INFINITE GROUP Narrows Losses, Faces Going Concern Doubts

Ticker: IMCI · Form: 10-Q · Filed: Oct 31, 2025 · CIK: 884650

Infinite Group Inc 10-Q Filing Summary
FieldDetail
CompanyInfinite Group Inc (IMCI)
Form Type10-Q
Filed DateOct 31, 2025
Risk Levelhigh
Pages15
Reading Time18 min
Sentimentbearish

Sentiment: bearish

Topics: Cybersecurity, Going Concern, Net Loss, Stockholders' Deficiency, Debt Restructuring, Customer Concentration, Small Cap

TL;DR

**IMCI is a speculative bet, as a one-time tax refund masked ongoing financial instability and a massive debt load.**

AI Summary

INFINITE GROUP INC (IMCI) reported a net loss of $1,139,028 for the nine months ended September 30, 2023, a significant improvement from the $2,788,725 net loss in the prior year period, primarily driven by a substantial ERC tax refund of $1,662,698. Revenue increased to $5,255,180 for the nine months ended September 30, 2023, up from $5,075,774 in the same period in 2022, a 3.5% increase. Gross profit also rose to $2,285,716 from $1,834,023 year-over-year. However, the company's stockholders' deficiency worsened to $7,836,365 at September 30, 2023, from $6,864,214 at December 31, 2022, and it maintains a working capital deficit of approximately $7.8 million. Interest expense remains a significant burden, totaling $1,517,149 for the nine months ended September 30, 2023. The company continues to face substantial doubt about its ability to continue as a going concern, despite plans to issue stock, restructure debt, and pursue business growth. Sales to one client accounted for 64% of total sales for the nine months ended September 30, 2023, indicating significant customer concentration risk.

Why It Matters

IMCI's persistent stockholders' deficiency of $7.8 million and working capital deficit signal deep financial instability, making it a high-risk investment. While the ERC tax refund provided a temporary boost, the underlying operational profitability remains challenged by high interest expenses and a reliance on debt restructuring. For employees, this financial precariousness could lead to job insecurity, and for customers, particularly the major client accounting for 64% of revenue, it raises questions about service continuity and long-term viability. In a competitive cybersecurity market, IMCI's struggle to achieve consistent profitability and its going concern warning could deter new business and talent, further weakening its market position.

Risk Assessment

Risk Level: high — The company reported a stockholders' deficiency of $7,836,365 and a working capital deficit of approximately $7.8 million at September 30, 2023. Management explicitly states "there is substantial doubt about the Company's ability to continue as a going concern," indicating severe financial distress and high operational risk.

Analyst Insight

Investors should exercise extreme caution and consider avoiding IMCI given the explicit "going concern" warning and significant financial deficiencies. Any investment would be highly speculative, contingent on successful debt restructuring and sustained, profitable business growth, which are not guaranteed.

Financial Highlights

debt To Equity
N/A
revenue
$5,255,180
operating Margin
-27.6%
total Assets
$1,520,053
total Debt
$9,356,418
net Income
-$1,139,028
eps
N/A
gross Margin
43.5%
cash Position
$9,137
revenue Growth
+3.5%

Revenue Breakdown

SegmentRevenueGrowth
Total Revenue$5,255,180+3.5%

Key Numbers

  • $1,139,028 — Net Loss (for the nine months ended September 30, 2023, an improvement from $2,788,725 in 2022)
  • $5,255,180 — Total Revenue (for the nine months ended September 30, 2023, up 3.5% from $5,075,774 in 2022)
  • $1,662,698 — ERC Tax Refund (a significant one-time income item for the nine months ended September 30, 2023)
  • $7,836,365 — Stockholders' Deficiency (at September 30, 2023, worsening from $6,864,214 at December 31, 2022)
  • $7.8 million — Working Capital Deficit (at September 30, 2023, indicating liquidity challenges)
  • $1,517,149 — Total Interest Expense (for the nine months ended September 30, 2023, a substantial financial burden)
  • 64% — Customer Concentration (percentage of total sales from one client for the nine months ended September 30, 2023)
  • $9,137 — Cash at End of Period (at September 30, 2023, a decrease from $23,187 at December 31, 2022)

Key Players & Entities

  • INFINITE GROUP INC (company) — registrant of the 10-Q filing
  • Peraton (company) — subcontractor for managed support services
  • U.S. Government (regulator) — end client for managed support services via Peraton
  • Nodeware (company) — proprietary software offering
  • Webroot (company) — third-party software offering
  • $1,139,028 (dollar_amount) — net loss for nine months ended September 30, 2023
  • $1,662,698 (dollar_amount) — ERC tax refund received
  • $7,836,365 (dollar_amount) — stockholders' deficiency at September 30, 2023
  • $7.8 million (dollar_amount) — working capital deficit at September 30, 2023
  • 64% (dollar_amount) — percentage of total sales from one client for nine months ended September 30, 2023

FAQ

What is INFINITE GROUP INC's net loss for the nine months ended September 30, 2023?

INFINITE GROUP INC reported a net loss of $1,139,028 for the nine months ended September 30, 2023. This is an improvement compared to the $2,788,725 net loss reported for the same period in 2022.

How much revenue did INFINITE GROUP INC generate in the first nine months of 2023?

For the nine months ended September 30, 2023, INFINITE GROUP INC generated $5,255,180 in revenue. This represents an increase from the $5,075,774 reported in the corresponding period of 2022.

What is INFINITE GROUP INC's stockholders' deficiency as of September 30, 2023?

As of September 30, 2023, INFINITE GROUP INC's stockholders' deficiency was $7,836,365. This has worsened from $6,864,214 at December 31, 2022.

Did INFINITE GROUP INC receive any significant tax refunds?

Yes, INFINITE GROUP INC recognized an ERC tax refund of $1,662,698 during the nine months ended September 30, 2023. This significantly impacted their total other income (expense).

What is the primary risk factor highlighted by INFINITE GROUP INC's management?

Management explicitly states that "there is substantial doubt about the Company's ability to continue as a going concern." This is due to persistent net losses and a significant stockholders' deficiency of $7,836,365.

How reliant is INFINITE GROUP INC on a single customer?

INFINITE GROUP INC is highly reliant on a single client, which accounted for 64% of total sales for the nine months ended September 30, 2023. This indicates significant customer concentration risk.

What are INFINITE GROUP INC's plans to address its financial challenges?

The company plans to issue stock, restructure certain debt, and anticipates significant business growth. They also aim to renegotiate terms of other notes and seek conversion of notes to common stock.

What was INFINITE GROUP INC's cash balance at the end of September 2023?

INFINITE GROUP INC's cash balance at September 30, 2023, was $9,137. This represents a decrease from $23,187 at the beginning of the period.

What is INFINITE GROUP INC's working capital position?

As of September 30, 2023, INFINITE GROUP INC had a working capital deficit of approximately $7.8 million. This indicates that current liabilities significantly exceed current assets.

What types of services does INFINITE GROUP INC offer?

INFINITE GROUP INC offers three major services: Managed support services, Cybersecurity projects (including assessments, testing, and CISO consulting), and Software sales (including Nodeware and third-party software like Webroot).

Risk Factors

  • Going Concern Uncertainty [high — financial]: The company has a stockholders' deficiency of $7,836,365 as of September 30, 2023, and a working capital deficit of approximately $7.8 million. Despite plans to issue stock and restructure debt, substantial doubt exists about its ability to continue as a going concern.
  • Significant Interest Expense [high — financial]: Interest expense totaled $1,517,149 for the nine months ended September 30, 2023, representing a substantial financial burden that impacts profitability.
  • Customer Concentration [high — operational]: Sales to a single client accounted for 64% of total sales for the nine months ended September 30, 2023. This high concentration poses a significant risk if this client's business or relationship with IMCI changes.
  • Deteriorating Stockholders' Equity [medium — financial]: The stockholders' deficiency worsened from $6,864,214 at December 31, 2022, to $7,836,365 at September 30, 2023, indicating a decline in the company's net worth.
  • Low Cash Position [high — financial]: Cash at the end of the period was only $9,137 as of September 30, 2023, a significant decrease from $23,187 at December 31, 2022, highlighting severe liquidity constraints.
  • High Accounts Payable [medium — financial]: Accounts payable stood at $1,622,626 as of September 30, 2023, indicating potential short-term liquidity pressures and reliance on supplier credit.
  • Substantial Accrued Interest Payable [medium — financial]: Accrued interest payable was $1,342,873 as of September 30, 2023, reflecting the significant cost of debt financing and potential cash flow strain.
  • High Current Maturities of Long-Term Obligations [medium — financial]: Current maturities of long-term obligations, including related parties, totaled $1,714,152 as of September 30, 2023, requiring significant near-term cash outflows.

Industry Context

Infinite Group Inc. operates in the cybersecurity technology sector, a rapidly evolving and competitive market. The industry is characterized by continuous innovation, increasing threat sophistication, and growing demand for advanced security solutions. Companies in this space often face challenges related to R&D investment, market adoption, and intense competition from both established players and emerging startups.

Regulatory Implications

As a technology company, IMCI is subject to data privacy regulations (e.g., GDPR, CCPA) and cybersecurity standards. Compliance with these evolving regulations is crucial to avoid penalties and maintain customer trust. Any failure to adhere to these standards could lead to significant legal and financial repercussions.

What Investors Should Do

  1. Monitor debt restructuring and equity issuance plans closely.
  2. Assess the sustainability of revenue growth without the ERC tax refund.
  3. Evaluate the risk associated with customer concentration.
  4. Analyze the company's cash flow generation capabilities.
  5. Scrutinize the management's strategy for business growth and debt reduction.

Key Dates

  • 2023-09-30: Nine Months Ended — Reported net loss of $1,139,028, revenue of $5,255,180, and stockholders' deficiency of $7,836,365. Highlights ongoing financial challenges despite revenue growth.
  • 2022-12-31: Year End — Stockholders' deficiency was $6,864,214, indicating a worsening financial position by Q3 2023.

Glossary

Stockholders' Deficiency
A situation where a company's liabilities exceed its assets, resulting in a negative net worth for shareholders. (Indicates the company's precarious financial health and potential insolvency.)
Working Capital Deficit
Occurs when a company's current liabilities are greater than its current assets, suggesting difficulty in meeting short-term obligations. (Highlights immediate liquidity concerns for Infinite Group Inc.)
ERC Tax Refund
Employee Retention Credit, a refundable tax credit for businesses that kept employees on payroll during the COVID-19 pandemic. (A significant one-time income item that temporarily improved net loss for the period.)
Going Concern
An assumption that a company will continue to operate for the foreseeable future, typically at least 12 months. (The company faces substantial doubt about its ability to continue as a going concern, a critical warning for investors.)
Customer Concentration
A situation where a significant portion of a company's revenue comes from a small number of customers. (IMCI's heavy reliance on one client (64% of sales) creates substantial business risk.)
Accumulated Deficit
The total net losses a company has incurred over its lifetime that have not been offset by profits. (Shows a history of unprofitability, contributing to the overall stockholders' deficiency.)
Current Maturities of Long-Term Obligations
The portion of long-term debt that is due within the next year. (Represents significant short-term cash outflows required for debt repayment.)
Right of Use Asset Operating Lease
An asset recognized under accounting standards for leases, representing the lessee's right to use an underlying asset for the lease term. (Represents a significant portion of the company's assets, tied to lease obligations.)

Year-Over-Year Comparison

Compared to the prior year period, Infinite Group Inc. has shown a revenue increase of 3.5% for the nine months ended September 30, 2023, reaching $5,255,180 from $5,075,774. Gross profit also improved significantly from $1,834,023 to $2,285,716. However, the net loss, while reduced to $1,139,028 from $2,788,725, was heavily influenced by a one-time $1,662,698 ERC tax refund. The company's financial position has deteriorated, with stockholders' deficiency worsening to $7,836,365 and a persistent working capital deficit, alongside a concerningly low cash balance. New risks related to substantial interest expenses and customer concentration have become more pronounced.

Filing Stats: 4,459 words · 18 min read · ~15 pages · Grade level 15 · Accepted 2025-10-31 17:26:00

Filing Documents

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION PAGE

Financial Statements

Item 1. Financial Statements 4 Balance Sheets – September 30, 2023 (Unaudited) and December 31, 2022 4 5 6 7

Notes to Financial Statements – (Unaudited)

Notes to Financial Statements – (Unaudited) 8

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

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 18

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 25

Controls and Procedures

Item 4. Controls and Procedures 25

- OTHER INFORMATION

PART II - OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 26

Risk Factors

Item 1A. Risk Factors 26

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 26

Defaults Upon Senior Securities

Item 3 Defaults Upon Senior Securities 26

Exhibits

Item 6. Exhibits 27

SIGNATURES

SIGNATURES 28 2 Table of Contents

FORWARD-LOOKING STATEMENTS

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, y

Financial Statements

Item 1. Financial Statements INFINITE GROUP, INC. BALANCE SHEETS ASSETS September 30, December 31, 2023 2022 (Unaudited) Current assets: Cash $ 9,137 $ 23,187 Accounts receivable, net of allowances for expected credit losses of $ 32,692 as of September 30, 2023 and $ 36,710 as of December 31, 2022, respectively 201,163 406,005 Prepaid expenses and other current assets 277,931 144,218 Total current assets 488,231 573,410 Right of Use Asset Operating Lease, net 583,503 645,095 Property and equipment, net 6,635 19,996 Software, net 431,540 417,325 Deposits 10,144 10,144 Total assets $ 1,520,053 $ 1,665,970 LIABILITIES AND STOCKHOLDERS' DEFICIENCY Current liabilities: Accounts payable $ 1,622,626 $ 1,687,579 Accrued payroll 449,808 386,289 Accrued interest payable 1,342,873 783,581 Accrued retirement 295,290 286,605 Deferred revenue 451,212 550,523 Accrued expenses other and other current liabilities 312,478 138,639 Operating lease liability - Short-term 82,798 76,826 Current maturities of long-term obligations 1,054,852 515,000 Current maturities of long-term obligations - related parties 659,300 385,000 Notes payable, net 1,804,361 1,572,857 Notes payable - related parties 219,000 229,000 Total current liabilities 8,294,598 6,611,899 Long-term obligations: Notes payable: Other 53,097 458,849 Related parties 499,000 886,876 Operating lease liability - long-term 509,723 572,560 Total liabilities 9,356,418 8,530,184 Commitments and contingencies - - Stockholders' deficiency: Common stock, $ 0.001 par value, 60,000,000 shares authorized; 521,175 and 470,093 shares issued and outstanding, September 30, 2023 and December 31, 2022, respectively. 521 470 Additional paid-in capital 32,331,160 32,164,334 Accumulated deficit ( 40,168,046 ) ( 39,029,018 ) Total stockholders' deficiency ( 7,836,365 )

Notes to Financial Statements - (Unaudited)

Notes to Financial Statements - (Unaudited) Note 1. Basis of Presentation The accompanying unaudited financial statements of Infinite Group, Inc. ("Infinite Group, Inc." or the "Company") included herein have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (U.S.) ("GAAP") for interim financial information and with instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature. The December 31, 2022 balance sheet has been derived from the audited financial statements at that date but does not include all disclosures required by GAAP. 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, 2022 filed with the U.S. Securities and Exchange Commission (SEC). Results of operations for the three and nine months ended September 30, 2023, are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2023. Note 2. Management Plans - Capital Resources The Company reported net losses of $ 1,139,028 and $ 2,788,725 for the nine months ended September 30, 2023 and 2022, respectively, and stockholders' deficiencies of $ 7,836,365 and $ 6,864,214 at September 30, 2023 and December 31, 2022, respectively. The Company has a working capital deficit of approximately $ 7.8 million at September 30, 2023. 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 i

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