two categories.

**Cash Flows Provided by Financing Activities**

During the three months ended March 31, 2025, we entered into a new Stripe loan from Celtic Bank for $241,500. We also paid principal of $87,817 on short term debt and $29,349 on the current portion of long term debt with a related party.

**Credit Resources**

We maintain an accounts receivable financing line of credit from an independent financial institution that allows us to sell selected accounts receivable invoices to the financial institution with full recourse against us in the amount of $2,000,000, including a sublimit for one major client of $1,500,000. This provides us with the cash needed to finance certain costs and expenses. At March 31, 2025, we had financing availability, based on eligible accounts receivable, of approximately $70,000 under this line. We pay fees based on the length of time that the invoice remains unpaid. We also have approximately $16,000 of available credit under various lines of credit as of March 31, 2025.

During May 2019, we originated a line of credit note payable for a $500,000 with a related party and borrowed $499,000 and have $1,000 available to borrow for working capital. This agreement matures in August 2026.

During 2017, we originated two lines of credit with related parties totaling $175,000. At March 31, 2025, we had $15,000 available under these financing agreements which matured in January 2023 and July 2023, respectively.

We believe the capital resources available under our factoring line of credit, cash from additional related party loans and cash generated by improving the results of our operations will be sufficient to fund our ongoing operations for at least the next 12 months.

We anticipate financing growth from acquisitions of other businesses, if any, and our longer-term internal growth through one or more of the following sources: issuance of equity: cash from collections of accounts receivable; additional borrowing from related and third parties; use of our existing accounts receivable credit facility; or a refinancing of our accounts receivable credit facility.

**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 4. Controls and Procedures**

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

<u>Changes in Internal Control over Financial Reporting.</u> There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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**PART II - OTHER INFORMATION**

**Item 1. Legal Proceedings**

We are not currently a party to any lawsuit or proceeding which, in the opinion of management, is likely to have a material adverse effect on us or our business.

**Item 1A. Risk Factors**

Refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2024 for a comprehensive listing of the Company's other risk factors. There are no material changes for the three months ended March 31, 2025.

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

During the three months ended March 31, 2025, no warrants were exercised.

**Item 3. Defaults Upon Senior Securities.**

The Company is in default on convertible notes to third parties of $150,000 due on December 31, 2016. The accrued interest on these notes is approximately $129,500 at March 31, 2025.

The Company is in default on long-term notes to third parties of $265,000 due on January 1, 2018. The accrued interest on these notes is approximately $306,900 at March 31, 2025.

The Company is in default on a note payable to third parties of $355,000 due on December 31, 2022. The accrued interest on the note is approximately $201,100 at March 31, 2025.

The Company is in default on a note payable to third parties of $566,000 due on March 22, 2023. The accrued interest on the note is approximately $279,200 at March 31, 2025.

The Company is in default on a note payable to third parties of $259,029 due on November 3, 2022. The accrued interest on the note is approximately $145,700 at March 31, 2025.

The Company is in default on a note payable to third parties of $213,772 due on July 15, 2022. The accrued interest on the note is approximately $132,400 at March 31, 2025.

The Company is in default on a note payable to third parties of $118,000 due on June 3, 2023. The accrued interest on the note is approximately $54,500 at March 31, 2025.

The Company is in default on a note payable to a related party of $1,868,160 due on August 5, 2028. The accrued interest on the note is approximately $37,600 at March 31, 2025.

**Item 6. Exhibits**

Exhibits required to be filed by Item 601 of Regulation S-K.

For the exhibits that are filed herewith or incorporated herein by reference, see the Index to Exhibits located below in this report. The Index to Exhibits is incorporated herein by reference.

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| 25 |
| *[**Table of Contents**](#toc)* |

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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.

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| | |
|:---|:---|
|  | Infinite Group, Inc. |
|  | (Registrant) |
| Date: January 30, 2026 | /s/ James Villa |
|  | James Villa |
|  | Chief Executive Officer |
|  | (Principal Executive Officer) |
| Date: January 30, 2026 | /s/ Richard Glickman |
|  | Richard Glickman |
|  | VP Finance and Chief Accounting Officer |
|  | (Chief Accounting Officer) |

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|:---|
| 26 |
| *[**Table of Contents**](#toc)* |

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| | |
|:---|:---|
| **INDEX TO EXHIBITS** | **INDEX TO EXHIBITS** |
| **Exhibit No.** | **Description** |
| [31.1](igi_ex311.htm) | [Chief Executive Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002. \*](igi_ex311.htm) |
| [31.2](igi_ex312.htm) | [VP Finance Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002. \*](igi_ex312.htm) |
| [32.1](igi_ex321.htm) | [Chief Executive Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002. \*](igi_ex321.htm) |
| [32.2](igi_ex322.htm) | [VP Finance Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002. \*](igi_ex322.htm) |
| 101.INS | XBRL Instance Document.\* |
| 101.SCH | XBRL Taxonomy Extension Schema Document.\* |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document.\* |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document.\* |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document.\* |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document.\* |

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\* Filed as an exhibit hereto.

## Exhibit 31.1

**EXHIBIT 31.1**

**CERTIFICATION**

I, James Villa, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Infinite Group, Inc.;

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

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

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

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

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

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

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

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

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

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

Date: January 30, 2026

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| |
|:---|
| /s/ James Villa |
| James Villa |
| Chief Executive Officer<br> (Principal Executive Officer) |

---

## Exhibit 31.2

**EXHIBIT 31.2**

**CERTIFICATION**

I, Richard Glickman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Infinite Group, Inc.;

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

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

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

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

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

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

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

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

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

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

Date: January 30, 2026

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| |
|:---|
| /s/ Richard Glickman |
| Richard Glickman |
| VP Finance and Chief Accounting Officer<br> (Principal Financial and Accounting Officer) |

---

## Exhibit 32.1

**EXHIBIT 32.1**

**CERTIFICATION PURSUANT TO** 

**18 U.S.C. SECTION 1350,** 

**AS ADOPTED PURSUANT TO** 

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the quarterly report of Infinite Group, Inc. (the "Company") on Form 10-Q for the period ending March 31, 2025 as filed with the Securities and Exchange Commission ("SEC") on the date hereof (the "Report"), I, James Villa, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

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

Dated: January 30, 2026

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| |
|:---|
| /s/ James Villa |
| James Villa |
| Chief Executive Officer<br> (Principal Executive Officer) |

---

## Exhibit 32.2

**EXHIBIT 32.2**

**CERTIFICATION PURSUANT TO** 

**18 U.S.C. SECTION 1350,** 

**AS ADOPTED PURSUANT TO** 

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the quarterly report of Infinite Group, Inc. (the "Company") on Form 10-Q for the period ending March 31, 2025 as filed with the Securities and Exchange Commission ("SEC") on the date hereof (the "Report"), I, Richard Glickman, VP Finance and Chief Accounting Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

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

Dated: January 30, 2026

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| |
|:---|
| /s/ Richard Glickman |
| Richard Glickman |
| VP Finance and Chief Accounting Officer<br> (Principal Financial and Accounting Officer) |

---