Infinite (IMCI) 10-Q 12 Nov 20 2020 Q3 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2020	Nov. 10, 2020
Cover [Abstract]
Entity Registrant Name	INFINITE GROUP INC
Entity Central Index Key	0000884650
Document Type	10-Q
Document Period End Date	Sep. 30, 2020
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Is Entity's Reporting Status Current?	No
Entity Shell Company	false
Entity Interactive Data Current	Yes
Entity Incorporation State Country Code	DE
Entity File Number	0-21816
Entity Common Stock, Shares Outstanding		29,061,883
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2020

BALANCE SHEETS (Unaudited)

BALANCE SHEETS (Unaudited) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Current Assets
Cash	$ 206,704	$ 6,398
Accounts receivable, net of allowances of $12,629 and $17,455, respectively	930,470	432,289
Prepaid expenses and other current assets	103,603	65,285
Total current assets	1,240,777	503,972
Right of use asset - lease, net	139,863	195,441
Property and equipment, net	10,836	5,915
Software, net	322,435	184,676
Deposits	6,937	6,937
Total assets	1,720,848	896,941
Current Liabilities
Accounts payable	268,792	217,777
Accrued payroll	508,310	218,352
Accrued interest payable	622,950	939,440
Accrued retirement	262,055	254,348
Deferred revenue	340,052	178,824
Accrued expenses - other	83,336	64,207
Operating lease liability - short-term	78,750	74,373
Current maturities of long-term obligations	695,000	950,000
Current maturities of long-term obligations - related parties	529,225	512,935
Notes payable	262,500	332,500
Notes payable - related parties	20,000	58,000
Total current liabilities	3,670,970	3,800,756
Long-term obligations:
Paycheck Protection Plan loan (Note 5)	957,372	0
Notes payable - other	658,280	486,890
Notes payable - related parties	360,000	394,000
Operating lease liability - long-term	63,050	122,605
Total liabilities	5,709,672	4,804,251
Stockholders' deficiency:
Common stock, $.001 par value, 60,000,000 shares authorized; 29,061,883 shares issued and outstanding	29,061	29,061
Additional paid-in capital	30,744,394	30,638,173
Accumulated deficit	(34,762,279)	(34,574,544)
Total stockholders' deficiency	(3,988,824)	(3,907,310)
Total liabilities and stockholders' deficiency	$ 1,720,848	$ 896,941

BALANCE SHEETS (Parenthetical)

BALANCE SHEETS (Parenthetical) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Allowances for accounts receivable	$ 12,629	$ 17,455
Common stock, par value	$ .001	$ 0.001
Common stock, shares authorized	60,000,000	60,000,000
Common stock, shares issued	29,061,883	29,061,883
Common stock, shares outstanding	29,061,883	29,061,883

STATEMENTS OF OPERATIONS (Unaud

STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Income Statement [Abstract]
Sales	$ 1,844,549	$ 1,819,699	$ 5,447,505	$ 5,286,141
Cost of sales	1,058,450	1,197,315	3,206,291	3,386,526
Gross profit	786,099	622,384	2,241,214	1,899,615
Costs and expenses:
General and administrative	462,265	335,528	1,239,021	959,535
Selling	327,109	311,647	973,034	822,307
Total costs and expenses	789,374	647,175	2,212,055	1,781,842
Operating income (loss)	(3,275)	(24,791)	29,159	117,773
Interest income (expense):
Interest income	268	0	701	0
Interest expense - related parties	(13,737)	(20,890)	(46,383)	(69,659)
Interest expense - other	(93,192)	(47,390)	(175,212)	(142,010)
Total interest expense	(106,929)	(68,280)	(221,595)	(211,669)
Other income	1,088	0	4,000	0
Total other income (expense)	(105,573)	(68,280)	(216,894)	(211,669)
Net loss	$ (108,848)	$ (93,071)	$ (187,735)	$ (93,896)
Net loss per share - basic and diluted	$ .00	$ .00	$ (.01)	$ .00
Weighted average shares outstanding - basic	29,061,883	29,061,883	29,061,883	29,061,883
Weighted average shares outstanding - diluted	29,061,883	29,061,883	29,061,883	29,061,883

STATEMENTS OF CHANGES IN STOCKH

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY) - USD ($)	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Total
Beginning balance, shares at Dec. 31, 2018	29,061,883
Beginning balance, amount at Dec. 31, 2018	$ 29,061	$ 30,593,366	$ (34,622,521)	$ (4,000,094)
Stock based compensation		260		260
Net income (loss)			35,036	35,036
Ending balance, shares at Mar. 31, 2019	29,061,883
Ending balance, amount at Mar. 31, 2019	$ 29,061	30,593,626	(34,587,485)	(3,964,798)
Beginning balance, shares at Dec. 31, 2018	29,061,883
Beginning balance, amount at Dec. 31, 2018	$ 29,061	30,593,366	(34,622,521)	(4,000,094)
Net income (loss)				(93,896)
Ending balance, shares at Sep. 30, 2019	29,061,883
Ending balance, amount at Sep. 30, 2019	$ 29,061	30,613,412	(34,716,417)	(4,073,944)
Beginning balance, shares at Mar. 31, 2019	29,061,883
Beginning balance, amount at Mar. 31, 2019	$ 29,061	30,593,626	(34,587,485)	(3,964,798)
Stock based compensation		14,250		14,250
Net income (loss)			(35,861)	(35,861)
Ending balance, shares at Jun. 30, 2019	29,061,883
Ending balance, amount at Jun. 30, 2019	$ 29,061	30,607,876	(34,623,346)	(3,986,409)
Stock based compensation		5,536		5,536
Net income (loss)			(93,071)	(93,071)
Ending balance, shares at Sep. 30, 2019	29,061,883
Ending balance, amount at Sep. 30, 2019	$ 29,061	30,613,412	(34,716,417)	(4,073,944)
Beginning balance, shares at Dec. 31, 2019	29,061,883
Beginning balance, amount at Dec. 31, 2019	$ 29,061	30,638,173	(34,574,544)	(3,907,310)
Stock based compensation		2,130		2,130
Net income (loss)			(6,062)	(6,062)
Ending balance, shares at Mar. 31, 2020	29,061,883
Ending balance, amount at Mar. 31, 2020	$ 29,061	30,640,303	(34,580,606)	(3,911,242)
Beginning balance, shares at Dec. 31, 2019	29,061,883
Beginning balance, amount at Dec. 31, 2019	$ 29,061	30,638,173	(34,574,544)	(3,907,310)
Net income (loss)				(187,735)
Ending balance, shares at Sep. 30, 2020	29,061,883
Ending balance, amount at Sep. 30, 2020	$ 29,061	30,744,394	(34,762,279)	(3,988,824)
Beginning balance, shares at Mar. 31, 2020	29,061,883
Beginning balance, amount at Mar. 31, 2020	$ 29,061	30,640,303	(34,580,606)	(3,911,242)
Stock based compensation		16,850
Net income (loss)			(72,825)	(72,825)
Ending balance, shares at Jun. 30, 2020	29,061,883
Ending balance, amount at Jun. 30, 2020	$ 29,061	30,657,153	(34,653,431)	(3,967,217)
Stock based compensation		87,241		87,241
Net income (loss)			(108,848)	(108,848)
Ending balance, shares at Sep. 30, 2020	29,061,883
Ending balance, amount at Sep. 30, 2020	$ 29,061	$ 30,744,394	$ (34,762,279)	$ (3,988,824)

STATEMENTS OF CASH FLOWS (Unaud

STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Cash flows from operating activities:
Net loss	$ (187,735)	$ (93,896)
Adjustments to reconcile net loss to net cash used by operating activities:
Stock based compensation	106,221	20,046
Depreciation and amortization	63,792	15,372
Bad debt expense	5,000	0
Change in assets:
Accounts receivable	(503,181)	(303,208)
Prepaid expenses and other assets	(38,318)	(72,320)
Change in liabilities:
Accounts payable	51,015	(71,689)
Accrued expenses	(7,403)	189,253
Deferred revenue	161,228	163,482
Accrued retirement	7,707	7,406
Net cash used by operating activities	(341,674)	(145,554)
Cash flows from investing activities:
Purchase of property, plant and equipment	(7,966)	(1,945)
Capitalization of software development costs	(193,190)	0
Net cash used by investing activities	(201,156)	(1,945)
Cash flows from financing activities:
Proceeds from note payable	957,372	0
Proceeds from issuance of notes payable - related party	0	200,000
Repayments of notes payable - short-term	(167,526)	0
Repayments of notes payable - related party	(46,710)	(50,050)
Net cash provided by financing activities	743,136	149,950
Net increase in cash	200,306	2,451
Cash - beginning of period	6,398	29,716
Cash - end of period	206,704	32,167
Supplemental Disclosures of Cash Flow Information:
Cash payments for interest	314,513	120,506
Cash payments for taxes	$ 0	$ 0

1. Basis of Presentation

1. Basis of Presentation	9 Months Ended
	Sep. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
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 and nine months ended September 30, 2020 are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2020.

2. Management Plans - Capital R

2. Management Plans - Capital Resources	9 Months Ended
	Sep. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Management Plans - Capital Resources	The Company reported net losses of $187,735 and $93,896 for the nine months ended September 30, 2020 and 2019, respectively, and stockholders’ deficiencies of $3,988,824 and $3,907,310 at September 30, 2020 and December 31, 2019, respectively. Accordingly, and due to a current working capital deficit of approximately $2.4 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.

3. Summary of Significant Accou

3. Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2020
Accounting Policies [Abstract]
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 Fair Value of Financial Instruments Revenue - Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Managed support services $ 1,192,469 $ 1,275,274 $ 3,533,777 $ 3,769,274 Cybersecurity projects and software 601,080 406,925 1,700,728 1,089,778 Other IT consulting services 51,000 137,500 213,000 427,089 Total sales $ 1,844,549 $ 1,819,699 $ 5,447,505 $ 5,286,141 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 and nine months ended September 30, 2020, sales to one client, including sales under subcontracts for services to several entities, accounted for 60.4% and 61.5%, respectively, of total sales. (62.0% and 63.1%, respectively, in 2019) and 49.6% of accounts receivable at September 30, 2020 (22.1% - December 31, 2019). Capitalization of Software for Resale Leases - Description Classification September 30, 2020 December 31, 2019 Right of use asset – lease, net Other assets $ 139,863 $ 195,441 Operating lease liability – short-term Accrued liabilities 78,750 74,373 Operating lease liability – long-term Other long-term liabilities 63,050 122,605

4. Sale of Certain Accounts Rec

4. Sale of Certain Accounts Receivable	9 Months Ended
	Sep. 30, 2020
Accounts Receivable, after Allowance for Credit Loss [Abstract]
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 September 30, 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 September 30, 2020, the Company sold approximately $1,437,000 ($3,398,000 – September 30, 2019) of its accounts receivable to the Purchaser. As of September 30, 2020, approximately $153,000 ($324,000 - December 31, 2019) of these receivables remained outstanding. Additionally, as of September 30, 2020, the Company had approximately $421,000 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 $15,300, at September 30, 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 $17,363 for the nine months ended September 30, 2020 ($38,382- September 30, 2019). These financing line fees are classified on the statements of operations as interest expense.

5. Debt Obligations

5. Debt Obligations	9 Months Ended
	Sep. 30, 2020
Debt Disclosure [Abstract]
Debt Obligations	Four debt obligations became due on January 1, 2020. The total amount of two of these debt instruments is approximately $503,000 as of September 30, 2020. The due dates have not been extended. This debt is with related parties. The third debt obligation is due to a third party for approximately $69,000. The fourth debt obligation of $334,000 plus accrued interest of $382,473 was extinguished when the Company entered into a Promissory Note agreement dated August 24, 2020 with a third party Lender. The new Note represents the remaining amount owed due to the Lender after a payment in the amount of $550,000 was made to settle previous notes and accrued interest held by the Lender. The principal amount of the new Note is $166,473. This note requires semi-annual interest only payments at the rate of 6% and becomes due on August 24, 2024. In connection with the extinguishment of the past due obligation, the Company issued the lender an option to purchase 500,000 shares of common stock at an exercise price of $.05 per share. The value of this option was approximately $50,000 and is recorded as interest expense. On April 10, 2020, the Company entered into a U. S. Small Business Administration (“SBA”) Note Payable agreement (the “Note”) with Upstate National Bank (“Lender”). The Note provides funding for working capital to the Company in the amount of $957,372 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 to July 21, 2021. Interest shall continue to accrue. The loan evidenced by the Note was made under the Paycheck Protection Program (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. The Company believes it has used the funds per the Act and will submit an application for 100% forgiveness of the loan during the fourth quarter of 2020. However, based on the uncertainty of the application review process, the full amount continues to be recorded as a liability as of September 30, 2020. The Company paid off a demand note to a related party in the amount of $34,000 during the third quarter.

6. Earnings Per Share

6. Earnings Per Share	9 Months Ended
	Sep. 30, 2020
Earnings Per Share [Abstract]
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 loss per share for the three and nine months ended: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Numerator for basic and diluted net loss per share: Net loss $ (108,848 ) $ (93,071 ) $ (187,735 ) $ (93,896 ) Basic and diluted net loss per share $ .00 $ .00 $ (.01 ) $ .00 Weighted average common shares outstanding Basic and diluted shares 29,061,883 29,061,883 29,061,883 29,061,883 Anti-dilutive shares excluded from net loss per share calculation 22,180,976 31,288,912 22,180,976 31,288,912 Certain common shares issuable under stock options and convertible notes payable have been omitted from the diluted net loss per share calculation because their inclusion is considered anti-dilutive because the exercise prices were greater than the average market price of the common shares or their inclusion would have been anti-dilutive.

7. Stock Option Plans and Agree

7. Stock Option Plans and Agreements	9 Months Ended
	Sep. 30, 2020
Share-based Payment Arrangement [Abstract]
Stock Option Plans and Agreements	The Company has approved stock options plans and agreements covering up to an aggregate of 12,717,000 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. On April 15, 2020, the Company’s board of directors approved the 2020 stock option plan, which grants options to purchase up to an aggregate of 1,500,000 common shares. As of September 30, 2020, 610,000 options to purchase shares remain unissued under the 2020 plan. Options issued to date are nonqualified since the Company has decided not to seek stockholder approval of the 2020 Plan. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. 1,555,000 options were granted for the nine months ended September 30, 2020 with a weighted average fair value of $ .07 per option. 2,973,500 options were granted for the nine months ended September 30, 2019. The following assumptions were used during the nine months ended September 30, 2020. Risk-free interest rate 0.18%-1.40% Expected dividend yield 0% Expected stock price volatility 100% Expected life of options 2.25-3.01 years The Company recorded expense for options issued to employees and independent service providers of $34,341 and $53,318 for the three and nine months ended September 30, 2020, respectively ($5,536 and $11,332 in 2019). The Company recorded expense for options issued for loan financing consideration of $52,900 for the three and nine months ended September 30, 2020, respectively ($0 and $14,250 in 2019). At September 30, 2020, there was no unrecognized compensation cost related to non-vested options and 125,000 options vested during the nine months ended September 30, 2020. A summary of all stock option activity for the nine months ended September 30, 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 1,555,000 .07 Forfeited (25,000 ) .05 Expired (335,000 ) .15 Outstanding at September 30, 2020 12,105,500 $ .05 3.5 years $ 713,300 At September 30, 2020 - Vested or expected to vest 12,105,500 $ .05 3.5 years $ 713,300 Exercisable 11,585,500 $ .05 3.5 years $ 689,300

8. Related Party Accounts Recei

8. Related Party Accounts Receivable and Accrued Interest Payable	9 Months Ended
	Sep. 30, 2020
Related Party Transactions [Abstract]
Related Party Accounts Receivable and Accrued Interest Payable	Included in accrued interest payable is amounts due to related parties of $161,783 at September 30, 2020 ($157,067 - December 31, 2019).

9. Subsequent Event

9. Subsequent Event	9 Months Ended
	Sep. 30, 2020
Subsequent Events [Abstract]
Subsequent Events	Subsequent to September 30, 2020, the Company applied for forgiveness of the Payroll Protection Program of approximately $957,000 using 100% eligible payroll expenses. Given current guidance that is available, the Company believes that it should be eligible to achieve forgiveness of the full loan amount, but this income will not be recognized until the eligible expenses are certified by the Lender and the federal government. Any such forgiveness of indebtedness, in accordance with the CARES Act, does not give rise to federal taxable income, but these forgiven expenses may not also be deducted for federal tax return purposes. If not forgiven, this funding accrues interest at a rate of 1% per annum beginning on April 10, 2020.

3. Summary of Significant Acc_2

3. Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2020
Accounting Policies [Abstract]
Reclassifications	Reclassifications
Fair Value of Financial Instruments	Fair Value of Financial Instruments
Revenue	Revenue - Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Managed support services $ 1,192,469 $ 1,275,274 $ 3,533,777 $ 3,769,274 Cybersecurity projects and software 601,080 406,925 1,700,728 1,089,778 Other IT consulting services 51,000 137,500 213,000 427,089 Total sales $ 1,844,549 $ 1,819,699 $ 5,447,505 $ 5,286,141 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 and nine months ended September 30, 2020, sales to one client, including sales under subcontracts for services to several entities, accounted for 60.4% and 61.5%, respectively, of total sales. (62.0% and 63.1%, respectively, in 2019) and 49.6% of accounts receivable at September 30, 2020 (22.1% - December 31, 2019).
Capitalization of Software for Resale	Capitalization of Software for Resale
Leases	Leases - Description Classification September 30, 2020 December 31, 2019 Right of use asset – lease, net Other assets $ 139,863 $ 195,441 Operating lease liability – short-term Accrued liabilities 78,750 74,373 Operating lease liability – long-term Other long-term liabilities 63,050 122,605

3. Summary of Significant Acc_3

3. Summary of Significant Accounting Policies (Tables)	9 Months Ended
	Sep. 30, 2020
Accounting Policies [Abstract]
Disaggregation of revenue	Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Managed support services $ 1,192,469 $ 1,275,274 $ 3,533,777 $ 3,769,274 Cybersecurity projects and software 601,080 406,925 1,700,728 1,089,778 Other IT consulting services 51,000 137,500 213,000 427,089 Total sales $ 1,844,549 $ 1,819,699 $ 5,447,505 $ 5,286,141
Leases	Description Classification September 30, 2020 December 31, 2019 Right of use asset – lease, net Other assets $ 139,863 $ 195,441 Operating lease liability – short-term Accrued liabilities 78,750 74,373 Operating lease liability – long-term Other long-term liabilities 63,050 122,605

6. Earnings Per Share (Tables)

6. Earnings Per Share (Tables)	9 Months Ended
	Sep. 30, 2020
Earnings Per Share [Abstract]
Loss per share, basic and diluted	Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Numerator for basic and diluted net loss per share: Net loss $ (108,848 ) $ (93,071 ) $ (187,735 ) $ (93,896 ) Basic and diluted net loss per share $ .00 $ .00 $ (.01 ) $ .00 Weighted average common shares outstanding Basic and diluted shares 29,061,883 29,061,883 29,061,883 29,061,883 Anti-dilutive shares excluded from net loss per share calculation 22,180,976 31,288,912 22,180,976 31,288,912

7. Stock Option Plans and Agr_2

7. Stock Option Plans and Agreements (Tables)	9 Months Ended
	Sep. 30, 2020
Share-based Payment Arrangement [Abstract]
Stock option valuation assumptions	Risk-free interest rate 0.18%-1.40% Expected dividend yield 0% Expected stock price volatility 100% Expected life of options 2.25-3.01 years
Stock option activity	Number of Options Outstanding Weighted Average Exercise Price Remaining Contractual Term Aggregate Intrinsic Value Outstanding at December 31, 2019 10,910,500 $ .05 Granted 1,555,000 .07 Forfeited (25,000 ) .05 Expired (335,000 ) .15 Outstanding at September 30, 2020 12,105,500 $ .05 3.5 years $ 713,300 At September 30, 2020 - Vested or expected to vest 12,105,500 $ .05 3.5 years $ 713,300 Exercisable 11,585,500 $ .05 3.5 years $ 689,300

2. Management Plans - Capital_2

2. Management Plans - Capital Resources (Details Narrative) - USD ($)	3 Months Ended						9 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019	Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Net loss	$ (108,848)	$ (72,825)	$ (6,062)	$ (93,071)	$ (35,861)	$ 35,036	$ (187,735)	$ (93,896)
Stockholders' deficiency	$ (3,988,824)	$ (3,967,217)	$ (3,911,242)	$ (4,073,944)	$ (3,986,409)	$ (3,964,798)	$ (3,988,824)	$ (4,073,944)	$ (3,907,310)	$ (4,000,094)

3. Summary of Significant Acc_4

3. Summary of Significant Accounting Policies (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Total sales	$ 1,844,549	$ 1,819,699	$ 5,447,505	$ 5,286,141
Managed Support Services
Total sales	1,192,469	1,275,274	3,533,777	3,769,274
Cybersecurity Projects and Software
Total sales	601,080	406,925	1,700,728	1,089,778
Other IT Consulting Services
Total sales	$ 51,000	$ 137,500	$ 213,000	$ 427,089

3. Summary of Significant Acc_5

3. Summary of Significant Accounting Policies (Details 1) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Accounting Policies [Abstract]
Right of use asset - lease, net	$ 139,863	$ 195,441
Operating lease liability - short-term	78,750	74,373
Operating lease liability - long-term	$ 63,050	$ 122,605

3. Summary of Significant Acc_6

3. Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Accounting Policies [Abstract]
Software development capitalized costs, gross	$ 387,405		$ 387,405		$ 194,215
Software development capitalized costs accumulated amortization	(64,969)		(64,969)		(9,539)
Software development capitalized costs, net	322,435		322,435		$ 184,676
Amortization of software development capitalized costs	$ 24,914	$ 0	$ 55,430	$ 0

4. Sale of Certain Accounts R_2

4. Sale of Certain Accounts Receivable (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Accounts Receivable, after Allowance for Credit Loss [Abstract]
Accounts receivable sold	$ 1,437,000	$ 3,398,000
Outstanding receivables	153,000		$ 153,000		$ 324,000
Line of credit	421,000		421,000		67,000
Allowance for bad debts	$ 15,300		15,300		$ 32,400
Costs associated with financing line			$ 17,363	$ 38,382

5. Debt Obligations (Details Na

5. Debt Obligations (Details Narrative)	Sep. 30, 2020USD ($)
Debt Disclosure [Abstract]
Debt instruments	$ 1,460,372

6. Earnings Per Share (Details)

6. Earnings Per Share (Details) - USD ($)	3 Months Ended						9 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2020	Sep. 30, 2019
Earnings Per Share [Abstract]
Net loss	$ (108,848)	$ (72,825)	$ (6,062)	$ (93,071)	$ (35,861)	$ 35,036	$ (187,735)	$ (93,896)
Basic and diluted net loss per share	$ .00			$ .00			$ (.01)	$ .00
Weighted average common shares outstanding basic and diluted shares	29,061,883			29,061,883			29,061,883	29,061,883
Anti-dilutive shares excluded from net loss per share calculation	22,180,976			31,288,912			22,180,976	31,288,912

7. Stock Option Plans and Agr_3

7. Stock Option Plans and Agreements (Details)	9 Months Ended
	Sep. 30, 2020
Expected dividend yield	0.00%
Expected stock price volatility	100.00%
Minimum
Risk-free interest rate	0.18%
Expected life of options	2 years 3 months
Maximum
Risk-free interest rate	1.40%
Expected life of options	3 years 4 days

7. Stock Option Plans and Agr_4

7. Stock Option Plans and Agreements (Details 1)	9 Months Ended
	Sep. 30, 2020USD ($)$ / sharesshares
Share-based Payment Arrangement [Abstract]
Number of options outstanding, beginning | shares	10,910,500
Number of options granted | shares	1,555,000
Number of options forfeited | shares	(25,000)
Number of options expired | shares	(335,000)
Number of options outstanding, ending | shares	12,105,500
Number of options vested or expected to vest | shares	12,105,500
Number of options exercisable | shares	11,585,500
Weighted average exercise price outstanding, beginning | $ / shares	$ .05
Weighted average exercise price granted | $ / shares	.07
Weighted average exercise price forfeited | $ / shares	.05
Weighted average exercise price expired | $ / shares	.15
Weighted average exercise price outstanding, ending | $ / shares	.05
Weighted average exercise price vested or expected to vest | $ / shares	.05
Weighted average exercise price exercisable | $ / shares	$ .05
Weighted-average remaining contractual term outstanding	3 years 6 months
Weighted-average remaining contractual term vested or expected to vest	3 years 6 months
Weighted-average remaining contractual term exercisable	3 years 6 months
Aggregate intrinsic value outstanding | $	$ 713,300
Aggregate intrinsic value vested or expected to vest | $	713,300
Aggregate intrinsic value exercisable | $	$ 689,300

7. Stock Option Plans and Agr_5

7. Stock Option Plans and Agreements (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Share-based Payment Arrangement [Abstract]
Option expense	$ 34,341	$ 5,536	$ 53,318	$ 11,332
Unrecognized compensation cost	$ 0		$ 0

8. Related Party Accounts Rec_2

8. Related Party Accounts Receivable and Accrued Interest Payable (Details Narrative) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Related Party Transactions [Abstract]
Accrued interest payable, related parties, current	$ 161,783	$ 157,067