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, 2010
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
INFINITY CAPITAL GROUP, INC.
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(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
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(Address of principal executive offices) (Zip Code)
(212) 962-4400
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Registrant's telephone number, including area code
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(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 preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes[_X_] No[__]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).
Yes[__] No[__]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, 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 17, 2010 the number of shares outstanding of the registrant's class of
common stock was 6,547,391.
TABLE OF CONTENTS
PAGE
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 2
Balance Sheets as of March 31, 2010 (Unaudited) and December 31, 2009 (Audited) 3
Statements of Operations (Unaudited) for the Three Months Ended
March 31, 2010 and 2009 4
Statements of Cash Flows (Unaudited) for the Three Months Ended
March 31, 2010 and 2009 5
Schedule of Investments as of March 31, 2010 (Unaudited) 6
Statements of Changes in Net Assets for the Three Months Ended March 31, 2010 (Unaudited)
and the Year Ended December 31, 2009 (Audited) 7
Notes to Financial Statements (Unaudited) 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 19
Item 3. Quantitative and Qualitative Disclosures About Market Risk 22
Item 4. Controls and Procedures 22
Item 4T. Controls and Procedures 22
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - NOT APPLICABLE 24
Item 1A. Risk Factors - NOT APPLICABLE 24
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 24
Item 3. Defaults upon Senior Securities - NOT APPLICABLE 24
Item 4. Removed and Reserved 24
Item 5. Other Information - NOT APPLICABLE 24
Item 6. Exhibits 24
Signatures 25
-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, 2009, included in the Company's Form 10-K.
-2-
INFINITY CAPITAL GROUP, INC.
BALANCE SHEETS
March December
31, 2010 31, 2009
--------------- ---------------
(Unaudited) (Audited)
Assets
Non Affiliated Investments (Cost - $159,755 and $159,005) $ 184,881 $ 104,926
Promissory Note 50,730 50,730
Stock Sale Receivable 50,500 110,750
Cash 4,286 1,002
Other assets 9,899 7,353
--------------- ---------------
Total assets $ 300,296 $ 274,761
=============== ===============
Liabilities
Accounts payable nonaffiliates $ 296,446 $ 276,514
Accrued expenses payable others 45,607 53,374
Notes payable others 152,020 164,020
Total Payable To Officers & Directors 210,764 223,737
--------------- ---------------
Total liabilities 704,837 717,645
--------------- ---------------
Net Assets $ (404,541) $ (442,884)
=============== ===============
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 6,547,391 issued
and outstanding $ 6,547 $ 6,547
Additional paid-in capital 797,138 820,735
Accumulated income (deficit)
Accumulated net operating (deficit), net of tax (1,282,505) (1,273,783)
Net realized gain on investments, net of tax 57,696 57,696
Net unrealized increase (decrease) of investments, net of tax 16,583 (54,079)
--------------- ---------------
Net Assets $ (404,541) $ (442,884)
=============== ===============
Net Asset Value Per Share $ (0.06) $ (0.07)
=============== ===============
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,
2010 2009
------------- -------------
Investment Income
Interest Income $ 896 $ 518
Forgiveness of Debt 10,000 -
------------- -------------
Total Investment Income 10,896 518
------------- -------------
Expenses
Salaries and wages 6,000 37,081
Waiver of Salaries (6,000) -
Stock Option Forfeiture (23,597) -
Management fees 22,500 22,500
Waiver of Management Fees (22,500) (11,396)
Professional fees 41,737 14,988
General and administrative 3,949 8,274
Interest Expense 6,073 4,816
------------- -------------
Total Expenses 28,162 76,263
------------- -------------
Net Investment Income (Loss) before taxes (17,266) (75,745)
Provision for income tax, all deferred (8,543) (5,829)
------------- -------------
Net investment income (loss) (8,723) (69,916)
------------- -------------
Net realized and unrealized gains (losses):
Net realized gain (loss), net of tax - -
------------- -------------
Net change in unrealized increase (decrease),
Affilates - 87,646
Net change in unrealized increase (decrease),
Non-affilates 79,205 (70,502)
------------- -------------
Net change in unrealized increase (decrease), 79,205 17,144
Deferred tax on change in unrealized 8,543 5,828
------------- -------------
Net change in unrealized, net of tax 70,662 11,316
------------- -------------
Net realized and unrealized gains (losses) 70,662 11,316
------------- -------------
Net increase (decrease) in net assets
from operations $ 61,939 $ (58,600)
============= =============
Net increase (decrease) in net assets per share
from continuing operations
Basic $ 0.01 $ (0.01)
Diluted $ 0.01 $ (0.01)
============= =============
Weighted average number of shares outstanding
Basic 6,547,391 6,513,399
Diluted 6,547,391 6,513,399
============= =============
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,
2010 2009
-------------- ---------------
Cash Flows from Operating Activities:
Net increase (decrease) in net assets from operations $ 61,939 $ (58,600)
Adjustments to reconcile net increase (decrease) in net assets
from operations to net cash used in operating activities
Change in unrealized increase of investments, pre-tax (79,205) (17,145)
Net purchase of investments (750) -
Stock Sale Receivable 60,250 -
Depreciation and amortization 349 349
(Forfeiture) Grant of stock options to directors & employees (23,597) 26,081
Other assets (2,895) 1,772
Accounts payable and credit cards 19,933 17,458
(Decrease) increase accrued expenses payable (20,740) 18,412
-------------- ---------------
Net cash provided by (used for)
operating activities 15,284 (11,673)
-------------- ---------------
Cash Flows from Investing Activities
Cash Flows from Financing Activities
Proceeds from notes payable - 8,820
Payments on notes payable (12,000) -
-------------- ---------------
Net cash provided by (used for)
financing activities (12,000) 8,820
-------------- ---------------
Increase (Decrease) in Cash 3,284 (2,853)
Cash and Cash Equivalents - Beginning of Period 1,002 2,891
-------------- ---------------
Cash and Cash Equivalents - End of Period $ 4,286 $ 38
============== ===============
The accompanying notes are an integral part of the financial statements
-5-
SCHEDULE OF INVESTMENTS
MARCH 31, 2010
(UNAUDITED)
Original
Date of Original Fair
Shares Warrants Acquisition Cost Value
- ----------------------------------------- ----------- -------------
Non Affiliate Investments
50,000 (1) Mar-10 BlackStar Energy Group, Inc., publicly traded $ 750 $ 5,600
over the counter, development stage
oil and gas exploration company
328,125 (2) Nov-04 Strategic Environmental & Energy Resources Inc. 69,294 $ 134,531
100,000 (3) Mar-08 publicly traded over the counter, 65,221 41,000
125,000 Mar-08 provider of technology-based industrial services 24,490 3,750
in the environmental, energy and rail transport(4)
----------- -------------
Subtotal $ 159,005 $ 179,281
----------- -------------
TOTAL INVESTMENTS $ 159,755 $ 184,881
=========== =============
Percentage of net asset information is not provided since net assets are
negative and would be misleading.
(1) Acquired as partial consideration for sale of NPI08, Inc. shares
(2) Company reverse split the stock at 1 for 4 shares January 22, 2008
(3) Note plus $50,000 cash exchanged for Shares and Warrants of SENR
(4) Formerly Satellite Organizing Systems, Inc.
The accompanying notes are an integral part of the financial statements
-6-
INFINITY CAPITAL GROUP, INC.
STATEMENTS OF CHANGES IN NET ASSETS
THREE MONTHS YEAR ENDED
ENDED MAR. 31, DEC. 31,
2010 2009
------------------ -------------------
(UNAUDITED) (AUDITED)
Changes in net assets from operations:
Net investment loss $ (8,723) $ (407,556)
Net realized gain (loss) on investments, net of tax - (121,098)
Net change in unrealized increase (decrease), net of tax 70,662 (398,814)
------------------ -------------------
Net increase (decrease) increase in net assets from operations 61,939 (927,468)
------------------ -------------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from issuance of common stock, net of offering costs - 2,189
Grant (Forfeiture) of employee stock options (23,597) 52,823
------------------ -------------------
Net increase in net assets from stock transactions (23,597) 55,012
------------------ -------------------
Net increase (decrease) in net assets 38,342 (872,456)
Net assets at beginning of year (442,884) 429,572
------------------ -------------------
Net assets at end of period (accumulated net investment
loss of $1,282,505 and $1,273,783) $ (404,542) $ (442,884)
================== ===================
The accompanying notes are an integral part of the financial statements
-7-
INFINITY CAPITAL GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2010
(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 ("1940
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 a market capitalization under
$250 million 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.
-8-
INFINITY CAPITAL GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2010
(Unaudited)
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, 2010, and the results of operations and cash flows for all periods
presented have been made.
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 2009 Annual Report
filed dated December 31, 2009. The results of operations for the three months
ended March 31, 2010 are not necessarily indicative of the operating results for
the full years.
The Board of Directors of the Company recommended, and holders of a majority of
the voting power of the Company's outstanding common stock have voted and
approved the two proposals on February 23, 2010:
- To withdraw the Company's election to be treated as a business
development company ("BDC") under the Investment Company Act of
1940, as amended (the "1940 Act").
- Authorization to reverse split the common stock on up to a ten
for one basis, by which each ten shares shall become one share;
and the appropriate Articles of Amendment to implement the
reverse split. Fractional shares will be rounded up to the next
whole share.
The Company intends to file a Notification of Withdrawal of Election to be
Subject to Sections 55 through 65 of the Investment Company Act of 1940 filed
pursuant to Section 54(c) of the Investment Company Act of 1940 (the 1940 Act)
on Form N-54C. Effective upon receipt by the Securities and Exchange Commission
(SEC) the Company is no longer deemed a Business Development Company and subject
to the provisions of the 1940 Act. Such filing has not been made at the date of
the filing of this Quarterly Report on Form 10-Q.
Reclassification
In order to conform with the presentation of the financial statements herein,
certain items in the financial statements for the prior periods have been
reclassified.
-9-
INFINITY CAPITAL GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2010
(Unaudited)
Going Concern
The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company's current
liabilities exceed the current assets by $599,321 at March 31, 2010.
The Company's ability to continue as a going concern is dependent upon its
ability to develop additional sources of capital or locate a merger candidate
and ultimately, achieve profitable operations. There can be no assurance that
the Company will be successful in obtaining such financing, or that it will
attain positive cash flow from operations. Management believes that actions
presently being taken provide the opportunity for the Company to continue as a
going concern. The accompanying financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
Management is seeking new capital to carry forward the purposes of the Company.
ACCOUNTING PRONOUNCEMENTS
There were various accounting standards and interpretations issued during the
three months ended March 31, 2010, none of which are expected to have a material
impact on the Company's financial position, operations or cash flows.
NOTE 2 - INVESTMENTS
- --------------------
As of March 31, 2010, the Company has made investments in six target companies
that total $593,686 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
NPI08 June 2008 Common Stock 232,000
BlackStar Energy Group, Inc. March 2010 Common Stock 750
-----------
Total 593,686
* 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.
-10-
INFINITY CAPITAL GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2010
(Unaudited)
In September of 2008 the Company acquired an 87.5% interest in NPI08 for
$232,000 consisting of 102,500 shares in Company stock and $150,000 cash. NPI08
was previously and education and college preparation company and is currently an
inactive publicly traded shell which the Company intends to hold for possible
future merger or acquisition.
In December 2009, the Company sold its interest in NPI08, Inc. for $125,000 and
50,000 shares in BlackStar Energy Group, Inc. which were received in March 2010.
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.
The Company, as a BDC, may 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
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.
-11-
INFINITY CAPITAL GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2010
(Unaudited)
The Company classifies the inputs used to measure fair values into the following
hierarchy:
Level 1: Quoted prices in active markets for identical assets or
liabilities
Level 2: Quoted prices for similar assets or liabilities in active markets,
or quoted prices for identical or similar assets or liabilities in markets
that are not active, or other observable inputs other than quoted prices.
Level 3: Unobservable and significant inputs to determining the fair value.
The carrying values and estimated fair values of the Company's findings:
SIGNIFICANT
QUOTE PRICES IN SIGNIFICANT OTHER UNOBSERVABLE
ACTIVE MARKETS OBSERVABLE INPUTS INPUTS
CARRYING VALUE (LEVEL 1) (LEVEL 2) (LEVEL 3)
-------------------- --------------------- ----------------------- -------------------
March 31, 2010:
Investment Securities;
Strategic Environmental
Stock $ 175,531 $ -- $ 175,531 $ --
Strategic Environmental
Warrants $ 4,151 $ -- $ 4,151 $ --
BlackStar Energy Group, Inc. $ 5,600 $ -- $ 5,600 $ --
-------------------- --------------------- ----------------------- -------------------
Total Investment Securities $ 185,282 $ -- $ 185,282 $ --
==================== ===================== ======================= ===================
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, 2010 and December 31, 2009
are stated at fair value as determined by the Board of Directors, in the absence
of readily available fair values. The Company generally uses the first-in,
first-out (FIFO) method of accounting for sales of its investments but will
sometimes sell specifically identified investments or shares.
-12-
INFINITY CAPITAL GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2010
(Unaudited)
NOTE 3 - RELATED PARTY TRANSACTIONS
- -----------------------------------
By contract, for each of the three months ended March 31, 2010 and 2009 the
Company incurred management fees expense of $22,500 to a company affiliated
through Gregory Laborde, an Officer & Director of the Company. As indicated on
the Statement of Operations, Mr. Laborde agreed to waive $22,500 and $11,396 in
each of the respective periods resulting in a net expense of $0 and $11,104
respectively.
NOTE 4 - NOTES PAYABLE & INTEREST EXPENSE
- -----------------------------------------
During the three months ended March 31, 2010, the Company made payments of
$12,000 on existing notes payable.
On September 15, 2009, the holders of Company notes totaling $125,000 foreclosed
on collateral of 200,000 shares of Strategic Environmental owned by the Company
and 250,000 shares of the Company pledged by GHL Group, Ltd. a company
controlled by Gregory Laborde, an Officer and Director of the Company. In their
foreclosure notice the lenders put a value of $20,000 on the shares of Strategic
Environmental and $250 on the Company shares. The Company does not agree with
these valuations but has taken a conservative approach and reduced the debt by
these values in the financial statements.
As of March 31, 2010, $279,820 in notes payable plus related accrued interest
are in default for lack of repayment by their due date. For the three month
period ended March 31, 2010 the Company incurred interest expense on notes
payable of $5,312.
On March 25, 2010, the Company received a demand letter for full payment of
principal and interest on a $15,000 promissory note, dated October 10, 2005 (the
Note.) The Note accrues interest at 7% per annum and had an original due date of
November 10, 2005. The holder of the Note, Mr. Wulf Rehder, an affiliate of the
Company, granted the Company extensions of the Note until June 20, 2006 and then
until July 30, 2006. Mr. Rehder has given the Company notice of his intent to
pursue legal action unless payment in full is received by April 16, 2010. As of
March 31, 2010, the Company owes Mr. Rehder $15,000 in principal and accrued
interest of $4,695 for a total of $19,695. On April 14, 2010, the company signed
a settlement/forestallment agreement with Mr. Rehder agreeing to pay the balance
due by August 12, 2010.
Notes payable are stated at the original principal amount less any repayments
made. The Company has not elected the fair value option under SFAS No. 159 for
its financial liabilities.
-13-
INFINITY CAPITAL GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2010
(Unaudited)
NOTE 5 - STOCKHOLDERS' EQUITY
- -----------------------------
During the three months ended March 31, 2010 the Company issued no common stock
or other equity.
NOTE 6 - STOCK BASED COMPENSATION PLANS
- ---------------------------------------
The Company follows FASB Accounting Standards Codification No. 718 -
Compensation - Stock Compensation for share based payments to employees. The
Company follows FASB Accounting Standards Codification No. 505 for share based
payments to Non-Employees.
As the result of forfeiture of employee stock options, the Company recognized
income in the amount of $23,597 for three months ended March 31, 2010. 109,500
options which were granted in January, 2009 were forfeited and previously
recognized expense related to these options was recorded as an offset to
expenses. The cost of these options was being recorded on a straight-line basis
over the vesting period. The related impact on basic and diluted earnings per
share for the three months ended March 31, 2010, was less than $0.01 per share.
There was no impact on the Company's cash flow.
The Company's stock incentive plan is the Infinity Capital Group, Inc. 2008
Stock Option Plan (the "Plan") which is shareholder approved. The Plan provides
for the grant of non-qualified stock options to selected employees and
directors. The Plan is administered by the Compensation Committee of the Board
and authorizes the grant of options 970,934. The Compensation Committee
determines which eligible individuals are to receive options or other awards
under the Plan, the terms and conditions of those awards, the applicable vesting
schedule, the option price and term for any granted options, and all other terms
and conditions governing the option grants and other awards made under the
Plans.
During the three month period ended March 31, 2009, 196,000 options were granted
to Joseph M. Chiappetta, the Company's Vice-President of Corporate Development.
The fair value of each option award was estimated on the date of grant using the
Black-Scholes option valuation model using the assumptions noted as follows:
expected volatility was based on historical trading in the company's stock from
inception of trading on September 11, 2008 through the January 2, 2009 which was
the last day of trading before the options were issued. The expected term of
options granted was determined using the simplified method under SAB 107 and
represents one-half the exercise period. The risk-free rate is calculated using
the U.S. Treasury yield curve, and is based on the expected term of the option.
The Company has estimated there will be no forfeitures.
-14-
INFINITY CAPITAL GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2010
(Unaudited)
No stock options were granted during the three months ended March 31, 2010.
Joseph M. Chiappetta, the Company's Vice-President of Corporate Development,
resigned on March 17, 2010 and forfeited 109,500 of the stock options he was
previously granted.
Further information relating to stock options is as follows:
WEIGHTED
WEIGHTED AVERAGE
NUMBER AVERAGE REMAINING
OF EXERCISE CONTRACT
SHARES PRICE LIFE (YEARS)
-----------------------------------
Outstanding options at 12/31/09 600,000 $ 0.70 8.70
Granted - - -
Exercised - - -
Forfeited/expired 109,500 $ 0.50 8.90
Outstanding options at 3/31/10 490,500 $ 0.75 8.41
Exercisable on 3/31/10 490,500 $ 0.75 8.41
The options have a contractual term of ten years. The aggregate intrinsic value
of shares outstanding and exercisable was $0 at March 31, 2010, as the market
price of the Company's common stock was below the weighted-average exercise
price of all of the options. Total intrinsic value of options exercised was $0
for the three months ended March 31, 2010 as no options were exercised during
this period.
At March 31, 2010, shares available for future stock option grants to employees
and directors under the 2008 Stock Option Plan were 480,434.
NOTE 7 - 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 raised capital of 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, 2010. In the Statement of Operations
Mr. Laborde's full salary of $22,500 for the three month periods ended March 31,
2010 and 2009 is shown as management fees and the amount he has waived is
reflected as an offsetting amount.
-15-
INFINITY CAPITAL GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2010
(Unaudited)
On January 5, 2009, Joseph M. Chiappetta signed an employment contract with the
Company with an annual compensation set at $60,000. As part of Mr. Chiappetta's
contract he received a stock option grant of 196,000 options of which 50,000
vested immediately. The option grant was in lieu of Mr. Chiappetta's first two
months salary. On June 5, 2009, Mr. Chiappetta's employment contract was amended
by both parties to reflect an annual compensation level of $12,000. On March 17,
2010, Mr. Chiappetta resigned his position with the Company. An agreement was
reached for Mr. Chiappetta to forfeit $10,000 of his accrued salary, shown as
forgiveness of debt on the Statement of Operations, and to retain 86,500 stock
options.
NOTE 8 - INCOME TAXES
- ---------------------
The Company complies with the accounting and disclosure for uncertain tax
positions by requiring that a tax position meet a "more likely than not
threshold" for the benefit of the tax position to be recognized in the financial
statements in accordance with GAAP. A tax position that fails to meet the more
likely than not recognition threshold will result in either a reduction of a
current or deferred tax asset or receivable, or the recording of a current or
deferred tax liability.
In searching for uncertain tax positions that would potentially result in a tax
liability, the Company has reviewed its tax filings and has found no such
position that fails to meet the more likely than not recognition threshold. In
addition, the Company has not received a notice of audit for any of its federal,
state or local income tax returns.
As of March 31, 2010, the Company's aggregate unrealized appreciation of
securities in which there is an excess of value over tax cost is $45,866.
As of March 31, 2010, the Company's aggregate unrealized depreciation of
securities in which there is an excess of tax cost over value is $20,740.
As of March 31, 2010, the Company's net aggregate unrealized appreciation of
value over tax cost of all its securities is $25,126.
As of March 31, 2010, the Company's aggregate cost of securities for federal
income tax purposes is $159,755.
The Company recognizes deferred income taxes for each category of income. For
the three months ended March 31, 2010, the Company had unrealized gains for
which deferred income taxes were calculated and deferred income tax benefit of a
similar amount was included in net investment income.
The Company is uncertain of future tax benefit of accumulated losses and takes a
full reserve against the potential deferred tax benefit beyond offsetting
deferred taxes on unrealized gains.
-16-
INFINITY CAPITAL GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2010
(Unaudited)
NOTE 9 - FINANCIAL HIGHLIGHTS
- -----------------------------
The following is a schedule of financial highlights for the three month period
ended March 31, 2010, and the year ended December 31, 2009.
THREE MONTHS YEAR ENDED
MARCH 31 DEC 31,
2010 2009
------------ ------------
Per share information
Net asset value, beginning of period (0.07) 0.07
------------ ------------
Net investment (loss) (1) (0.00) (0.06)
Net realized and unrealized gain (loss) (1) 0.01 (0.09)
------------ ------------
Net(decrease) increase in net assets
resulting from operations (1) 0.01 (0.15)
Issuance of common stock, warrants
and other new equity (1) 0.00 0.01
------------ ------------
Net asset (deficit) value, end of period (0.06) (0.07)
============ ============
Per share market value, end of period $ 0.02 $ 0.08
Total Return Based Upon Net Asset Value (3) N/A -216%
Ratios and Supplemental Data
Net assets (deficit), end of year/period (142,474) (442,884)
Common shares outstanding at end of year/period 6,547,391 6,547,391
Diluted weighted average number of
shares outstanding during the year/period 6,547,391 6,531,811
Ratio of expenses to average net assets (2)(4) -27% 228%
Ratio of net increase (decrease) in net assets
from operations to average net assets (2)(4) -58% -879%
Portfolio turnover 0% 0%
Average Debt Outstanding 285,820 288,786
Average Debt Per Share (1) 0.04 0.04
(1) Calculated based on diluted weighted average number of shares outstanding
during the year.
(2) Annualized for interim period
(3) 2010 did not start with positive net assets so cannot compute
(4) Average net assets were low resulting in calculation out of scale
-17-
INFINITY CAPITAL GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2010
(Unaudited)
NOTE 10 - SUBSEQUENT EVENTS
- ---------------------------
The Board of Directors of the Company recommended, and holders of a majority of
the voting power of the Company's outstanding common stock have voted and
approved the two proposals on February 23, 2010:
- To withdraw the Company's election to be treated as a business
development company ("BDC") under the Investment Company Act of
1940, as amended (the "1940 Act").
- Authorization to reverse split the common stock on up to a ten
for one basis, by which each ten shares shall become one share;
and the appropriate Articles of Amendment to implement the
reverse split. Fractional shares will be rounded up to the next
whole share.
The Company intends to file a Notification of Withdrawal of Election to be
Subject to Sections 55 through 65 of the Investment Company Act of 1940 filed
pursuant to Section 54(c) of the Investment Company Act of 1940 (the 1940 Act)
on Form N-54C. Effective upon receipt by the Securities and Exchange Commission
(SEC) the Company is no longer deemed a Business Development Company and subject
to the provisions of the 1940 Act. Such filing has not been made at the date of
the filing of this Quarterly Report on Form 10-Q.
The Company upon the effectiveness of its Notification of Withdrawal intends to
pursue other business opportunities. The Company will at all times conduct its
activities in such a way that it will not be deemed an "investment company"
subject to regulation under the 1940 Act. Thus, it will not hold itself out as
being engaged primarily in the business of investing, reinvesting or trading in
securities. In addition, the Company will conduct its business in such a manner
as to ensure that it will not own or propose to acquire investment securities
having a value exceeding 40% of the Company's total assets at any one time.
There is no assurance that any business opportunities will be finalized or that
any stockholder will realize any return on their shares after such a
transaction. Any merger or acquisition completed by us can be expected to have a
significant dilutive effect on the percentage of shares held by our current
stockholders. We believe we are an insignificant participant among the firms
which engage in the acquisition of business opportunities. There are many
established venture capital and financial concerns that have significantly
greater financial and personnel resources and technical expertise than we have.
In view of our limited financial resources and limited management availability,
we will continue to be at a significant competitive disadvantage compared to our
competitors.
On April 14, 2010, the Company signed a settlement/forestallment agreement with
Mr. Wulf Rehder, an affiliate of the Company and the holder of promissory note
issued by the Company with an original due date of November 10, 2005, agreeing
to pay the balance due by August 12, 2010. On March 25, 2010, the Company had
received a demand letter for full payment of principal and interest on this
promissory note.
The Company evaluated events through May 17, 2010, for consideration as a
subsequent event to be included in its March 31, 2010, financial statements
herein and found no other events, other than the above.
-18-
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 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 a market capitalization under
$250 million 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.
The Board of Directors of the Company recommended, and holders of a majority of
the voting power of the Company's outstanding common stock have voted and
approved the two proposals on February 23, 2010:
- To withdraw the Company's election to be treated as a business
development company ("BDC") under the Investment Company Act of 1940,
as amended (the "1940 Act").
- Authorization to reverse split the common stock on up to a ten for one
basis, by which each ten shares shall become one share; and the
appropriate Articles of Amendment to implement the reverse split.
Fractional shares will be rounded up to the next whole share.
The Company intends to file a Notification of Withdrawal of Election to be
Subject to Sections 55 through 65 of the Investment Company Act of 1940 filed
pursuant to Section 54(c) of the Investment Company Act of 1940 (the 1940 Act)
on Form N-54C. Effective upon receipt by the Securities and Exchange Commission
(SEC) the Company is no longer deemed a Business Development Company and subject
to the provisions of the 1940 Act. Such filing has not been made as of the date
of the filing of this Quarterly Report on Form 10-Q.
The Company upon the effectiveness of its Notification of Withdrawal intends to
pursue other business opportunities. The Company will at all times conduct its
activities in such a way that it will not be deemed an "investment company"
-19-
subject to regulation under the 1940 Act. Thus, it will not hold itself out as
being engaged primarily in the business of investing, reinvesting or trading in
securities. In addition, the Company will conduct its business in such a manner
as to ensure that it will not own or propose to acquire investment securities
having a value exceeding 40% of the Company's total assets at any one time.
There is no assurance that any business opportunities will be finalized or that
any stockholder will realize any return on their shares after such a
transaction. Any merger or acquisition completed by us can be expected to have a
significant dilutive effect on the percentage of shares held by our current
stockholders. We believe we are an insignificant participant among the firms
which engage in the acquisition of business opportunities. There are many
established venture capital and financial concerns that have significantly
greater financial and personnel resources and technical expertise than we have.
In view of our limited financial resources and limited management availability,
we will continue to be at a significant competitive disadvantage compared to our
competitors.
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, 2010 COMPARED TO THE THREE MONTH
PERIOD ENDED MARCH 31, 2009.
The Company recognized $10,896 in investment income during the three month
period ended March 31, 2010. During the three month period ended March 31, 2009,
the Company recognized investment income of $518. The increase of $10,478 was
primarily due to settlement of an accrued expense which resulted in $10,000
forgiveness of debt.
Total expenses during the three month period ended March 31, 2010 were $28,162
compared to $76,263 during the three month period ended March 31, 2009. The
decrease of $48,101 was a result of a decrease of $37,081 in salaries, net of
the amount waived, a decrease of 11,104 in management fees, net of the amount
waived and a reduction of expenses of $23,597 due to forfeiture of employee
stock options offset by an increase of 26,749 in professional fees. The
reduction in salary and management fees comes from officers waiving all
compensation they were entitled to during the quarter and a charge for employee
stock options in the prior quarter that did not repeat this year. The increase
in professional fees was mostly legal fees connected to the Company's plan to
elect out of Business Development Company status and to pursue other business
opportunities.
During the three month period ended March 31, 2010, the Company had a net
investment loss of $8,723 compared to a net investment loss of $69,916 in the
three month period ended March 31, 2009. The decreased loss of $61,193 is
primary a result of the $10,478 increase in investment income and the $48,101
decrease in expenses.
During the three month period ended March 31, 2010, the Company had net realized
and unrealized gains of $70,662 compared to net realized and unrealized gains of
$11,316 during the three month period ended March 31, 2009. The increased gain
of $59,346 was a result of an increase in the value of the company's investment
in Strategic Environmental and Energy Solutions during the three month period
ended March 31, 2010.
During the three month period ended March 31, 2010, the Company had a net
increase in net assets from operations of $61,939 compared to a net decrease in
net assets of $58,600 during the three month period ended March 31, 2009. The
change in net assets was a result of the increased gain in net realized and
unrealized gains, the increase in net investment income and the decrease in
total expenses, as discussed above. Net assets per share from operations
increased $0.01 per share during the three month period ended March 31, 2010 and
decreased by $0.01 per share during the three month period ended March 31, 2009.
-20-
LIQUIDITY AND CAPITAL RESOURCES
The Company had a cash balance of $4,286 at March 31, 2010 compared to $1,002 at
December 31, 2009. Current liabilities exceed current assets by $599,321. The
Company had $184,881 in non affiliate investments at March 31, 2010. The Company
expects to raise capital and/or sell assets to fund working capital for the next
twelve months.
The notes payable of the Company decreased from $291,820 as of December 31, 2009
to $279,820 as of March 31, 2010. This decrease was attributable to partial
repayment of promissory notes from individuals in the amount of $12,000.
During the three month period ended March 31, 2010, operating activities
provided the Company with $15,284. During the three month period ended March 31,
2009, the Company used $11,673 in operating activities. The increase of $26,957
was due to the receipt of $60,250 in payments from the Company's sale of its
investment in NPI08, Inc. in December 2009 which provided for a series of
payments over time offset by a reduction in accrued expenses of $20,740.
During the three month periods ended March 31, 2010 and 2009, the Company did
not use or receive funds from investing activities. During the three month
period ended March 31, 2010, the Company used $12,000 for financing activities
which consisted of payments on promissory notes. During the three month period
ended March 31, 2009, the Company received $8,820 from its financing activities
which consisted of proceeds from promissory notes.
NEED FOR ADDITIONAL FINANCING
While the Company had an operating profit during the three month period ended
March 31, 2010, the Company had an operating loss during the three month period
ended March 31, 2009 and the Company may have operating losses in the future
unless adequate income can be achieved to meet expenses. While the Company is
seeking capital sources for investment, there is no assurance that sources can
be found.
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.
GOING CONCERN
The Company has a deficit in working capital and assets, which may be illiquid.
Management plans to fund operations of the Company by raising capital and/or
selling assets or through interest bearing advances from existing shareholders.
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.
The critical assumption made by management of the Company is that the Company
will continue to operate as a going concern. The Company's auditors have
expressed a concern that the Company may not be able to continue as a going
concern.
The independent registered public accounting firm's report on the Company's
financial statements as of December 31, 2008 and 2009 includes a "going concern"
explanatory paragraph that describes substantial doubt about the Company's
ability to continue as a going concern.
The Company may raise additional capital through the sale of its equity
securities, through an offering of debt securities, or through borrowings from
financial institutions or individuals and may address the liquidity situation by
selling some assets. Management believes that actions presently being taken to
obtain additional funding provide the opportunity for the Company to continue as
a going concern."
-21-
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
- ------------------------------------------------------------------
Not Applicable
ITEM 4. CONTROLS AND PROCEDURES
- --------------------------------
DISCLOSURES CONTROLS AND PROCEDURES
We have adopted and maintain disclosure controls and procedures (as such term is
defined in Rules 13a 15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) that are designed to ensure that
information required to be disclosed in our reports under the Exchange Act, is
recorded, processed, summarized and reported within the time periods required
under the SEC's rules and forms and that the information is gathered and
communicated to our management, including our Chief Executive Officer (Principal
Executive Officer) and Principal Financial Officer, as appropriate, to allow for
timely decisions regarding required disclosure.
As required by SEC Rule 15d-15(b) for the quarter ended March 31, 2010, our
Chief Executive Officer and Chief Financial Officer, carried out an evaluation
under the supervision and with the participation of our management, of the
effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 15d-14 as of the end of the period
covered by this report. Based on the foregoing evaluation, they have concluded
that our disclosure controls and procedures are not effective in timely alerting
them to material information required to be included in our periodic SEC filings
and to ensure that information required to be disclosed in our periodic SEC
filings is accumulated and communicated to our management, including our Chief
Executive Officer, to allow timely decisions regarding required disclosure as a
result of the deficiency in our internal control over financial reporting
discussed below.
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, based on criteria established in Internal
Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission and 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 of financial statements in accordance
with generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with authorizations
of our management and directors; and
(iii)provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of our assets that
could have a material effect on our financial statements.
Our management, with the participation of the Company's President and Chief
Financial Officer, evaluated the effectiveness of the Company's internal control
over financial reporting as of March 31, 2010. Based on this evaluation, our
management, concluded that, as of March 31, 2010, our internal control over
financial reporting was not effective due to material weaknesses in the system
of internal control.
-22-
Specifically, management identified the following control deficiencies:
(1) The Company has not properly segregated duties as a few
individuals initiate, authorize, and complete all transactions. The Company has
not implemented measures that would prevent the individuals from overriding the
internal control system. The Company does not believe that this control
deficiency has resulted in deficient financial reporting because the Chief
Financial Officer is aware of his responsibilities under the SEC's reporting
requirements and personally certifies the financial reports.
(2) The Company has installed accounting software that does not
prevent erroneous or unauthorized changes to previous reporting periods and does
not provide an adequate audit trail of entries made in the accounting software.
As a result of Management's assessment of the effectiveness of the small
business issuer's internal control over financial reporting as of the quarter
ended March 31, 2010 we believe that internal control over financial reporting
has not been effective and we are in the process of improving controls. We have
identified certain material weaknesses of accounting relating to a shortage of
qualified information technology, IT personnel and financial reporting personnel
due to limited financial resources. This material weakness can lead to the
following:
o An inability to ensure there is timely analysis and review of
accounting records, spreadsheets, and supporting data; and
o an inability to effectively monitor access to, or maintain effective
controls over changes to, certain financial application programs and
related data.
Considering the nature and extent of our current operations and any risks or
errors in financial reporting under current operations, the fact that we have
been a small business with limited employees causes a weakness in internal
controls involving the areas disclosed above.
REMEDIATION OF MATERIAL WEAKNESS
As our current financial condition allows, we are in the process of analyzing
and developing our processes for the establishment of formal policies and
procedures with necessary segregation of duties, which will establish mitigating
controls to compensate for the risk due to lack of segregation of duties.
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.
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, 2010, that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
-23-
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- -------------------------
None.
ITEM 1A. RISK FACTORS
- ---------------------
None.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
- -------------------------------------------------------------------
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
- ---------------------------------------
None.
ITEM 4. REMOVED AND RESERVED
- ----------------------------
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
-24-
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 17, 2010 By: /s/Gregory H. Laborde
-------------------------------------
Gregory H. Laborde,
Principal Executive Officer,
President & Chief Executive Officer
Dated: May 17, 2010 By: /s/Theodore A. Greenberg
-------------------------------------
Theodore A. Greenberg,
Principal Accounting Officer,
Chief Financial Officer,
Chief Investment Officer & Secretary
-25-