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 ~~September~~March 3031, ~~2024~~2025

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: 000-21816

_________________________________________

INFINITE GROUP, INC.

(Exact name of registrant as specified in its charter)

_________________________________________

Delaware		52-1490422
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
175 Sully’s Trail, Suite 202, Pittsford, New York		14534
(Address of principal executive offices)		(Zip Code)

175 Sully’s Trail, Suite 202, Pittsford, New York		14534
(Address of principal executive offices)		(Zip Code)

(585) 385-0610

(Registrant’s telephone number, including area code)

~~____________________________________________~~ _________________________________________

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

Title of each class		Trading Symbol		Name of each exchange on which registered
N/A		N/A		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 ☐☒ 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~~ ☒ 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.

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 ☐ 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 ~~October~~January 2126, ~~2025~~2026.

Infinite Group, Inc.

Quarterly Report on Form 10-Q

For the Period Ended ~~September~~March 3031, ~~2024~~2025

Table of Contents

PART I - FINANCIAL INFORMATION		~~PAGE~~	PAGE
Item 1.	Financial Statements	4	4
	Balance Sheets – September 30, 2024 (Unaudited) and December 31, 2023	4
	Balance Sheets – March 31, 2025 (Unaudited) and December 31, 2024		4
	Statements of Operations (Unaudited) for the three and nine months ended September 30, 2024 and 2023	5
	Statements of Operations (Unaudited) for the three months ended March 31, 2025 and 2024		5
	Statements of Changes in Stockholders’ Deficiency (Unaudited) for the three and nine months ended September 30, 2024 and 2023	6
	Statements of Changes in Stockholders’ Deficiency (Unaudited) for the three months ended March 31, 2025 and 2024		6
	Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2024 and 2023	7
	Statements of Cash Flows (Unaudited) for the three months ended March 31, 2025 and 2024		7
	Notes to Financial Statements – (Unaudited)	8	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22	24
Item 4.	Controls and Procedures	22	24
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	23	25
Item 1A.	Risk Factors	23	25
Item 3	Defaults Upon Senior Securities.	23	25
Item 6.	Exhibits	23	25
SIGNATURES		24	26

Table of Contents

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, ~~2023~~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.

Table of Contents

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

INFINITE GROUP, INC.

BALANCE SHEETS

ASSETS
	September 30,			December 31,
	March 31,			December 31,
	2024			2023
	2025			2024
	(Unaudited)
Current assets:
Cash	$	2221,~~481~~331		$	25168,~~473~~937
Accounts receivable, net of allowances for expected credit losses of $12,200 as of September 30, 2024 and $7,800 as of December 31, 2023, respectively		296,977			214,221
Accounts receivable, net		267,226			392,746
Prepaid expenses and other current assets		~~362~~159,~~712~~456			~~138~~194,~~637~~308
Total current assets		682,170			378,331
Other current assets - related parties		65,742			67,742
Right of Use Asset Operating Lease, net		251,416			562,296
Total current assets		513,755			823,733
Property and equipment, net		869			2,865
Right of Use Asset Operating Lease, net		228,627			240,128
Software, net		411,384			425,810
Property and equipment, net		196			503
Software, net		431,725			400,364
Deposits		10,144			10,144
Total assets	$	1,~~355~~184,~~983~~447		$	1,~~379~~474,~~446~~872
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Accounts payable	$	21,~~086~~883,~~002~~879		$	1,~~627~~820,~~169~~726
Accrued payroll		~~730~~743,~~004~~898			~~649~~860,~~328~~130
Accrued interest payable		1,~~709~~891,~~885~~565			1,~~435~~780,~~533~~225
Accrued retirement		~~307~~304,~~280~~456			~~298~~310,~~243~~352
Deferred revenue		~~329~~264,~~282~~567			~~404~~346,~~998~~655
Accrued expenses other and other current liabilities		320,793			392,097
Accrued expenses and other current liabilities		353,993			446,352
Operating lease liability - Short-term		43,804			84,869
Current maturities of long-term obligations		631,473			641,473
Current maturities of long-term obligations		965,473			1,065,895
Current maturities of long-term obligations (convertible)		284,000			284,000
Current maturities of long-term obligations - related parties		1,263,523			659,300
Operating lease liability - Short-term		46,174			44,977
Notes payable, net		1,956,712			2,085,191
Current maturities of long-term obligations - related parties		983,443			1,015,914
Notes payable - related parties		139,000			219,000
Current maturities of long-term obligations - related parties (convertible)		171,300			171,300
Total current liabilities		9,851,758			8,921,623
Notes payable, net		1,761,067			1,595,018
Long-term obligations:
Notes payable (convertible)		150,000			150,000
Notes payable:
Notes payable - related parties		139,000			139,000
Other		-			22,993
Total current liabilities		9,608,815			9,606,122
Related parties		1,072,527			499,000
Long-term liabilities:
Operating lease liability - long-term		205,346			487,691
Notes payable - related parties, net of current		1,871,718			1,868,596
Total liabilities		11,129,631			9,931,307
Operating lease liability - long-term		181,702			193,642
Total liabilities		11,662,235			11,668,360
Commitments and contingencies		-			-
Stockholders' deficiency:
Common stock, $0.001 par value, 60,000,000 shares authorized; 521,175 shares issued and outstanding on September 30, 2024 and December 31, 2023.		521			521
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
Additional paid-in capital		32,337,451			32,~~331~~337,~~160~~451
Accumulated deficit		(42,~~111~~815,~~620~~760	)		(4042,~~883~~531,~~542~~460	)
Total stockholders' deficiency		(910,~~773~~477,~~648~~788	)		(810,~~551~~193,~~861~~488	)
Total liabilities and stockholders' deficiency	$	1,~~355~~184,~~983~~447		$	1,~~379~~474,~~446~~872

See notes to unaudited financial statements.

Table of Contents

INFINITE GROUP, INC.

STATEMENTS OF OPERATIONS (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
	2024			2023			2024			2023
	2025			2024
Revenue	$	1,635,958		$	1,707,711		$	4,842,422		$	5,255,180
	$	1,683,867		$	1,578,495
Cost of revenue		~~944~~934,~~914~~654			1971,~~005,043~~410			~~2,842,848~~			~~2,969,464~~
Gross profit		~~691~~749,~~044~~213			~~702~~607,~~668~~085			~~1,999,574~~			~~2,285,716~~
Costs and expenses:
General and administrative		~~453~~441,~~407~~030			~~620~~451,~~180~~880			~~1,349,433~~			~~1,617,002~~
Selling		~~499~~433,~~869~~938			~~665~~408,~~571~~315			~~1,294,277~~			~~2,120,046~~
Total costs and expenses		~~953~~874,~~276~~968			1860,~~285,751~~195			~~2,643,710~~			~~3,737,048~~
Operating loss		(~~262~~125,~~232~~755	)		(~~583~~253,~~083~~110	)		~~(644,136~~	)		~~(1,451,332~~	)
Other income (expense)
Interest expense
Interest Income		-			-			-			71,624
Interest expense:
Interest expense:
Related parties		(60,002	)		(25,721	)
Related parties		(37,046	)		(31,477	)		(88,488	)		(89,177	)
Other		(98,543	)		(196,048	)
Other		(159,756	)		(239,481	)		(582,540	)		(1,427,972	)
Total interest expense		(158,545	)		(221,769	)
Total interest expense		(196,802	)		(270,958	)		(671,028	)		(1,517,149	)
Gain on partial termination of lease		-			15,350
Debt forgiveness		71,736			-			71,736			95,131
Net loss	$	(284,300	)	$	(459,529	)
Gain on partial termination of lease		-			-			15,350			-
Net loss per share – basic and diluted	$	(0.55	)	$	(0.88	)
ERC tax refund		-			-			-			1,662,698
Weighted average shares outstanding
Total other income (expense)		(125,066	)		(270,958	)		(583,942	)		312,304
- basic and diluted		521,175			521,175
Net loss	$	(387,298	)	$	(854,041	)	$	(1,228,078	)	$	(1,139,028	)
Net loss per share – basic and diluted	$	(0.74	)	$	(1.65	)	$	(2.36	)	$	(2.30	)
Weighted average shares outstanding
– basic and diluted		521,175			517,533			521,175			494,799

See notes to unaudited financial statements.

Table of Contents

INFINITE GROUP, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY (Unaudited)

~~Nine~~Three Months Ended ~~September~~March 3031, 2024 and 2023

~~Nine~~Three Months Ended ~~September~~March 3031, ~~2024~~2025

					Additional
	Common Stock				Paid-in		Accumulated
	Shares		Amount		Capital		Deficit			Total
Balance - December 31, 2023		521,175	$	521	$	32,331,160	$	(40,883,542	)	$	(8,551,861	)
Balance - December 31, 2024		521,175	$	521	$	32,337,451	$	(42,531,460	)	$	(10,193,488	)
Stock based compensation		-		-		6,291		-			6,291
Net loss		0		0		0		(284,300	)		(284,300	)
Net loss		-		-		-		(459,529	)		(459,529	)
Balance - March 31, 2025		521,175	$	521	$	32,337,451	$	(42,815,760	)	$	(10,477,788	)
Balance - March 31, 2024		521,175	$	521	$	32,337,451	$	(41,343,071	)	$	(9,005,099	)
Net loss		-		-		-		(381,251	)		(381,251	)
Balance - June 30, 2024		521,175	$	521	$	32,337,451	$	(41,724,322	)	$	(9,386,350	)
Net loss		-		-		-		(387,298	)		(387,298	)
Balance - September 30, 2024		521,175	$	521	$	32,337,451	$	(42,111,620	)	$	(9,773,648	)

~~Nine~~Three Months Ended ~~September~~March 3031, ~~2023~~2024

					Additional
	Common Stock				Paid-in			Accumulated
	Shares		Amount		Capital			Deficit			Total
Balance - December 31, 2022		470,093	$	470	$	32,164,334		$	(39,029,018	)	$	(6,864,214	)
Balance - December 31, 2023		521,175	$	521	$	32,331,160		$	(40,883,542	)	$	(8,551,861	)
Stock based compensation		-0		-0		266,~~159~~291			-0			266,~~159~~291
Warrants issued		-		-		107,834			-			107,834
Net loss		0		0		0			(459,529	)		(459,529	)
Cashless exercise of warrants		6,515		7		(7	)		-			-
Balance - March 31, 2024		521,175	$	521	$	32,337,451		$	(41,343,071	)	$	(9,005,099	)
Net loss		-		-		-			(953,971	)		(953,971	)
Balance - March 31, 2023		476,608	$	477	$	32,298,320		$	(39,982,989	)	$	(7,684,192	)
Stock Issued		30,000		30		26,671			-			26,701
Net income		-		-		-			668,984			668,984
Balance - June 30, 2023		506,608	$	507	$	32,324,991		$	(39,314,005	)	$	(6,988,507	)
Stock based compensation		-		-		6,183			-			6,183
Cashless exercise of warrants		14,567		14		(14	)		-			0
Net loss		-		-		-			(854,041	)		(854,041	)
Balance - September 30, 2023		521,175	$	521	$	32,331,160		$	(40,168,046	)	$	(7,836,365	)

See notes to unaudited financial statements.

Table of Contents

INFINITE GROUP, INC.

STATEMENTS OF CASH FLOWS (Unaudited)

	Nine Months Ended September 30,
	Three Months Ended March 31,
	2024			2023
	2025			2024
Cash flows from operating activities:
Net loss	$	(1284,~~228,078~~300	)	$	(1459,~~139,028~~529	)
Adjustments to reconcile net loss to net cash provided (used) by operating activities:
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization		168,948			175,859
Stock based compensation		0			6,291
Amortization of debt discount		39,286			768,547
Depreciation and amortization		48,122			56,185
Amortization of common stock expensed for services		-			18,817
Amortization of debt discount		2,366			19,043
Stock based compensation		6,291			32,343
Bad debt recovery		0			0
Bad debt expense (recovery)		8,806			(4,018	)
Bad debt expense		0			6,206
Forgiveness of debt		(71,736	)		(95,131	)
Gain on partial termination of lease		0			(15,350	)
Gain on partial termination of lease		(15,350	)		-
(Increase) decrease in assets:
Accounts receivable		~~(91~~125,~~562~~520	)		~~208~~115,~~860~~632
Prepaid expenses and other assets		~~(224~~36,~~075~~852	)		(~~125~~104,~~830~~451	)
Increase (decrease) in liabilities:
Accounts payable		~~458~~63,~~833~~153			~~(64~~96,~~953~~702	)
Deferred revenue		(7582,~~716~~088	)		(9913,~~311~~144	)
Accrued expenses		~~312~~(97,~~631~~250	)		~~738~~169,~~340~~648
Accrued retirement		9(5,~~037~~896	)		82,~~685~~982
Net cash provided (used) by operating activities		(702,685	)		423,180
Net cash used by operating activities		(193,521	)		(119,785	)
Cash flows from investing activities:
Purchase of property and equipment		(564	)		(2,099	)
Capitalization of software development costs		(78,418	)		(53,525	)
Sale of ERC claim		-			1,413,294
Net cash used by investing activities		(78,418	)		(53,525	)
Capitalization of software development costs		(149,144	)		(169,887	)
Net cash provided (used) by investing activities		(149,708	)		1,241,308
Cash flows from financing activities:
Proceeds from notes payable		~~486~~241,~~000~~500			~~600~~335,~~805~~500
Debt issuance costs		-			(58,322	)
Repayments of notes payable - related parties		(29,350	)		0
Proceeds from issuance of notes payable - related parties		1,200,000			40,000
Repayments of notes payable		(87,817	)		(183,398	)
Repayment of ERC Claim Agreement		-			(1,662,698	)
Net cash provided by financing activities		124,333			152,102
Repayments of note payable-related parties		(102,250	)		(50,000	)
Net decrease in cash		(147,606	)		(21,208	)
Repayments of note payable		(734,349	)		(548,323	)
Cash - beginning of period		168,937			25,473
Net cash provided (used) by financing activities		849,401			(1,678,538	)
Cash - end of period	$	21,331		$	4,265
Net decrease in cash		(2,992	)		(14,050	)
Cash - beginning of period		25,473			23,187
Cash - end of period	$	22,481		$	9,137
Supplemental Disclosures of Cash Flow Information:
Cash payments for interest	$	~~366~~39,~~111~~618		$	~~370~~125,~~524~~887
Non-cash investing and financing activities:
Warrant issued in conjunction with debts	$	-		$	107,834
Common stock issued via exercise of warrant	$	-		$	21
Common stock issued in conjunction with services	$	-		$	30

See notes to unaudited financial statements.

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INFINITE GROUP, INC.

Notes to Financial Statements - (Unaudited)

Note 1. Basis of Presentation

The ~~accompanying~~December ~~unaudited financial statements of Infinite Group~~31, ~~Inc.~~2024 ~~(“Infinite~~balance ~~Group,~~sheet ~~Inc.”~~has ~~or the “Company”) included herein have~~ been ~~prepared~~derived byfrom the ~~Company~~audited ~~in accordance with accounting principles generally accepted in the United States of America (U.S.) (“GAAP”) for interim~~ financial ~~information~~statements ~~and~~at ~~with~~that ~~instructions~~date tobut ~~Form~~does ~~10-Q. Accordingly, they do~~ not include all of the information and footnotes required by ~~accounting~~GAAP ~~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, 2023 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, ~~2023~~2024 filed with the U.S. Securities and Exchange Commission (SEC). Results of operations for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024,~~2025 are not necessarily indicative of the operating results that may be expected for the year ending December 31, ~~2024~~2025.

Note 2. ~~Management~~Going ~~Plans - Capital Resources~~Concern

The Company reported net losses of $1284,~~228,078~~300 and $1459,~~139,028~~529 for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024, respectively, and stockholders’ deficiencies of $910,~~773~~477,~~648~~788 and $810,~~551~~193,~~861~~488 at ~~September~~March 3031, ~~2024~~2025 and December 31, ~~2023~~2024, respectively. The Company has a working capital deficit of approximately $9.21 million at ~~September~~March 3031, ~~2024~~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 ~~some~~ certain obligations, using operational cash flow to pay down balances and extending terms, and ~~provided~~has ~~financing~~obtained ~~with~~and ~~the~~may ~~issuance~~continue ofto ~~new~~seek ~~loans~~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 ~~the improving results of its~~ operations, astogether ~~well~~with as cash available under its factoring line of credit and from additional related ~~parties~~partiy and third-party loans, if ~~needed~~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 ~~within~~for ~~one~~a ~~year~~period of ~~issuance~~at ofleast 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, ~~2023~~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 ~~period~~year amounts to conform with the current ~~period~~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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~~Revenue~~As of March 31, 2025, cash was held in the following amounts:

The Company’s total revenue recognized from contracts from 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 September 30, 2024 or 2023 for contracts with an expected original duration of more than one year. The following table summarizes the revenue recognized by the major services:

Category	March 31, 2025		December 31, 2024

Cash in bank accounts	$	21,331	$	168,937
Total cash and cash equivalents	$	21,331	$	168,937

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Managed support services	$	1,113,968	$	1,127,707	$	3,268,608	$	3,376,589
Cybersecurity projects		189,391		263,562		598,332		939,563
Software		332,599		316,442		975,482		939,028
Total Revenue	$	1,635,958	$	1,707,711	$	4,842,422	$	5,255,180

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:

	Three Months Ended
	March 31,
	2025		2024
Managed support services	$	1,085,542	$	1,074,096
Cybersecurity projects		227,808		185,596
Software		360,517		318,803
Total Revenue	$	1,673,867	$	1,578,495

Managed support services

Managed support services consist of revenue primarily from ~~our~~the Company’s subcontracts with Peraton for services to its end clients, principally a major establishment of the U.S. Government for which wethe ~~manage~~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. ~~The~~Revenue ~~revenues~~is ~~are~~ recognized atover time ofas ~~service~~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 ~~stand~~standalone ~~alone~~ 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 ~~when~~as ~~the~~each performance ~~obligations~~obligation ~~are~~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 ~~based~~using onthe a relative standalone selling price ofmethod ~~the~~in ~~products~~accordance ~~sold~~with ASC 606.

In substantially all agreements, a down payment of 50% to 75% ~~down payment~~ is required before work is initiated. Down payments received are deferred until revenue is earned. Upon completion of the performance obligation, ofthe ~~service,~~remaining ~~payment~~balance ~~terms~~is ~~are~~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 ~~the~~ 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 isoccurs ~~made~~ 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. ~~The~~Revenue ~~revenues~~is recognized as services are ~~recognized~~performed atin ~~time~~accordance ofwith ~~service~~ASC 606.

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

~~During~~Capitalization of Software for Resale -The Company capitalizes the ~~three~~software ~~and~~development ~~nine~~costs ~~months~~for ~~ended~~software ~~September~~to 30be sold, ~~2024~~leased, ~~sales~~or tootherwise ~~one~~marketed ~~client,~~in ~~including~~accordance ~~sales~~with ~~under~~ASC ~~subcontracts~~985-20. ~~for~~Capitalization ~~services~~begins upon the establishment of technological feasibility of a new product or enhancements to ~~several~~an ~~entities~~existing product, ~~accounted~~which ~~for~~is ~~68%~~generally the completion of a working prototype that has been certified as having no critical bugs and ~~67%,~~is ~~respectively,~~a ofrelease ~~total~~candidate. ~~sales,~~Costs ~~(66%~~incurred after the enhancement has reached technological feasibility and ~~64%,~~before ~~respectively,~~it ~~for~~is released in the ~~three~~market are capitalized and ~~nine~~are ~~months~~primarily ~~ended~~labor ~~September~~costs ~~30,~~related ~~2023)~~to coding and ~~25%~~testing. ofAmortization ~~accounts~~begins ~~receivable~~once atthe ~~September~~software ~~30,~~is ~~2024~~ready ~~(16%~~for atits ~~December~~intended 31use, ~~2023)~~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.

~~Capitalization~~Leases of- ~~Software~~At ~~for~~contract ~~Resale~~inception, ~~-The~~the Company ~~capitalizes~~determines whether the ~~software~~arrangement ~~development~~is ~~costs~~or ~~for~~contains ~~software~~a tolease beand ~~sold,~~determines ~~leased,~~the orlease ~~otherwise~~classification ~~marketed~~in accordance with ASC 842. ~~Capitalization~~The ~~begins~~lease ~~upon~~term ~~the~~is ~~establishment~~determined ofbased ~~technological~~on ~~feasibility~~the ofnon-cancellable aterm ~~new~~of ~~product~~the orlease ~~enhancements~~adjusted to anthe ~~existing~~extent ~~product,~~optional ~~which~~renewal isterms ~~generally~~and ~~the~~termination ~~completion~~rights ofare areasonably ~~working~~certain. ~~prototype~~Lease ~~that~~expense ~~has~~is ~~been~~recognized ~~certified~~evenly asover ~~having~~the nolease ~~critical~~term. ~~bugs~~Variable ~~and~~lease ispayments aare ~~release~~recognized ~~candidate.~~as ~~Costs~~period ~~incurred~~costs. ~~after~~The ~~the~~present ~~enhancement~~value ~~has~~of ~~reached~~remaining ~~technological~~lease ~~feasibility~~payments ~~and~~is ~~before~~recognized itas isa ~~released~~liability inon the ~~market~~balance ~~are~~sheet ~~capitalized~~with ~~and~~a ~~are~~corresponding ~~primarily~~right-of-use ~~labor~~asset ~~costs~~adjusted ~~related~~for toprepaid ~~coding~~or ~~and~~accrued ~~testing~~lease payments. ~~Amortization~~The ~~begins~~Company ~~once~~uses ~~the~~its ~~software~~incremental isborrowing ~~ready~~rate for ~~its~~the ~~intended~~discount ~~use~~rate, ~~generally~~unless ~~based~~the oninterest ~~the~~rate ~~pattern~~implicit in ~~which~~ the ~~economic~~lease ~~benefits~~contract ~~will~~is bereadily ~~consumed~~determinable. ~~Costs~~The ~~associated~~Company ~~with~~has ~~major~~adopted ~~upgrade~~the ~~releases~~practical ~~begin~~expedients ~~amortization~~to innot ~~the~~separate ~~month~~non-lease ~~after~~components ~~release.~~from ~~The~~lease ~~amortization~~components ~~period~~and isto ~~three~~not ~~years~~present short-term leases on the balance sheet. See Note 510 for further disclosure regarding ~~capitalization~~lease ~~of software for resale~~accounting.

9Income ~~Table~~Taxes of– ~~Contents~~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.

~~Leases~~The ~~- At contract inception, the~~ Company ~~determines~~has ~~whether~~incurred ~~the~~significant ~~arrangement~~operating islosses orsince ~~contains~~inception ~~a lease~~ and ~~determines~~continues ~~the lease classification. The lease term is determined based on the non-cancellable term of the lease adjusted~~ to ~~the~~maintain 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~~full onvaluation ~~the~~allowance ~~balance~~against ~~sheet with a corresponding right-of-use asset adjusted for prepaid or accrued lease payments. The Company uses~~ its ~~incremental~~deferred ~~borrowing~~tax ~~rate~~assets ~~for~~because ~~the~~management ~~discount~~has ~~rate,~~concluded ~~unless~~that ~~the~~it ~~interest rate implicit in the lease contract~~ is ~~readily~~more ~~determinable.~~likely ~~The~~than ~~Company has adopted the practical expedients to~~ not ~~separate~~that ~~non-lease~~these ~~components~~assets ~~from~~will ~~lease components and to~~ not ~~present~~be ~~short-term~~realized ~~leases~~based on the ~~balance~~weight ~~sheet.~~of ~~See~~available ~~Note 11 for further disclosure regarding lease accounting~~evidence.

~~Recently~~As ~~Adopted~~of ~~Accounting~~March ~~Guidance~~31, ~~- In June 2016~~2025, the ~~Financial~~Company ~~Accounting~~had ~~Standards~~approximately ~~Board~~$9.0 ~~(“FASB”)~~million ~~issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326) – Measurement~~ of ~~Credit~~federal ~~Losses~~and onstate ~~Financial~~net ~~Instruments”,~~operating ~~which~~loss ~~requires~~carryforwards. ~~entities~~The tofederal ~~measure~~NOLs ~~all~~generated ~~expected~~after ~~credit~~2017 ~~losses~~may ~~for~~be ~~financial~~carried ~~assets~~forward ~~held~~indefinitely. atUtilization ~~the~~of ~~reporting~~NOLs ~~date~~may ~~based~~be onsubject ~~historical~~to ~~experience,~~annual ~~current~~limitations ~~conditions,~~under ~~and~~Sections ~~reasonable~~382 and ~~supportable~~383 ~~forecasts.~~of ~~This replaces~~ the ~~existing~~Internal ~~incurred~~Revenue ~~loss~~Code ~~model~~if ~~and is applicable to~~ the ~~measurement of credit losses on financial assets measured at amortized cost. This guidance is effective for the~~ Company ~~for~~experiences ~~fiscal~~an ~~years,~~ownership ~~and~~change ~~interim~~as ~~periods~~defined ~~within~~in those ~~fiscal years, beginning after December 15, 2022~~sections. The Company adopted this standard on January 1, 2023. The adoption of this new accounting standard increased the reserve by approximately $21,600, which was deemed immaterial to adjust beginning accumulated deficit.

~~Recently~~No ~~Issued~~material ~~Accounting~~uncertain ~~Pronouncements~~tax -positions Inhave ~~November~~been ~~2023,~~recorded ~~the~~as ~~Financial~~of ~~Accounting~~March ~~Standards Board (“FASB”) issued ASU 2023-07~~31, ~~Segment~~ ~~Reporting (Topic 280). The amendments in this ASU require disclosures~~2025, ~~on an annual~~ and ~~interim basis, of significant segment expenses that are regularly provided to~~ the ~~chief~~Company ~~operating~~does ~~decision~~not ~~maker~~anticipate ~~(CODM),~~significant aschanges 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~~its ~~all~~unrecognized ~~annual~~tax ~~disclosures~~benefits 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 is permitted. The Company will adopt this standard beginning with our fiscal 2024 annual filing. The Company is currently evaluating these new disclosure requirements and the ~~impact~~next oftwelve ~~adoption~~months.

InUse ~~December~~of ~~2023,~~Estimates ~~the FASB issued ASU 2023~~-~~09, Income~~ ~~Taxes (Topic 740).~~ The ~~amendments~~preparation ~~in this ASU are intended to enhance the transparency~~ of ~~income~~financial ~~tax~~statements ~~information~~in byconformity ~~updating~~with ~~income tax disclosure requirements~~U.S. ~~The~~generally ~~guidance~~accepted isaccounting ~~effective~~principles ~~for~~(“GAAP”) ~~public~~requires ~~entities~~management ~~for~~to ~~annual~~make ~~periods~~estimates ~~beginning after December 15, 2024,~~ and ~~early~~assumptions ~~adoption~~that isaffect ~~permitted.~~the ~~The~~reported ~~amendments~~amounts inof ~~this~~assets ~~ASU~~and ~~should be applied on a prospective basis; however~~liabilities, ~~retrospective~~the ~~application~~disclosure isof ~~permitted.~~contingent ~~The~~assets ~~Company~~and ~~will~~liabilities ~~adopt~~at ~~this~~the ~~standard~~date ~~with~~of ~~our~~the ~~fiscal~~financial ~~2025~~statements, ~~annual~~and ~~filing.~~the ~~The~~reported ~~Company~~amounts isof ~~currently~~revenue ~~evaluating~~and ~~these~~expenses ~~new~~during ~~disclosure~~the ~~requirements~~reporting ~~and~~period. ~~does~~Actual ~~not~~results ~~expect~~could ~~the~~differ ~~adoption~~from tothose ~~have a material impact~~estimates.

InSignificant ~~November~~estimates ~~2024,~~and ~~the~~assumptions ~~FASB~~used ~~issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40). This ASU requires disclosure~~ in the ~~notes~~preparation toof these financial statements, ~~at each interim and annual reporting period~~include, ofbut specified information about certain costs and expenses including purchases of inventory, employee compensation, depreciation and intangible asset amortization included in each relevant expense caption. Also required is a qualitative description of the amounts remaining in relevant expense captions that are not ~~separately~~limited disaggregated. This ASU is effective for all public entities for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, and early adoption is permitted. This ASU should be applied either prospectively to financial statements issued after the effective date of this update or retrospectively to all prior periods presented in the financial statements. The Company will adopt this standard with our fiscal 2027 annual filing. The Company is currently evaluating these new disclosure requirements and the impact of adoption.:

~~Note~~· 4Revenue 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. ~~Sale~~· Allowance for credit losses on accounts receivable and contract assets. · Capitalized software development costs, including the determination of ~~Certain~~technological ~~Accounts~~feasibility ~~Receivable~~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.

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 against the Company. 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 prime plus 3.6% (effective rate of 11.60% at September 30, 2024) against 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 the ability to finance up to $2,000,000 of selected accounts receivable invoices, which includes a sublimit for one of the Company’s customers of $1,500,000. During the nine months ended September 30, 2024, the Company sold approximately $3,137,000 ($3,118,000 – September 30, 2023) of its accounts receivable to the Purchaser. As of September 30, 2024, approximately $332,000 ($335,000 - December 31, 2023) of these receivables remained outstanding. Additionally, as of September 30, 2024, the Company had $37,000 available under the financing line with the Purchaser ($1,000 at December 31, 2023). After deducting estimated fees, allowance for expected credit losses and advances from the Purchaser, the net receivable from the Purchaser amounted to approximately $33,000 at September 30, 2024 ($33,000 at December 31, 2023), and is included in accounts receivable in the accompanying balance sheets.

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~~There~~Management ~~were~~bases noits ~~gains~~estimates ~~or losses~~ on ~~the~~historical ~~sale of the accounts receivable because all were collected. The cost associated with the financing line totaled $18~~experience,~~648~~ ~~for~~current ~~the~~business ~~three~~and ~~months~~economic ~~ended September 30~~conditions, ~~2024~~and ~~($18,563~~other –relevant ~~September 30, 2023)~~factors. ~~The~~Estimates ~~cost~~and ~~associated~~assumptions ~~with~~are ~~the~~reviewed ~~financing line totaled $55~~periodically,~~530~~ ~~for~~and the ~~nine~~effects ~~months~~of ~~ended~~revisions ~~September 30, 2024 ($43,073 – September 30, 2023). These financing line fees~~ are ~~classified~~recorded onin the ~~statements~~period ofin ~~operations~~which asthey ~~interest~~are ~~expense~~determined.

~~Note~~Recently 5Issued Accounting Pronouncements - In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Segment Reporting (Topic 280). ~~Capitalization~~The amendments in this ASU require disclosures, on an annual and interim basis, of ~~Software~~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 ~~Resale~~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.

AsIn ofDecember ~~September 30~~2023, ~~2024,~~the ~~there~~FASB ~~was~~issued $1ASU 2023-09,~~260,374~~ Income ofTaxes ~~costs capitalized~~ (~~$1,111,230~~Topic as740). ofThe ~~December~~amendments ~~31,~~in ~~2023)~~this ~~and~~ASU ~~$848,990~~are ofintended ~~accumulated~~to ~~amortization~~enhance ~~($685,420~~the astransparency of ~~December~~income ~~31,~~tax ~~2023).~~information ~~During~~by ~~the~~updating ~~three~~income ~~and~~tax ~~nine~~disclosure ~~months~~requirements. ~~ended~~The ~~September~~guidance ~~30,~~is ~~2024,~~effective ~~there~~for ~~was~~public ~~$57,272~~entities ~~and~~for ~~$163,570,~~annual ~~respectively,~~periods ofbeginning ~~amortization~~after ~~expense~~December ~~recorded~~15, ~~($45~~2024,~~454~~ and ~~$155,672,~~early ~~respectively,~~adoption ~~for~~is ~~the~~permitted. ~~three~~The ~~and~~amendments ~~nine~~in ~~months~~this ~~ended~~ASU ~~September~~should ~~30,~~be ~~2023).~~applied ~~Costs~~on ~~incurred~~a ~~prior~~prospective tobasis; ~~reaching~~however, ~~technological~~retrospective ~~feasibility~~application ~~are~~is ~~expensed as incurred~~permitted. ~~During~~The ~~the~~Company ~~three~~will ~~and~~adopt ~~nine~~this ~~months~~standard ~~ended~~with ~~September~~our ~~30,~~fiscal ~~2024,~~2025 ~~there~~annual ~~was~~filing. ~~approximately~~The ~~$19,400~~Company ~~and~~is ~~$54,800,~~currently ~~respectively,~~evaluating ofthese ~~labor~~new ~~amounts~~disclosure ~~expensed~~requirements ~~related~~and todoes ~~these~~not ~~development~~expect ~~costs~~the ~~($11,100~~adoption ~~and~~to ~~$32,800,~~have ~~respectively~~a inmaterial ~~2023)~~impact.

Note 64. ~~Deferred~~Concentrations ~~Revenue~~of Risk and ~~Performance~~Significant ~~Obligations~~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 ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024, that was included in the deferred revenue balances at the beginning of the respective periods, was approximately $90144,~~000~~900 and $~~187~~166,~~000~~100, respectively.

Revenue recognized during the nine months ended September 30, 2024 and 2023, that was included in the deferred revenue balances at the beginning of the respective periods was approximately $295,000 and $386,000, 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 ~~September~~March 3031, ~~2024~~2025, total remaining non-cancelable performance obligations under the Company’s contracts with customers was approximately $~~471~~263,000. The Company expects to recognize all of this revenue over the next 12 months.

Note 78. Debt Obligations

~~Future~~Revised ~~Receivables~~Financing ~~Purchase~~Arrangement ~~Agreement~~ - On ~~February~~March 1610, ~~2024~~2025, the Company received funding from a ~~future~~loan ~~receivables purchase~~ agreement with ~~UFS~~Stripe ~~West~~and ~~LLC.~~Celtic Bank. The ~~purchase~~loan ~~price~~ amount was $~~150~~241,~~000~~500 ~~with~~plus a fixed fee of $423,~~500~~667. AThe ~~payment~~repayment ~~plan~~amount of $5265,~~824~~167 ~~per~~will ~~week~~be ~~for~~repaid 34at ~~weeks~~a ~~effective~~repayment ~~February~~rate ~~23,~~of ~~2024~~30% of the Company’s receivables automatically withheld by Stripe. There is no financing percentage. The ~~effective~~repayment ~~interest~~start ~~rate~~date was March 17, 2025, with a minimum payment amount of ~~the~~$29,463 ~~agreement~~over isevery 8760-day period.~~5%.~~ InThe final repayment date is September ~~2024~~8, ~~UFS~~2026, ~~West~~if ~~LLC~~the ~~forgave~~total repayment amount is not paid as of that date. This loan agreement also eliminates the remaining ~~payments~~balance onof $30,090 from the ~~subordinated~~previous ~~business~~Stripe loan ~~for~~dated ~~$51~~June 4,~~500. This~~ ~~forgiveness~~2024, ofas ~~debt~~the ~~resulted~~remaining inbalance awas ~~gain~~rolled into this new loan. At March 31, 2025, the balance of ~~approximately~~this revised financing arrangement was $29258,~~900~~067.

~~Subordinated~~Obligations ~~Business~~in ~~Loan~~Default -– OnAs of March 1431, ~~2024~~2025, the Company ~~received~~is ~~funding~~in ~~from~~default ~~a subordinated business loan and security agreement~~ with ~~Agile~~the ~~Lending~~Mast ~~LLC.~~Hill ~~The~~financing ~~term~~arrangements ~~loan~~dated ~~amount~~November ~~was~~3, ~~$185~~2021,~~500~~ ~~with~~February a15, ~~fixed~~2022, ~~fee~~May of31, ~~$10~~2022,~~500.~~ ANovember ~~payment~~23, ~~plan of $11~~2022,~~285~~ ~~per~~and ~~week~~February ~~for 24 weeks effective March 18~~2, ~~2024~~2023. Per ~~The~~the ~~effective~~arrangements, ~~interest rate of~~ the ~~agreement~~Company ishas accrued approximately ~~199%. In~~$55,000 ~~August~~and ~~2024~~$217,000 ~~Agile~~in ~~Lending~~default ~~LLC~~and ~~forgave~~penalty ~~the~~interest ~~remaining~~expense ~~payments~~during on the ~~subordinated~~three ~~business~~months ~~loan~~ended ~~for~~March ~~$60~~31,~~000. This~~ ~~forgiveness~~2025 ofand ~~debt resulted in a gain of approximately $43~~2024,~~600~~ respectively.

~~Revised~~The ~~Financing Arrangement - During June 2024, the~~ Company ~~entered~~is ~~into~~in adefault ~~revised financing arrangement~~ with ~~Celtic~~four ~~Bank~~third ~~which~~parties’ ~~originally~~notes ~~loaned~~from ~~the~~2003 ~~Company~~and ~~$150,500 with a one-time fixed loan fee of $17,157 for a total obligation of $167,657~~2004. InThe ~~2023, under the terms of the previous revised financing arrangement, the lender loaned the~~ Company ~~$140,200~~has ~~with~~accrued aapproximately ~~one-time fixed loan fee of~~ $168,~~403~~900 ~~for a total obligation~~ of ~~$156,603. The~~interest ~~balance~~expense offor ~~the~~these ~~previous~~notes ~~loan~~during ~~of $33,815 was paid to~~ the ~~lender~~three asmonths ~~part~~ended ofMarch ~~the revised financing agreement. Payments to the lender began on June 11~~31, 2024, and consisted of 20% of the Company’s receivables processed through Stripe, Inc.’s payment processing platform or $18,629 over a sixty-day period, whichever is higher, with the final payment due on December 3, 2025. ~~At September 30, 2024, the balance of this revised financing arrangement was $112,769.~~

~~Related~~The ~~Party Loan- On August 16, 2024, the~~ Company ~~entered~~is ~~into~~in andefault ~~amended~~with ~~and~~a ~~restated~~note ~~loan~~with ~~and~~a ~~security~~related ~~agreement~~party ~~(the~~from ~~“Agreement”), dated as of August 16,~~ 2024,. byThe ~~and between the~~ Company ~~and~~has ~~the~~accrued ~~Company’s~~approximately ~~President’s brother~~$37,600 ~~Harry Hoyen (the “Lender”), pursuant to which the Company may borrow up to an aggregate amount~~ of ~~$2,000,000~~interest ~~(the~~expense ~~“Loan”)~~for atthese 8%notes ~~per~~during ~~annum. Pursuant to~~ the ~~Agreement,~~three onmonths ~~August~~ended ~~16,~~March ~~2024~~31, ~~the Company borrowed $1,200,000 from the Lender and issued to the Lender a secured promissory note evidencing such portion of the Loan having a term ending on August 16, 2028~~2025. ~~The Agreement’s payment plan is for 48 payments of $52,500 per month.~~

~~Commencing~~The ~~on September 1, 2024, the~~ Company ~~may~~is ~~borrow~~working up to anresolve ~~additional~~these ~~$800,000~~defaults. ~~from~~Continued ~~the~~default ~~Lender~~may toresult bein ~~evidenced~~acceleration byof ~~secured promissory notes. Additional~~ amounts ~~of $80~~due,~~000,~~ ~~$70,000,~~additional ~~$555~~penalties,~~000~~ ~~and~~legal ~~$50~~action,~~000~~ ~~were~~or ~~borrowed~~other onadverse ~~October~~consequences ~~15,~~that ~~2024,~~could ~~October~~materially ~~16,~~harm ~~2024,~~the ~~November~~Company's ~~13,~~financial ~~2024,~~condition and ~~October 27, 2025, respectively~~operations.

OnNote September 30, 2024, the Company did not make the scheduled payment due under its financing agreement with the Lender, resulting in a technical default under the terms of the agreement as well as violating several other loan covenants9. ~~The~~Earnings/(loss) ~~payment~~per ~~default and violated covenants have been waived by the Lender through November 15, 2026.~~Share

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Loan Forgiveness- In September 2024, CAN Capital LLC forgave the remaining payments on the subordinated business loan for $60,295. This forgiveness of debt resulted in a gain of approximately $12,800.

Obligations in Default– As of September 30, 2024, the Company is in default with the Mast Hill financing arrangements dated November 3, 2021, February 11, 2022, May 31, 2022, November 23, 2022, and February 3, 2023. Per the arrangements, the Company has accrued approximately $56,000 and $166,000 in default and penalty interest expense during the three months and nine months ended September 30, 2024, respectively.

Note 8. Earnings 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.

The following table sets forth the computation of basic and diluted net profit (loss) per share for the three and nine months ended September 30, 2024:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Numerator for basic and diluted net loss per share:
Net loss	$	(387,298	)	$	(854,041	)	$	(1,228,078	)	$	(1,139,028	)
Basic and diluted net loss per share	$	(0.74	)	$	(1.65	)	$	(2.36	)	$	(2.30	)
Weighted average common shares outstanding
Basic and diluted shares		521,175			517,533			521,175			494,799
Anti-dilutive shares excluded from
per share calculation		442,949			462,035			442,949			462,035

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 9. Stock Option Plans 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 (“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 fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. No options were granted during the nine months ended September 30, 2024. 67,600 options were granted during the nine months ended September 30, 2023.

10,000 options were vested during the nine months ended September 30, 2024 for two employees. The expense for the options was $6,291.

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The ~~Company~~following ~~recorded~~table ~~expense~~sets ~~for~~forth ~~options~~the ~~issued~~computation toof ~~employees~~basic and ~~independent~~diluted ~~service~~net ~~providers~~loss ofper ~~$6,184~~share ~~and $32,343~~ for the three ~~and nine~~ months ended ~~September 30, 2023, respectively.~~ :

A summary of all stock option activity for the nine months ended September 30, 2024 follows:

	Three Months Ended March 31,
	2025			2024
Numerator for basic and diluted net loss per share:
Net loss	$	(284,300	)	$	(459,529	)
Basic and diluted net loss per share	$	(0.55	)	$	(0.88	)

Weighted average common shares outstanding
Basic and diluted shares		521,175			521,175

Anti-dilutive shares excluded from net loss per share calculation		419,492			453,876

	Number of			Weighted		Remaining	Aggregate
	Options			Average		Contractual	Intrinsic
	Outstanding			Exercise Price		Term	Value
Outstanding at December 31, 2023		157,631		$	3.23
Expired		(22,750	)		5.63
Outstanding at September 30, 2024		134,881		$	2.85	2.5 years	$	0.00
At September 30, 2024- vested or expected to vest		134,881		$	2.85	2.5 years	$	0.00
Exercisable		134,881		$	2.85	2.5 years	$	0.00

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:

	Number of			Weighted		Remaining	Aggregate
	Options			Average		Contractual	Intrinsic
	Outstanding			Exercise Price		Term	Value
Outstanding at December 31, 2024		110,209		$	2.67
Expired		(801	)		3.75
Outstanding at March 31, 2025		109,408		$	2.66	2.2 years	$	0

At March 31, 2025- vested or expected to vest		109,408		$	2.66	2.2 years	$	0
Exercisable		109,408		$	2.66	2.2 years	$	0

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

	Number of			Weighted		Remaining	Aggregate
	Options			Average		Contractual	Intrinsic
	Outstanding			Exercise Price		Term	Value
Outstanding at December 31, 2023		157,631		$	3.23
Expired		(9,801	)		8.59
Outstanding at March 31, 2024		147,830		$	2.87	2.5 years	$	0

At March 31, 2024- vested or expected to vest		147,830		$	2.87	2.5 years	$	0
Exercisable		147,830		$	2.87	2.5 years	$	0

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 ~~partially terminated~~ 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 iswas $5,052 per month from February 1, 2024 to June 30, 2024, ~~the~~The subsequent annual lease amount iswas $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 ~~January~~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 ~~September~~March 3031, ~~2024~~2025 and December 31, ~~2023~~2024 is as follows:

		September 30,			December 31,
		March 31,			December 31,
Description	Classification	~~2024~~2025			~~2023~~2024
Right of Use Asset – Lease, net	Other assets (non-current)	$	~~251~~228,~~416~~627		$	~~562~~240,~~296~~128
Operating Lease liability – Short-term	Accrued liabilities		4346,~~804~~174			8444,~~869~~977
Operating Lease liability – Long-term	Other long-term liabilities		~~205~~181,~~346~~702			~~487~~193,~~691~~642
Total operating lease liability		$	~~249~~227,~~150~~876		$	~~572~~238,~~560~~618
Discount rate – operating lease			8.000	%		78.000	%

Note 12. Related Party ~~Accrued Interest Payable~~

~~Included~~As inof ~~accrued~~March ~~interest~~31, ~~payable~~2025, atthe ~~September~~Company ~~30,~~had ~~2024~~the ~~are~~following ~~amounts~~other ~~due~~assets to- related ‑parties ~~of approximately $458,000, ($395,000~~:

at December 31, 2023).

	Other current assets
Related Party	3/31/2026			12/31/2025
CEO		84,602			86,602
President		(18,860	)		(18,860	)
Total		65,742			67,742

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~~Note~~As ~~13.~~of ~~Subsequent~~March ~~Events~~31, 2025, the Company had the following related‑party debt outstanding:

In October 2024, Celtic Bank Corporation forgave the remaining payments on the subordinated business loan for $93,381. This forgiveness of debt resulted in a gain of approximately $45,200.

		Principal Outstanding
Related Party	Instrument	March 31, 2025		December 31, 2024		Interest Rate			Maturity Date
Chief Executive Officer	Convertible Note	$	146,300	$	146,300		6.0	%	1/1/2024
President	Convertible Note		25,000		25,000		6.0	%	6/30/2023
President	Line of Credit		90,000		90,000		7.0	%	7/31/2023
President	Demand Note		25,000		25,000		6.0	%	Demand
President	Demand Note		12,000		12,000		6.0	%	Demand
Chief Executive Officer	Demand Note		12,000		12,000		6.0	%	Demand
Board Member	Note Payable		328,000		328,000		6.0	%	1/1/2024
Board Member	Note Payable		40,000		40,000		6.0	%	1/1/2023
Relative of Executive	Note Payable		1,868,160		1,897,510		8.0	%	8/5/2028
Relative of Executive	Line of Credit		499,000		499,000		7.5	%	8/31/2026
Relative of Executive	Line of Credit		70,000		70,000		6.0	%	1/1/2023
Vice President	Demand Note		50,000		50,000		6.0	%	Demand

InIncluded ~~October~~in ~~2024,~~accrued ~~Fresh~~interest ~~Funding~~payable ~~forgave~~at ~~the~~March ~~remaining~~31, ~~payments~~2025 onis ~~the~~amounts ~~subordinated~~due ~~business~~to ~~loan~~related ~~for~~parties ~~$64,750. This forgiveness~~ of ~~debt~~approximately ~~resulted~~$535,000 in($467,000 aat ~~loss~~December ~~of approximately $1~~31,~~500~~ 2024).

OnNote ~~December 6, 2024, ASM Technologies Division LLC~~13. ~~was~~Commitments ~~organized~~and ~~in the state of Delaware.~~Contingencies

OnNon-cancelable ~~January~~Purchase 1,Obligations ~~2025,~~- ~~Infinite~~In ~~Group~~the ~~Inc.~~normal ~~was~~course ~~admitted~~of asbusiness, the ~~initial~~Company ~~member~~enters into non-cancelable purchase commitments with ~~100%~~various ofthird ~~the~~parties ~~membership~~to ~~interests~~purchase inproducts ~~ASM~~and ~~Technologies~~services ~~Division~~such ~~LLC~~as cloud infrastructure capacity, subscription-based cloud service arrangements, technology equipment, corporate and marketing events and consulting services.

OnLegal ~~March~~Matters ~~12,~~- ~~2025~~From time to time, the Company ~~received~~is ~~funding~~involved ~~from~~in alegal ~~loan~~proceedings, ~~agreement~~claims, ~~with Stripe~~ and ~~Celtic~~regulatory ~~Bank.~~matters ~~The~~arising ~~loan~~in ~~amount~~the ~~was~~ordinary ~~$241,500~~course ~~plus a fixed fee~~ of ~~$23,667~~business. The ~~repayment~~Company ~~amount~~accrues ~~of $265,167 will be repaid at~~ a ~~repayment~~liability ~~rate~~for ofloss ~~30%~~contingencies ofwhen ~~the~~it ~~Company’s receivables automatically withheld by Stripe. There~~ is noboth ~~financing~~probable ~~percentage.~~that ~~The~~a ~~repayment~~liability ~~start~~has ~~date~~been ~~was~~incurred ~~March~~and ~~17,~~the ~~2025,~~amount ~~with~~of athe ~~minimum~~loss ~~payment~~can ~~amount~~be ofreasonably ~~$29,463~~estimated. ~~over~~For ~~every~~matters ~~60-day~~where ~~period.~~a ~~The~~loss ~~final~~is ~~repayment~~reasonably ~~date~~possible isbut ~~September~~not 8probable, ~~2026,~~or ifwhere ~~total~~the ~~repayment~~ amount ~~is not paid as~~ of ~~that~~loss ~~date.~~cannot ~~This~~be ~~loan~~reasonably ~~agreement~~estimated, ~~also eliminates~~ the ~~remaining~~Company ~~balance~~discloses ~~of $30,029 from~~ the ~~previous~~nature ~~Stripe~~of ~~loan dated June 3, 2024, as~~ the ~~remaining~~contingency ~~balance~~but ~~was~~does ~~rolled~~not ~~into~~record ~~this~~a ~~new loan~~liability.

OnAs of March 1231, 2025, ~~Infinite Group, Inc. (~~the “Company”) ~~entered~~is ~~into~~not ana ~~Asset~~party ~~Purchase~~to ~~Agreement~~any ~~(this~~legal ~~“Agreement”)~~proceedings ~~with Opti9 Technologies LLC~~that, aindividually ~~Delaware~~or ~~limited~~in ~~liability company (“Buyer”) for~~ the ~~sale~~aggregate, ofare ~~assets~~expected ~~related~~ to ~~the~~have ~~division~~a ofmaterial ~~business~~adverse ~~known~~effect ason ~~the~~its ~~Ace~~financial ~~Server~~position, ~~Management~~results ~~division.~~of ~~Under this division the Company provides IT managed infrastructure services~~operations, toor acash USflows. ~~government~~No ~~agency~~accrual asfor aloss ~~subcontractor~~contingencies tohas ~~Peraton~~been ~~Enterprise Solutions LLC (f/k/a Perspecta Enterprise Solutions LLC (“Peraton”))~~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:

	For the 3 months ended March 31,
	2025			2024

Sales		1,683,867			1,578,495
Less (a):
Employee expenses (b)		1,320,672			1,357,960
Software and equipment		181,123			210,988
Sales and marketing expenses (c)		126,323			103,321
Other professional services (d)		85,162			66,095
Other operating expenses (e)		96,342			93,241
Loss from operations		(125,755	)		(253,110	)

Reconcilation to net income
Other income (f)		-			15,350
Interest income (expense), net		(158,545	)		(221,769	)
Reconcilation to net income		(284,300	)		(459,529	)

	(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, ~~Nodeware,~~IGI ~~Inc.~~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:

-	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.

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 ~~Nodeware,~~CyberLabs ~~Inc.~~ 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.

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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.

OnIn ~~April~~May 32024, ~~2024.~~the ~~The~~ Company formed Nodeware Inc. in the state of ~~Delaware~~Nevada. It is a wholly owned subsidiary to support ~~Nodeware~~the Company’s goNodeware solution. Nodeware, Inc. was established to ~~market~~take over the operations of CyberLabs.

On May 22, 2024, the Company formed Nodeware Inc. in the state of Nevada. It is a wholly owned subsidiary to support the Company’s Nodeware solution.

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 ~~will~~term ~~remain~~is intwenty ~~effect for four~~ years from the earliest effective filing date of(May ~~issue~~19, ~~and~~2017), ~~may~~subject beto ~~extended~~any ~~for~~patent upterm toadjustments ~~twenty~~or ~~years~~extensions ~~from~~granted by the ~~filing date~~USPTO. Therefore, the expiration date of the subject patent, ~~assuming~~absent ~~all~~any ~~milestones~~adjustments toor ~~extend are met~~extensions, is ~~July~~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 ~~and Nine~~ Months Ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024

The following ~~tables~~table ~~compare~~compares our statements of operations data for the three ~~and nine~~ months ended ~~September~~March 3031, 2024 and 2023. The trends suggested by this table are not indicative of future operating results.

	Three Months Ended September 30,
	Three Months Ended March 31,
													2024 vs 2023
													2025 vs 2024
				As a % of						As a % of			Amount of			% Increase
	2024			Sales			2023			Sales			Change			(Decrease)
	2025			Sales			2024			Sales			Change			(Decrease)
Sales	$	1,~~635~~683,~~958~~867			100.0	%	$	1,~~707~~578,~~711~~495			100.0	%	$	~~(71~~105,~~753~~372	)		(46.27	)%
Cost of sales		~~944~~934,~~914~~654			5755.85			1971,~~005,043~~410			5861.95			(6036,~~129~~756	)		(63.08	)
Gross profit		~~691~~749,~~044~~213			4244.25			~~702~~607,~~668~~085			4138.15	%		~~(11~~142,~~624~~128	)		(123.74	)
General and administrative		~~453~~441,~~407~~030			2726.72			~~620~~451,~~180~~880			3628.36			(~~166~~10,~~773~~850	)		(262.94	)
Selling		~~499~~433,~~869~~938			3025.68			~~665~~408,~~571~~315			3925.09			~~(165~~25,~~702~~623	)		~~(24~~6.93	)
Total cost and expenses		~~953~~874,~~276~~968			5852.30			1860,~~285,751~~195			7554.35			~~(332~~14,~~475~~773	)		~~(25~~1.97	)
Operating loss		(~~262~~125,~~232~~755	)		(167.05	)		(~~583~~253,~~083~~110	)		(3416.10	)		~~320~~127,~~851~~355			55(50.03	)
Interest expense (net)		(~~196~~158,~~802~~545	)		(129.04	)		(~~270~~221,~~958~~769	)		(1514.90	)		7463,~~156~~224			27(28.45	)
Other income		~~71,736~~-			~~4.4~~-			-15,350			-1.0			71(15,~~736~~350	)		-
Net loss	$	(~~387~~284,~~298~~300	)		(2316.79	)%	$	(~~854~~459,~~041~~529	)		(5029.01	)%	$	~~466~~175,~~743~~229			5438.71	%
Net loss per share - basic and diluted	$	(0.7455	)				$	(10.6588	)				$	0.9133

	Nine Months Ended September 30,
													2024 vs 2023
				As a % of						As a % of			Amount of			% Increase
	2024			Sales			2023			Sales			Change			(Decrease)
Sales	$	4,842,422			100.0	%	$	5,255,180			100.0	%	$	(412,758	)		(7.9	)%
Cost of sales		2,842,848			58.7			2,969,464			56.5			(126,616	)		(4.3	)
Gross profit		1,999,574			41.3			2,285,716			43.5	%		(286,142	)		(12.5	)
General and administrative		1,349,433			27.9			1,617,002			30.8			(267,569	)		(16.5	)
Selling		1,294,277			26.7			2,120,046			40.3			(825,769	)		(39.0	)
Total cost and expenses		2,643,710			54.6			3,737,048			71.1			(1,093,338	)		(29.3	)
Operating loss		(644,136	)		(13.3	)		(1,451,332	)		(27.6	)		807,196			55.6
Interest expense (net)		(671,028	)		(13.9	)		(1,445,525	)		(27.5	)		774,497			53.6
Other Income		87,086			1.8			1,757,829			33.4			(1,670,743	)		-
Net loss	$	(1,228,078	)		(25.4	)%	$	(1,139,028	)		(21.7	)%	$	(89,050	)		(7.8	)%
Net loss per share - basic and diluted	$	(2.36	)				$	(2.30	)				$	(0.06	)

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Sales

Our managed support service sales ~~decreased~~increased by 12% from $1,~~127~~074,~~707~~096 during the three months ended ~~September~~March 3031, ~~2023~~2024 to $1,~~113~~095,~~968~~542 during the corresponding period of ~~2024~~2025. ~~For the nine month period ended September 30, managed support service sales decreased 3% from $3,376,589 in 2023, to $3,268,608 for the same period in 2024.~~ Managed support service sales comprised approximately 6865% of our sales ~~during~~in ~~the~~ three months ended ~~September~~March 3031, ~~2024~~2025, and approximately 6668% for the same period in ~~2023. For the nine months ended September 30, managed support service sales comprised approximately 67% of sales in~~ 2024~~, and 64% for the same period in 2023~~. The ~~change~~increase in our managed support service sales during the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025 was due to the ~~termination~~addition of ~~smaller~~a ~~projects~~project ~~during~~by ~~the third quarter of 2023~~Perspecta.

Our cybersecurity projects ~~revenue~~sales ~~decreased~~increased by 2823%, from $~~263~~185,~~562~~596 ~~for~~during the three months ended ~~September~~March 3031, ~~2023,~~2024 to $~~188~~227,~~391~~808 ~~for~~during the ~~same~~corresponding period ~~ended~~of ~~September 30, 2024~~2025. The ~~For~~increase ~~the~~in ~~nine~~our ~~months ended September 30, 2024,~~ cybersecurity projects ~~decreased~~sales ~~36%~~during ~~to $598,332 from $939,563 in~~ the ~~same~~three ~~prior~~months ~~year~~ended ~~period.~~March ~~These~~31, ~~changes~~2025 ~~were~~was due to ~~less~~more ~~engagements~~projects being completed in 2024.

Software sales, which includes the selling of licenses of Nodeware and third-party software Webroot, increased by 513% from the three months ended ~~September~~March 3031, ~~2023~~2024 to the same period in ~~2024~~2025. Sales for the period in ~~2023~~2024 were $~~316~~318,~~442~~803 and increased by $1641,~~157~~714 to $~~332~~360,~~599~~517 for the same period in ~~2024~~2025. ~~For the nine months ended September 30, 2023 and 2024, sales were $939,028 and $975,482, respectively, for an increase of 4%.~~ The increase was primarily attributable to improving sales of Nodeware, and slightly offset by decreasing sales of Webroot. We ~~have expended significant sales and marketing resources on Nodeware in 2023 and 2024, while concurrently diverting resources from Webroot. We~~ expect this trend to continue throughout ~~2024 and~~ 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 ~~of our managed support services and cybersecurity projects teams~~. Cost of sales decreased by 63.8% to $~~944~~934,~~914~~654 during the three months ended ~~September~~March 3031, ~~2024~~2025 from $1971,~~005,043~~410 during the corresponding period of ~~2023. For the nine month periods ended September 30, 2023 and~~ 2024~~, cost of sales decreased from $2,969,464 in 2023 to $2,842,848 in 2024; a decrease of 4%~~. The ~~decrease~~change in cost of sales during the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025 from ~~2023~~2024 was primarily due to a decrease in ~~payroll~~software and ~~benefits~~equipment ofcosts ~~salaried~~supporting ~~employees who support~~ our ~~managed~~software ~~services~~sales and cybersecurity projects. ~~This reduction~~ of ~~payroll~~approximately ~~was due to normal attrition without replacement. There was no impact on performance~~$30, ~~as we were able to absorb the staff reduction with efficiency improvements to our processes and tools~~000.

Our gross profit ~~decreased~~increased by $11142,~~624~~128 ~~for~~from the three months ended ~~September~~March 3031, ~~2023 to~~ 2024, ~~from $702,668~~ to ~~$691,044~~2025. ~~For the nine months ended September 30, 2024, gross profit of $1,999,574 represents a 13% decrease in gross profits for the same period in 2023 of $2,285,716.~~ The ~~decrease~~increase was primarily due to the ~~combination~~increase ofin ~~decreased~~ sales ~~offset by the decrease in salary and benefits previously~~ 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 $~~453~~441,~~407~~030 for the three months ended ~~September~~March 3031, ~~2024~~2025 decreased approximately 272% from $~~620~~451,~~180~~880 for the same quarter of ~~2023. For the nine months ended September 30,~~ 2024~~, general and administrative expenses were $1,349,433, down from $1,617,002 for the same period in 2023~~. The decrease was primarily due to the reduction in salaries and benefits infrom ~~addition~~2024 to ~~lower~~2025 ~~rent~~by ~~due~~approximately to$21,000, ~~downsizing~~offset ~~the~~by ~~office~~an ~~space~~increase ~~and~~in ~~marketing~~legal ~~spending,~~and ~~with~~accounting ~~total~~fees ~~year~~from 2024 to ~~date~~2025 ~~expenses~~by ~~in those categories down~~ approximately $~~166~~13,000, ~~for the comparative nine month periods.~~

Selling Expenses

Selling expenses of $~~499~~433,~~869~~938 for the three months ended ~~September~~March 3031, ~~2024~~2025 ~~decreased~~increased approximately 256% from $~~665~~408,~~571~~315 for the same quarter of ~~2023. For the nine months ended September 30,~~ 2024~~, selling expenses were $1,294,277; a decrease of 39% from $2,120,046 for the same period in 2023~~. ~~For~~The ~~the~~increase ~~three month period, approximately $54,000 of the decrease~~ was ~~due~~primarily ~~to reductions in number of trade shows attended as well as decreases in marketing of approximately $57,000. For the nine month period, approximately $305,000 of the decrease was~~ due to aan ~~decrease~~increase in marketing ~~and trade show~~ spending ~~and~~by ~~reductions~~about ~~in staffing and related benefits of approximately~~ $~~240~~13,000.

Operating Loss

For the three months ended ~~September~~March 3031, ~~2024~~2025 and ~~September~~March 3031, ~~2023~~2024, operating loss was $~~262~~125,~~232~~755 and $~~583~~253,~~083~~110, respectively, for an improvement in the loss by $~~320~~127,~~851~~355. ~~For the nine months ended September 30, 2024 and September 30, 2023, the operating loss was $644,136 and $1,451,332, respectively.~~ The improvement in our operating loss from the previous year is principally attributable to the ~~reduction~~increase in ~~cost~~gross ofprofit ~~sales~~and ~~as referenced above, the~~ reduction of general and administrative expenses aspartially ~~referenced~~offset ~~above,~~by ~~and~~ the ~~decrease~~increase inof selling expenses of approximately $25,600 for the three months ended March 31, 2025 as ~~referenced~~compared ~~above~~to 2024.

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Interest Expense

Net interest expense of $~~196~~158,~~802~~545 for the three months ended ~~September~~March 3031, ~~2024~~2025 decreased ~~significantly~~29% from expense of $~~270~~221,~~958~~769 for the same quarter of ~~2023. For the nine months ended September 30,~~ 2024~~, net interest expense of $671,028 represents a decrease of $774,497 from the same period in 2023~~. The decrease in interest expense is primarily attributable to the ~~bridge~~elimination ~~loans entered into during 2022 and the first quarter~~ of ~~2023 and~~ the ~~associated~~MCA ~~amortization~~loans ofin the ~~warrants~~second ~~associated~~half ~~with the debt~~ of ~~approximately $110,000 for the three months ended September 30, 2023 and approximately $425,000 for the nine months ended September 30, 2023 versus none in~~ 2024. ~~There was also approximately $337,000 of interest expense associated with the loan associated with the Employee Retention Credit for the nine months ended September 30, 2023.~~

Other Income

For the three months ended ~~September~~March 3031, 2024, ~~other~~we ~~income~~had ~~included gain on the extinguishment of debts in the amount of~~ $~~71,736. For the nine months ended September 30, 2024, other income included $~~15,350 ~~was for the partial termination~~ of ~~the lease agreement for the corporate office in addition to the gain on the extinguishment of debts. For the nine months ended September 30, 2023,~~ other income. This ~~included~~was adue ~~one-time refund of taxes of $1,662,698 related~~ to the ~~approval~~accounting offor the ~~Employee~~partial ~~Retention~~termination ~~Credit by the IRS as well as a gain~~ of ~~$95,131~~our ~~related~~office tolease ~~debt~~in ~~forgiveness~~January 2024.

Net Loss

For the three months ended ~~September~~March 3031, ~~2024,~~2025 ~~net~~and ~~loss~~March ~~was $387~~31,~~298.~~ ~~For the same period in 2023, we showed a net loss of $854,041. For the nine months ended September 30,~~ 2024 ~~and September 30~~, ~~2023, the~~ net loss was $1284,~~228,078~~300 and $1459,~~139~~529,~~028,~~ respectively., ~~The~~a ~~primary~~decrease ~~reasons~~in ~~for~~the ~~this~~loss ~~approximate~~by $~~467~~175,~~000~~229. ~~improvement~~The decrease in ~~the~~net ~~three~~loss ~~month period~~ was primarily due to the ~~effort~~increase ~~to reign~~ in ~~operating~~gross ~~expenses~~profit, ~~the~~reduction ~~ending~~ of ~~debt~~general ~~amortization~~and administrative expenses, and ~~other~~decrease ~~income. For the nine month period the primary reason for the increase~~ in ~~loss~~interest ~~was due to the larger other income amount in 2023 associated with the Employee Retention Credit in the second quarter of 2023~~expense.

Liquidity and Capital Resources

At ~~September~~March 3031, ~~2024~~2025, we had cash of $2221,~~481~~331 available for working capital needs and planned capital asset expenditures. At ~~September~~March 3031, ~~2024~~2025, we had a working capital deficit of approximately $9.21 million and a current ratio of 0.0705.

During ~~2024~~2025, our primary ~~source~~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 ~~September~~March 3031, ~~2023~~2025, based on eligible accounts receivable, we had $3770,000 available under this arrangement. We expect sales during ~~2024~~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 ~~four~~one loan ~~agreements~~agreement ~~and~~in ~~a revised financing arrangement during~~ the ~~nine~~three month period ended ~~September~~March 3031, ~~2024~~2025.

On ~~February~~March 1610, ~~2024~~2025, we received funding from a ~~future~~loan ~~receivables purchase~~ agreement with ~~UFS~~Stripe ~~West~~and ~~LLC.~~Celtic Bank. The ~~purchase~~loan ~~price~~ amount was $~~150~~241,~~000~~500 ~~with~~plus a fixed fee of $423,~~500~~667. ~~and~~The repayment amount of $265,167 will be repaid at a ~~payment~~repayment ~~plan~~rate of $530% of our receivables automatically withheld by Stripe. There is no financing percentage. The repayment start date was March 17,~~824~~ ~~per~~2025, ~~week~~with ~~for~~a 34minimum ~~weeks~~payment ~~effective~~amount ~~February~~of 23$29,463 ~~2024~~over every 60-day period. InThe ~~August~~final ~~2024~~repayment date is September 8, US2026, ~~West~~if ~~LLC~~the ~~forgave~~total repayment amount is not paid as of that date. This loan agreement also eliminates the remaining ~~payments~~balance onof $30,090 from the ~~subordinated~~previous ~~business~~Stripe loan ~~for~~dated ~~$51~~June 4,~~500.~~ ~~This~~2024, ~~forgiveness~~as ofthe ~~debt~~remaining ~~resulted~~balance inwas arolled ~~gain~~into ofthis ~~approximately~~new ~~$29,900~~loan.

On22 ~~March~~Table ~~14, 2024, we received funding from a subordinated business loan and security agreement with Agile Lending, LLC. The term loan amount was $185,500with a fixed fee~~ of $10,500. A payment plan of $11,285 per week for 24 weeks effective March 18, 2024. In August 2024, Agile Lending LLC forgave the remaining payments on the subordinated business loan for $60,000. This forgiveness of debt resulted in a gain of approximately $43,600.Contents

~~During~~At ~~June~~March ~~2024~~31, ~~we entered into a revised financing arrangement with Celtic Bank for $150~~2025,~~500~~ ~~with~~we ahad ~~one-time~~current ~~fixed~~notes ~~loan~~payable ~~fee~~ of $17139,~~157~~000 ~~for~~to arelated ~~total obligation of $167,657~~parties. ~~In 2023, under the terms of the previous revised financing arrangement, the lender loaned us~~ $~~140~~40,~~200~~000 ~~with a one-time fixed loan fee~~ of ~~$16,403~~this ~~for~~debt awas ~~total~~due ~~obligation~~on ofJanuary ~~$156~~1,~~603~~ 2023. The ~~balance~~remaining ~~of the previous loan of~~ $3399,~~815~~000 ~~was~~are ~~paid~~in to the ~~lender~~form ~~as part~~ of ~~the~~demand ~~revised~~notes ~~financing~~with ~~agreement.~~an ~~The~~interest ~~lender~~rate ~~payments became due on June 11, 2024, and consisted~~ of 206% ~~of the Company’s receivables processed through Stripe, Inc~~.~~’s payment processing platform. At September 30, 2024, the balance of this revised financing arrangement was $112,768.~~

OnAt ~~August~~March 1631, ~~2024~~2025, ~~the~~we ~~Company~~have ~~entered~~current ~~into~~notes anpayable ~~amended and restated loan and security agreement (the “Agreement”), dated as~~ of ~~August~~approximately 16$1, ~~2024~~911,000 byto ~~and~~third ~~between~~parties, ~~the~~which ~~Company~~includes ~~and~~convertible ~~the~~notes ~~Company’s~~payable ~~President’s~~of ~~brother~~approximately $150,000. ~~Harry~~Also ~~Hoyen~~included ~~(the~~is ~~“Lender”)~~$12,500 ~~pursuant~~in toprincipal ~~which~~amount ~~the~~of ~~Company~~a ~~may~~note ~~borrow~~payable upthat towas andue ~~aggregate~~on ~~amount~~June ~~of $2~~30,~~000,000~~ ~~(the~~2016 ~~“Loan”)~~which athas 8%not ~~per~~been ~~annum~~paid. ~~Pursuant~~This tonote ~~the~~was ~~Agreement,~~issued onin ~~August~~payment ~~16,~~of ~~2024,~~software ~~the~~we ~~Company~~purchased ~~borrowed~~in ~~$1,200,000~~February ~~from~~2016 ~~the Lender~~ and ~~issued~~is tosecured ~~the~~by ~~Lender~~ a ~~secured~~security ~~promissory~~interest ~~note~~in ~~evidencing such portion of~~ the ~~Loan~~software. ~~having~~To ~~a maturity~~ date ~~of August 16~~, ~~2028.~~the ~~The~~holder ~~Agreement’s~~has ~~payment~~not ~~plan~~taken isany ~~for~~action 48to ~~payments~~collect ofthe ~~$52,500~~amount ~~per~~past ~~month.~~due ~~Commencing~~ on ~~September~~this 1,note ~~2024,~~or ~~the Company may borrow up~~ to anenforce ~~additional~~the ~~$800,000~~security ~~from~~interest in the ~~Lender~~software. toThe beCompany ~~evidenced~~has byaccrued ~~another~~interest ~~secured~~on ~~promissory~~this note. ~~Additional amounts~~ of ~~$80,000,~~approximately $70253,000, ~~$550,000~~as ~~and~~of ~~$50,000 were~~March ~~borrowed on October 15~~31, ~~2024, October 16, 2024, November 13, 2024, and October 27,~~ 2025 ~~respectively~~.

20Also ~~Table~~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 ~~Contents~~$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.

AtNotes ~~September~~payable 30to third parties at March 31, ~~2024~~2025, wealso ~~had~~includes ~~current~~a ~~notes~~loan ~~payable~~balance ofwith Celtic Bank for $~~139~~257,~~000~~543. This toloan ~~related~~does ~~parties.~~not ~~$40~~bear interest,~~000~~ ofand ~~this~~instead ~~debt~~incurred ~~was~~a ~~due~~one-time onfee ~~January~~of 1$23,667 ~~2023.~~at origination. The ~~remaining~~payments ~~$99,000~~consist ~~are~~of in30% of the ~~form~~Company’s ofreceivables ~~demand~~processed ~~notes~~through ~~with~~Stripe, anInc.’s ~~interest~~payment ~~rate~~processing ~~of 6%~~platform.

AtDuring ~~September~~the ~~30,~~first ~~2024,~~quarter ~~we have current notes payable~~ of ~~approximately $1~~2025,~~957,000~~ tothere ~~third~~was ~~parties,~~one ~~which~~transaction ~~includes~~to ~~convertible~~deferred ~~notes~~note ~~payable of approximately $150,000~~costs. ~~Also~~This ~~included~~was isthe $1223,~~500~~667 inassociated ~~principal~~with ~~amount~~the ofStripe aloan. ~~note~~At ~~payable~~March ~~due~~31, ~~on June 30~~2025, ~~2016~~the ~~which~~unamortized ~~has~~balance ~~not~~of ~~been~~the ~~paid.~~deferred ~~This~~ note ~~was~~costs ~~issued~~for inall ~~payment~~notes ofpayable ~~software~~to wethird ~~purchased~~parties inapproximately ~~February 2016 and secured by a security interest in the software~~$21,300. ToSee ~~date,~~Notes ~~the~~5 ~~holder~~and ~~has~~6 ~~not~~of ~~taken any action to collect~~ the ~~amount~~2024 ~~past~~Audited ~~due~~Financial onStatements ~~this~~for ~~note~~more ~~or to enforce the security interest in the software~~information.

~~Also~~We ~~included~~entered ininto ~~the~~unsecured ~~current~~lines ~~notes~~of ~~payable~~credit tofinancing ~~third~~agreements ~~parties~~(the at“LOC ~~September~~Agreements”) ~~30, 2024, are five bridge loans~~ with ~~Mast~~two ~~Hill~~related ~~Fund,~~parties ~~L.P.,~~in ~~for~~previous ~~$1,511,801~~years. ~~All~~The ~~five~~LOC ~~loans~~Agreements ~~bear~~provide ~~interest~~for atworking ancapital ~~original~~of ~~rate~~up ofto ~~8%.~~$100,000 ~~Since~~through ~~these~~July ~~loans~~31, ~~are~~2022 inand ~~default~~$75,000 ~~the~~through ~~interest~~January ~~rate~~2, ~~is 12%~~2023. WeAt ~~used~~March ~~the~~31, ~~proceeds~~2025, ~~from~~we ~~the~~had ~~bridge~~approximately ~~loans~~$15,000 ~~to substantially enhance our marketing~~ of ~~Nodeware,~~availability ~~Inc.’s~~under ~~Nodeware~~the ~~solution,~~LOC ~~in order to significantly increase its growth~~Agreements.

During ~~the first nine months of 2024~~2021, ~~approximately~~we ~~$17,000~~issued ~~was~~demand ~~recorded~~notes asto ~~deferred~~three ~~note~~board ~~costs.~~members Atfor ~~September 30~~$79,000 ~~2024,~~in ~~the~~total. ~~unamortized~~The ~~balance~~demand ~~of the deferred note costs for all~~ notes ~~payable~~bear toa ~~third~~6% ~~parties~~interest ~~was~~rate. ~~approximately~~ $749,000. ~~See~~is ~~Notes~~outstanding 5as ~~and 6~~ of ~~the~~March ~~2023~~31, ~~Audited Financial Statements for more information~~2025.

We ~~entered~~have ~~into~~$915,473 ~~unsecured lines~~ of ~~credit~~current ~~financing~~maturities ~~agreements~~of ~~(the~~long-term ~~“LOC~~obligations ~~Agreements”)~~to ~~with~~third ~~two~~parties. ~~related~~This ~~parties~~is incomprised ~~previous~~of ~~years.~~various ~~The~~notes ~~LOC~~including ~~Agreements~~long-term ~~provide~~notes ~~for~~to ~~working~~third ~~capital~~parties of ~~up to~~ $~~100~~265,000 ~~through~~due ~~July~~on 31January 1, ~~2022~~2018 ~~and~~(plus accrued interest of approximately $75307,000), ~~through~~$284,000 due January 21, ~~2023.~~2024, At$116,473 ~~September~~due 30on August 24, 2024, weand ~~had approximately~~ $15250,000 ofdue ~~availability~~on ~~under~~September ~~the~~30, ~~LOC Agreements~~2025.

~~During~~At ~~2021~~March 31, 2025, we ~~issued~~have ~~demand~~$1,154,743 ~~notes~~of current maturities of long-term obligations to ~~three~~related ~~board~~parties. ~~members~~$270,000 ~~for~~was due on January 1, 2023, $7925,000 inwas ~~total.~~due ~~The~~June ~~demand~~30, ~~notes~~2023, ~~bear~~$90,000 awas 6%due ~~interest~~on ~~rate.~~July ~~The~~31, ~~amount~~2023, ~~outstanding~~$274,300 aswas ofdue ~~September~~January 301, 2024, isand $49495,~~000~~443 due before March 31, 2026.

We have approximately $965,000 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 $294,000), approximately $284,000 due on January 1, 2024, approximately $166,000 due August 24, 2024, $250,000 due September 30, 2025 and approximately $89,000 due in the next 12 months on an 18 month loan agreement ending on February 17, 2025.

At September 30, 2023, we have $1,264,000 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 is due January 1, 2024 and $604,223 due by September 30, 2025.

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 ~~September~~March 3031, ~~2024~~2025.

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

	Nine Months Ended September 30,
	Three Months Ended March 31,
	2024			2023
	2025			2024
Net cash provided by (used in) operating activities	$	(702,685	)	$	423,180
Net cash used by operating activities	$	(193,521	)	$	(119,785	)
Net cash provided by (used in) investing activities		(149,708	)		1,241,308
Net cash used by investing activities		(78,418	)		(53,525	)
Net cash provided by (used in) financing activities		849,401			(1,678,538	)
Net cash provided by financing activities		124,333			152,102
Net decrease in cash	$	(2147,~~992~~606	)	$	(1421,~~050~~208	)

Cash Flows ~~Provided~~Used by ~~(Used in)~~ 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 $1284,~~228,078~~300 for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 was offset in part by non-cash expenses and credits of $~~223~~50,~~331 and an addback of a gain of debt forgiveness of $71,736 and a gain on the partial termination of the lease of $15,350~~488. In addition, our net loss was ~~increased~~further offset by ana ~~increase~~decrease in accounts receivable and other assets of $~~315~~162,~~637~~372, ~~and~~an ~~offset~~decrease ~~by increases~~ in ~~accounts payable,~~ accrued payroll, deferred revenue and other expenses payable of $~~780~~185,~~501~~234 and aan ~~decrease~~increase in ~~deferred~~accounts ~~revenue~~payable of $7563,~~716~~153 resulting in cash used inby operating activities of $~~702~~193,~~685~~521.

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We ~~are~~continue ~~continuing~~ to ~~increase~~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, ~~the~~a potential equity raise and incremental borrowings, as needed.

Cash Flows ~~Provided~~Used by ~~(Used in)~~ Investing Activities

~~During~~In the ~~nine~~quarters ~~months~~ ended ~~September~~March 3031, 2025 and 2024, we incurred capital expenditures offor ~~$149,144~~computer ~~for~~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 ~~(Used in)~~ Financing Activities

During the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025, we ~~received~~entered ~~$1,686,000~~into ~~from various debt products, including~~ a ~~future~~new ~~receivables~~Stripe ~~purchase agreement with UFS West LLC for $150,000 which is paid in 34 weekly installments, a subordinated business~~ loan ~~and~~from ~~security~~Celtic ~~agreement~~Bank ~~with Agile Lending, LLC~~ for $~~185~~241,500. We ~~payable~~also ~~over~~paid 24principal ~~weeks,~~of ~~a restructured loan with Celtic Bank for~~ $~~167~~87,~~657,~~817 ~~and~~on anshort ~~amended~~term ~~and~~debt ~~restated loan~~ and ~~security with a related party for~~ $129,~~200,000.~~349 Weon ~~paid~~ the ~~principal~~current portion of ~~$734,349~~long onterm ~~notes~~debt ~~payable,~~with ~~and~~a ~~$102,250 of~~ related party ~~short term debt~~.

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 ~~September~~March 3031, ~~2024~~2025, we had financing availability, based on eligible accounts receivable, of approximately $3770,000 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 ~~September~~March 3031, ~~2024~~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 ~~September~~March 3031, ~~2024~~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 and 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

Evaluation of Disclosure Controls and Procedures. 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.

Changes in Internal Control over Financial Reporting. 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, ~~2023~~2024 for a comprehensive listing of the Company’s other risk factors. There are no material changes for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025.

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

During the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~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 $~~134~~129,~~000~~500 at ~~September~~March 3031, ~~2024~~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 $~~294~~306,~~000~~900 at ~~September~~March 3031, ~~2024~~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 $~~175~~201,~~000~~100 at ~~September~~March 3031, ~~2024~~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 $~~237~~279,~~000~~200 at ~~September~~March 3031, ~~2024~~2025.

The Company is in default on a note payable to third parties of $~~118~~259,~~000~~029 due on ~~June~~November 3, ~~2023~~2022. The accrued interest on the note is approximately $46145,~~000~~700 at ~~September~~March 3031, ~~2024~~2025.

The Company is in default on a note payable to third parties of $213,772 due on July 15, ~~2023~~2022. The accrued interest on the note is approximately $~~117~~132,~~000~~400 at ~~September~~March 3031, ~~2024~~2025.

The Company is in default on a note payable to third parties of $~~259~~118,~~029~~000 due on ~~November~~June 3, ~~2022~~2023. The accrued interest on the note is approximately $~~127~~54,~~000~~500 at ~~September~~March 3031, ~~2024~~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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SIGNATURES

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

		Infinite Group, Inc.
		(Registrant)
Date: October 31, 2025		/s/ James Villa
Date: January 30, 2026		/s/ James Villa
		James Villa
		Chief Executive Officer
		(Principal Executive Officer)
Date: October 31, 2025		/s/ Richard Glickman
Date: January 30, 2026		/s/ Richard Glickman
		Richard GlickmanFinance and Chief Accounting OfficerVP Finance and Chief Accounting Officer
		Richard Glickman
		VP Finance and Chief Accounting Officer
		(Chief Accounting Officer)

2426 Table of Contents

INDEX TO EXHIBITS

INDEX TO EXHIBITS

Exhibit No.		Description

31.1		Chief Executive Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002. *

31.2		VP Finance Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002. *

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

32.2		VP Finance Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002. *

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.*

Exhibit
No.		Description
31.1		Chief Executive Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002. *
31.2		VP Finance Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002. *
32.1		Chief Executive Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002. *
32.2		VP Finance Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002. *
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.*

* Filed as an exhibit hereto.

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