INFINITE GROUP INC 10-Q for FY2020 Q1
INFINITE GROUP INC (IMCI)
10-Q
2020-05-11
For: 2020-03-31
View Original
Added on
April 06, 2026
About this 10-Q
INFINITE GROUP INC filed this 10-Q on May 11, 2020, covering the quarter ended March 31, 2020 (FY2020 Q1).
Headline figures
Quarter ended March 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $1.9M
- up 12.5% from $1.69M a year earlier
- Net loss
- $6062
- compared with net income of $35.04K a year earlier
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 March 31, 2020
Commission file number: 0-21816
_________________________________________
INFINITE GROUP, INC.
(Exact
name of registrant as specified in its charter)
_________________________________________
175
Sully’s Trail, Suite 202
Pittsford,
New York 14534
(585)
385-0610
A
Delaware Corporation
IRS Employer Identification Number: 52-1490422
_________________________________________
Securities
registered pursuant to Section 12(b) of the Act
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Common
Stock, $0.001 par value per share
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IMCI
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OTC Bulletin Board
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(Title of each class)
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(Trading Symbol)
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(Name of each exchange on which registered)
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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
☐
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 ☐
Non-accelerated
filer ☐
|
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. There were 29,061,883
shares of the issuer’s common stock, par value $.001 per
share, outstanding as of May 8, 2020.
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Infinite Group,
Inc.
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Quarterly Report on
Form 10-Q
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For
the Period Ended March 31, 2020
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Table of
Contents
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PART I - FINANCIAL
INFORMATION
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PAGE
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Item 1.
Financial
Statements
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Balance Sheets
– March 31, 2020 (Unaudited) and December 31,
2019
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3
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Statements of
Operations (Unaudited) for the three months ended March 31, 2020
and 2019
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4
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Statements of
Stockholders’ Deficiency (Unaudited) for the three months
ended March 31, 2020 and 2019
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5
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Statements of Cash
Flows (Unaudited) for the three months ended March 31, 2020 and
2019
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6
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Notes to Financial
Statements – (Unaudited)
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7
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Item 2.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations
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10
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Item 3.
Quantitative and Qualitative Disclosures About Market
Risk
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14
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Item 4. Controls
and Procedures
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14
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PART II - OTHER
INFORMATION
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Item 1. Legal
Proceedings
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14
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Item 1A. Risk
Factors
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14
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Item 6.
Exhibits
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15
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SIGNATURES
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15
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FORWARD-LOOKING STATEMENTS
Certain
statements made in this Quarterly Report on Form 10-Q are
“forward-looking statements” regarding the plans and
objectives of management for future operations and market trends
and expectations. Such statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results,
performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by
such forward-looking statements. The forward-looking statements
included herein are based on current expectations that involve
numerous risks and uncertainties. Our plans and objectives are
based, in part, on assumptions involving the expansion of our
business. Assumptions relating to the foregoing involve judgments
with respect to, among other things, future economic, competitive
and market conditions and future business decisions, all of which
are difficult or impossible to predict accurately and many of which
are beyond our control. Although we believe that our assumptions
underlying the forward-looking statements are reasonable, any of
the assumptions could prove inaccurate and, therefore, there can be
no assurance that the forward-looking statements included in this
report will prove to be accurate. In light of the significant
uncertainties inherent in the forward-looking statements included
herein, the inclusion of such information should not be regarded as
a representation by us or any other person that our objectives and
plans will be achieved. We undertake no obligation to revise or
update publicly any forward-looking statements for any reason. See
“Risk Factors” in our annual report on Form 10-K for
the year ended December 31, 2019, filed with the Securities and
Exchange Commission (“SEC”), for a more detailed
discussion of uncertainties and risks that may have an impact on
future results. The terms “we”, “our”,
“us”, or any derivative thereof, as used herein refer
to Infinite Group, Inc., a Delaware corporation.
2
PART
I
FINANCIAL INFORMATION
Item 1. Financial Statements
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INFINITE
GROUP, INC.
BALANCE
SHEETS
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||
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March
31,
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December
31,
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2020
(Unaudited)
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2019
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ASSETS
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Current
assets:
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Cash
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$106,439
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$6,398
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Accounts
receivable, net of allowances of $12,629 and $17,455,
respectively
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436,712
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432,289
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Prepaid expenses
and other current assets
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50,208
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65,285
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Total current
assets
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593,359
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503,972
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Right
of use asset – lease, net
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177,189
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195,441
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Property
and equipment, net
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9,768
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5,915
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Software,
net
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232,660
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184,676
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Deposit
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6,937
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6,937
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Total
assets
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$1,019,913
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$896,941
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LIABILITIES
AND STOCKHOLDERS’ DEFICIENCY
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Current
liabilities:
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Accounts
payable
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$289,770
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$217,777
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Accrued
payroll
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362,510
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218,352
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Accrued interest
payable
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946,704
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939,440
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Accrued
retirement
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256,891
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254,348
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Accrued expenses -
other
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167,068
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243,031
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Operating lease
liability - short-term
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75,809
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74,373
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Current maturities
of long-term obligations
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950,000
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950,000
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Current maturities
of long-term obligations - related parties
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544,255
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512,935
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Notes
payable
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332,500
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332,500
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Notes payable -
related parties
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54,000
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58,000
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Total current
liabilities
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3,979,507
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3,800,756
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Long-term
obligations:
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Notes
payable:
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Other
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488,529
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486,890
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Related
parties
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360,000
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394,000
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Operating lease
liability - long-term
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103,119
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122,605
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Total
liabilities
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4,931,155
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4,804,251
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Stockholders'
deficiency:
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Common stock, $.001
par value, 60,000,000 shares authorized; 29,061,883 shares issued
and outstanding
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29,061
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29,061
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Additional paid-in
capital
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30,640,303
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30,638,173
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Accumulated
deficit
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(34,580,606)
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(34,574,544)
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Total
stockholders’ deficiency
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(3,911,242)
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(3,907,310)
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Total liabilities
and stockholders’ deficiency
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$1,019,913
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$896,941
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See
notes to unaudited financial statements.
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3
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INFINITE
GROUP, INC.
STATEMENTS
OF OPERATIONS (Unaudited)
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Three
Months Ended March 31,
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2020
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2019
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Sales
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$1,899,595
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$1,687,794
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Cost of
sales
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1,123,066
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1,057,170
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Gross
profit
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776,529
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630,624
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Costs
and expenses:
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General and
administrative
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374,530
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277,605
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Selling
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346,701
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253,306
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Total costs and
expenses
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721,231
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530,911
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Operating
income
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55,298
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99,713
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Interest
expense:
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Related
parties
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(15,863)
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(16,638)
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Other
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(45,497)
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(48,039)
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Total interest
expense
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(61,360)
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(64,677)
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Net
income (loss)
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$(6,062)
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$35,036
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Net
income (loss) per share – basic and diluted
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$.00
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$.00
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Weighted
average shares outstanding – basic
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29,061,883
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29,061,883
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Weighted
average shares outstanding – diluted
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29,061,883
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29,061,883
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See
notes to unaudited financial statements.
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4
INFINITE GROUP, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
(Unaudited)
Three Months Ended March 31, 2020 and 2019
Three Months Ended March 31, 2020
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Additional
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Common
Stock
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Paid-in
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Accumulated
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Shares
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Amount
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Capital
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Deficit
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Total
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Balance
- December 31, 2019
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29,061,883
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$29,061
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$30,638,173
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$(34,574,544)
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$(3,907,310)
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Stock based
compensation
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0
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0
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2,130
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0
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2,130
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Net
loss
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0
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0
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0
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(6,062)
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(6,062)
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Balance
- March 31, 2020
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29,061,883
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$29,061
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$30,640,303
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$(34,580,606)
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$(3,911,242)
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Three Months Ended March 31, 2019
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Additional
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Common
Stock
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Paid-in
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Accumulated
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Shares
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Amount
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Capital
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Deficit
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Total
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Balance
- December 31, 2018
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29,061,883
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$29,061
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$30,593,366
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$(34,622,521)
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$(4,000,094)
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Stock based
compensation
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0
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0
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260
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0
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260
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Net
income
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0
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0
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0
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35,036
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35,036
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Balance
- March 31, 2019
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29,061,883
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$29,061
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$30,593,626
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$(34,587,485)
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$(3,964,798)
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See
notes to unaudited financial statements.
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5
INFINITE GROUP, INC.
STATEMENTS OF CASH FLOWS (Unaudited)
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Three
Months Ended March 31,
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2020
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2019
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Cash
flows from operating activities:
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Net income
(loss)
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$(6,062)
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$35,036
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Adjustments to
reconcile net income (loss) to net cash provided
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(used) by
operating activities:
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Stock based
compensation
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2,130
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260
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Depreciation and
amortization
|
12,450
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5,313
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(Increase) decrease
in assets:
|
|
|
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Accounts
receivable
|
(4,423)
|
(104,599)
|
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Prepaid expenses
and other assets
|
15,077
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(8,955)
|
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Increase (decrease)
in liabilities:
|
|
|
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Accounts
payable
|
71,993
|
(81,007)
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Accrued
expenses
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75,459
|
136,305
|
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Accrued
retirement
|
2,543
|
2,444
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Net
cash provided (used) by operating activities
|
169,167
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(15,203)
|
|
|
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Cash
flows from investing activities:
|
|
|
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Purchase of
property and equipment
|
(4,924)
|
0
|
|
Capitalization of
software development costs
|
(57,522)
|
0
|
|
|
|
|
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Net
cash used by financing activities
|
(62,446)
|
0
|
|
|
|
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Cash
flows from financing activities:
|
|
|
|
Repayments of notes
payable - related party
|
(6,680)
|
(2,010)
|
|
|
|
|
|
Net
cash used by financing activities
|
(6,680)
|
(2,010)
|
|
|
|
|
|
Net
increase (decrease) in cash
|
100,041
|
(17,213)
|
|
|
|
|
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Cash - beginning of
period
|
6,398
|
29,716
|
|
|
|
|
|
Cash
- end of period
|
$106,439
|
$12,503
|
|
|
|
|
|
Supplemental
Disclosures of Cash Flow Information:
|
|
|
|
Cash payments for
interest
|
$53,404
|
$35,490
|
|
|
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See
notes to unaudited financial statements.
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||
6
INFINITE GROUP, INC.
Notes to Financial Statements - (Unaudited)
Note 1. Basis of Presentation
The
accompanying unaudited financial statements of Infinite Group, Inc.
(“Infinite Group, Inc.” or the “Company”)
included herein have been prepared by the Company in accordance
with accounting principles generally accepted in the United States
of America (U.S.) ("GAAP") for interim financial information and
with instructions to Form 10-Q. Accordingly, they do not include
all the information and footnotes required by accounting principles
generally accepted in the U.S. for complete financial statements.
In the opinion of management, all adjustments considered necessary
for a fair presentation have been included. All such adjustments
are of a normal recurring nature. The December 31, 2019 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, 2019 filed with the
U.S. Securities and Exchange Commission (SEC). Results of
operations for the three months ended March 31, 2020 are not
necessarily indicative of the operating results that may be
expected for the year ending December 31, 2020.
Note 2. Management Plans - Capital Resources
The
Company reported net loss of $6,062 and a net income of $35,036 for
the three months ended March 31, 2020 and 2019, respectively, and
stockholders’ deficiencies of $3,911,242 and $3,907,310 at
March 31, 2020 and December 31, 2019, respectively. Accordingly and
due to current working capital deficit of approximately $3.4
million, there is substantial doubt about the Company’s
ability to continue as a going concern within one year of issuance
of the financial statements. The Company's goal is to increase
sales and generate cash flow from operations on a consistent basis.
The Company uses a formal financial review and budgeting process as
a tool for improvement that has aided expense reduction and
internal performance. The Company’s business plans require
improving the results of its operations in future
periods.
The
Company believes the capital resources available under its
factoring line of credit, cash from additional related party and
third-party loans and cash generated by improving the results of
its operations provide sources to fund its ongoing operations and
to support the internal growth of the Company. Although the Company
has no assurances, the Company believes that related parties, who
have previously provided working capital, and third parties will
continue to provide working capital loans on similar terms, as in
the past, as may be necessary to fund its on-going operations for
at least the next 12 months. 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.
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, 2019 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 - The Company reclassifies amounts in its
financial statements to comply with recently adopted accounting
pronouncements.
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.
Revenue -
The
Company’s total revenue recognized from contracts from
customers was comprised of three major services: Managed support
services, Cybersecurity projects and software and Other IT
consulting services. 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, 2020 or 2019 for contracts with an
expected original duration of more than one year. The following
table summarizes the revenue recognized by the major
services:
|
|
Three
Months Ended March 31,
|
|
|
|
2020
|
2019
|
|
$1,141,761
|
$1,228,747
|
|
|
646,834
|
310,608
|
|
|
Other IT consulting
services
|
111,000
|
148,439
|
|
Total
sales
|
$1,899,595
|
$1,687,794
|
7
Managed support services
Managed
support services consist of revenue primarily from our subcontracts
for services to its end clients, principally a major establishment
of the U.S. Government for which we manage 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 revenues
are recognized at time of service.
Cybersecurity projects and software
Cybersecurity
projects and software revenue includes the selling of licenses of
Nodeware® and third-party software, principally Webroot™
as well as performing cybersecurity assessments and
testing.
●
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. Substantially all customers are billed
in the month of the service and is cancellable upon notice per the
respective agreements. Substantially all payments are
electronically billed, and the billed amounts are paid to the
Company instantaneously via an online payment platform. If payments
are made in advance, revenues related to the term associated with
our software licenses is recognized ratably over the contractual
period.
●
Some of our customers have the option to purchase additional
subscription and support services at a stated price. These options
generally do not provide a material right as they are priced at our
standalone selling price.
●
Cybersecurity assessments and testing services are considered
distinct performance obligations when sold stand 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
recognized when the performance obligations are 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 on a relative standalone selling price of the
products sold.
●
In substantially all agreements, a 50% to 75% down payment is
required before work is initiated. Down payments received are
deferred until revenue is recognized. Upon completion of
performance obligation of service, payment terms are 30
days.
Other IT consulting services
Other
IT consulting services consists of services such as project
management and general IT consulting services.
●
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 revenues are
recognized at time of service.
Based
on historical experience, the Company believes that collection is
reasonably assured.
During
the three months ended March 31, 2020, sales to one client,
including sales under subcontracts for services to several
entities, accounted for 58.4% of total sales (65.0% - 2019) and
48.9% of accounts receivable at March 31, 2020 (22.1% - December
31, 2019).
Capitalization of Software for Resale - The Company
capitalizes the software development costs for software to be sold,
leased, or otherwise marketed. Capitalization begins upon the
establishment of technological feasibility of a new product or
enhancements to an existing product, which is generally the
completion of a working prototype that has been certified as having
no critical bugs and is a release candidate. Costs incurred after
the enhancement has reached technological feasibility and before it
is released in the market are capitalized and are primarily labor
costs related to coding and testing. Amortization begins once the
software is ready for its intended use, generally based on the
pattern in which the economic benefits will be consumed. Costs
associated with major upgrade releases begin amortization in the
month after release. The amortization period is three years. As of
March 31, 2020, there was $251,737 of costs capitalized ($194,215
as of December 31, 2019) and $19,077 of accumulated amortization
($9,539 as of December 31, 2019). During the quarter ended March
31, 2020 there was $9,538 of amortization expense recorded ($0 in
2019). Costs incurred prior to reaching technological feasibility
are expensed as incurred. Labor amounts expensed related to these
development costs amounted to approximately $17,400 and $49,100
during the quarter ended March 31, 2020 and 2019,
respectively.
Leases - In February 2016, the FASB issued amended guidance
for lease arrangements to increase transparency and comparability
by providing additional information to users of financial
statements regarding an entity's leasing activities. The new
standard requires entities to recognize a liability for their lease
obligations and a corresponding right-of-use asset, initially
measured at the present value of the lease payments. Subsequent
accounting depends on whether the agreement is deemed to be a
financing or operating lease. For operating leases, a lessee
recognizes its total lease expense as an operating expense over the
lease term. For financing leases, a lessee recognizes amortization
of the right-of-use asset as an operating expense over the lease
term separately from interest on the lease liability. The ASU
requires that assets and liabilities be presented and disclosed
separately, and the liabilities must be classified appropriately as
current and noncurrent. The ASU further requires additional
disclosure of certain qualitative and quantitative information
related to lease agreements. The ASU was effective for the Company
beginning on January 1, 2019, at which time we adopted the new
standard using the modified retrospective approach as of the date
of adoption. Upon
adoption, we recognized a right-of-use asset of $265,825 and a
lease liability of $265,825 related to the existing office lease
that is classified as an operating lease. Supplemental balance
sheet information related to the lease on March 31, 2020 and
December 31, 2019 is as follows:
|
Description
|
Classification
|
March
31, 2020
|
December
31, 2019
|
|
Right of Use Asset
– Lease, net
|
Other
assets (non-current)
|
$177,189
|
$195,441
|
|
Operating Lease
liability – Short-term
|
Accrued
liabilities
|
75,809
|
74,373
|
|
Operating Lease
liability – Long-term
|
Other long-term
liabilities
|
103,119
|
122,605
|
8
Note 4. 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 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 6.85% at March 31, 2020) 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 three months ended March 31, 2020, the Company sold
approximately $1,052,000 ($1,082,000 - March 31, 2019) of its
accounts receivable to the Purchaser. As of March 31, 2020,
approximately $99,000 ($324,000 - December 31, 2019) of these
receivables remained outstanding. Additionally, as of March 31,
2020, the Company had approximately $156,000 available under the
financing line with the financial institution ($67,000 - December
31, 2019). After deducting estimated fees, allowance for bad debts
and advances from the Purchaser, the net receivable from the
Purchaser amounted to $9,900, at March 31, 2020 ($32,400 - December
31, 2019), 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 $11,026 for the three months ended March 31, 2020
($13,782 - March 31, 2019). These financing line fees are
classified on the statements of operations as interest
expense.
Note 5: Debt Obligations
Three
debt obligations became due on January 1, 2020. The total amount of
these debt instruments is approximately $774,000 as of March 31,
2020. The due dates have not been extended. The amount of debt with
related parties is approximately $510,000 as of March 31,
2020.
Note 6. 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
income (loss) per share for the three months ended:
|
|
Three
Months Ended March 31,
|
|
|
|
2020
|
2019
|
|
Numerator for basic
and diluted net income (loss) per share:
|
|
|
|
Net
income (loss)
|
$(6,062)
|
$35,036
|
|
Basic and diluted
net income (loss) per share
|
$.00
|
$.00
|
|
|
|
|
|
Weighted average
common shares outstanding
|
|
|
|
Basic and diluted
shares
|
29,061,883
|
29,061,883
|
|
|
|
|
|
Anti-dilutive
shares excluded from net income (loss) per share
calculation
|
32,673,741
|
28,123,143
|
Certain common shares issuable under stock options and convertible
notes payable have been omitted from the diluted net income (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.
9
Note 7. Stock Option Plans and Agreements
The
Company has approved stock options plans and agreements covering up
to an aggregate of 11,020,000 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.
The
fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model. 75,000 options were
granted for the three months ended March 31, 2020. 50,000 options
were granted for the three months ended March 31, 2019. The
following assumptions were used for the three months ended March
31, 2020.
|
Risk-free interest
rate
|
1.40%
|
|
Expected dividend
yield
|
0%
|
|
Expected stock
price volatility
|
100%
|
|
Expected life of
options
|
2.75 years
|
The
Company recorded expense for options issued to employees and
independent service providers of $2,130 and $260 for the three
months ended March 31, 2020 and 2019, respectively.
At
March 31, 2020, there was no unrecognized compensation cost related
to non-vested options. 25,000 options vested during the three
months ended March 31, 2020.
A
summary of all stock option activity for the three months ended
March 31, 2020 follows:
|
|
Number
of Options Outstanding
|
Weighted
Average Exercise Price
|
|
Remaining
Contractual Term
|
|
Aggregate
Intrinsic Value
|
|
Outstanding at
December 31, 2019
|
10,910,500
|
$.05
|
|
|
|
|
|
Granted
|
75,000
|
.05
|
|
|
|
|
|
Forfeited
|
0
|
.00
|
|
|
|
|
|
Expired
|
(35,000)
|
.05
|
|
|
|
|
|
Outstanding at
March 31, 2020
|
10,950,500
|
$.05
|
|
3.8
years
|
|
$174,700
|
|
|
|
|
|
|
|
|
|
At March 31, 2020 -
vested or
|
|
|
|
|
|
|
|
expected to vest
and exercisable
|
10,950,500
|
$.05
|
|
3.8
years
|
|
$174,700
|
Note 8. Related Party Accounts Receivable and Accrued Interest
Payable
Included
in accrued interest payable is amounts due to related parties of
$165,216 at March 31, 2020 ($157,067 - December 31,
2019).
Note 9. Subsequent Events
Subsequent
to March 31, 2020, the Company entered into a U. S. Small Business
Administration (“SBA”) Note Payable agreement (the
“Note”) with Upstate National Bank
(“Lender”). The signed Note was provided to the Company
on April 10, 2020. The Note provides funding to the Company in the
amount of $957,373 and is restricted to certain uses and cannot be
used to repay debt. The interest rate on the Note is fixed at 1.00%
and the payments of principal and interest shall be deferred for
six months from the date of the Note. Interest shall continue to
accrue. The loan evidenced by the Note was made under the Paycheck
Protection Plan (15 U.S.C. § 636(a)(36)) enacted by Congress
under the Coronavirus Aid, Relief and Economic Security Act (the
“Act”). The Act (including the guidance issued by SBA
and U.S. Department of the Treasury related thereto) provides that
all or a portion of this Note may be forgiven upon request from
Borrower to Lender, subject to requirements in the Note and
Act. All remaining
principal and accrued interest is due and payable two (2) years
from date of Note.
On
April 15, 2020, the Company’s Board approved the 2020 stock
option plan, which grants options to purchase up to an aggregate of
1,500,000 common shares. Options are nonqualified since the Company
has decided not to seek stockholder approval of the 2020
Plan.
************
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 disclaim
any obligation to update information contained in any
forward-looking statements.
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.
10
Impact of COVID-19 on Our Business
The
COVID-19 pandemic has resulted, and is likely to continue to
result, in significant economic disruption. It has already
disrupted global travel and supply chains and adversely impacted
global commercial activity. Considerable uncertainty still
surrounds COVID-19 and its potential long-term economic effects, as
well as the effectiveness of any responses taken by government
authorities and businesses. The travel restrictions, limits on
hours of operations and/or closures of non-essential businesses,
and other efforts to curb the spread of COVID-19 have significantly
disrupted business activity globally.
During
the first quarter of 2020, our managed support services,
cybersecurity projects and software license revenues were minimally
impacted by the impact of the COVID-19 pandemic on our
customers’ operational priorities. We are also continuing to
adapt our operations to meet the challenges of this uncertain and
rapidly evolving situation, including establishing remote working
arrangements for our employees, limiting non-essential business
travel, and transitioning towards virtual sales and marketing
events. Our sales and marketing expenses decreased during the first
quarter of 2020, and we expect these expenses will be lower
compared to prior year periods due to the ongoing impact of the
COVID-19 pandemic on travel and in-person marketing events.
We will continue to actively monitor the nature and extent of the
impact to our business, operating results, and financial
condition.
Business
Headquartered
in Pittsford, New York, Infinite Group, Inc. is a provider of
managed IT and virtualization services and a developer and provider
of cybersecurity tools and solutions to private businesses and
government agencies. As part of these services we:
●
focus on key
security services (virtual CISO, compliance review and assessment,
incident response, penetration testing, and vulnerability
assessments) to solve and simplify security for small and medium
sized enterprises (SMEs), government agencies, and certain large
commercial enterprises. We act as the security layer to both
internal IT and third-party IT
(MSPs, VARs, MSSPs) organizations. We work with both our channel
partners and direct customers to provide these
services;
●
developed and
brought to market our patent pending, automated vulnerability
management solution through our OEM business, Nodeware®, which
we sell through distribution and channel partners. We are also a
master distributor for other security solutions such as Webroot, a
cloud-based endpoint security platform solution, where we market to
and provide support for over 300 reseller partners across North
America;
●
provide level 2
technical and security support across the application layer and
physical and virtual infrastructure including software-based
managed services supporting enterprise and federal government
customers through our partnership with Perspecta; and
●
are an Enterprise
Level sales and professional services partner with VMware selling
virtualization licenses and solutions and providing virtualization
services support to commercial and government customers including
the New York State and Local Government and Education (SLED)
entities and the New York State Office of General Services (NYS
OGS).
Business Strategy
Our
strategy is to build our business by designing, developing, and
marketing cybersecurity-based services, products and solutions that
address the evolving landscape in cybersecurity for our channel and
customers. We have patent pending technology in the market and we
continue to develop other additional products and solutions that
can be added to our channel of domestic and international partners
and distributors. Our products and solutions are designed to
simplify the security needs in customer and partner environments,
with a focus on the mid-tier Enterprise market and below. We enable
our partners by providing recurring revenue-based business models
for both recurring services and through our automated and
continuous security solutions. Products may be sold as standalone
solutions or integrated into existing environments to further
automate the management of cybersecurity and related IT functions.
Our ability to differentiate ourselves in the market at a time when
competition and consolidation in these markets is on the rise has
proven successful due to our increased cybersecurity
engagements.
Our
cybersecurity business is comprised of three components: managed
security services, product development and deployment, and
integration of third-party security solutions into our security
offerings to our channel and customers. We provide cybersecurity
services and technical consulting resources to support both our
channel partners and end customers. For example, we sell our
proprietary product, Nodeware, through both our direct partners and
through other 3rd party partner distribution and agents so they can
either sell it as a standalone solution or part of other technical
services they provide to their customers. This enables the channel
partner to develop a base of recurring revenue. We also provide our
cybersecurity services through our channel partners as a
cybersecurity overlay to the technical services they already
provide.
Our
goal is to maintain our base of opportunities in our VMware
business in both the public and commercial sector.
Opportunistically, we will continue to identify license and
services engagements as they arise.
We are
working to expand our managed services business with our prime
partner, Perspecta, and the current federal enterprise customer and
its customers.
11
Results of Operations
Comparison of the Three Months Ended March 31, 2020 and
2019
The
following table compares our statements of operations data for the
three months ended March 31, 2020 and 2019. The trends suggested by
this table are not indicative of future operating
results.
|
|
Three Months Ended March
31,
|
|||||
|
|
|
|
|
|
2020
vs. 2019
|
|
|
|
|
As a % of
|
|
As a
% of
|
Amount
of
|
%
Increase
|
|
|
2020
|
Sales
|
2019
|
Sales
|
Change
|
(Decrease)
|
|
|
|
|
|
|
|
|
|
Sales
|
$1,899,595
|
100.0%
|
$1,687,794
|
100.0%
|
$211,801
|
12.5%
|
|
Cost of
sales
|
1,123,066
|
59.1
|
1,057,170
|
62.6
|
65,896
|
6.2
|
|
Gross
profit
|
776,529
|
40.9
|
630,624
|
37.4
|
145,905
|
23.1
|
|
General and
administrative
|
374,530
|
19.7
|
277,605
|
16.4
|
96,925
|
34.9
|
|
Selling
|
346,701
|
18.3
|
253,306
|
15.0
|
93,395
|
36.9
|
|
Total costs and
expenses
|
721,231
|
38.0
|
530,911
|
31.4
|
190,320
|
35.8
|
|
Operating
income
|
55,298
|
2.9
|
99,713
|
5.9
|
(44,415)
|
(44.5)
|
|
Interest
expense
|
(61,360)
|
(3.2)
|
(64,677)
|
(3.8)
|
(3,317)
|
(5.1)
|
|
Net income
(loss)
|
$(6,062)
|
(0.3)%
|
$35,036
|
2.1%
|
$(41,098)
|
(117.3)%
|
|
|
|
|
|
|
|
|
|
Net income (loss)
per share - basic and diluted
|
$.00
|
|
$.00
|
|
$.00
|
|
Sales
Our
managed support service sales comprised approximately 60% of our
sales in 2020 and approximately 73% in 2019. Our cybersecurity
projects and software sales, primarily to SMEs, were approximately
34% of our total sales as compared to approximately 18% for
2019.
Sales
of virtualization subcontract projects have continued to decrease
since 2015 because VMware has continued to assign fewer projects to
us. Our virtualization subcontract project sales decrease of
approximately 76% from 2019 to 2020 was more than offset by sales
growth of approximately 108% from our cybersecurity projects and
software business during the three months ended March 31, 2019 as
compared to 2018. Our goal is to continue to grow our cybersecurity
projects and software business by using our expanding salesforce as
well as channel partners. We also hope to recapture some of our
VMware business in both the public and commercial sector by
building VMware license sales volume and services concurrently
directly with customers rather than relying on subcontract project
services. Other IT projects comprised the balance of our
sales.
Cost
of Sales and Gross Profit
Cost of
sales principally represents the cost of employee services related
to our IT Services Group. We have grown our cybersecurity projects
team to meet demand and terminated some support personnel in the
last year as part of efficiency measures. As virtualization project
sales decreased, related personnel cost of sales also
decreased.
Our
gross profit improved by $145,905 primarily due to improved
cybersecurity projects sales and better cost containment of
salaries as noted.
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 increased due
primarily to personnel increases and increases to professional fees
for legal and accounting services.
Selling
Expenses
The
increase in selling expenses is due to the hiring of salespeople
throughout 2019 to sell our cybersecurity services and software and
associated commissions due to the increased sales. The increase in
selling expenses from the hiring of new personnel was offset by
approximately $57,000 for capitalized labor relating to software
development costs.
Operating
Income
The
decrease in our operating income from the previous year is
principally attributable to the growth of our sales team and the
associated costs as well as professional fees incurred for the
three months ended March 31, 2020 as compared to 2019.
Interest
Expense
The
decrease in interest expense is principally attributable to the
decrease in interest rates over the last year.
Net
Income (loss)
The
decrease is attributable to the items discussed above for the three
months ended March 31, 2020 as compared to 2019.
Liquidity and Capital Resources
At
March 31, 2020, we had cash of $106,439 available for working
capital needs and planned capital asset expenditures. At March 31,
2020, we had a working capital deficit of approximately $3,386,000
and a current ratio of .15.
During
2020, we financed our business activities principally through cash
flows provided by operations and sales with recourse of our
accounts receivable. Our primary source of liquidity is cash
provided by collections of accounts receivable and our factoring
line of credit. We maintain an accounts
receivable financing line of credit with an independent financial
institution that allows us to sell selected accounts receivable
invoices to the financial institution with full recourse against us
in the amount of $2,000,000, including a sublimit for one major
client of $1,500,000. This provides us with the cash needed to
finance certain of our on-going costs and expenses. At March 31,
2020, we had financing availability, based on eligible accounts
receivable, of approximately $156,000 under this line. We pay fees
based on the length of time that the invoice remains
unpaid.
We
entered into unsecured lines of credit financing agreement (the
“LOC Agreements”) with three related parties in
previous years. The LOC Agreements provide for working capital of
up to $400,000 through January 1, 2020, $100,000 through July 31,
2022 and $75,000 through January 2, 2023. At March 31, 2020, we had
approximately $38,000 of availability under the LOC
Agreements.
At
March 31, 2020, we have current notes payable of $332,500 to third
parties, which includes convertible notes payable of $290,000. Also
included is $12,500 in principal amount of a note payable due on
June 30, 2016 but not paid. This note was issued in payment of
software we purchased in February 2016 and secured by a security
interest in the software. To date, the holder has not taken any
action to collect the amount past due on this note or to enforce
the security interest in the software.
We have
$950,000 of current maturities of long-term obligations to third
parties. This is comprised of various notes including $264,000 due
on January 1, 2020 which
has not been extended. We also have current maturities of long-term
obligations of approximately $246,000 to the Pension Benefit
Guaranty Corporation (the PBGC) with all principal due by September
15, 2018, which the due date has not been extended. We have
maturities of our long-term notes to third parties of $265,000 due
on January 1, 2018, which has not been renewed or amended and
$175,000 due on August 31, 2018, which have not been renewed or
amended.
We also
have current maturities of our long-term debt to related parties of
approximately $544,000 of which approximately $510,000 was due on
January 1, 2020 and has not been extended. Also included is a note
payable for $25,000 due to an officer of the Company which is due
on March 31, 2021 and a separate note for $9,000 due on January 1,
2021. We also have a current demand note payable to a related party
of $34,000.
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 LOC Agreement which was entered into on September 17, 2017 and
provides for working capital of up to $75,000 with interest at 6%
due quarterly through January 2, 2023. The balance is $70,000 at
March 31, 2020.
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
long-term obligations to third parties of $500,000 due on December
31, 2021.
We have
an unsecured line of credit financing agreement with our Chief
Operating Officer. It provides for working capital of up to
$100,000 with an interest rate of prime plus 1.5% due quarterly
through July 31, 2021. The balance is $90,000 at March 31,
2020.
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 $200,000 at March 31, 2020.
The following table
sets forth our cash flow information for the periods
presented:
|
Three
Months Ended March 31,
|
||
|
|
2020
|
2019
|
|
Net cash provided
(used) by operating activities
|
$169,167
|
$(15,203)
|
|
Net cash used by
investing activities
|
(62,446)
|
0
|
|
Net cash used by
financing activities
|
(6,680)
|
(2,010)
|
|
Net increase
(decrease) in cash
|
$100,041
|
$(17,213)
|
13
Cash
Flows Provided (Used) by Operating Activities
Our
operating cash flow is primarily affected by the overall
profitability of our contracts, our ability to invoice and collect
from our clients in a timely manner, and our ability to manage our
vendor payments. We bill our clients weekly or monthly after
services are performed as well as collect down payments depending
on the contract terms. Our net loss of $6,062 for 2020 was offset
in part by non-cash expenses and credits of $19,406. In addition, a
decrease in accounts receivable and other assets of $5,828, offset
by an increase in accrued payroll and other expenses payable of
$78,002 and in accounts payable of $71,993 resulting in cash
provided by operating activities of $169,167.
We
market Webroot and Nodeware to our IT channel partners who resell
to their customers. We continue to make investments in expanding
our sales of cyber security and Nodeware licenses to a growing
channel and direct commercial customers. Due to the time of
investment in cultivating relationships with our channel partners
and end customers needed to generate these new sales, we do not
expect to realize a return from our sales and marketing efforts for
one or more quarters. As a result, we may continue to experience
operating losses from these investments in personnel until
sufficient sales are generated. We expect to fund the cost for the
new sales personnel from our operating cash flows and incremental
borrowings, as needed.
Cash
Flows Used by Investing Activities
Cash
used by investing activities was $62,446 during the three months
ended March 31, 2020. It was primarily for capitalization of
software development costs as well as computer hardware for new
employees.
Cash
Flows Used by Financing Activities
Cash
used by financing activities was $6,680 for the three months ended
March 31, 2020 consisted of principal repayments to related
parties.
Credit Resources
We
believe the capital resources available under our factoring line of
credit, cash from additional related party and third-party loans
and cash generated by improving the results of our operations
provide sources to fund our ongoing operations and to support our
internal growth. Although we have no assurances, we believe that
related parties, who have previously provided working capital, and
third parties will continue to provide working capital loans on
similar terms, as in the past, as may be necessary to fund our
on-going operations for at least the next 12 months, however,
substantial doubt about our ability to continue as a going concern
has not been alleviated. If we experience significant growth in its
sales, we believe that this may require us to increase our
financing line, finance additional accounts receivable, or obtain
additional working capital from other sources to support its sales
growth.
We plan
to evaluate alternatives which may include renegotiating the terms
of our notes, seeking conversion of the notes to shares of common
stock and seeking funds to repay our notes. We continue to evaluate
repayment of our notes payable based on its cash flow.
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.
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
The COVID-19 pandemic could have a material adverse effect on our
results of operations, financial position, and cash
flows.
The
COVID-19 pandemic has created significant uncertainty and economic
disruption. Effects of the COVID-19 pandemic that may
negatively impact our business in future periods include, but are
not limited to: limitations on the ability of our customers to
conduct their business, purchase our products and services, and
make timely payments; curtailed consumer spending; deferred
purchasing decisions; delayed consulting services implementations;
and decreases in cybersecurity services and software license
revenues driven by channel partners.
14
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.
************
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:
May 11, 2020
|
/s/
James Villa
|
|
|
James
Villa
|
|
|
Chief
Executive Officer
|
|
|
(Principal
Executive Officer)
|
|
|
|
|
Date:
May 11, 2020
|
/s/
Donald Reeve
|
|
|
Donald
Reeve
|
|
|
Chairman
|
|
|
|
|
Date:
May 11, 2020
|
/s/
Richard Glickman
|
|
|
Richard
Glickman
|
|
|
VP
Finance and Chief Accounting Officer
|
|
|
(Principal
Financial Officer)
|
|
|
|
************
|
INDEX
TO EXHIBITS
|
|
|
|
|
|
Exhibit No.
|
Description
|
|
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.
|
|
15
INFINITE GROUP, INC.
2020 STOCK OPTION PLAN
1.
PURPOSES.
The purposes of
this Stock Option Plan (the “Plan”) are to attract and
retain the best qualified personnel for positions of substantial
responsibility, to provide additional incentive to the Employees of
the Company or its Subsidiaries, if any (as defined in Section 2
below), as well as other individuals who perform services for the
Company or its Subsidiaries, and to promote the success of the
Company’s business.
Options
granted hereunder may be either “incentive stock
options” as defined in Section 422A of the Internal Revenue
Code, or “non-qualified stock options,” at the
discretion of the Board and as reflected in the terms of the
written instrument evidencing an Option.
2.
DEFINITIONS.
As used herein, the following definitions shall apply:
(a) “Board”
shall mean the Committee, if one has been appointed, or the Board
of Directors of the Company, if no Committee is
appointed.
(b) “Common
Stock” shall mean the Common Stock of the Company, par value
$.001 per share.
(c) “Company”
shall mean Infinite Group, Inc., a Delaware
corporation.
(d) “Committee”
shall mean the Committee appointed by the Board of Directors in
accordance with paragraph (a) of Section 4 of the Plan, if one is
appointed.
(e) “Continuous
Status as an Employee” shall mean the absence of any
interruption or termination of service as an Employee. Continuous
Status as an Employee shall not be considered interrupted in the
case of sick leave, military leave, or any other leave of absence
approved by the Board.
(f) “Employee”
shall mean any person, including officers and directors, employed
by the Company or any Parent or Subsidiary of the Company. The
payment of a director’s fee by the Company shall not be
sufficient to constitute “employment” by the
Company.
(g) “Exchange
Act” shall mean the Securities Exchange Act of 1934, as
amended.
(h) “Incentive
Stock Option” shall mean a stock option intended to qualify
as an incentive stock option within the meaning of Section 422A of
the Internal Revenue Code of 1986, as amended.
(i) “Non-qualified
Stock Option” shall mean a stock option not intended to
qualify as an Incentive Stock Option.
(j)
“Option”
shall mean a stock option granted pursuant to the
Plan.
(k) “Optioned
Stock” shall mean the Common Stock subject to an
Option.
(l) “Optionee”
shall mean an Employee or other person who receives an
Option.
(m) “Parent”
shall mean a “parent corporation”, whether now or
hereafter existing, as defined in Section 425(e) of the Internal
Revenue Code of 1986, as amended.
(n) “Securities
Act” shall mean the Securities Act of 1933, as
amended.
(o) “SEC”
shall mean the Securities and Exchange Commission.
(p)
"Share” shall
mean a share of Common Stock, as adjusted in accordance with
Section 11 of the Plan.
(q)
"Subsidiary”
shall mean a “subsidiary corporation”, whether now or
hereafter existing, as defined in Section 425(f) of the Internal
Revenue Code of 1986, as amended.
3.
STOCK.
Subject
to the provisions of Section 11 of the Plan, the maximum aggregate
number of shares which may be optioned and sold under the Plan is
one million five hundred thousand (1,500,000) shares of authorized,
but unissued, or reacquired $.001 par value Common Stock. If an
Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares which were
subject thereto shall, unless the Plan shall have been terminated,
shall become available for further grant under the
Plan.
4.
ADMINISTRATION.
(a) Procedure. The
Company’s Board of Directors may appoint a Committee to
administer the Plan. The Committee shall consist of not less than
two members of the Board of Directors who shall administer the Plan
on behalf of the Board of Directors, subject to such terms and
conditions as the Board of Directors may prescribe. Once appointed,
the Committee shall continue to serve until otherwise directed by
the Board of Directors. From time to time the Board of Directors
may increase the size of the Committee and appoint additional
members thereof, remove members (with or without cause), and
appoint new members in substitution therefore, fill vacancies
however caused, or remove all members of the Committee and
thereafter directly administer the Plan.
If a
majority of the Board of Directors is eligible to be granted
Options or has been eligible at any time within the preceding year,
a Committee must be appointed to administer the Plan. The Committee
must consist of not less than two members of the Board of
Directors, all of whom are “non-employee directors” as
defined in Rule 16b-3 of the General Rules and Regulations
promulgated under the Exchange Act.
(b) Powers
of the Board. Subject to the provisions of the Plan, the
Board shall have the authority, in its discretion: (i) to grant
Incentive Stock Options, in accordance with Section 422A of the
Internal Revenue Code of 1986, as amended, or to grant
Non-Qualified Stock Options; (ii) to determine, upon review of
relevant information and in accordance with Section 8(a) of the
Plan, the fair market value of the Common Stock; (iii) to determine
the exercise price per share of Options to be granted, which
exercise price shall be determined in accordance with Section 8(a)
of the Plan; (iv) to determine the persons to whom, and the time or
times at which, Options shall be granted and the number of shares
to be represented by each Option; (v) to interpret the Plan; (vi)
to prescribe, amend and rescind rules and regulations relating to
the Plan; (vii) to determine the terms and provisions of each
Option granted (which need not be identical) and, with the consent
of the holder thereof, modify or amend each Option; (viii) to
accelerate or defer (with the consent of the Optionee) the exercise
date of any Option; (ix) to authorize any person to execute on
behalf of the Company any instrument required to effectuate the
grant of an Option previously granted by the Board; and (x) to make
all other determinations deemed necessary or advisable for the
administration of the Plan.
(c) Effect
of the Board’s Decision. All decisions, determinations
and interpretations of the Board shall be final and binding on all
Optionees and any other holders of any Options granted under the
Plan.
5.
ELIGIBILITY.
Incentive Stock
Options may be granted only to Employees. Nonqualified Stock
Options may be granted to Employees as well as directors (subject
to the limitations set forth in Section 4), independent contractors
and agents, as determined by the Board. Any person who has been
granted an Option may, if he is otherwise eligible, be granted an
additional Option or Options.
No
Incentive Stock Option may be granted to an Employee if, as the
result of such grant, the aggregate fair market value (determined
at the time each Option was granted) of the Shares with respect to
which such Incentive Stock Options are exercisable for the first
time by such Employee during any calendar year (under all such
plans of the Company and any Parent and Subsidiary) shall exceed
One Hundred Thousand Dollars ($100,000).
The
Plan shall not confer upon any Optionee any right with respect to
continuation of employment by the Company, nor shall it interfere
in any way with his right or the Company’s right to terminate
his employment at any time.
6.
TERM OF
PLAN.
The Plan shall
become effective upon the earlier to occur of (i) its adoption by
the Board of Directors, or (ii) its approval by vote of a majority
of the outstanding shares of the Company entitled to vote on the
adoption of the Plan. The Plan shall continue in effect for a
period of ten (10) years from the effective date of the Plan,
unless sooner terminated pursuant to Section 13 of the
Plan.
7.
TERM OF
OPTION. The term of
each Option shall be ten (10) years from the date of the grant
thereof, or such shorter term as may be provided in the instrument
evidencing the Option. However, in the case of an Incentive Stock
Option granted to an Employee who, immediately before the Incentive
Stock Option is granted, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Incentive
Stock Option shall be five (5) years from the date of grant thereof
or such shorter time as may be provided in the instrument
evidencing the Option.
8.
EXERCISE PRICE AND CONSIDERATION.
(a) The
per Share exercise price for the Shares to be issued pursuant to
the exercise of an Option shall be such price as is determined by
the Board, but shall be subject to the following:
(i) In
the case of an Incentive Stock Option
(A)
granted to an Employee who, immediately before the grant of such
Incentive Stock Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price
shall be no less than 110% of the fair market value per Share on
the date of the grant; or, as the case may be
(B) granted to an
Employee not subject to the provisions of Section 8(a)(i)(A), the
per Share exercise price shall be no less than one hundred percent
(100%) of the fair market value per Share on the date of the
grant.
(ii) In
the case of a Non-qualified Stock Option, the per Share exercise
price shall be no less than one hundred percent (100%) of the fair
market value per Share on the date of the grant.
(b)
The fair market
value shall be determined by the Board in its discretion; provided,
however, that where there is a public market for the Common Stock,
the fair market value per Share shall be the mean of the bid and
asked prices or, if applicable, the closing price of the Common
Stock on the date of the grant, as reported by the National
Association of Securities Dealers Automated Quotation (NASDAQ)
System or, in the event the Common Stock is listed on a stock
exchange, the fair market value per Share shall be the closing
price on the exchange on the date of the grant of the Option, as
reported in the Wall Street Journal.
(c)
The consideration
to be paid for the Shares to be issued upon the exercise of an
Option or in payment of any withholding taxes thereon, including
the method of payment, shall be determined by the Board and may
consist entirely of (i) cash, check or promissory note; (ii) other
Shares of Common Stock owned by the Employee that has a fair market
value on the date of surrender equal to the aggregate exercise
price of the Shares as to which said Option shall be exercised;
(iii) an assignment by the Employee of the net proceeds to be
received from a registered broker upon the sale of the Shares or
the proceeds of a loan from such broker in such amount; or (iv) any
combination of such methods of payment, or such other consideration
and method of payment for the issuance of Shares to the extent
permitted under Delaware law and meeting rules and regulations of
the SEC to plans meeting the requirements of Section 16(b)(3) of
the Exchange Act.
9.
EXERCISE OF OPTION.
(a) Procedure
for Exercise; Rights as a Stockholder. Any Option granted
hereunder shall be exercisable at such times and subject to such
conditions as may be determined by the Board, including performance
criteria with respect to the Company and/or the Optionee, as shall
be permissible under the terms of the Plan.
An
Option may not be exercised for a fraction of a Share.
An
Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms
of the instrument evidencing the Option by the person entitled to
exercise the Option and full payment for the Shares with respect to
which the Option is exercised has been received by the Company.
Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(c)of
the Plan; it being understood that the Company shall take such
action as may be reasonably required to permit use of an approved
payment method. Until the issuance, which in no event will be
delayed more than thirty (3) days from the date of the exercise of
the Option, (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company)
of the stock certificate evidencing such Shares, no right to vote
or receive dividends or any other rights as a stockholder shall
exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. No adjustment will be made for a dividend
or other right for which the record date is prior to the date the
sock certificate is issued, except as provided in the
Plan.
Exercise of an
Option in any manner shall result in a decrease in the number of
Shares which thereafter may be available, both for purposes of the
Plan and for the sale under the Option, by the number of Shares as
to which the Option is exercised.
(b) Termination
of Status as an Employee. If an Employee ceases to serve as
an Employee, he may, but only within thirty (30) days (or such
other period of time not exceeding three (3) months as is
determined by the Board) after the date he ceases to be an Employee
of the Company, exercise his Option to the extent that he was
entitled to exercise it as of the date of such termination. To the
extent that he was not entitled to exercise the Option at the date
of such termination, or if he does not exercise such option (which
he was entitled to exercise) within the time period specified
herein, the Option shall terminate. Notwithstanding the provisions
of this Section 9(b), in the event that the Employee’s
employment is terminated “for cause,” as such term is
defined and interpreted by the courts of the State of New York, the
Employee’s right to exercise his Option shall expire on the
date of his termination.
(c) Notwithstanding
the provisions of Section 9(b) above, in the event an Employee is
unable to continue his employment with the Company as a result of
his total and permanent disability (as defined in Section 105(d)(4)
of the Internal Revenue Code of 1986, as amended), he may, but only
with three (3) months (or such other period of time not exceeding
twelve (12) months as is determined by the Board) from the date of
disability, exercise his Option to the extent he was entitled to
exercise it at the date of such disability. To the extent that he
was not entitled to exercise the Option at the date of disability,
or if he does not exercise such Option (which he was entitled to
exercise) within the time specified herein, the Option shall
terminate.
(d) Death
of Optionee. In the event of the death of an
Optionee:
(i)
during the term of the Option who is at the time of his death an
Employee of the Company and who shall have been in Continuous
Status as an Employee since the date of the grant of the Option,
the Option may be exercised, at any time within twelve (12) months
following the date of death, by the Optionee’s estate or by a
person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent of the right to exercise that
would have accrued had the Optionee continued living one (1) month
after the date of death; or
(ii)
within thirty (30) days (or such other period of time not exceeding
three (3) months as is determined by the Board) after the
termination Continuous Status as an Employee, the Option may be
exercised, at any time within three (3) months following the date
of death, by the Optionee’s estate or by a person who
acquired the right to exercise the Option by bequest or
inheritance, but only to the extent of the right to exercise that
had accrued at the date of termination.
10.
NON-TRANSFERABILITY
OF OPTIONS. The
Option may not be sold, pledged, assigned, hypothecated or disposed
of in any manner other than by will or by the laws of descent or
distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
11.
ADJUSTMENTS UPON
CHANGES IN CAPITALIZATION OR MERGER. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock
covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan
but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option,
as well as the price per share of Common Stock covered by each such
outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock
resulting from a stock split or the payment of a stock dividend
with respect to the Common Stock or any other increase or decrease
in the number of issued shares of Common Stock effected without
receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not
be deemed to have been “effected without receipt of
consideration.” Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or
price of shares of Common Stock subject to an Option.
In the
event of the proposed dissolution or liquidation of the Company, or
in the event of a proposed sale of all or substantially all of the
assets of the Company, or the merger of the Company with or into
another corporation, the Board of Directors of the Company shall,
as to outstanding Options, either (i) make appropriate provision
for the protection of any such outstanding Options by the
substitution on an equitable basis of appropriate stock of the
Company or of the merged, consolidated or otherwise reorganized
corporation which will be issuable in respect to one share of
Common Stock of the Company; provided, only that the excess of the
aggregate fair market value of the shares subject to the Options
immediately after such substitution over the market price thereof
is not more than the excess of the aggregate fair market value of
the shares subject to such Options immediately before such
substitution over the purchase price thereof, or (ii) upon written
notice to an Optionee, provide that all unexercised Options must be
exercised within a specified number of days of the date of such
notice or they will be terminated. In any case, the Board of
Directors may, in its discretion, advance the lapse of any waiting
or installment period and exercise dates.
12.
TIME FOR GRANTING
OPTIONS. The date of
grant of an Option shall, for all purposes, be the date on which
the Board makes the determination granting such Option. Notice of
the determination shall be given to each person to whom an Option
is so granted within a reasonable time after the date of such
grant.
13.
AMENDMENT AND TERMINATION OF THE PLAN.
(a)
The Board may amend
or terminate the Plan from time to time in such respects as the
Board may deem advisable; provided, however, that the following
revisions or amendments shall require the approval of the holders
of a majority of the outstanding shares of the Company entitled to
vote:
(i) any
increase in the number of Shares subject to the Plan, other than in
connection with an adjustment under Section 11 of the
Plan;
(ii)
any change in the designation of the class of persons eligible to
be granted Options; or
(iii)
any material increase in the benefits accruing to participants
under the Plan.
(b)
Stockholder Approval. If any
amendment requiring stockholder approval under Section 13(a) of the
Plan is made, such stockholder approval shall be solicited as
described in Section 17(a) of the Plan.
(c)
Effect of Amendment or
Termination. Any such amendment or termination of the Plan
shall not affect Options already granted and such Options shall
remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the
Optionee and the Company.
14.
CONDITIONS UPON
ISSUANCE OF SHARES.
Shares shall not be issued pursuant to the exercise of an Option
unless the exercise of such Option and the issuance and delivery of
such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities
Act, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which
the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such
compliance.
As a
condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute
such Shares if, in the opinion of counsel for the Company, such a
representation is required by, or appropriate under, any of the
aforementioned relevant provisions of law.
15.
RESERVATION OF
SHARES.
The Company shall
be under no obligation to reserve shares of capital stock to fill
Options. The grant of Options to Employees hereunder shall not be
construed to constitute the establishment of a trust of such shares
and no particular shares shall be identified as optioned and
reserved for Employees hereunder. The Company shall be deemed to
have complied with the terms of the Plan if, at the time of
issuance and delivery pursuant to the exercise of an Option, it has
a sufficient number of shares authorized and unissued or in its
treasury which may then be appropriated and issued for purposes of
the Plan, irrespective of the date when such shares were
authorized.
16.
OPTION
AGREEMENT.
Options shall be
evidenced by written option agreements in such form as the Board
shall approve.
17.
STOCKHOLDER
APPROVAL.
Continuation of the
Plan shall be subject to approval by the stockholders of the
Company within twelve (12) months before or after the date the Plan
is adopted. If such stockholder approval is obtained at a duly held
stockholders’ meeting, it may be obtained by the affirmative
vote of the holders of a majority of the outstanding shares of the
Company present or represented and entitled to vote thereon. The
approval of such stockholders of the Company shall be (1) solicited
substantially in accordance with Section 14(a) of the Exchange Act
and the rules and regulations promulgated thereunder, or (2)
solicited after the Company has furnished in writing to the holders
entitled to vote substantially the same information concerning the
Plan as that which would be required by the rules and regulations
in effect under Section 14(a) of the Exchange Act at the time such
information is furnished.
18.
OTHER
PROVISIONS. The Stock
Option Agreement authorized under the Plan shall contain such other
provisions, including without limitation restrictions upon the
exercise of the Option, as the Board of Directors of the Company
shall deem advisable. Any Incentive Stock Option Agreement shall
contain such limitations and restrictions upon the exercise of the
Incentive Stock Options as shall be necessary in order that such
Option will be an Incentive Stock Option as defined in Section 422A
of the Internal Revenue Code of 1986, as amended.
19.
INDEMNFICATION OF
BOARD. In addition to
such other rights of indemnification as they may have as directors
or as members of the Board, the members of the Board shall be
indemnified by the Company against the reasonable expenses,
including attorneys fees actually and necessarily incurred in
connection with the defense of any action, suit or proceeding, or
in connection with any appeal therein, to which they or any of them
may be a party by reason of any action taken or failure to act
under or in connection with the Plan or any Option granted
thereunder, and against all amounts paid by them in settlement
thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of
a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such
action, suit or proceeding that such Board member is liable for
negligence or misconduct in the performance of his duties, provided
that within 60 days after the institution of any such action, suit
or proceeding a Board member shall, in writing, offer the Company
the opportunity, at its own expense, to handle and defend the
same.
20.
OTHER COMPENSATION
PLANS. The adoption
of the Plan shall not affect any other stock option or incentive or
other compensation plans in effect for the Company or any
Subsidiary, nor shall the Plan preclude the Company from
establishing any other forms of incentive or other compensation for
employees and directors of the Company or any
Subsidiary.
21.
SINGULAR, PLURAL;
GENDER. Whenever used
herein, nouns in the singular shall include the plural, and
masculine pronoun shall include the feminine gender.
22.
HEADINGS, ETC., NO
PART OF PLAN.
Headings of Articles and Sections hereof are inserted for
convenience and reference; they constitute no part of the
Plan.
Adopted by the Board of Directors: April 15, 2020
EXHIBIT 31.1
CERTIFICATION
I,
James Villa, certify that:
1. I
have reviewed this quarterly report on Form 10-Q of Infinite Group,
Inc.;
2. Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the
period covered by this report;
3. Based
on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
4. The
registrant’s other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a)
Designed such disclosure controls and procedures,
or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating
to the registrant is made known to us by others within those
entities, particularly during the period in which this report is
being prepared;
b)
Designed such
internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
c)
Evaluated the
effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
d)
Disclosed in this
report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal
quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting;
and
5. The
registrant’s other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the
audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
a)
All significant
deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to
record, process, summarize and report financial information;
and
b)
Any fraud, whether
or not material, that involves management or other employees who
have a significant role in the registrant’s internal control
over financial reporting.
Date:
May 11, 2020
/s/
James Villa
James
Villa
Chief
Executive Officer
(Principal
Executive Officer)
EXHIBIT 31.2
CERTIFICATION
I,
Richard Glickman, certify that:
1. I
have reviewed this quarterly report on Form 10-Q of Infinite Group,
Inc.;
2. Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the
period covered by this report;
3. Based
on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
4. The
registrant’s other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a)
Designed such disclosure controls and procedures,
or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating
to the registrant is made known to us by others within those
entities, particularly during the period in which this report is
being prepared;
b)
Designed such
internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
c)
Evaluated the
effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
d)
Disclosed in this
report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal
quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting;
and
5. The
registrant’s other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the
audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
a)
All significant
deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to
record, process, summarize and report financial information;
and
b)
Any fraud, whether
or not material, that involves management or other employees who
have a significant role in the registrant’s internal control
over financial reporting.
Date:
May 11, 2020
/s/
Richard Glickman
Richard
Glickman
VP
Finance and Chief Accounting Officer
(Principal
Financial and Accounting Officer)
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Infinite Group, Inc.
(the "Company") on Form 10-Q for the period ending March 31, 2020
as filed with the Securities and Exchange Commission
(“SEC”) on the date hereof (the "Report"), I, James
Villa, Chief Executive Officer of the Company, certify, pursuant to
18 U.S.C. § 1350, as adopted pursuant to § 906 of the
Sarbanes-Oxley Act of 2002, that:
(1)
The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended;
and
(2)
The information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Company.
A
signed original of this written statement has been provided to the
Company and will be retained by the Company and furnished to the
SEC or its staff upon request.
Dated: May 11, 2020
__/s/ James
Villa
James Villa
Chief Executive Officer
(Principal Executive Officer)
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Infinite Group, Inc.
(the "Company") on Form 10-Q for the period ending March 31, 2020
as filed with the Securities and Exchange Commission
(“SEC”) on the date hereof (the "Report"), I, Richard
Glickman, VP Finance and Chief Accounting Officer of the Company,
certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to
§ 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended;
and
(2)
The information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Company.
A
signed original of this written statement has been provided to the
Company and will be retained by the Company and furnished to the
SEC or its staff upon request.
Dated: May 11, 2020
__/s/ Richard
Glickman
Richard Glickman
VP Finance and Chief Accounting Officer
(Principal Financial and Accounting Officer)