Infinite (IMCI) 10-Q 17 Aug 21 2021 Q2 Quarterly report Financial data

Cover

Cover - shares	6 Months Ended
	Jun. 30, 2021	Aug. 10, 2021
Cover [Abstract]
Entity Registrant Name	INFINITE GROUP, INC.
Entity Central Index Key	0000884650
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Jun. 30, 2021
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2021
Entity Common Stock Shares Outstanding		29,595,883
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	000-21816
Entity Incorporation State Country Code	DE
Entity Tax Identification Number	52-1490422
Entity Address Postal Zip Code	14534
Entity Address Address Line 1	175 Sully’s Trail
Entity Address Address Line 2	Suite 202
Entity Address City Or Town	Pittsford
Entity Address State Or Province	NY
City Area Code	585
Local Phone Number	385-0610
Entity Interactive Data Current	Yes

BALANCE SHEETS

BALANCE SHEETS - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Current assets:
Cash	$ 3,966	$ 32,313
Accounts receivable, net of allowance of $10,089	796,656	953,826
Prepaid expenses and other current assets	181,338	96,483
Total current assets	981,960	1,082,622
Right of use asset - lease, net	81,733	120,777
Property and equipment, net	47,222	48,199
Software, net	401,285	354,905
Deposit	6,937	6,937
Total assets	1,519,137	1,613,440
Current liabilities:
Accounts payable	358,051	343,073
Accrued payroll	364,380	353,268
Accrued interest payable	592,344	531,409
Accrued retirement	269,995	264,675
Deferred revenue	429,466	320,042
Accrued expenses - other and other current liabilities	95,505	74,579
Operating lease liability - short-term	83,340	80,258
Current maturities of long-term obligations-other	807,723	1,004,445
Current maturities of long-term obligations-related parties	100,000	0
Notes payable - other	162,500	162,500
Notes payable - related parties	100,000	0
Total current liabilities	3,363,304	3,134,249
Long-term obligations:
Other	458,037	457,769
Related parties	1,120,048	1,015,820
Accrued payroll taxes	69,025	69,025
Operating lease liability - long-term	0	42,347
Total liabilities	5,010,414	4,719,210
Stockholders' deficiency:
Common stock, $.001 par value, 60,000,000 shares authorized; 29,595,883 and 29,061,883 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively	29,595	29,061
Additional paid-in capital	30,946,406	30,763,717
Accumulated deficit	(34,467,278)	(33,898,548)
Total stockholders' deficiency	(3,491,277)	(3,105,770)
Total liabilities and stockholders' deficiency	$ 1,519,137	$ 1,613,440

BALANCE SHEETS (Parenthetical)

BALANCE SHEETS (Parenthetical) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
BALANCE SHEETS
Allowances for accounts receivable	$ 10,089
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	60,000,000	60,000,000
Common stock, shares issued	29,595,883	29,061,883
Common stock, shares outstanding	29,595,883	29,061,883

STATEMENTS OF OPERATIONS (Unaud

STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
STATEMENTS OF OPERATIONS (Unaudited)
Revenue	$ 1,797,504	$ 1,703,361	$ 3,621,846	$ 3,602,956
Cost of revenue	1,109,223	1,024,775	2,182,138	2,147,841
Gross profit	688,281	678,586	1,439,708	1,455,115
Costs and expenses:
General and administrative	541,711	402,226	1,006,103	776,756
Selling	507,042	299,224	894,767	645,925
Total costs and expenses	1,048,753	701,450	1,900,870	1,422,681
Operating income (loss)	(360,472)	(22,864)	(461,162)	32,434
Other income (expense)
Interest income	1	433	3	433
Interest expense:
Related parties	(16,541)	(16,783)	(31,054)	(32,645)
Other	(39,491)	(36,523)	(76,517)	(82,021)
Total interest expense	(56,032)	(53,306)	(107,571)	(114,666)
Other income	0	2,912	0	2,912
Total other income (expense)	64,474	(49,961)	12,937	(111,321)
Net loss	$ (416,503)	$ (72,825)	$ (568,730)	$ (78,887)
Net loss per share - basic and diluted	$ (0.01)	$ 0	$ (0.02)	$ 0
Weighted average shares outstanding - basic	29,238,323	29,061,883	29,150,590	29,061,883
Weighted average shares outstanding - diluted	29,238,323	29,061,883	29,150,590	29,061,883

STATEMENTS OF CHANGES IN STOCKH

STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY (Unaudited) - USD ($)	3 Months Ended				6 Months Ended
	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2021	Jun. 30, 2020
Balance, amount	$ (3,229,749)	$ (3,105,770)	$ (3,911,242)	$ (3,907,310)	$ (3,105,770)	$ (3,907,310)
Stock based compensation, amount	81,920	28,248	16,850	2,130
Net loss	(416,503)	(152,227)	(72,825)	(6,062)	(568,730)	(78,887)
Issuance of common stock, amount	58,125
Exercise of stock options, amount	14,930
Balance, amount	$ (3,491,277)	$ (3,229,749)	$ (3,967,217)	$ (3,911,242)	$ (3,491,277)	$ (3,967,217)
Common Stock
Balance, shares	29,061,883	29,061,883	29,061,883	29,061,883	29,061,883	29,061,883
Balance, amount	$ 29,061	$ 29,061	$ 29,061	$ 29,061	$ 29,061	$ 29,061
Stock based compensation, shares	0	0	0	0
Stock based compensation, amount	$ 0	$ 0	$ 0	$ 0
Net loss	$ 0	$ 0	$ 0	$ 0
Issuance of common stock, shares	250,000
Issuance of common stock, amount	$ 250
Exercise of stock options, shares	284,000
Exercise of stock options, amount	$ 284
Balance, shares	29,595,883	29,061,883	29,061,883	29,061,883	29,595,883	29,061,883
Balance, amount	$ 29,595	$ 29,061	$ 29,061	$ 29,061	$ 29,595	$ 29,061
Additional Paid-In Capital
Balance, amount	30,791,965	30,763,717	30,640,303	30,638,173	30,763,717	30,638,173
Stock based compensation, amount	81,920	28,248	16,850	2,130
Net loss	0	0	0	0
Issuance of common stock, amount	57,875
Exercise of stock options, amount	14,646
Balance, amount	30,946,406	30,791,965	30,657,153	30,640,303	30,946,406	30,657,153
Retained Earnings (Accumulated Deficit)
Balance, amount	(34,050,775)	(33,898,548)	(34,580,606)	(34,574,544)	(33,898,548)	(34,574,544)
Stock based compensation, amount	0	0	0	0
Net loss	(416,503)	(152,227)	(72,825)	(6,062)
Issuance of common stock, amount	0
Exercise of stock options, amount	0
Balance, amount	$ (34,467,278)	$ (34,050,775)	$ (34,653,431)	$ (34,580,606)	$ (34,467,278)	$ (34,653,431)

STATEMENTS OF CASH FLOWS (Unaud

STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Cash flows from operating activities:
Net loss	$ (568,730)	$ (78,887)
Adjustments to reconcile net loss to net cash used by operating activities:
Stock based compensation	110,168	18,980
Depreciation and amortization	87,551	36,215
(Increase) decrease in assets:
Accounts receivable	157,170	(562,688)
Prepaid expenses and other assets	(26,730)	(2,582)
Increase (decrease) in liabilities:
Accounts payable	14,978	46,928
Deferred revenue	109,424	(18,762)
Accrued expenses	98,469	133,464
Accrued retirement	5,320	5,112
Net cash used by operating activities	(12,380)	(422,220)
Cash flows from investing activities:
Purchase of property and equipment	(8,722)	(6,705)
Capitalization of software development costs	(121,175)	(128,366)
Net cash used by investing activities	(129,897)	(135,071)
Cash flows from financing activities:
Proceeds from issuance of notes payable - related parties	299,000	0
Proceeds from note payable	0	957,372
Proceeds from the exercise of common stock options	14,930	0
Repayment of long-term obligations	(200,000)	0
Repayments of notes payable - related party	0	(10,700)
Net cash provided by financing activities	113,930	946,672
Net increase (decrease) in cash	(28,347)	389,381
Cash - beginning of period	32,313	6,398
Cash - end of period	3,966	395,779
Supplemental Disclosures of Cash Flow Information:
Cash payments for interest	$ 39,369	$ 77,080

Basis of Presentation

Basis of Presentation	6 Months Ended
	Jun. 30, 2021
Basis of Presentation
Note 1. Basis of Presentation	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, 2020 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, 2020 filed with the U.S. Securities and Exchange Commission (SEC). Results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2021.

Management Plans - Capital Reso

Management Plans - Capital Resources	6 Months Ended
	Jun. 30, 2021
Basis of Presentation
Note 2. Management Plans - Capital Resources	Note 2. Management Plans - Capital Resources The Company reported net losses of $568,730 and $78,887 for the six months ended June 30, 2021 and 2020, respectively, and stockholders’ deficiencies of $3,491,277 and $3,105,770 at June 30, 2021 and December 31, 2020, respectively. The Company has a working capital deficit of approximately $2.4 million at June 30, 2021. These factors raise substantial doubt about the ability to continue as a going concern. The Company has previously modified a significant amount of the short-term liabilities and plans to restructure certain remaining short-term debt, is exploring additional sources of financing, including debt and equity, and anticipates significant growth of business. These plans, in management’s opinion, will allow the Company to meet its obligations for at least the twelve-month period from the date the financial statements are available to be issued and alleviate the substantial doubt. 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.

Summary of Significant Accounti

Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2021
Summary of Significant Accounting Policies
Note 3. Summary of Significant Accounting Policies	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, 2020 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 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 June 30, 2021 or 2020 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 June 30, Six Months Ended June 30, 2021 2020 2021 2020 Managed support services $ 1,057,431 $ 1,199,546 $ 2,128,331 $ 2,341,308 Cybersecurity projects and software 689,073 452,815 1,391,515 1,099,648 Other IT consulting services 51,000 51,000 102,000 162,000 Total sales $ 1,797,504 $ 1,703,361 $ 3,621,846 $ 3,602,956 Managed support services Managed support services consist of revenue primarily from our subcontracts with Peraton (which purchased Perspecta in May 2021) 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 earned. 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 six months ended June 30, 2021, sales to one client, including sales under subcontracts for services to several entities, accounted for 58.8% and 58.1%, respectively, of total sales (66.0% and 62.0%, respectively, in 2020) and 17.2% of accounts receivable at June 30, 2021 (38.8% - December 31, 2020). Capitalization of Software for Resale Leases -

Sale of Certain Accounts Receiv

Sale of Certain Accounts Receivable	6 Months Ended
	Jun. 30, 2021
Sale of Certain Accounts Receivable
Note 4. Sale of Certain Accounts Receivable	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 June 30, 2021) 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 six months ended June 30, 2021, the Company sold approximately $1,778,000 ($1,207,000 – June 30, 2020) of its accounts receivable to the Purchaser. As of June 30, 2021, approximately $267,000 ($0 - December 31, 2020) of these receivables remained outstanding. Additionally, as of June 30, 2021, the Company had $0 available under the financing line with the financial institution ($362,000 - December 31, 2020). After deducting estimated fees, allowance for bad debts and advances from the Purchaser, the net receivable from the Purchaser amounted to $30,000 at June 30, 2021 ($0 - December 31, 2020), 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 $13,967 for the six months ended June 30, 2021 ($15,536 – June 30, 2020). These financing line fees are classified on the statements of operations as interest expense.

Capitalization of Software for

Capitalization of Software for Resale	6 Months Ended
	Jun. 30, 2021
Capitalization of Software for Resale
Note 5. Capitalization of Software for Resale	Note 5 Capitalization of Software for Resale As of June 30, 2021, there was $570,619 of costs capitalized ($449,445 as of December 31, 2020) and $169,334 of accumulated amortization ($94,540 as of December 31, 2020). During the three and six months ended June 30, 2021, there was $39,844 and $74,794, respectively, of amortization expense recorded ($20,978 and $30,516, respectively, in 2020). Costs incurred prior to reaching technological feasibility are expensed as incurred. During the three and six months ended June 30, 2021, there was $46,900 and $87,700, respectively, of labor amounts expensed related to these development costs ($59,900 and $77,400, respectively, in 2020).

Deferred Revenue and Performanc

Deferred Revenue and Performance Obligations	6 Months Ended
	Jun. 30, 2021
Deferred Revenue and Performance Obligations
Note 6. Deferred Revenue and Performance Obligations	Note 6. Deferred Revenue and Performance Obligations Deferred Revenue Deferred revenue, which is a contract liability, consists primarily of payments received and accounts receivable recorded in advance of revenue recognition under the Company’s contracts with customers and is recognized as the revenue recognition criteria are met. Revenue recognized during the three months ended June 30, 2021 and 2020 that was included in the deferred revenue balances at the beginning of the respective periods was approximately $132,800 and $30,300, respectively. Revenue recognized during the six months ended June 30, 2021 and 2020 that was included in the deferred revenue balances at the beginning of the respective periods was approximately $210,300 and $111,700, respectively. Transaction Price Allocated to the Remaining Performance Obligations Transaction price allocated to the remaining performance obligations represents all future, non-cancelable contracted revenue that has not yet been recognized, inclusive of deferred revenue that has been invoiced and non-cancelable amounts that will be invoiced and recognized as revenue in future periods. As of June 30, 2021, total remaining non-cancelable performance obligations under the Company’s contracts with customers was approximately $637,000. The Company expects to recognize all of this revenue over the next 12 months.

Debt Obligations

Debt Obligations	6 Months Ended
	Jun. 30, 2021
Debt Obligations
Note 7. Debt Obligations	Note 7. Debt Obligations During the three months ended June 30, 2021, the Company settled the long-term debt agreement with the PBGC for $200,000 on the outstanding principal of $246,000 and accrued interest of approximately $74,500. During the three months ending September 30, 2021, the PBGC is expected to release the remaining principal and accrued interest owed. The Company will record a gain of approximately $120,500 at that time. During the six months ended June 30, 2021, the Company received proceeds of $299,999 from related parties. The Company issued a short-term note payable to a board member for $100,000. The note bears a 6% interest rate and is due on October 1, 2021. The Company also borrowed $199,000 on the previously disclosed 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 $449,000 at June 30, 2021.

Stock Transactions

Stock Transactions	6 Months Ended
	Jun. 30, 2021
Stock Transactions
Note 8. Stock Transactions	Note 8. Stock Transactions During the three months ended June 30, 2021, the Company issued 200,000 shares at a price of $0.2325 per share to a consultant for services to be rendered from March 1, 2021 to February 28, 2023 as well as issued 50,000 shares at a price of $0.2325 per share to another consultant for services from April 1, 2021 to September 30, 2021. The aggregate expenses associated with the issuances of $58,125 was recorded as prepaid expenses and will be recognized over the term of the respective agreements. The Company expensed approximately $13,600 during the three months ended June 30, 2021. This is a non-cash financing activity. See Note 10 regarding issuances pursuant to exercises of options.

Earnings per Share

Earnings per Share	6 Months Ended
	Jun. 30, 2021
Earnings per Share
Note 9. Earnings per Share	Note 9. 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 June 30, Six Months Ended June 30, 2021 2020 2021 2020 Numerator for basic and diluted net loss per share: Net loss $ (416,503 ) $ (72,825 ) $ (568,730 ) $ (78,887 ) Basic and diluted net loss per share $ (.01 ) $ .00 $ (.02 ) $ .00 Weighted average common shares outstanding Basic and diluted shares 29,238,323 29,061,883 29,150,590 29,061,883 Anti-dilutive shares excluded from net loss per share calculation 23,148,234 32,910,942 23,148,234 32,910,942 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.

Stock Option Plans and Agreemen

Stock Option Plans and Agreements	6 Months Ended
	Jun. 30, 2021
Stock Transactions
Note 10. Stock Option Plans and Agreements	Note 10. Stock Option Plans and Agreements The Company has approved stock options plans and agreements covering up to an aggregate of 13,190,000 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. 1,705,000 options were granted for the six months ended June 30, 2021. 575,000 options were granted for the six months ended June 30, 2020. The following assumptions were used for the six months ended June 30, 2021. Risk-free interest rate 0.16% -0.38% Expected dividend yield 0% Expected stock price volatility 100% Expected life of options 2.75 – 5.25 years The Company recorded expense for options issued to employees and independent service providers of $81,920 and $110,168 for the three and six months ended June 30, 2021, respectively ($16,850 and $18,980 in 2020). The Company issued 750,000 performance-based stock options during the three months ended June 30, 2021 at $0.245 per share to an executive of the Company. Certain revenue targets must be made to grant the options in three tranches of 250,000 shares each. The unrecognized compensation expense for these options is approximately $135,800 at June 30, 2021. 1,165,000 options vested during the six months ended June 30, 2021. A summary of all stock option activity for the six months ended June 30, 2021 follows: Number of Options Outstanding Weighted Average Exercise Price Remaining Contractual Term Aggregate Intrinsic Value Outstanding at December 31, 2020 12,430,500 $ .05 Granted 1,705,000 .21 Exercised (284,000 ) .02 Forfeited (823,000 ) .08 Expired (45,000 ) .10 Outstanding at June 30, 2021 12,983,500 $ .07 3.3 years $ 2,006,500 At June 30, 2021 - vested or expected to vest 12,983,500 $ .07 3.3 years $ 2,006,500 Exercisable 11,923,500 $ .06 3.2 years $ 1,965,000

Lease

Lease	6 Months Ended
	Jun. 30, 2021
Lease
Note 11. Lease	Note 11. Lease Beginning on August 1, 2016, the Company leases its headquarters facility under an operating lease agreement that expires on June 30, 2022. The Company has the right to terminate the lease upon six months prior notice after three years of occupancy. Rent expense is $80,000 annually during the first year of the lease term and increases by 1.5% annually thereafter. Supplemental balance sheet information related to the lease on June 30, 2021 and December 31, 2020 is as follows: Description Classification June 30, 2021 December 31, 2020 Right of Use Asset – Lease, net Other assets $ 81,733 $ 120,777 Operating Lease liability – Short-term Accrued liabilities 83,340 80,258 Operating Lease liability – Long-term Other long-term liabilities 0 42,347 Total operating lease liability $ 83,340 $ 122,605 Discount rate – operating lease 6.0 %

Related Party Accounts Receivab

Related Party Accounts Receivable and Accrued Interest Payable	6 Months Ended
	Jun. 30, 2021
Related Party Accounts Receivable and Accrued Interest Payable
Note 12. Related Party Accounts Receivable and Accrued Interest Payable	Note 12. Related Party Accounts Receivable and Accrued Interest Payable Included in accrued interest payable is amounts due to related parties of $73,091 at June 30, 2021 ($62,114 - December 31, 2020). An additional $111,748 of accrued interest to related parties is due to be paid after June 30, 2022.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2021
Summary of Significant Accounting Policies
Reclassifications	Reclassifications
Fair Value of Financial Instruments	Fair Value of Financial Instruments
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 June 30, 2021 or 2020 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 June 30, Six Months Ended June 30, 2021 2020 2021 2020 Managed support services $ 1,057,431 $ 1,199,546 $ 2,128,331 $ 2,341,308 Cybersecurity projects and software 689,073 452,815 1,391,515 1,099,648 Other IT consulting services 51,000 51,000 102,000 162,000 Total sales $ 1,797,504 $ 1,703,361 $ 3,621,846 $ 3,602,956 Managed support services Managed support services consist of revenue primarily from our subcontracts with Peraton (which purchased Perspecta in May 2021) 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 earned. 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 six months ended June 30, 2021, sales to one client, including sales under subcontracts for services to several entities, accounted for 58.8% and 58.1%, respectively, of total sales (66.0% and 62.0%, respectively, in 2020) and 17.2% of accounts receivable at June 30, 2021 (38.8% - December 31, 2020).
Capitalization of Software for Resale	Capitalization of Software for Resale
Leases	Leases -

Summary of Significant Accoun_3

Summary of Significant Accounting Policies (Tables)	6 Months Ended
	Jun. 30, 2021
Summary of Significant Accounting Policies
Schedule of Disaggregation of revenue	Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Managed support services $ 1,057,431 $ 1,199,546 $ 2,128,331 $ 2,341,308 Cybersecurity projects and software 689,073 452,815 1,391,515 1,099,648 Other IT consulting services 51,000 51,000 102,000 162,000 Total sales $ 1,797,504 $ 1,703,361 $ 3,621,846 $ 3,602,956

Earnings Per Share (Tables)

Earnings Per Share (Tables)	6 Months Ended
	Jun. 30, 2021
Earnings per Share
Schedule of earning Loss per share, basic and diluted	Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Numerator for basic and diluted net loss per share: Net loss $ (416,503 ) $ (72,825 ) $ (568,730 ) $ (78,887 ) Basic and diluted net loss per share $ (.01 ) $ .00 $ (.02 ) $ .00 Weighted average common shares outstanding Basic and diluted shares 29,238,323 29,061,883 29,150,590 29,061,883 Anti-dilutive shares excluded from net loss per share calculation 23,148,234 32,910,942 23,148,234 32,910,942

Stock Option Plans and Agreem_2

Stock Option Plans and Agreements (Tables)	6 Months Ended
	Jun. 30, 2021
Stock Transactions
Stock option valuation assumptions	Risk-free interest rate 0.16% -0.38% Expected dividend yield 0% Expected stock price volatility 100% Expected life of options 2.75 – 5.25 years
Stock option activity	Number of Options Outstanding Weighted Average Exercise Price Remaining Contractual Term Aggregate Intrinsic Value Outstanding at December 31, 2020 12,430,500 $ .05 Granted 1,705,000 .21 Exercised (284,000 ) .02 Forfeited (823,000 ) .08 Expired (45,000 ) .10 Outstanding at June 30, 2021 12,983,500 $ .07 3.3 years $ 2,006,500 At June 30, 2021 - vested or expected to vest 12,983,500 $ .07 3.3 years $ 2,006,500 Exercisable 11,923,500 $ .06 3.2 years $ 1,965,000

Lease (Tables)

Lease (Tables)	6 Months Ended
	Jun. 30, 2021
Lease
Supplemental operating lease information	Description Classification June 30, 2021 December 31, 2020 Right of Use Asset – Lease, net Other assets $ 81,733 $ 120,777 Operating Lease liability – Short-term Accrued liabilities 83,340 80,258 Operating Lease liability – Long-term Other long-term liabilities 0 42,347 Total operating lease liability $ 83,340 $ 122,605 Discount rate – operating lease 6.0 %

Management Plans Capital Resour

Management Plans Capital Resources (Details Narrative) - USD ($)	3 Months Ended				6 Months Ended
	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020	Dec. 31, 2019
Basis of Presentation
Net loss	$ (416,503)	$ (152,227)	$ (72,825)	$ (6,062)	$ (568,730)	$ (78,887)
Total stockholders' deficiency	(3,491,277)	$ (3,229,749)	$ (3,967,217)	$ (3,911,242)	(3,491,277)	$ (3,967,217)	$ (3,105,770)	$ (3,907,310)
Working capital deficit	$ (2,400,000)				$ (2,400,000)

Summary of Significant Accoun_4

Summary of Significant Accounting Policies (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Sales	$ 1,797,504	$ 1,703,361	$ 3,621,846	$ 3,602,956
Managed Support Services
Sales	1,057,431	1,199,546	2,128,331	2,341,308
Cybersecurity Projects and Software
Sales	689,073	452,815	1,391,515	1,099,648
Other IT Consulting Services
Sales	$ 51,000	$ 51,000	$ 102,000	$ 162,000

Summary of Significant Accoun_5

Summary of Significant Accounting Policies (Details Narrative) - Customer A	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Sales [Member]
Concentration risk	58.8%	66.0%	58.1%	62.0%
Accounts Receivable [Member]
Concentration risk			17.2%	38.8%

Sale of Certain Accounts Rece_2

Sale of Certain Accounts Receivable (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Retained amount rate	10%
Prime plus rate	3.6%
Accounts receivable	$ 2,000,000
Gains or losses accounts receivable	13,967	$ 15,536
Customer A | Accounts Receivables [Member]
Accounts receivable	1,778,000		$ 1,207,000
Purchaser [Member]
Accounts receivable	267,000		0
Remained outstanding receivables	0		362,000
Allowance for bad debts	$ 30,000		$ 0

Capitalization of Software fo_2

Capitalization of Software for Resale (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Capitalization of Software for Resale
Software development capitalized costs, gross	$ 570,619		$ 570,619		$ 449,445
Software development capitalized costs accumulated amortization	169,334		169,334		$ 94,540
Amortization of software development capitalized costs	39,844	$ 20,978	74,794	$ 30,516
Labor amounts expensed	$ 46,900	$ 59,900	$ 87,700	$ 77,400

Deferred Revenue and Performa_2

Deferred Revenue and Performance Obligations (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Stock Transactions
Remaining non-cancelable performance obligations	$ 637,000		$ 637,000
Revenue recognized	$ 132,800	$ 30,300	$ 210,300	$ 111,700

Debt Obligations (Details Narra

Debt Obligations (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Borrowed amount	$ 199,000
Interest rate	7.5%
Proceeds from related parties	$ 299,999
Short-term note payable	$ 100,000
Bears interest rate	6%
Balance amount	$ 449,000
Due maturity date	August 31, 2026
Note payable related party	$ 100,000	$ 0
PBGC [Member]
Settled long-term debt	200,000
Outstanding principal amount	246,000
Accrued interest	74,500
Expected gain	120,500
Note payable related party	$ 500,000

Stock Transactions (Details Nar

Stock Transactions (Details Narrative)	3 Months Ended
	Jun. 30, 2021USD ($)$ / sharesshares
Prepaid expenses | $	$ 58,125
Common stock share issued for service | shares	50,000
Share price | $ / shares	$ 0.2325
Description	April 1, 2021 to September 30, 2021
Expense | $	$ 13,600
Consultant [Member]
Common stock share issued for service | shares	200,000
Share price | $ / shares	$ 0.2325

Earnings Per Share (Details)

Earnings Per Share (Details) - USD ($)	3 Months Ended				6 Months Ended
	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2021	Jun. 30, 2020
Earnings per Share
Net loss	$ (416,503)	$ (152,227)	$ (72,825)	$ (6,062)	$ (568,730)	$ (78,887)
Basic and diluted net loss per share	$ (0.01)		$ 0		$ (0.02)	$ 0
Weighted average common shares outstanding basic and diluted shares	29,238,323		29,061,883		29,150,590	29,061,883
Anti-dilutive shares excluded from net loss per share calculation	23,148,234		32,910,942		23,148,234	32,910,942

Stock Option Plans and Agreem_3

Stock Option Plans and Agreements (Details)	6 Months Ended
	Jun. 30, 2021
Expected dividend yield	0%
Expected stock price volatility	100%
Minimum
Expected life of options	2 years 9 months
Risk-free interest rate	0.16%
Maximum
Expected life of options	5 years 3 months
Risk-free interest rate	0.38%

Stock Option Plans and Agreem_4

Stock Option Plans and Agreements (Details 1)	6 Months Ended
	Jun. 30, 2021USD ($)$ / sharesshares
Stock Transactions
Number of options outstanding, beginning | shares	12,430,500
Number of options granted | shares	1,705,000
Number of options Exercised | shares	(284,000)
Number of options forfeited | shares	823,000
Number of options expired | shares	45,000
Number of options outstanding, ending | shares	12,983,500
Number of options vested or expected to vest | shares	12,983,500
Number of options exercisable | shares	11,923,500
Weighted average exercise price outstanding, beginning | $ / shares	$ 0.05
Weighted average exercise price granted | $ / shares	0.21
Weighted average exercise price exercised | $ / shares	0.02
Weighted average exercise price forfeited | $ / shares	0.08
Weighted average exercise price outstanding, ending | $ / shares	0.07
Weighted average exercise price expired | $ / shares	0.10
Weighted average exercise price vested or expected to vest | $ / shares	0.07
Weighted average exercise price exercisable | $ / shares	$ 0.06
Weighted-average remaining contractual term outstanding	3 years 3 months 18 days
Weighted-average remaining contractual term vested or expected to vest	3 years 3 months 18 days
Weighted-average remaining contractual term exercisable	3 years 2 months 12 days
Aggregate intrinsic value outstanding | $	$ 2,006,500
Aggregate intrinsic value vested or expected to vest | $	2,006,500
Aggregate intrinsic value exercisable | $	$ 1,965,000

Stock Option Plans and Agreem_5

Stock Option Plans and Agreements (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Stock Transactions
Option expense	$ 81,920	$ 16,850	$ 110,168	$ 18,980
Unrecognized compensation cost	$ 135,800		$ 135,800
Options and granted			1,705,000	575,000
Performance-based stock options			750,000
Option price	$ 0.245		$ 0.245
Options shares			250,000
Options vested			1,165,000

Lease (Details)

Lease (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Jun. 30, 2021
Lease
Right of use asset - lease, net	$ 120,777	$ 81,733
Operating lease liability - short-term	80,258	83,340
Operating lease liability - long-term	42,347	0
Operating lease liabililty	$ 122,605	$ 83,340
Discount rate - operating lease	6.0

Lease (Details Narrative)

Lease (Details Narrative)	6 Months Ended
	Jun. 30, 2021USD ($)
Lease
Leases expires	June 30, 2022
Rent expense	$ 80,000
Leases rate	1.5%

Related Party Accounts Receiv_2

Related Party Accounts Receivable and Accrued Interest Payable (Details Narrative) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Related Party Accounts Receivable and Accrued Interest Payable
Accrued interest payable, related parties, current	$ 73,091	$ 62,114
Additional accrued interest to related parties	$ 111,748