UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For Quarterly Period Ended March 31, 2008 or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Transition period from _______________ to ______________
COMMISSION FILE NUMBER: 814-00708
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INFINITY CAPITAL GROUP, INC.
------------------------------
(Exact name of registrant as specified in its charter)
MARYLAND 16-1675285
- ---------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
80 BROAD STREET, 5TH FLOOR, NEW YORK, NY 10004
------------------------------------
(Address of principal executive offices) (Zip Code)
(212) 962-4400
-----------------------------
Registrant's telephone number, including area code
--------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 proceeding 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[_X_] No[__]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check One).
Large accelerated filer [___] Accelerated filer [___]
Non-accelerated filer [___] Smaller reporting company [_X_]
(Do not check if a smaller
reporting company)
Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes[__] No[_X_]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
As of May 14, 2008 the number of shares outstanding of the registrant's class of
common stock was 6,270,774.
TABLE OF CONTENTS
PAGE
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements................................................................................. 2
Balance Sheets as of March 31, 2008 (unaudited) and December 31, 2007 (audited)...................... 3
Statements of Operations (unaudited) for the Three Months ended
March 31, 2008 and 2007............................................................................. 4
Statements of Cash Flows (unaudited) for the Three Months ended
March 31, 2008 and 2007.............................................................................. 5
Schedule of Investments as of March 31, 2008......................................................... 6
Statements of Changes in Net Assets.................................................................. 7
Notes to Financial Statements (unaudited)............................................................ 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................ 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk........................................... 15
Item 4. Controls and Procedures.............................................................................. 15
Item 4T. Controls and Procedures.............................................................................. 16
PART II - OTHER INFORMATION
Item 1. Legal Proceedings ................................................................................... 17
Item 1A. Risk Factors......................................................................................... 17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.......................................... 17
Item 3. Defaults upon Senior Securities...................................................................... 18
Item 4. Submission of Matters to a Vote of Security Holders.................................................. 18
Item 5. Other Information.................................................................................... 18
Item 6. Exhibits ............................................................................................ 18
Signatures.................................................................................................... 19
1
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
For financial information, please see the financial statements and the
notes thereto, attached hereto and incorporated by this reference.
The financial statements have been adjusted with all adjustments which,
in the opinion of management, are necessary in order to make the financial
statements not misleading.
The financial statements have been prepared by Infinity Capital Group,
Inc. without audit pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnotes disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted as allowed by such rules
and regulations, and management believes that the disclosures are adequate to
make the information presented not misleading. These financial statements
include all the adjustments which, in the opinion of management, are necessary
for a fair presentation of financial position and results of operations. All
such adjustments are of a normal and recurring nature. These financial
statements should be read in conjunction with the audited financial statements
at December 31, 2007, included in the Company's Form 10-KSB.
2
INFINITY CAPITAL GROUP, INC.
Balance Sheets
March December
31, 2008 31, 2007
--------------- --------------
(Unaudited) (Audited)
Assets
Investments in noncontrolled affiliates (Cost - $314,664 and $94,064) $1,148,018 $ 94,660
Controlled Investments (Cost - $136,326) 200,809
Promissory Note 25,980 50,000
Cash 238 67,609
Deferred offering costs 36,664 36,664
Other assets 1,914 6,991
--------------- --------------
Total assets $1,212,814 $456,733
=============== ==============
Liabilities
Accounts payable and credit cards $ 211,099 $193,932
Accrued interest and expenses payable 12,973 $ 26,027
Deferred Taxes Payable 65,879
Notes payable 158,000 $132,020
--------------- --------------
Total liabilities 447,951 351,979
--------------- --------------
Net Assets $764,863 $104,754
=============== ==============
Composition of net assets
Preferred stock, $0.001 par value,
10,000,000 shares authorized,
none issued or outstanding.
Common Stock. $0.001 par value,
100,000,000 shares authorized
6,270,774 and 6,170,774 issued and outstanding $ 6,271 $ 6,171
at March 31, 2008 and December 31, 2007, respectively
Additional paid-in capital 574,632 534,892
Accumulated income (deficit)
Accumulated net operating deficit (587,963) (695,859)
Net realized gain on investments, net of tax 214,802 207,466
Net unrealized increase of investments, net of tax 557,121 52,084
--------------- --------------
Net Assets $ 764,863 $104,754
=============== ==============
Net Asset Value Per Share $ 0.12 $ 0.02
=============== ==============
The accompanying notes are an integral part of the financial statements.
3
INFINITY CAPITAL GROUP, INC.
STATEMENTS OF OPERATIONS
Unaudited
For the Three Months Ended
March 31,
2008 2007
-------------- --------------
Investment Income
Investment fees $ - $ -
Interest Income - -
Consulting fees - 100,000
Other - -
-------------- --------------
Total Investment Income - 100,000
-------------- --------------
Expenses
Salaries and wages 6,000 -
Management fees 10,690 5,329
Professional fees 19,921 9,138
Insurance 3,360 11,132
General and administrative 8,370 6,673
Interest & Settlement Costs 44,901 2,056
-------------- --------------
Total Expenses 93,242 34,328
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Net Investment (Loss) Income before taxes (93,242) 65,672
-------------- --------------
Provision for income tax (199,113) -
-------------- --------------
Net investment income (loss) 105,871 65,672
Net realized and unrealized gains (losses):
Net realized gain (loss) on investments
net of tax 7,335 -
Net change in unrealized increase (decrease),
net of tax 507,062 26,275
-------------- --------------
Net realized and unrealized gains 514,397 26,275
-------------- --------------
Net increase in net assets
from operations $ 620,269 $ 91,947
============== ==============
Net increase (decrease) in net assets per share
from continuing operations
Basic $ 0.10 $ 0.02
Diluted $ 0.10 $ 0.02
============== ==============
Weighted average number of shares outstanding
Basic 6,246,598 6,000,297
Diluted 6,287,098 6,077,464
============== ==============
The accompanying notes are an integral part of the financial statements.
4
INFINITY CAPITAL GROUP, INC.
Statement of Cash Flows
Unaudited
For the Three Months Ended
March 31, March 31,
2008 2007
-------------- ---------------
Cash Flows from Operating Activities:
Net increase in net assets from operations $ 620,269 $ 91,947
Adjustments to reconcile net increase (decrease) in net assets
from operations to net cash used in operating activities
Change in net unrealized (increase) decrease of investments, pre-tax (768,276) (26,275)
Proceeds from disposition of investment securities 32,857 -
Net realized gain on investments, pre-tax (11,114) -
Purchase of investments (106,016) -
Loan receivable 24,020 -
Depreciation and amortization 195 -
Deferred offering costs - (7,239)
Accounts receivable - (100,000)
Other assets 4,882 -
Accounts payable 17,167 8,375
Accrued interest and expenses payable (13,054) (4,217)
Deferred Taxes Payable 65,879 -
Deposits payable - 14,900
-------------- ---------------
Net cash used for
operating activities (133,191) (22,509)
-------------- ---------------
Cash Flows from Financing Activities
Proceeds from notes payable 25,980 -
Payments on notes payable - (30,000)
Stock issued pursuant to settlement 39,840 -
Stock issued for debt - 39,669
-------------- ---------------
Net cash provided by
financing activities 65,820 9,669
-------------- ---------------
Decrease in Cash $(67,371) $(12,840)
-------------- ---------------
Cash and Cash Equivalents - Beginning of Period 67,609 13,168
-------------- ---------------
Cash and Cash Equivalents - End of Period $ 238 $ 328
============== ===============
The accompanying notes are an integral part of the financial statements.
5
INFINITY CAPITAL GROUP, INC.
SCHEDULE OF INVESTMENTS
March 31, 2008
Original
Date of Original Fair
Shares Warrants Acquisition Cost Value
- --------------------------------------- ------------ ------------
Noncontrol Affiliate Investments, 149% of net assets
528,125 (1) Nov-04 Strategic Environmental & Energy Resources, Inc. $121,214 $ 815,640
125,000 (2) Mar-08 publicly traded over the counter, 75,510 193,051
125,000 Mar-08 provider of technology-based industrial services 24,490 75,535
in the environmental, energy and rail transport,
141% of net assets(3)
845,000 Aug-04 Lumonall, Inc. publicly traded over the counter, $ 8,450 $ 21,292
global supplier of photoluminescent products,
3% of net assets (4)
21,250 Apr-07 Fluid Media Networks, Inc. privately held, $ 85,000 $ 42,500
------------ ------------
6% of net assets
TOTAL INVESTMENTS $314,664 $1,148,018
============ ============
(1) Company reverse split the stock at 1 for 4 shares January 22,
2008
(2) Note plus $50,000 cash exchanged for Shares and Warrants of
SENR
(3) Formerly Satellite Organizing Solutions, Inc.
(4) Formerly Midland International Corporation
The accompanying notes are an integral part of the financial statements.
6
INFINITY CAPITAL GROUP, INC.
Statements of Changes in Net Assets
Three Months Ended Year Ended
March 31, December 31,
2008 2007
------------------ -------------------
Changes in net assets from operations:
Net investment income (loss) $ 105,871 $ (21,327)
Net realized gain (loss) on investments, net of tax 7,335 32,816
Net change in unrealized increase (decrease), net of tax 507,062 20,324
------------------ -------------------
Net increase (decrease) in net assets from operations 620,269 31,813
------------------ -------------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from issuance of common stock 39,840 109,596
Issuance of common stock for debt - 36,272
------------------ -------------------
Net increase (decrease) in net assets from stock transactions 39,840 145,868
------------------ -------------------
Net increase (decrease) in net assets 660,109 177,681
Net assets at beginning of year 104,754 (72,927)
------------------ -------------------
Net assets at end of period $ 764,863 $ 104,754
================== ===================
The accompanying notes are an integral part of the financial statements.
7
INFINITY CAPITAL GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2008
(Unaudited)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
Infinity Capital Group, Inc. ("ICG", the "Company"), was incorporated in the
State of Maryland on July 8, 2003. ICG is a non-diversified, closed-end
management investment company that has elected to be treated as a Business
Development Company("BDC") under the Investment Company Act of 1940 ("1040
Act").
On April 29, 2005, the Company entered into a Plan of Merger with Fayber Group,
Inc. ("Fayber"). The Company acquired all of the outstanding shares of Fayber
for the purposes of accomplishing the Merger of the Company and Fayber. All
shares of Fayber were retired by virtue of the merger. The Merger was completed
on May 2, 2005 with the Company as the surviving corporation. The Company
acquired 100% of Fayber in exchange for 100,000 shares of common stock and a
$20,000 Promissory Note.
As a BDC, the Company must be primarily engaged in the business of furnishing
capital and making available managerial assistance to companies that generally
do not have ready access to capital through conventional financial channels.
Such companies are termed "portfolio" companies.
The Company invests in portfolio companies that management identifies as
emerging growth companies positioned to benefit from additional financing and
managerial assistance. The portfolio companies frequently have little or no
prior operating history. The Company intends on investing in emerging growth
companies, defined as (A) publicly traded companies whose market for their
securities are thinly traded which may be caused by a shift in business
direction, change in market or industry in which they operate, or various other
factors causing their stock and trading in their stock to not be in or fall out
of favor; (B) publicly traded companies that have non-marginable securities and
seek expansion or mezzanine capital to implement growth strategies executable
within 12-24 months; and (C) private companies seeking expansion or mezzanine
financing and which wish to access the equity capital markets within the next 12
months.
BASIS OF PRESENTATION:
The accompanying financial statements have been prepared by the Company without
audit. In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position as of
March 31, 2008, and the results of operations and cash flows for all periods
presented have been made.
8
INFINITY CAPITAL GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2008
(Unaudited)
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted. These financial
statements should be read in conjunction with the audited financial statements
and related notes and schedules included in the Company's 2007 Annual Report
filed dated December 31, 2007. The results of operations for the periods ended
March 31, 2008 and 2007 are not necessarily indicative of the operating results
for the full years.
In the Company's Annual Report on Form 10-KSB for the fiscal year ended December
31, 2007, the Report of the Independent Registered Public Accounting Firm
includes an explanatory paragraph that describes substantial doubt about the
Company's ability to continue as a going concern. The Company's interim
financial statements for the three months ended March 31, 2008 have been
prepared on a going concern basis, which contemplates the realization of assets
and the settlement of liabilities and commitments in the normal course of
business.
NOTE 2 - INVESTMENTS
As of March 31, 2008, the Company has made investments in four target companies
that total approximately $361,000 in funded capital. We have completed the
following transactions:
PORTFOLIO COMPANY DATE INVESTMENT COST
- -----------------------------------------------------------------------------------------------------
Strategic Environmental & Energy Resources, Inc.* November 2004 Common stock 121,336
Strategic Environmental & Energy Resources, Inc.* March 2008 Common stock 75,510
Strategic Environmental & Energy Resources, Inc.* March 2008 Warrants 24,490
Heartland Inc September 2004 Common stock 12,500
Fluid Media Networks May 2007 Common Stock 85,000
Lumonall, Inc.** August 2004 Common stock 42,100
----------
TOTAL 360,936
==========
* In January 2008, Satellite Organizing Solutions, Inc. changed its name to
Strategic Environmental & Energy Resources, Inc.
** On July 18, 2005 Azonic Corporation changed its name to Midland International
Corporation. On August 16,2007 Midland International Corporation changed its
name to Lumonall, Inc.
Investments are stated at "value" as defined in the 1940 Act and in the
applicable regulations of the Securities and Exchange Commission. Value, as
defined in Section 2(a) (41) of the 1940 Act, is (i) the market price for those
securities for which a quotation is readily available and (ii) the fair value as
determined in good faith by, or under the direction of, the Board of Directors
for all other assets.
9
INFINITY CAPITAL GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2008
(Unaudited)
The Company, as a BDC, will generally invest in illiquid and restricted
securities. The Company's investments may be subject to certain restrictions on
resale and may have no ready trading market. The Company values substantially
all of its investments at fair value as determined in good faith by the Board of
Directors in accordance with the Company's valuation policy. The Company
determines fair value to be the amount for which an investment could be
exchanged in orderly disposition over a reasonable period of time between
willing parties rather than in a forced or liquidation sale. Factors that the
Board of Directors may consider in determining fair value of an individual
investment are financial performance and condition, business plan and progress
towards plan, restrictions on the investment securities, liquidity, trading
activity, financing activity and relative valuation to comparable companies.
With respect to our investments for which market quotations are not readily
available and/or investments subject to restrictions, our Board of Directors
recently adopted a multi-step valuation process for each quarter as described
below:
1) Management reviews all investments and summarizes current status:
2) An independent valuation firm conducts independent appraisals of all
investments;
3) The audit committee of our board of directors reviews the managements
summary and the report of the independent valuation firm and supplements
with additional comments; and
4) The Board of Directors discusses valuation and determines the fair value of
each investment in our portfolio in good faith based on the input of
management, the independent valuation firm and the audit committee.
This policy became effective for the quarter ending September 30, 2006. Previous
to adopting this process management communicated informally with the independent
valuation firm whose report was submitted to the board of directors for review
and comment. The audit committee was formed in April 2006 and has reviewed the
valuation reports and financial statements beginning with the quarter ended
March 31, 2006.
Without a readily available market value, the value of the Company's portfolio
of equity securities may differ significantly from the values that would be
placed on the portfolio if there existed a ready market for such equity
securities. All equity securities owned at March 31, 2008 and December 31, 2007
are stated at fair value as determined by the Board of Directors, in the absence
of readily available fair values. The Company uses the first-in, first-out
(FIFO) method of accounting for sales of its investments.
NOTE 3 - RELATED PARTY TRANSACTIONS
The Company for the three months ended March 31, 2008 and 2007 incurred expenses
of approximately $10,690 and $5,329, respectively, to a company affiliated
through an Officer & Director for management fees and expenses.
10
INFINITY CAPITAL GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2008
(Unaudited)
NOTE 4 - NOTES PAYABLE & INTEREST EXPENSE
During the three months ended March 31, 2008 the Company retired notes payable
in the amount of $24,020 and issued a new note for $50,000 to Theodore A.
Greenberg, an officer of the Company.
Additionally, the Company reached a settlement agreement with two debtors on
over due loans calling for the Company to immediately pay $50,000 in cash and
issue 100,000 shares on Infinity common stock. The debtors are still owed
$75,000 and in accordance with the loan terms received 78,125 shares in
Strategic Environmental & Energy Solutions, Inc. The value of the shares issued
to the debtors was charged as an expense and is included in the statement of
operations on the interest expense and settlement costs line. As of March 31,
2008 $108,000 in notes payable plus related accrued interest are in default for
lack of repayment by their due date. $75,000 of the notes in default are secured
by the Company's investment in Strategic Environmental & Energy Solutions, Inc.
For the three month period ended March 31, 2007 the Company incurred interest
expense and settlement costs on notes payable of $44,901.
NOTE 5 - STOCKHOLDERS' EQUITY
During the three months ended March 31, 2008, the Company issued 100,000 shares
of its common stock, as part of the settlement agreement described in Note 4.
NOTE 6 - EMPLOYMENT CONTRACTS
On April 20, 2006 Gregory Laborde and Theodore A. Greenberg signed employment
contracts with the Company with annual compensation set at $90,000 for each. Mr.
Greenberg has agreed to reduced compensation of $2,000 per month until the
Company has completed its planned Regulation E offering for at least $1,500,000
and to defer a proportionate amount of his compensation if the offering raises
less than $3,000,000. Such deferral until the Company has raised additional
capital or sufficient income from fees and/or investments is achieved. In lieu
of Mr. Laborde's salary, management fees have been paid to a company he is
affiliated with. These fees have been in an amount lower than the contractual
amount. Mr. Laborde and Mr. Greenberg have agreed to waive all salary amounts
due under their contracts which were not paid or accrued by March 31, 2008.
11
INFINITY CAPITAL GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2008
(Unaudited)
NOTE 7 - FINANCIAL HIGHLIGHTS
The following is a schedule of financial highlights for the three month period
ended March 31, 2008 and the year ended December 31, 2007.
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
2008 2007
------------------- -------------------
Per share information
Net asset value, beginning of period 0.02 (0.01)
------------------- -------------------
Net investment income (loss) (1) 0.02 (0.00)
Net realized and unrealized gain (loss) (1) 0.08 0.01
------------------- -------------------
Net increase (decrease) in net assets
resulting from operations (1) 0.10 0.01
Issuance of common stock, warrants
and other new equity (1) 0.01 0.02
------------------- -------------------
Net asset (deficit) value, end of year 0.12 0.02
=================== ===================
Per share market value, end of year (2) N/A N/A
Total Return Based Upon Net Asset Value (3) 516% N/A
Ratios and Supplemental Data
Net assets (deficit), end of year 764,863 104,754
Common shares outstanding at end of period 6,270,774 6,140,774
Diluted weighted average number of
shares outstanding during the year 6,287,098 6,103,745
Ratio of expenses to average net assets (4) 85% 1531%
Ratio of net increase (decrease) in net assets
from operations to average net assets (4) 143% 314%
Average Debt Outstanding 145,010 134,509
Average Debt Per Share (1) 0.02 0.02
(1) Calculated based on diluted weighted average number of shares
outstanding during the period.
(2) Not applicable - prior to public trading of shares
(3) 2007 did not start with positive net assets so cannot compute
(4) Average net assets were low in 2007 resulting in calculation out of
scale
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR UNAUDITED
FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED HEREIN. IN CONNECTION WITH, AND
BECAUSE WE DESIRE TO TAKE ADVANTAGE OF, THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, WE CAUTION READERS REGARDING
CERTAIN FORWARD LOOKING STATEMENTS IN THE FOLLOWING DISCUSSION AND ELSEWHERE IN
THIS REPORT AND IN ANY OTHER STATEMENT MADE BY, OR ON OUR BEHALF, WHETHER OR NOT
IN FUTURE FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. FORWARD-LOOKING
STATEMENTS ARE STATEMENTS NOT BASED ON HISTORICAL INFORMATION AND WHICH RELATE
TO FUTURE OPERATIONS, STRATEGIES, FINANCIAL RESULTS OR OTHER DEVELOPMENTS.
FORWARD LOOKING STATEMENTS ARE NECESSARILY BASED UPON ESTIMATES AND ASSUMPTIONS
THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND OUR CONTROL AND MANY
OF WHICH, WITH RESPECT TO FUTURE BUSINESS DECISIONS, ARE SUBJECT TO CHANGE.
THESE UNCERTAINTIES AND CONTINGENCIES CAN AFFECT ACTUAL RESULTS AND COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD LOOKING
STATEMENTS MADE BY, OR ON OUR BEHALF. WE DISCLAIM ANY OBLIGATION TO UPDATE
FORWARD-LOOKING STATEMENTS.
OVERVIEW
Infinity Capital Group is a non-diversified, closed-end management investment
company that has elected to be treated as a Business Development Company ("BDC")
under the Investment Company Act of 1940 ("1940 Act"). As a BDC, the Company
must be primarily engaged in the business of furnishing capital and making
available managerial assistance to companies that generally do not have ready
access to capital through conventional financial channels. Such companies are
termed "portfolio" companies.
The Company has no plans at this time for purchases or sales of fixed assets
which would occur in the next twelve months.
The Company has no expectation or anticipation of significant changes in number
of employees in the next twelve months, it may acquire or add employees of an
unknown number in the next twelve months.
RESULTS OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2008 COMPARED
TO THE THREE MONTH PERIOD ENDED MARCH 31, 2007.
During the three-month period ending March 31, 2008, the Company did not
recognize any investment income from its investment activities compared to
$100,000 for the same period in 2007. During the three months ended March 31,
2007, investment income included consulting services to Fluid Audio Networks for
which the Company received $15,000 in cash and $85,000 in stock.
13
The Company had an increase in change in unrealized gains from investments, net
of tax, of $507,062 during the three months ended March 31, 2008, compared to an
increase in the change in unrealized gains from investments, net of tax, of
$26,275 during the three months ended March 31, 2007. The increase in change in
unrealized gains from investments during the three months ended March 31, 2008
is largely a result of the Company's investment in Strategic Environmental &
Energy Solutions.
The Company incurred $65,879 in deferred taxes during the three months ended
March 31, 2008, which relates to unrealized gains on the Company's holdings in
Strategic Environmental & Energy Solutions. The deferred tax amount is after
allowing for the Company's net operating losses which had accumulated since
inception.
During the three months ended March 31, 2008, the Company incurred expenses for
professional fees in the amount of $19,921 compared to $9,138 during the three
months ended March 31, 2007.
The Company incurred insurance costs of $3,360 during the three months ended
March 31, 2008 compared to $11,132 during the three months ended
March 31, 2007. Insurance costs consist mainly of costs related to Directors and
Officers insurance.
During the three months ended December 31, 2008, the Company incurred management
fees in the amount of $10,690 compared to $5,329 during the three months ended
March 31, 2007. The increase of $5,361 is a result of increased activity over
the prior period.
Other general and administrative expenses during the three months ended
March 31, 2008 were $8,370 compared to $6,673 during the three months ended
March 31, 2007. There was an increase of $1,697 as a result of increase
operating activity.
The Company had a net increase in net assets from operations of $620,269 for
during the three months ended March 31, 2008 as compared to a net increase in
net assets from operations of $91,947 for the three months ended March 31, 2007.
This represents an increase of $528,322. The increase in net assets per share
from operations for the three months ended March 31, 2008 was $0.10 compared to
a decrease of $0.02 for the three months ended March 31, 2007.
LIQUIDITY AND CAPITAL RESOURCES
The Company had a cash on hand of $238 at March 31, 2008. The Company owns stock
in two small public companies which it may sell in increments for capital. The
Company has current liabilities totaling $382,072. The Company expects to raise
capital in connection with its proposed Regulation E offering and anticipates
that the funds available from this offering would provide required working
capital for the next twelve months.
14
During the three months ended March 31, 2008, the outstanding notes payable of
the Company decreased during the quarter from $158,000 to $132,020.
GOING CONCERN
Prior to January 1, 2008, the Company had accumulated significant losses form
operations and in all likelihood will be required to make significant future
expenditures in connection with continuing acquisition and marketing efforts
along with general administrative expenses. The Company's most valuable assets
are investment securities with limited liquidity. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
Management plans to fund operations of the Company through non-interest bearing
advances from existing shareholders and the sale of its securities including as
part of the Company's Regulation E offering, until such time as a business
combination or other profitable investment may be achieved. There are no written
agreements in place for such funding, and there can be no assurance that such
funding will be available in the future.
NEED FOR ADDITIONAL FINANCING
No commitments to provide additional funds have been made by management or other
stockholders. Accordingly, there can be no assurance that any additional funds
will be available to the Company to allow it to cover expenses as they may be
incurred. The Company filed its final Regulation E offering circular with the
Securities and Exchange Commission and is actively seeking capital. This final
offering was amended from an offering of up to 1,250,000 Units at $2.40 per Unit
to an offering of 6,062,500 shares for a maximum aggregate price of $4,850,000
or $0.80 per share.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable
ITEM 4. CONTROLS AND PROCEDURES
Disclosures Controls and Procedures
The Company maintains a system of disclosure controls and procedures that are
designed for the purposes of ensuring that information required to be disclosed
in our SEC reports is recorded, processed, summarized, and reported within the
time periods specified in the SEC rules and forms, and that such information is
accumulated and communicated to our management, including the Chief Executive
Officer as appropriate to allow timely decisions regarding required disclosure.
15
Management, after evaluating the effectiveness of the Company's disclosure
controls and procedures as defined in Exchange Act Rules 13a-14(c) as of March
31, 2008 (the "Evaluation Date") concluded that as of the Evaluation Date, the
Company's disclosure controls and procedures were effective to ensure that
material information relating to the Company would be made known to them by
individuals within those entities, particularly during the period in which this
annual report was being prepared and that information required to be disclosed
in our SEC reports is recorded, processed, summarized, and reported within the
time periods specified in the SEC's rules and forms.
ITEM 4T. CONTROLS AND PROCEDURES
Management's Quarterly Report on Internal Control over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting for the company in accordance with as defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control
over financial reporting is designed 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. Our internal control over financial reporting includes
those policies and procedures that:
(i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions
of our assets;
(ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation
(iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized
Management's assessment of the effectiveness of the Registrant's internal
control over financial reporting is as of the quarter ended March 31, 2008. We
believe that internal control over financial reporting is effective. We have not
identified any, current material weaknesses considering the nature and extent of
our current operations and any risks or errors in financial reporting under
current operations.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
16
This quarterly report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the Company to provide only management's
report in this annual report.
There was no change in our internal control over financial reporting that
occurred during the fiscal quarter ended March 31, 2008, that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
Not applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The Company made the following unregistered sales of its securities from January
1, 2008 through March 31, 2008:
During the three month period ended March 31, 2008, 100,000 shares of restricted
common stock were issued to a note holders as part of a settlement agreement
with that note holder.
17
Exemption From Registration Claimed
All of the sales by the Company of its unregistered securities were made by the
Company in reliance upon Section 4(2) of the Securities Act of 1933, as amended
(the "1933 Act"). The individual and/or entity listed above that received the
unregistered securities was known to the Company and its management, through
pre-existing business relationships. The individual and/or entity was provided
access to all material information, which was requested, and all information
necessary to verify such information and were afforded access to management of
the Company in connection with the issuance. The individual and/or entity of the
unregistered securities acquired such securities for investment and not with a
view toward distribution, acknowledging such intent to the Company. All
certificates or agreements representing such securities that were issued
contained restrictive legends, prohibiting further transfer of the certificates
or agreements representing such securities, without such securities either being
first registered or otherwise exempt from registration in any further resale or
disposition.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
The following is a complete list of exhibits filed as part of this Form 10-Q.
Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of
Regulation S-K.
EXHIBIT NO. DESCRIPTION
31.1 Section 302 Certification - CEO
31.2 Section 302 Certification - CFO
32.1 Section 906 Certification - CEO
32.2 Section 906 Certification - CFO
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
INFINITY CAPITAL GROUP, INC.
(Registrant)
Dated: May 15, 2008 By: /s/Gregory H. Laborde
-----------------------------------
Gregory H. Laborde,
President & Chief Executive Officer
Dated: May 15, 2008 By: /s/Theodore A. Greenberg
-----------------------------------
Theodore A. Greenberg,
Chief Financial Officer &
Chief Investment Officer &
Secretary
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