Infinite Group Leans on Nodeware AI, Government Contract for Growth

TL;DR

**IMCI is a risky bet, heavily reliant on one government contract, but its AI-powered Nodeware could be a game-changer if they can execute and diversify.**

AI Summary

Infinite Group Inc. (IMCI) reported total software revenue of approximately $1,265,000 for the twelve months ended December 31, 2023, with Nodeware contributing 56% of that figure. Cybersecurity consulting services generated approximately $1,269,000, while managed support services, primarily for a U.S. government agency via Peraton, accounted for the largest segment at approximately $4,420,000. Overall, managed support services represent 64% of total sales, with cybersecurity and software making up 36%. The company is strategically focused on developing its patented Nodeware SaaS solution, leveraging generative AI for vulnerability management and attack surface management. Key risks include reliance on a single major customer (Peraton) for 64% of revenue and a history of significant financing arrangements, including multiple loans from Mast Hill Fund, L.P. and Talos Victory Fund, LLC, totaling over $1.4 million in principal, often with high original issue discounts and conversion features. The strategic outlook involves global expansion of Nodeware through cloud infrastructure and continued intellectual property development in cybersecurity.

Why It Matters

IMCI's heavy reliance on a single government contract through Peraton for 64% of its revenue poses a significant concentration risk for investors; any disruption to this relationship could severely impact financial performance. The company's push into generative AI for its Nodeware platform could be a differentiator in the competitive cybersecurity market, potentially attracting new customers and channel partners like Telarus and TD SYNNEX, but also requires substantial R&D investment. For employees, the focus on advanced cybersecurity solutions and IP development suggests a need for specialized talent, while customers could benefit from more automated and predictive vulnerability management. The broader market will watch if IMCI can successfully scale its innovative AI-driven solutions against larger, more established cybersecurity players.

Risk Assessment

Risk Level: high — The company exhibits high risk due to its significant customer concentration, with approximately 64% of total sales derived from one customer, a major independent agency of the U.S. Government, through Peraton. Furthermore, IMCI has engaged in multiple financing arrangements with high original issue discounts and conversion features, such as the $448,000 Bridge Loan with a $44,800 discount and the $370,000 loan with a $37,000 discount from Mast Hill Fund, L.P., indicating potential liquidity challenges and dilutive pressure.

Analyst Insight

Investors should approach IMCI with extreme caution due to high customer concentration and a history of dilutive financing. Monitor the diversification of revenue streams beyond the Peraton contract and the successful market adoption of the GenAI-powered Nodeware to assess future viability.

Revenue Breakdown

Key Numbers

• $1,265,000 — Software Revenue (for the twelve months ended December 31, 2023, with 56% from Nodeware)
• $1,269,000 — Cybersecurity Consulting Services Revenue (for the twelve months ended December 31, 2023)
• $4,420,000 — Managed Support Services Revenue (for the twelve months ended December 31, 2023, primarily from one customer via Peraton)
• 64% — Percentage of Total Sales (derived from managed support services, largely from one customer)
• 36% — Percentage of Total Sales (derived from cybersecurity and software)
• $557,300 — Aggregate Market Value of Common Stock (held by non-affiliates as of June 30, 2023)
• 521,175 — Shares of Common Stock Outstanding (as of October 21, 2025)
• $448,000 — Bridge Loan Principal (from Mast Hill Fund, L.P. on November 3, 2021, with an $44,800 original issue discount)
• $370,000 — Second Loan Principal (from Mast Hill Fund, L.P. on February 15, 2022, with a $37,000 original issue discount)
• $296,000 — Loan Principal (from Talos Victory Fund, LLC on April 12, 2022, with a $29,600 original issue discount)

Key Players & Entities

• Infinite Group, Inc. (company) — registrant
• Peraton (company) — major channel partner and U.S. government contractor
• IGI CyberLabs (company) — wholly-owned subsidiary for software development
• Mast Hill Fund, L.P. (company) — lender in multiple financing arrangements
• Talos Victory Fund, LLC (company) — lender in a financing arrangement
• J.H. Darbie & Co., Inc. (company) — registered broker-dealer and finder for loans
• Celtic Bank (company) — lender in a financing arrangement
• Nodeware (company) — patented SaaS cybersecurity solution
• Webroot (company) — third-party cybersecurity software distributed by IGI
• Pratum, Inc. (company) — acquisition target, agreement terminated

FAQ

Risk Factors

• Customer Concentration Risk [high — financial]: The company's revenue is heavily reliant on a single major customer (Peraton) for 64% of its total sales through managed support services. This concentration creates significant risk if this customer's business needs change, contract is terminated, or relationship deteriorates.
• Financing and Debt Arrangements [high — financial]: Infinite Group has a history of significant financing arrangements, including multiple loans from Mast Hill Fund, L.P. and Talos Victory Fund, LLC, totaling over $1.4 million in principal. These loans often included high original issue discounts and conversion features, indicating potential financial distress and dilution risk for existing shareholders.
• Competitive Market Landscape [medium — market]: The cybersecurity market is characterized by rising competition and consolidation. The company's success depends on its ability to differentiate its software and services, particularly its Nodeware SaaS solution, from competitors.
• Reliance on Channel Partners [medium — operational]: The company primarily sells its software and services through indirect channels like MSPs, MSSPs, agents, and distributors. The effectiveness and reach of these channel partners are critical to the company's sales strategy.
• Intellectual Property Development [medium — operational]: The company's strategy relies on developing and expanding its intellectual property, including its patented Nodeware SaaS solution and leveraging generative AI. Delays or failures in IP development and patent protection could hinder growth.
• Scalability and Global Expansion [medium — market]: The company aims for global expansion of Nodeware through cloud infrastructure and licensing. Challenges in scaling operations, adapting to international markets, and integrating with other technology providers could impede this strategy.

Industry Context

The cybersecurity market is highly competitive and rapidly evolving, driven by increasing cyber threats and the growing adoption of digital technologies. Companies are increasingly seeking integrated solutions for vulnerability management, threat detection, and incident response. Trends include the rise of AI-powered security tools for automation and predictive analytics, and the expansion of cloud-native solutions to address complex IT environments.

Regulatory Implications

As a cybersecurity firm, Infinite Group operates in a sector with increasing regulatory scrutiny regarding data privacy and security standards. Compliance with regulations like GDPR, CCPA, and sector-specific mandates is crucial. The company's use of AI also brings potential future regulatory considerations related to AI governance and ethical use.

What Investors Should Do

1. Monitor customer concentration risk
2. Analyze debt structure and repayment capacity
3. Evaluate Nodeware SaaS adoption and growth
4. Assess competitive positioning and differentiation

Key Dates

• 2023-12-31: End of Fiscal Year — Reporting period for the financial data, including total software revenue of $1,265,000 and other segment revenues.
• 2023-06-30: Stock Market Valuation Date — Aggregate market value of common stock held by non-affiliates was $557,300.
• 2022-04-12: Talos Victory Fund Loan — Received a loan principal of $296,000 with a $29,600 original issue discount.
• 2022-02-15: Second Mast Hill Fund Loan — Received a loan principal of $370,000 with a $37,000 original issue discount.
• 2021-11-03: Mast Hill Fund Bridge Loan — Received a bridge loan principal of $448,000 with a $44,800 original issue discount.

Glossary

SaaS

Software as a Service. A software distribution model where a third-party provider hosts applications and makes them available to customers over the Internet. (Infinite Group is developing its Nodeware solution as a SaaS product, indicating a focus on recurring revenue and cloud-based delivery.)

GenAI

Generative Artificial Intelligence. A type of artificial intelligence that can generate new content, such as text, images, audio, and synthetic data. (The company is leveraging GenAI in its Nodeware platform for vulnerability management and attack surface management, aiming to enhance automation and predictive capabilities.)

MSPs

Managed Service Providers. Companies that remotely manage a customer's IT infrastructure and/or end-user systems, typically on a proactive basis and under a subscription model. (Infinite Group sells its software and services through MSPs, highlighting a key part of its go-to-market strategy.)

MSSPs

Managed Security Service Providers. Third-party companies that offer outsourced monitoring and management of security devices and systems. (Infinite Group utilizes MSSPs as channel partners for distributing its cybersecurity solutions.)

Channel Partners

Businesses that resell or distribute a vendor's products or services. (The company relies heavily on channel partners, including MSPs and MSSPs, for its sales and distribution strategy.)

Attack Surface Management

The practice of identifying, monitoring, and securing all the points where an organization is vulnerable to cyberattacks. (Infinite Group is developing its Nodeware solution to include comprehensive attack surface management capabilities, leveraging GenAI.)

Original Issue Discount (OID)

The difference between the face value of a bond or debt instrument and the lower price at which it was originally issued. (Several of the company's financing arrangements involved significant OIDs, suggesting the debt was issued at a substantial discount to its face value, often indicative of higher risk.)

Year-Over-Year Comparison

The provided 10-K focuses on the twelve months ended December 31, 2023. Without access to the prior year's filing, a direct comparison of key metrics like revenue growth, margin changes, and the emergence of new risks cannot be made. However, the narrative suggests a continued strategic focus on developing the Nodeware SaaS solution and leveraging generative AI, while also highlighting persistent risks such as customer concentration and significant debt financing arrangements.

Key Financial Figures

• $1.10 — the Over the Counter Bulletin Board of $1.10 on June 30, 2023 the last business day
• $0.001 — hares of the registrant's common stock, $0.001 par value, were outstanding. DOCUMENTS
• $1,265,000 — our software revenue was approximately $1,265,000, with approximately 56% of that being r
• $1,269,000 — uding software sales, was approximately $1,269,000; and Provide managed support services
• $4,420,000 — port services revenue was approximately $4,420,000. 4 Table of Contents Sales and Ma
• $448,000 — note, Lender agreed to lend the Company $448,000, which bears interest at a rate of eigh
• $44,800 — e of eight percent (8%) per annum, less $44,800 original issue discount. Under the term
• $8,500,000 — ase price under the Pratum agreement is $8,500,000, subject to customary purchase price ad
• $8,000,000 — debtedness of Pratum as of the closing. $8,000,000 will be paid to Pratum's shareholder at
• $500,000 — to Pratum's shareholder at closing and $500,000 will be deposited at closing with an es
• $370,000 — note, Lender agreed to lend the Company $370,000, which bears interest at a rate of eigh
• $37,000 — e of eight percent (8%) per annum, less $37,000 original issue discount. Under the term
• $7.50 — s common stock at a conversion price of $7.50 per share. As additional consideration
• $12.00 — ompany common stock at a fixed price of $12.00 per share. J.H. Darbie & Co., Inc. ( "F
• $14,650 — th the Loan, and was paid a cash fee of $14,650 (4.39% of the gross proceeds of the Loa

Filing Documents

• igi_10k.htm (10-K) — 1568KB
• igi_ex311.htm (EX-31.1) — 11KB
• igi_ex312.htm (EX-31.2) — 11KB
• igi_ex321.htm (EX-32.1) — 5KB
• igi_ex322.htm (EX-32.2) — 5KB
• igi_fsimg19.jpg (GRAPHIC) — 5KB
• igi_fsimg20.jpg (GRAPHIC) — 3KB
• igi_fsimg18.jpg (GRAPHIC) — 6KB
• 0001654954-25-012432.txt ( ) — 6537KB
• igi-20231231.xsd (EX-101.SCH) — 71KB
• igi-20231231_lab.xml (EX-101.LAB) — 365KB
• igi-20231231_cal.xml (EX-101.CAL) — 50KB
• igi-20231231_pre.xml (EX-101.PRE) — 307KB
• igi-20231231_def.xml (EX-101.DEF) — 170KB
• igi_10k_htm.xml (XML) — 963KB

Business

Business 4 Item 1A.

Risk Factors

Risk Factors 15 Item 1B. Unresolved Staff Comments 26 Item 1C. Cybersecurity 26 Item 2.

Properties

Properties 26 Item 3.

Legal Proceedings

Legal Proceedings 26 Item 4. Mine Safety Disclosures 26 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 27 Item 6. [Reserved] 27 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 27 Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 36 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 36 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 36 Item 9A.

Controls and Procedures

Controls and Procedures 36 Item 9B. Other Information 36 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 36 PART III . Item 10. Directors, Executive Officers and Corporate Governance 37 Item 11.

Executive Compensation

Executive Compensation 38 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 40 Item 13. Certain Relationships and Related Transactions, and Director Independence 42 Item 14. Principal Accountant Fees and Services 43 PART IV. Item 15. Exhibits and Financial Statement Schedules 44 Item 16. Form 10-K Summary 47 2 Table of Contents FORWARD LOOKING STATEMENT INFORMATION Certain statements made in this Annual Report on Form 10-K are "forward-looking statements" regarding the plans and objectives of management for future operations and market trends and expectations. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Our plans and objectives are based, in part, on assumptions involving the expansion of our business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that our assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. We undertake no obligation to revise or update publicly any forwar

Business

Item 1. Business Overview 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. We are building the next generation of Nodeware, a patented, cloud native SaaS solution that automates network asset identification, fingerprinting, automated patching and remediation through an integrated generative artificial intelligence ("GenAI") vulnerability management platform. By leveraging Gen AI at the core and through to the user experience, we are making vulnerability and threat intelligence data more actionable and automated, with greater fidelity and unmatched predictive capabilities. We are scaling using Gen AI driven insights towards a complete Gen AI powered attack surface management. We are integrating across IT ecosystems via ISVs, PSAs, and other strategic alignm

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