Delaware
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52-1490422
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(State
or other jurisdiction of
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(IRS
Employer
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incorporation
or organization)
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Identification
No.)
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Large
Accelerated filer o
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Accelerated
filer o
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Non-accelerated
filer o
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Smaller
reporting company x
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PAGE
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PART
I - FINANCIAL INFORMATION
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Item
1.
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Financial
Statements
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||
Consolidated Balance
Sheets – March 31, 2010 (Unaudited) and December
31, 2009
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3
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||
Consolidated
Statements of Operations (Unaudited) for the three months ended March 31,
2010 and 2009
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4
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||
Consolidated
Statements of Cash Flows (Unaudited) for the three months ended March 31,
2010 and 2009
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5
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||
Notes
to Consolidated Financial Statements – (Unaudited)
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6
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||
Item
2.
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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9
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Item
3.
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Quantitative
and Qualitative Disclosures About Market Risk.
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13
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Item
4.
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Controls
and Procedures
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13
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PART II – OTHER INFORMATION
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Item
2.
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Unregistered
Sales of Equity Securities and Use of Proceeds
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13
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Item 6.
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Exhibits
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14
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SIGNATURES
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14
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March 31,
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December 31,
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|||||||
2010
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2009
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|||||||
(Unaudited)
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||||||||
ASSETS
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||||||||
Current
assets:
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||||||||
Cash
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$ | 151,558 | $ | 196,711 | ||||
Accounts
receivable, net of allowance of $70,000
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1,105,743 | 1,118,580 | ||||||
Prepaid
expenses and other current assets
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76,286 | 56,622 | ||||||
Total
current assets
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1,333,587 | 1,371,913 | ||||||
Property
and equipment, net
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92,132 | 58,777 | ||||||
Deposits
and other assets
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18,424 | 21,544 | ||||||
Total
assets
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$ | 1,444,143 | $ | 1,452,234 | ||||
LIABILITIES
AND STOCKHOLDERS’ DEFICIENCY
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||||||||
Current
liabilities:
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||||||||
Accounts
payable
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651,111 | 686,457 | ||||||
Accrued
payroll
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507,656 | 388,131 | ||||||
Accrued
interest payable
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294,209 | 275,563 | ||||||
Accrued
retirement and pension
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3,184,051 | 3,078,361 | ||||||
Accrued
expenses - other
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66,879 | 61,632 | ||||||
Current
maturities of long-term obligations-bank
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42,813 | 32,243 | ||||||
Notes
payable
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470,000 | 295,000 | ||||||
Notes
payable - related parties
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129,000 | 154,000 | ||||||
Total
current liabilities
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5,345,719 | 4,971,387 | ||||||
Long-term
obligations:
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||||||||
Notes
payable:
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||||||||
Banks
and other
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183,388 | 334,029 | ||||||
Related
parties
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501,324 | 501,324 | ||||||
Accrued
pension expense
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735,012 | 735,012 | ||||||
Total
liabilities
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6,765,443 | 6,541,752 | ||||||
Commitments
and contingencies (Note 5)
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||||||||
Stockholders’
deficiency:
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||||||||
Common
stock, $.001 par value, 60,000,000 shares authorized;25,661,883
(25,661,883 - 2009) shares issued and outstanding
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25,661 | 25,661 | ||||||
Additional
paid-in capital
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29,911,517 | 29,870,506 | ||||||
Accumulated
deficit
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(32,453,438 | ) | (32,180,645 | ) | ||||
Accumulated
other comprehensive loss
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(2,805,040 | ) | (2,805,040 | ) | ||||
Total
stockholders’ deficiency
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(5,321,300 | ) | (5,089,518 | ) | ||||
Total
liabilities and stockholders’ deficiency
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$ | 1,444,143 | $ | 1,452,234 |
Three
Months Ended
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||||||||
March 31,
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||||||||
2010
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2009
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|||||||
Sales
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$ | 2,769,795 | $ | 2,655,930 | ||||
Cost
of services
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2,056,804 | 1,992,710 | ||||||
Gross
profit
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712,991 | 663,220 | ||||||
Costs
and expenses:
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||||||||
General
and administrative
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308,299 | 296,791 | ||||||
Defined
benefit pension plan
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126,153 | 164,869 | ||||||
Selling
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483,956 | 455,369 | ||||||
Total
costs and expenses
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918,408 | 917,029 | ||||||
Operating
loss
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(205,417 | ) | (253,809 | ) | ||||
Interest
expense:
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||||||||
Related
parties
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(12,010 | ) | (12,822 | ) | ||||
Other
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(54,136 | ) | (56,048 | ) | ||||
Total
interest expense
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(66,146 | ) | (68,870 | ) | ||||
Loss
before income tax expense
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(271,563 | ) | (322,679 | ) | ||||
Income
tax expense
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(1,230 | ) | (4,000 | ) | ||||
Net
loss
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$ | (272,793 | ) | $ | (326,679 | ) | ||
Net
loss per share - basic and diluted
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$ | (.01 | ) | $ | (.01 | ) | ||
Weighted
average number of shares outstanding - basic and diluted
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25,661,883 | 25,230,189 |
Three Months Ended
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||||||||
March 31,
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||||||||
2010
|
2009
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|||||||
Operating
activities:
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Net
loss
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$ | (272,793 | ) | $ | (326,679 | ) | ||
Adjustments
to reconcile net loss to net cash used by operating
activities:
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Stock
based compensation
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41,011 | 48,886 | ||||||
Depreciation
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8,388 | 8,180 | ||||||
Decrease
(increase) in assets:
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Accounts
receivable
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12,837 | (50,931 | ) | |||||
Other
assets
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(16,544 | ) | (33,247 | ) | ||||
(Decrease)
increase in liabilities:
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||||||||
Accounts
payable
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(35,346 | ) | 111,653 | |||||
Accrued
expenses
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143,418 | 134,993 | ||||||
Accrued
pension obligations
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105,690 | 104,593 | ||||||
Net
cash used by operating activities
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(13,339 | ) | (2,552 | ) | ||||
Investing
activities:
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||||||||
Purchase
of property and equipment
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(3,068 | ) | (2,862 | ) | ||||
Net
cash used by investing activities
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(3,068 | ) | (2,862 | ) | ||||
Financing
activities:
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||||||||
Repayments
of notes payable
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(3,746 | ) | (26,773 | ) | ||||
Repayments
of note payable-related party
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(25,000 | ) | (50,000 | ) | ||||
Net
cash used by financing activities
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(28,746 | ) | (76,773 | ) | ||||
Net
decrease in cash
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(45,153 | ) | (82,187 | ) | ||||
Cash
- beginning of period
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196,711 | 153,336 | ||||||
Cash
- end of period
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$ | 151,558 | $ | 71,149 | ||||
Supplemental
disclosure:
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||||||||
Cash
paid for:
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Interest
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$ | 50,387 | $ | 54,469 | ||||
Income
taxes
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$ | 1,230 | $ | 4,000 |
2010
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2009
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Risk-free
interest rate
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2.74%
- 2.90%
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2.09%
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Expected
dividend yield
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0%
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0%
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Expected
stock price volatility
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75%
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75%
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Expected
life of options
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5.75
years
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5.75
years
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Number of
Options
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Weighted
Average
Exercise
Price
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Weighted-
Average
Remaining
Contractual
Term
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Aggregate
Intrinsic Value
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||||||||||
Outstanding
at December 31, 2009
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5,491,500 | $ | .26 | ||||||||||
Options
granted
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376,000 | $ | .17 | ||||||||||
Options
expired
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(15,000 | ) | $ | 1.50 | |||||||||
Outstanding
at March 31, 2010
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5,852,500 | $ | .25 |
6.1 years
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$ | 105,549 | |||||||
Exercisable
at March 31, 2010
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5,032,167 | $ | .25 |
5.7 years
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$ | 105,549 |
Non-vested Shares
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Shares
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Weighted
Average
Fair Value
at Grant Date
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Non-vested
at December 31, 2009
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866,333 | $ | .15 | |||||
Granted
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376,000 | $ | .11 | |||||
Vested
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(422,000 | ) | $ | .13 | ||||
Non-vested
at March 31, 2010
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820,333 | $ | .14 |
Three Months Ended
March 31,
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||||||||
2010
|
2009
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Interest
cost
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$ | 72,531 | $ | 71,996 | ||||
Expected
return on plan assets
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(39,148 | ) | (42,115 | ) | ||||
Service
cost
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12,500 | 17,750 | ||||||
Actuarial
loss
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31,882 | 37,343 | ||||||
Net
periodic pension cost
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$ | 77,765 | $ | 84,974 |
Three Months Ended March 31,
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||||||||||||||||||||||||
2010 vs. 2009
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||||||||||||||||||||||||
As a % of
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As a % of
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Amount of
|
% Increase
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2010
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Sales
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2009
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Sales
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Change
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(Decrease)
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|||||||||||||||||||
Sales
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$ | 2,769,795 | 100.0 | % | $ | 2,655,930 | 100.0 | % | $ | 113,865 | 4.3 | % | ||||||||||||
Cost
of services
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2,056,804 | 74.3 | 1,992,710 | 75.0 | 64,094 | 3.2 | ||||||||||||||||||
Gross
profit
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712,991 | 25.7 | 663,220 | 25.0 | 49,771 | 7.5 | ||||||||||||||||||
General
and administrative
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308,299 | 11.1 | 296,791 | 11.2 | 11,508 | 3.9 | ||||||||||||||||||
Defined
benefit pension plan
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126,153 | 4.6 | 164,869 | 6.2 | (38,716 | ) | (23.5 | ) | ||||||||||||||||
Selling
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483,956 | 17.5 | 455,369 | 17.1 | 28,587 | 6.3 | ||||||||||||||||||
Total
operating expenses
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918,408 | 33.2 | 917,029 | 34.5 | 1,379 | 0.2 | ||||||||||||||||||
Operating
income (loss)
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(205,417 | ) | (7.4 | ) | (253,809 | ) | (9.6 | ) | 48,392 | (19.1 | ) | |||||||||||||
Interest
expense
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(66,146 | ) | (2.4 | ) | (68,870 | ) | (2.6 | ) | (2,724 | ) | (4.0 | ) | ||||||||||||
Income
tax expense
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(1,230 | ) | (.0 | ) | (4,000 | ) | (.2 | ) | (2,770 | ) | (69.3 | ) | ||||||||||||
Net
loss
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$ | (272,793 | ) | (9.8 | )% | $ | (326,679 | ) | (12.3 | )% | $ | 53,886 | (16.5 | )% | ||||||||||
Net
loss per share - basic and diluted
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$ | (.01 | ) | $ | (.01 | ) |
Three Months Ended
March 31,
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||||||||
2010
|
2009
|
|||||||
Net
cash used by operating activities
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$ | (13,339 | ) | $ | (2,552 | ) | ||
Net
cash used by investing activities
|
(3,068 | ) | (2,862 | ) | ||||
Net
cash used by financing activities
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(28,746 | ) | (76,773 | ) | ||||
Net
decrease in cash
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$ | (45,153 | ) | $ | (82,187 | ) |
Item
2.
|
Unregistered
Sales of Equity Securities and Use of
Proceeds.
|
Exhibit No.
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Description
|
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31.1
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Chief
Executive Officer Certification pursuant to section 302 of the
Sarbanes-Oxley Act of 2002.*
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31.2
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Chief
Financial Officer Certification pursuant to section 302 of the
Sarbanes-Oxley Act of 2002.*
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32.1
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Chief
Executive Officer Certification pursuant to section 906 of the
Sarbanes-Oxley Act of 2002.*
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32.2
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Chief
Financial Officer Certification pursuant to section 906 of the
Sarbanes-Oxley Act of
2002.*
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Infinite
Group, Inc.
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(Registrant)
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Date May
12, 2010
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/s/ Michael S. Smith
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Michael
S. Smith
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Chief
Executive Officer
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(Principal
Executive Officer)
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Date May
12, 2010
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/s/ James Witzel
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James
Witzel
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|
Chief
Financial Officer
|
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(Principal
Financial Officer)
|