As filed with the Securities and Exchange Commission on December 17, 2001
Registration No. 333-__________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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INFINITE GROUP, INC.
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(Exact name of Registrant as specified in its charter)
Delaware 3674 52-1490422
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(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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2364 Post Road
Warwick, RI 02886
(401) 738-5777
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(Address, including zip code, and telephone number,
including area code, of Registrant's executive offices)
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Clifford G. Brockmyre II, CEO
2364 Post Road
Warwick, RI 02886
(401) 738-5777
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(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------------
Copies to:
Kenneth S. Rose, Esq.
Morse, Zelnick, Rose & Lander, LLP
450 Park Avenue
New York, New York 10022
(212) 838-5030
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Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are to be offered
pursuant to dividend or reinvestment plans, please check the following box. |_|
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, as amended (the "Securities Act") other than securities offered only in
connection with dividend or reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
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Proposed
Maximum
Title of Each Class of Amount to be Offering Proposed Maximum Aggregate Amount of
Securities to be Registered Registered Price(1) Offering Price(1) Registration Fee
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Common stock, $0.001 par value
per share...................... 592,518 $2.81(3) $ 1,664,976 $416.24
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Common stock, $0.001 par value
per share underlying warrants.. 73,400(2) $4.00(4) $ 293,600 $ 73.40
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Total ......... 665,918 $ 1,958,576 $489.64
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(1) The proposed maximum offering price is estimated solely for the purposes
of calculating the registration fee pursuant to Rule 457(c) and 457(g)(3)
of the Securities Act of 1933.
(2) Includes 73,400 shares of common stock to be issued upon exercise of
common stock purchase warrants.
(3) The last reported sales price of the registrant's common stock as reported
on the Nasdaq SmallCap Market System on December 13, 2001.
(4) The maximum exercise price of the warrants.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
The information in this prospectus is not complete and may be changed.
These securities may not be sold until the registration statement of which this
prospectus is a part filed with the Securities and Exchange Commission is
declared effective. This prospectus is not an offer to sell these securities and
it is not soliciting an offer to buy these securities in any state where the
offer or sale is not permitted.
PROSPECTUS
SUBJECT TO COMPLETION
DATED December 17, 2001
665,918 Shares
Common Stock
INFINITE GROUP, INC.
The selling stockholders identified in this prospectus are offering to
sell up to 665,918 shares of our common stock. Of this amount, 73,400 shares are
covered by warrants held by selling stockholders that have not yet been
exercised.
Except for the proceeds from the exercise of the warrants, we will not
receive any of the proceeds from the sale of these shares. The shares are being
registered for resale by the selling stockholders.
Our common stock is quoted on the Nasdaq SmallCap Market under the symbol
"IMCI." The last reported sale price of our common stock on the Nasdaq SmallCap
Market on December 13, 2001 was $2.81 per share.
Investing in our common stock involves a high degree of risk. See "Risk
Factors" beginning on page 3.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is _________________, 2001
TABLE OF CONTENTS
Page
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Risk Factors..................................................................3
Where You Can Find More Information..........................................10
Reports to Security Holders..................................................10
Incorporation of Certain Documents by Reference..............................10
Special Note Regarding Forward-Looking Statements............................11
The Company..................................................................11
Use of Proceeds..............................................................18
Selling Stockholders.........................................................18
Plan of Distribution.........................................................19
Legal Matters................................................................20
Experts......................................................................20
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You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
any other information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other than the date on
the front cover.
References in this prospectus, and the documents incorporated by reference
in this prospectus, to "Infinite," "we," "our," and "us" refer to Infinite
Group, Inc., a Delaware corporation. We maintain web sites at
www.infinite-group.com, www.laserfare.com, www.infinitephotonics.com, and
www.expresspattern.com. None of the information contained in any of our web
sites constitute part of this prospectus.
We own various intellectual property rights to our name and the names of
our subsidiaries, as well as the Infinite Group logo. This prospectus also
contains trademarks and tradenames belonging to other persons.
RISK FACTORS
A purchase of our common stock is speculative and involves a high degree
of risk. You should carefully consider the risks described below together with
all of the other information included or incorporated by reference in this
prospectus before making an investment decision. The risks and uncertainties
described below are not the only ones we face. If any of the following risks
actually occur, our business, financial condition or operating results could be
harmed. In such case, the trading price of our common stock could decline and
you could lose all or part of your investment.
We have experienced losses in the current and prior years and we anticipate that
we will continue to generate losses for the foreseeable future.
Our operations to date have not been profitable. As of September 30, 2001
we had an accumulated deficit of $22.2 million. We expect to continue operating
at a loss during the fourth quarter of 2001. These losses are primarily
attributable to low margins in our injection molding business of our Osley &
Whitney subsidiary (which was closed in late November, 2001), and the
significant costs and expenses associated with the research and development,
prototyping, marketing, and general and administrative expenses, associated with
our new Infinite Photonics, Inc. subsidiary. Other factors that could adversely
affect our operating results include:
o the cost of manufacturing scale-up and production;
o introduction of new products and product enhancements by us or our
competitors;
o changes in applied photonics technologies; and
o changes in general economic conditions.
We cannot assure you that our revenues will increase sufficiently to
offset our operating costs or that, even if they do, that our operations will
ever be profitable.
Our auditors expressed a going concern limitation in their report on our 2000
financial statements.
The report of our independent auditors with respect to our financial
statements for the year ended December 31, 2000 incorporated by reference in
this report states that there is substantial doubt regarding our ability to
continue as a going concern. There can be no assurance that our existing
operations will not continue to generate negative cash flows. However, we
believe that increased funds derived from private placements during the current
year, coupled with improved cash flow from fixed costs of sales leverage and
cost saving measures that have been implemented, will satisfy our working
capital needs.
We are highly leveraged, which increases our operating deficit and makes it
difficult for us to grow.
At of September 30, 2001 we had current liabilities, including trade
payables, of $5.4 million, long-term liabilities of $4.3 million and a working
capital deficit of $2.7 million. Our working capital shortages continue to
materially impair our business operations and growth strategy. If we continue to
experience working capital limitations, our business, business prospects,
operations and financial condition will be materially adversely affected.
3
We have certain contingent liabilities that could materially and adversely
effect our financial position.
As a result of the closure of the O&W facility, we could be subject to
certain third party claims including with respect to O&W obligations, which the
company guaranteed. In addition, under the agreement we reached in November with
respect to the conversion of debt due to the estate of the former principal
shareholder of O&W, we have a contingent obligation to reacquire certain of the
shares upon the occurrence of specified events. Either of these contingent
liabilities, if asserted, could have a material adverse impact on our financial
condition and operations.
Our stockholders may experience significant dilution as a result of stock
issuances under the equity line of credit agreement, conversion of debt to
equity and the exercise of options / warrants.
We have an equity line of credit agreement with Cockfield Holdings, LLC,
pursuant to which we may sell shares of our common stock at prices that may be
below the market price of our stock at that time. As a result, these sales will
dilute the interests of our existing stockholders. In addition, as the price of
our common stock decreases, we will be required to issue more shares of our
common stock for any given dollar amount invested. The more shares that are
issued under the equity line of credit, the more our shares will be diluted and
the more our stock price may decrease. This may encourage short sales, which
could place further downward pressure on the price of our common stock.
Furthermore, for the life of any outstanding options, warrants, the holders will
have the opportunity to profit from a rise in the price of the underlying common
stock. When the holders of these derivative securities exercise their rights to
acquire shares of our common stock, the interests of the other stockholders will
be diluted. In addition, the holders of derivative securities can be expected to
exercise their instruments at a time when we would, in all likelihood, be able
to obtain additional capital by an offering of our unissued common stock on
terms more favorable to us than those provided by such instruments.
The price of our common stock may be adversely affected by the possible issuance
of shares of our common stock under the equity line of credit agreement and as a
result of the exercise of outstanding warrants and options.
In addition to the 665,918 shares covered by this prospectus, we have
previously registered shares and common stock purchase warrants. Additionally,
we have granted options covering 1,251,233 shares under the incentive stock
option plan. In addition, we have issued warrants covering 555,675 shares of
common stock. We have agreed with certain of these holders to register the
shares underlying their warrants. As a result of the actual or potential sale of
these shares into the market, our common stock price may decrease. In that event
not only would you lose a portion of your investment, but we would probably find
it more difficult to obtain additional financing.
We will require additional financing in the future, which may not be available
on acceptable terms.
We will require additional funds to expand our production capability,
continue to develop new applications for our direct write technology and for
working capital and general corporate purposes. At this time, we do not believe
that product sales will reach the level required to sustain our operations and
growth plans in the near term. Therefore, we are actively pursuing additional
financing alternatives. We cannot assure you that any additional financing will
be available or, if available, will be offered on acceptable terms. Any
additional equity financing may be dilutive to stockholders, and debt
financings, if available, may involve restrictive covenants that further limit
our ability to make decisions that we believe will be in our best interests. In
the event we cannot obtain additional financing on terms acceptable to us when
required, our operations will be materially adversely affected and we will have
to cease or substantially reduce operations.
4
Some of our products and services are at an early stage of development and may
not achieve market acceptance.
Currently, our primary focus is to develop new commercial applications for
grating coupled surface emitting laser ("GCSEL") diodes and laser driven direct
write technologies. Many of the benefits of GCSEL, diode laser and laser driven
direct write technologies are not widely known. Therefore, we anticipate that we
will need to educate our target markets to generate demand for our services and,
as a result of market feedback, we may be required to further refine these
services. In order to persuade potential customers to purchase our services, we
will need to overcome industry resistance to, and suspicion of, new
technologies. In addition, developing new applications for these technologies
and other new technologies will require significant further research,
development, testing and marketing prior to commercialization. We cannot assure
you that commercial applications of these technologies can be successfully
developed, marketed or produced.
Some of our current products and services have not been commercially successful.
Some of our products and services do not generate a significant amount of
revenue, even though they have been available for some time. In addition, most
of our revenue from these businesses is generated from a limited number of
customers. We cannot assure you that these customers will continue to purchase
these products and services or that we will be able to expand the market for
these products and services. Our resources available for sales and marketing
activities are limited. Therefore, any material delay, retooling, cancellation
or reduction in orders from the customers who purchase these products and
services could have a material adverse affect on our business, operations and
financial condition.
We have limited marketing and sales capabilities and must make sales in
fragmented markets.
Our future success depends, to a great extent, on our ability to
successfully market our products and services. We currently have limited sales
and marketing capabilities and experience and we will need to hire qualified
sales and marketing personnel, develop additional sales and marketing programs
and establish sales distribution channels in order to achieve and sustain
commercial sales of our products. Our ability to successfully market our
products and services is further complicated by the fact that our principal
markets, laser photonics, telecommunications, aerospace and medical components,
are highly fragmented. Consequently, we will need to identify and successfully
target particular market segments in which we believe we will have the most
success. These efforts will require a substantial, but unknown, amount of effort
and resources. We cannot assure you that any marketing and sales efforts
undertaken by us will be successful or will result in any significant product
sales.
We depend on the aerospace, laser photonic, telecommunications, and medical
device industries, which continually produce technologically advanced products.
A majority of our sales are to companies in the aerospace, laser photonic,
telecommunications and medical device industries, which are subject to rapid
technological change and product obsolescence. If our customers are unable to
create products that keep pace with the changing technological environment and
market demand, their products could become obsolete and the demand for our
services could decline significantly. If we are unable to offer cost-effective,
quick-response manufacturing services to customers, demand for our services will
also decline. This would have a material adverse affect on our business,
operations and financial condition.
5
Our industry is intensely competitive, which may adversely affect our operations
and financial results.
All our markets are intensely competitive and numerous companies offer
conventional and laser driven products and services that compete with our
products and services. We anticipate that competition for our products and
services will continue to increase. Most of our competitors have substantially
greater capital resources, research and development staffs, manufacturing
capabilities, sales and marketing resources, facilities and experience. These
companies, or others, could undertake extensive research and development in
laser technology and related fields that could result in technological changes.
Many of these companies also are primary customers for various components, and
therefore have significant control over certain markets that we have targeted.
In addition, we may not be able to offer prices as low as some of our
competitors because those competitors may have lower cost structures as a result
of their geographic location or the services they provide. Our inability to
provide comparable or better products and services at a lower cost than our
competitors could cause our net sales to decline. We cannot assure you that our
competitors will not succeed in developing technologies in these fields which
will enable them to offer laser services more advanced and less costly than
those we offer or which could render our technologies obsolete.
Our products and services are subject to industry standards, which increases
their cost and could delay or bar their commercial acceptance.
Since some of our products and services are used in the telecommunications
industry, they must comply with the Bellcore Testing standards for traditional
equipment and/or Bluetooth standards for wireless devices. These standards
govern the design, manufacture and marketing of these items. If we fail to
comply with these standards, we will not be able to sell our products. We may
encounter significant delays or incur additional costs in our efforts to comply
with these industry standards.
We depend on our relationship with third parties to develop and commercialize
new products.
Our strategy for research and development and for the commercialization of
our products contemplates a continuing relationship with various publicly and
privately funded consortia and our existing relationships will continue with
strategic partners, OEMs, licensees and others. We depend on these associations
and relationships not only to underwrite our research and development efforts,
but also for product testing and to create markets for our products and
services. We cannot assure you that our existing relationships will continue or
the extent to which the parties to such arrangements will continue to allocate
time of resources to these strategic alliances. Similarly, we cannot assure you
that we will be able to enter into new arrangements in the future. In addition,
we cannot assure you that such agreements will progress to a production phase
or, if production commences, that we will receive significant revenues as a
result of these relationships. We cannot assure you that these parties, or any
future partners, will perform their obligations as expected or that any revenue
will be derived from such arrangements.
We have only limited manufacturing capabilities and our inability to continually
manufacture products on a cost-effective basis would harm our business.
We have limited production facilities and limited experience in
manufacturing our product offerings. To the extent any of our existing or future
products must be produced in commercially reasonable quantities, we will have to
either develop that expertise quickly or outsource that function. Developing
manufacturing capability is an expensive and time-consuming endeavor and we do
not have the resources that are required for a full-scale manufacturing
capability. Therefore, in all likelihood we will have to engage a third party to
manufacture our products for us. In that event, we will depend on the
manufacturer to produce high-quality products based on our specifications, on
time and within budget. If
6
we are unable to manufacture products in sufficient quantities and in a timely
manner to meet customer demand ourselves or by others, our business, financial
condition and results of operations will be materially adversely affected.
We depend on our intellectual property rights to provide us with a competitive
advantage.
Our ability to compete successfully depends, in part, on our ability to
protect our products and technologies under United States and foreign patent
laws, to preserve trade secrets and other proprietary information and
technologies, and to operate without infringing the proprietary rights of
others. We cannot assure you that patent applications relating to our products
or potential products will result in patents being issued, that any issued
patents will afford adequate protection or not be challenged, invalidated,
infringed or circumvented, or that any rights granted will give us a competitive
advantage. Furthermore, we cannot assure you that others have not independently
developed, or will not independently develop, similar products and/or
technologies, duplicate any of our product or technologies, or, if patents are
issued to, or licensed by, us, design around such patents. We cannot assure you
that patents owned or licensed and issued in one jurisdiction will also be
issued in any other jurisdiction. In addition, we cannot assure you that we can
adequately protect our proprietary technology and processes that we maintain as
trade secrets. If we are unable to develop and adequately protect our
proprietary technology and other assets, our business, financial condition and
results of operations will be materially adversely affected.
We depend on the continued services of our key personnel.
Our future success depends, in part, on the continuing efforts of our
senior executive officers, Clifford G. Brockmyre II, Thomas Mueller, J. Terence
Feeley, Jeff Bullington and Bruce J. Garreau, who conceived our strategic plan
and who are responsible for executing that plan. The loss of any of these key
employees may adversely affect our business. At this time we do not have any
term "key man" insurance on any of these executives other than a $1.7 million
policy on Clifford G. Brockmyre II. If we lose the services of any of these
senior executives, our business, operations and financial condition could be
materially adversely affected.
We must attract, hire and retain qualified personnel.
As we continue to develop new products and as our business grows,
significant demands will be placed on our managerial, technical, financial and
other resources. One of the keys to our future success will be our ability to
attract, hire and retain highly qualified engineering, marketing, sales and
administrative personnel. Competition for qualified personnel in these areas is
intense and we will be competing for their services with companies that have
substantially greater resources than we do. We cannot assure you that we will be
able to identify, attract and retain employees with skills and experience
necessary and relevant to the future operations of our business. Our inability
to retain or attract qualified personnel in these areas could have a material
adverse effect on our business and results of operations.
We may have difficulties in managing our growth.
Our future growth depends, in part, on our ability to implement and expand
our financial control systems and to expand, train and manage our employee base
and provide support to an expanded customer base. If we cannot manage growth
effectively, it could have material adverse effect on our results of operations,
business and financial condition. In 1999 we made two acquisitions and opened a
new facility in Illinois. Acquisitions and expansion involve substantial
infrastructure and working capital costs. We cannot assure you that we will be
able to integrate our acquisitions and expand efficiently.
7
Due to continued quarterly operating losses, we closed our Osley & Whitney
operations in November 2001, one of the businesses acquired in 1999.
Additionally, we cannot assure you that we will be able to expand our business
operations or that any expansion will enhance our profitability. If we do not
achieve sufficient revenue growth to offset increased expenses associated with
our expansion, our results will be adversely affected.
We face potential product liability claims.
The sale of our telecommunications, aerospace and medical products and
services will involve the inherent risk of product liability claims by others.
We maintain product liability insurance coverage. However, we cannot assure that
the amount and scope of our existing coverage is adequate to protect us in the
event that a product liability claim is successfully asserted. Moreover, we
cannot assure you that we will continue to maintain the coverage we currently
have. Product liability insurance is expensive, subject to various coverage
exclusions and may not always be obtainable on terms acceptable to us.
Our stock price is volatile and could be further affected by events not within
our control.
The trading price of our common stock has been volatile and will continue
to be subject to:
o Volatility in the trading markets generally;
o Significant fluctuations in our quarterly operating results;
o Announcements regarding our business or the business of our
competitors;
o Changes in prices of our or our competitors' products and services;
o Changes in product mix; and
o Changes in revenue and revenue growth rates for us as a whole or for
geographic areas, and other events or factors.
Statements or changes in opinions, ratings or earnings estimates made by
brokerage firms or industry analysts relating to the markets in which we operate
or expect to operate could also have an adverse effect on the market price of
our common stock. In addition, the stock market as a whole has from time to time
experienced extreme price and volume fluctuations which have particularly
affected the market price for the securities of many small cap companies and
which often have been unrelated to the operating performance of these companies.
Concentration of ownership
As of December 1, 2001, our chief executive officer, Clifford G. Brockmyre
II, is our largest stockholder, owning approximately 23% of our issued and
outstanding shares of our common stock. Mr. Brockmyre may effectively control
all our affairs, including the election of directors and any proposals regarding
a sale of the Company or its assets or a merger.
Some provisions in our charter documents and bylaws may have anti-takeover
effects.
Our certificate of incorporation and bylaws contain provisions that may
make it more difficult for a third party to acquire us, with the result that it
may deter potential suitors. For example, our board of directors is authorized,
without action of the stockholders, to issue authorized but unissued common
stock
8
and preferred stock. The existence of undesignated preferred stock and
authorized but unissued common stock enables us to discourage or to make it more
difficult to obtain control of us by means of a merger, tender offer, proxy
contest or otherwise.
Absence of dividends to shareholders.
We have never declared a dividend on our common stock. We do not
anticipate paying dividends on the common stock in the foreseeable future. We
anticipate that earnings, if any, will be reinvested in the expansion of our
business.
We have agreed to limitations on the potential liability of our directors.
Our certificate of incorporation provides that, in general, directors will
not be personally liable for monetary damages to the company or our stockholders
for a breach of fiduciary duty. Although this limitation of liability does not
affect the availability of equitable remedies such as injunctive relief or
rescission, the presence of these provisions in the certificate of incorporation
could prevent us from recovering monetary damages.
We must maintain compliance with certain criteria in order to maintain listing
of our shares on the Nasdaq market.
Our common stock is currently traded on the Nasdaq SmallCap Market. In
order to maintain this listing, we are required to meet certain requirements
relating to our stock price and net tangible assets of $2.0 million
(stockholders' equity, less unamortized goodwill). If we fail to meet these
requirements, our stock could be delisted. Last year we received a series of
letters from Nasdaq addressing our failure to satisfy the minimum net tangible
asset continued listing requirements for the SmallCap Market. As a result of
private placement transactions consummated after December 31, 2000, and during
the quarter ended June 30, 2001, we received a letter from Nasdaq that we were
in compliance with the net tangible asset requirement at that date.
Because of the tragedies of September 11, 2001, and the resultant market
disruptions, our capital raising efforts were substantially impaired. As a
result of this disruption and continued operating losses through September 30,
2001, we were below the minimum net tangible assets listing maintenance
requirements at September 30, 2001. On November 26, 2001, we were notified by
Nasdaq that it was reviewing our eligibility for continued listing. We are
providing Nasdaq with a specific plan to achieve and sustain compliance with all
the Nasdaq SmallCap Market listing requirements, including the time frame for
completion of the plan. We believe that through equity infusions and conversion
of debt to equity we will achieve compliance with the Nasdaq listing
requirements. If we are delisted, an investor could find it more difficult to
dispose of or to obtain accurate quotations as to the market value of our
securities. Among other consequences, delisting from Nasdaq may cause a decline
in the stock price and difficulty in obtaining future financing.
The liquidity of our stock could be severely reduced if it becomes classified as
"penny stock".
The Securities and Exchange Commission has adopted regulations which
generally define a "penny stock" to be any non-Nasdaq equity security that has a
market price (as therein defined) of less than $5.00 per share or with an
exercise price of less than $5.00 per share. If our securities were subject to
the existing rules on penny stocks, the market liquidity for our securities
could be severely adversely affected. For any transaction involving a penny
stock, unless exempt, the rules require substantial additional disclosure
obligations and sales practice obligations on broker-dealers where the sale is
to persons other than established customers and accredited investors (generally,
those persons with assets in
9
excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together
with their spouse). For transactions covered by these rules, the broker-dealer
must make a special suitability determination for the purchase of the common
stock and have received the purchaser's written consent to the transaction prior
to the purchase. Additionally, for any transaction involving a penny stock,
unless exempt, the rules require the delivery, prior to the transaction, of a
risk disclosure document mandated by the Commission relating to the penny stock
market. The broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and, if the broker-dealer is the sole market-maker, the broker-dealer
must disclose this fact and the broker-dealer's presumed control over the
market. Finally, monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks. Consequently, the "penny stock" rules may
restrict the ability of broker-dealers to sell the common stock and accordingly
the market for our common stock.
WHERE YOU CAN FIND MORE INFORMATION
We are required to comply with the informational and reporting
requirements of the Securities Exchange Act of 1934, as amended. As required by
that statute, we have filed various reports, proxy statements and other
information with the Securities and Exchange Commission. You may inspect these
reports, proxy statements and other information at the public reference
facilities of the Securities and Exchange Commission at its principal offices at
Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at its regional offices located at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. You can get copies of these reports, proxy statements and
other information from these offices by paying the required fees. Please call
the Securities and Exchange Commission at (800) SEC-0330 for further information
regarding the operation of its public reference room. These reports, proxy
statements and other information can also be accessed over the Internet at the
web site maintained by the Securities and Exchange Commission at
http://www.sec.gov.
We have filed a registration statement on Form S-3 with the Securities and
Exchange Commission under the Securities Act regarding the shares of our common
stock covered by this prospectus. This prospectus, which forms a part of that
registration statement, does not contain all of the information included in that
registration statement and its accompanying exhibits. Statements contained in
this prospectus regarding the contents of any document are not necessarily
complete and are qualified in their entirety by that reference. You should refer
to the actual document as filed with the Securities and Exchange Commission.
REPORTS TO SECURITY HOLDERS
We furnish our stockholders with annual reports containing audited
financial statements. In addition, we are required to file reports on Forms 8-K,
10-QSB and 10-KSB with the Securities and Exchange Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by us with the Securities and Exchange
Commission are incorporated in this prospectus by reference:
(1) Annual Report on Form 10-KSB for the fiscal year ended December 31, 2000;
(2) Definitive proxy statement dated February 27, 2001;
(3) Registration Statement on Form 8-A, filed September 23, 1993; and
(4) Forms 10-QSB filed for the quarters ended March 31, June 30, and September
30, 2001.
(5) Forms 8-K dated August 6, November 29 and December 12, 2001.
10
Each document filed after the date of this prospectus under Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act but before this offering
terminates is incorporated in this prospectus by reference and is to be treated
as part of this prospectus as of the date it is filed. Any statement contained
in a document incorporated or deemed to be incorporated in this prospectus by
reference is modified or superseded to the extent that a statement contained in
this prospectus or in any other subsequently filed document that is incorporated
in this prospectus by reference modifies or supersedes that statement.
We will provide, without charge, each person to whom a copy of this
prospectus is delivered, a copy of any document incorporated by reference in
this prospectus (other than exhibits, unless those exhibits are specifically
incorporated by reference in those documents) if it is requested. Requests
should be directed to Infinite Group, Inc., 2364 Post Road, Warwick, Rhode
Island 02886, Attention: Clifford G. Brockmyre II, President and Chief Executive
Officer.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY US. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE OF SHARES OF OUR COMMON STOCK
COVERED BY THIS PROSPECTUS SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN OUR AFFAIRS SINCE THE DATE OF THIS
PROSPECTUS OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED
SECURITIES TO WHICH IT RELATES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN ANY CIRCUMSTANCES IN
WHICH THE OFFER OR SOLICITATION IS UNLAWFUL.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference in this
prospectus contain forward-looking statements that involve substantial risks and
uncertainties. You can identify these statements by forward-looking words such
as "anticipate," "believe," "could," "estimate," "expect," "intend," "may,"
"should," "will" and "would" or similar words. You should read statements that
contain these words carefully because they discuss our future expectations,
contain projections of our future results of operations or of our financial
position or state other "forward-looking" information. We believe that it is
important to communicate our future expectations to our stockholders. However,
there may be events in the future that we are not able to accurately predict or
control. The factors listed above in the section captioned "Risk Factors," as
well as any cautionary language in this prospectus, provide examples of risks,
uncertainties and events that may cause our actual results to differ materially
from the expectations we describe in our forward-looking statements. Before you
invest in our common stock, you should be aware that the occurrence of the
events described in these risk factors and elsewhere in this prospectus could
have a material adverse effect on our business, results of operations, financial
position and the price of our common stock.
THE COMPANY
Our business has three segments, the Laser Group, the Plastics Group and
the Photonics Group. We sell products and services in the fields of material
processing, advanced manufacturing methods, high productivity production, and
laser-application technology. Our Laser Group provides comprehensive
11
laser-based materials and processing services. With the closing of our Osley &
Whitney subsidiary in late November, the Plastics Group includes primarily our
Express Pattern subsidiary for rapid prototyping. The Photonics Group develops
semiconductor laser diodes, based on our proprietary grating coupled surface
emitting laser (GCSEL) diode technology.
The Laser Group
For over fifteen years, we have provided applied photonic services.
Specifically, we provide high value, laser-based manufacturing services to
industrial customers. We use laser driven technologies that enable cost
effective component fabrication for customers in the aerospace, defense,
medical, telecommunications and sensing industries. Through industry and
government funded research, we have developed proprietary manufacturing
techniques that, we believe, have established us as a valued supplier of
engineered components. These skill sets range from classical laser materials
processing to state of the art laser driven direct manufacturing and prototyping
technologies.
We use lasers to either subtract metals from a block of metal (known as,
precision laser materials processing) or to add or deposit metals (known as
laser material deposition processing). The subtractive process uses lasers to
cut away, drill or weld metals to form a part. The additive process uses lasers
to add or build metals on to a surface. Both processes can be used for a wide
variety of commercial applications, including:
o Large parts ("macroscale"), such as jet engine components;
o Handheld parts ("mesoscale"), such as GPS (global positioning
system) antennas and sensors;
o Barely visible or not visible to the human eye size parts
("microscale"), such as medical stents used in angioplasty, and
circuitry for next generation electronics, sensors and medical
devices.
Our services and products can be grouped into three major categories:
1. Precision Laser Materials Processing. Improved performance of lasers
has allowed classic laser materials processing, such as cutting and
welding, to be done at the micro-level. For example, through our
Laser Fare ("LF") and Mound Laser and Photonics Center ("MLPC"),
another of our subsidiaries, we believe we have superior
technological capabilities in this area. Current applications
include:
Micro Machining -- Both Laser Fare and Mound provide laser machining
on a micro scale. For example, we currently manufacture
medical devices, such as stents. Stents are sections of small
stainless steel tubing, most of which have been machined away
to leave a mesh which can be expanded once the surgeon has
inserted it into an artery. The stent is used to hold open an
artery once an angiogram has been performed.
Macro Machining -- Laser Fare is a leading provider of laser
material processing services to the aerospace, gas turbine,
automotive, and medical industries.
2. Laser Material Deposition Processing. LENS(R) CRADA (Laser
Engineered Net Shaping - Cooperative Research and Development
Agreement) has developed a number of methods, many with our
involvement, to deposit controlled amounts of a metal material on a
selected surface. Our Laser Fare and Mound Laser and Photonics
Center
12
subsidiaries have developed and continue to develop high value
manufacturing services in this area. Examples of laser material
deposition processes, or additive processes, include:
LENS(R) Process -- The LENS(R) CRADA process was developed at Sandia
National Laboratories by a consortium of companies of which we
are a part. As a result, we have an irrevocable, fully paid
nonexclusive, worldwide license for the technology developed
under this program. Laser Fare has entered into contracts for
macro applications relating to this process. These
applications include depositing metals for the overhaul and
repair of military and high value commercial parts, such as
aerospace parts. We have also begun building mesoscale parts
for such diverse applications as titanium golf club heads and
titanium spinal medical devices. Micro applications include
small fractal antenna fabricated using silver alloys for
handheld GPS (global positioning systems), and other wireless
applications.
Pulsed Laser Deposition -- This is a proprietary process developed
by MLPC to bond one metal to a different metal using lasers.
For example, we can bond very thin layers of titanium to other
metals for high temperature superconductors (HTS) used in
satellite electronics and other applications.
3. Laser-related Contract Research and Development. We continue
research and development in both additive and subtractive laser
material processes. We are both a prime contractor and subcontractor
to several projects sponsored by DARPA. We are subcontractors on
three of DARPA's MICE (Defense Advanced Research Projects Agency -
Mesoscopic Integrated Conformal Electronics) programs. Other
projects include acoustic bandgap research for the U.S. Naval
Underwater Warfare Center ("NUWC") and Electric Boat, and high
temperature superconductor ("HTS") research for the U.S. Air Force
Research Laboratory ("AFRL"). We also have an agreement with the
National Center for Manufacturing Sciences to provide higher quality
metal part repairs at a lower cost than traditional methods under
NCMS's Commercial Technologies for Maintenance Activities Program.
This program enables the cost-effective repair of parts that
previously would have been discarded at significant cost to military
and commercial users. NCMS is a not-for-profit cooperative research
consortium and is funded by the Department of Defense as well as
over 175 corporations in the United States and Canada.
Photonics Group
Photonics is the science of generating and harnessing light to do useful
work. Lasers and fiber optics are the best-known expressions of photonics
technology. We believe optical technology will be as important to the 21st
Century as electricity was to the 20th Century.
Photonic technologies use light to:
o deposit materials;
o detect, transmit, store and process information;
o generate energy; and
o capture and display images.
13
The basic unit of light is the photon, while in electronics it is the
electron. Because photons are massless and travel faster than electrons,
photonic devices can be smaller and significantly faster than electronic
devices. For example, replacing electronics (copper wire) with photonics (fiber
optic cable) boosts the capacity of telecommunications transmission lines by a
factor of 10,000.
Photonic components are the "enabling technology" in many familiar
consumer products including CD-ROM players, digital cameras, displays on laptop
computers and calculators, fiber optic cable for telephones, cable television,
and networked computer systems. In industry, photonics "eyes" enable robots to
"see." Photonics is also found in semiconductor manufacturing as well as
analytical and process-monitoring applications. In medicine, photonics is at the
core of diagnostic instrumentation, laser microsurgery, and filmless real-time
imaging.
Infinite Photonics, Inc. develops and markets laser diodes based on its
proprietary Grating Coupled Surface Emitting Lasers (GCSEL) technology platform.
To date we have obtained one patent; have 10 patents pending and an additional
10 patents under development for GCSEL and related technologies. In addition to
our researchers, we have also engaged researchers at the Photonics Research
Center at the University of Connecticut, the Ioffe Institute in St. Petersburg,
Russia, and the Center for Research and Education in Optics and Lasers,
University of Central Florida in Orlando on applications of our grating coupled
surface emitting lasers. Semiconductor diode wafers used in the manufacture of
GCSEL's are produced at Cutting Edge Optronics, (a TRW subsidiary) and we are
qualifying a second source, as required by most larger telecommunications
equipment manufacturers.
We have prototyped 980nM and 1550nM GCSEL diodes for use in
telecommunications and other commercial pump and source laser applications,
respectively. We compete with companies producing traditional edge emitting
laser diodes used in telecommunications, such as Fabry-Perot (FP) and
Distributed Feedback (DFB) diode lasers, as well as Vertically Coupled Surface
Emitting Lasers (VCSEL). We believe GCSEL's produce the best overall combination
of: power and divergence angle of emitted light; require lower cost or no cost
collimating optics; provide lower test, burn-in and packaging cost; and provide
tunability over a greater number of available channels. GCSEL's have:
o Higher power than currently commercially available FP, DFB and
VCSEL;
o Lower Divergence Angle than FP, DFB and VCSEL for the emitted light
(which reduces the cost and complexity, or eliminates, collimating
optics);
o Narrower Emission Linewidth allowing for more channels with greater
tunability; and
o Surface Emitting qualities similar to VCSEL's (which allow for lower
cost testing on wafer, and simpler and less costly coupling to fiber
optics) over competitive edge emitting FP and DFB.
In May 2001, we were notified that the Defense Advanced Research Projects
Agency (DARPA) had awarded us a one-year $1.0 (subsequently increased to $1.3)
million contract in support of our proprietary GCSEL development. In June 2001,
the Air Force Research Laboratory (AFRL) at Kirtland AFB, NM signed a
cooperative research and development agreement (CRADA) for development of
scalable GCSEL.
In July 2001, we were certified by the Florida Governor's Office as a
Semiconductor Diode Facility and exempted from sales and use taxes under
Florida's Semiconductor, Defense and Space Technology Facility program. We are
in the process of establishing diode development facilities near UCF-CREOL in
Orlando. We are exploring numerous funding sources to ramp-up product
development, the second site manufacturing capability in Orlando, and develop
additional sales, marketing and administrative infrastructure.
14
On November 13, 2001, we received notice of a pre-award of a contract from
DARPA for further GCSEL development.
We intend to continue to use a combination of direct sales to customers,
contract research and development for new and existing customer applications and
early stage prototype assistance to foster our growth. We will continue to
provide these customers with traditional and advanced manufacturing services to
fabricate their components in the most cost-effective manner.
Plastics Group
On November 29, 2001, we announced that our Osley & Whitney, Inc. (OW)
subsidiary had ceased operations. Our decision was a result of OW having posted
continuing losses for several quarters, due in part to price competition from
foreign competitors, a severe slowdown in the injection mold industry and other
factors. This closure followed our comprehensive efforts to exhaust all
alternatives for OW to continue its plastic injection mold business, including
seeking strategic financial investors, strategic partnerships and the sale of
OW. These measures followed OW's efforts over the past several months to reduce
operating expenses, refocus marketing programs, and to increase business
efficiencies. However, the bankruptcy of Polaroid, one of OW's major customers,
coupled with reduced demand from other key customers and continued weakness in
the industry mandated the closure. The financial statement impact of this
transaction is uncertain at this time and is being reviewed by management.
We continue operations in the other major subsidiary in that group,
Express Pattern, Inc. (EP) as it continues to be profitable. EP uses a variety
of additive techniques to provide rapid prototyping services to industrial
customers. These services enable customers to reduce risk in product development
by providing fast, low cost prototypes that allow designs to be tested before
large investments in tooling are made.
Effects of Recent Events
The terrorist attacks in New York and Washington, D.C. on September 11,
2001, additional threatened terrorist acts, and the ongoing military action have
created uncertainties in our industry, as well as domestic and international
economies, and the financial markets in general. These events, and potential
future terrorist acts, may result in reduced demand from our clients for our
services and products and may potentially have a material adverse effect on our
business, financial condition and operating results. It is too soon, however,
for us to reasonably estimate the impact of these tragic events on our industry
and our future financial performance.
We have continued to experience operating losses in 2001, with our third
quarter negatively impacted by the tragedies of September 11, which resulted in
delays at LF in the receipt of materials for aerospace and jet engine parts, a
slowdown in prototype part orders at EP, and slowed demand for new injection
molds at OW. This tragedy coupled with generally falling demand for plastic
products due to the rapid increase in petroleum prices in 2000 and early 2001,
resulted in reduced O&W/EP profitability. Although the bankruptcy of our
significant long-term OW customer, Polaroid, did not result in accounts
receivable losses, it did result in reduced year over year revenues for OW.
Finally, the events of September 11 have negatively impacted the Nasdaq market
in general and have reduced our ability to complete private placement
transactions to improve our capital position. This has resulted in reductions in
cash flow, increased borrowings from banks and an increased negative working
capital position.
Despite these negative events, we improved net year over year revenues,
and comparable quarter over quarter net revenues, primarily due to increased
revenues at LF from laser materials processing of
15
power generation gas turbine parts, and increased contract research and
development at ATG and MLPC from DARPA and AFRL, respectively.
------------------------------------------------------------
We were incorporated under the laws of the state of Delaware on October
14, 1986. On January 7, 1998, we changed our name from Infinite Machines Corp.
to Infinite Group, Inc. Our principal executive offices are located at 2364 Post
Road, Warwick, RI 02886 and our facsimile number is (401) 738-6180. Our
subsidiaries are located in Rhode Island, Florida, New Mexico, Ohio and
Illinois. We maintain sites on the world wide web at www.infinite-group.com,
www.laserfare.com, www.infinitephotonics.com, and www.expresspattern.com.
Information contained on any of our websites does not constitute a part of this
prospectus.
------------------------------------------------------------
Recent Developments
DARPA Award
On December 12, 2001, we announced that our Infinite Photonics, Inc.
subsidiary has been selected to receive a $12 million contract for its
proprietary grating coupled surface emitting laser (IP GCSEL(TM)) diode
technology from the Defense Advanced Research Projects Agency, (DARPA). Subject
to final contract negotiations, the full effort is to begin in the first quarter
of 2002.
The contract will provide funding for both pump and source laser diodes.
The goal of the program is the development and commercialization of single mode
GCSEL devices with powers more than 100 times greater than commercially
available Fabry-Perot devices. We will also deploy the technology to use our
best efforts to obtain ultra short pulse widths, high repetition rates, high
beam quality, and lower divergence angles times than existing competitive diodes
with narrow line width, tunability, and high mode suppression. This work built
on the work currently being performed at our Laser Fare ATG, Infinite's research
and development division.
Osley & Whitney
On November 29, 2001, we announced that our Osley & Whitney, Inc. (OW)
subsidiary had ceased operations. Our decision was a result of OW having posted
continuing losses for several quarters, due in part to price competition from
foreign competitors, a severe slowdown in the injection mold industry and other
factors. The financial statement impact of this transaction is uncertain at this
time and is being reviewed by management.
This closure follows comprehensive efforts to exhaust all alternatives for
OW to continue its plastic injection mold business, including seeking strategic
financial investors, strategic partnerships and the sale of OW. These measures
followed OW's efforts over the past several months to reduce operating expenses,
refocus marketing programs, and to increase business efficiencies. However, the
bankruptcy of Polaroid, one of OW's major customers, coupled with reduced demand
from other key customers and continued weakness in the industry mandated the
closure.
Nasdaq Listing Status
16
On November 26, 2001, Nasdaq staff notified us that we had fallen short of
the net tangible assets (stockholders' equity, less unamortized goodwill), and
stockholder equity requirements of $2.0 million with values of $1,876,504 and
$1,972,423, at September 30, 2001, respectively. Because of the tragedies of
September 11, 2001, and the resultant market disruptions, our capital raising
efforts were substantially impaired. As a result of this disruption and
continued operating losses through September 30, 2001, we were below the minimum
net tangible assets listing maintenance requirements. We are providing Nasdaq
with a specific plan to achieve and sustain compliance with all the Nasdaq
SmallCap Market listing requirements, including the time frame for completion of
the plan. We believe that through equity infusions and conversion of debt to
equity we will be in compliance with those listing requirements.
Agreement to Convert Debt
Under an agreement we reached in November 2001, which is scheduled to
close in January 2002, we agreed to convert $758,507 of debt and other
outstanding liabilities due to the estate of the former largest shareholder of
Osley & Whitney into 379,253 shares of our common stock.
17
USE OF PROCEEDS
All of the shares of our common stock offered by this prospectus are being
registered for the account of the selling stockholders. We will not receive any
of the proceeds from the sale of these shares. However, we will receive the
proceeds from the exercise of the warrants covering the 73,400 shares of common
stock covered by this prospectus to the extent those warrants are exercised.
These proceeds would be approximately $250,600 if all the warrants and options
are exercised. We expect to use substantially all the net proceeds from the
exercise of the warrants and the sale of the shares for general corporate
purposes, including research and development, expansion of sales and marketing
activities and working capital. We will retain broad discretion in the
allocation of those net proceeds.
SELLING STOCKHOLDERS
The following table sets forth the name and the number of shares of our
common stock beneficially owned by each selling stockholder as of December 1,
2001 and as adjusted to reflect the sale of the shares offered by this
prospectus, by each selling stockholder. Except as otherwise indicated, the
persons listed below have sole voting and investment power with respect to all
shares of common stock owned by them including those shares not yet issued. In
addition, unless otherwise indicated, none of the selling stockholders has had a
material relationship with us or any of our affiliates within the past three
years. All information with respect to beneficial ownership has been furnished
to us by the respective stockholder.
Shares Beneficially Owned Shares Beneficially
Prior to Offering(1) Owned After the Offering
------------------------- ------------------------
Shares
Name of Beneficial Owner Number Percent Offered Number Percent
------------------------------------ -------- --------- --------- -------- --------
Roger P. Moore (2) 13,750 * 13,750 -- --
Gulati Family, LP (2) 13,750 * 13,750 -- --
Douglas J. Rademacher (2) 13,750 * 13,750 -- --
David R. Johnson Living Trust (2) 27,250 * 13,750 13,500 *
Delivery From Heaven Foundation (3) 54,500 1.2% 27,500 27,000 *
David P. Pilotte 75,000 1.6% 75,000 -- --
Christopher DiNapoli (3) 41,000 * 27,500 13,500 *
John J. Perkins (4) 82,500 1.8% 82,500 -- --
Dana A. Marshall (5) 55,000 1.2% 55,000 -- --
Daniel Cohen 100,000 2.1% 100,000 -- --
Larry Dosser 16,268 * 16,268 -- --
Allan Ligi 82,500 1.8% 82,500 -- --
Idea Capital, Inc. (6) 15,400 * 15,400 -- --
Rhino Capital (7) 34,000 * 34,000 -- --
Christopher Murney (8) 16,500 * 16,500 -- --
John F. Corridan III 3,750 * 3,750 -- --
William M. Johnston 25,000 * 25,000
Richard G. Heidt 50,000 1.1% 50,000
* Less than 1%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that
person,
18
shares of common stock underlying options and warrants held by that person
that are currently exercisable or exercisable within 60 days of December
7, 2001 are deemed outstanding. These shares, however, are not deemed
outstanding for the purpose of computing the percentage ownership of any
other person.
(2) Includes 1,250 shares subject to currently exercisable warrants
(exercisable at $4.00 per share through June 15, 2004).
(3) Includes 2,500 shares subject to currently exercisable warrants
(exercisable at $4.00 per share through June 15, 2004).
(4) Includes 7,500 shares subject to currently exercisable warrants
(exercisable at $3.00 per share through June 15, 2004).
(5) Includes 5,000 shares subject to currently exercisable warrants
(exercisable at $4.00 per share through June 15, 2004).
(6) Includes 15,400 shares subject to currently exercisable warrants
(exercisable at $4.00 per share through June 15, 2004).
(7) Includes 34,000 shares subject to currently exercisable warrants
(exercisable at $3.00 per share through November 6, 2004.
(8) Includes 1,500 shares subject to currently exercisable warrants
(exercisable at $3.00 per share through November 30, 2004.
PLAN OF DISTRIBUTION
The selling stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock covered by this prospectus on any stock exchange, market or
trading facility on which the shares are traded or in private transactions.
These sales may be at fixed or negotiated prices. The selling stockholders may
use any one or more of the following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately negotiated transactions;
o short sales;
o broker-dealers may agree with the selling stockholders to sell a
specified number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
The selling stockholders may also engage in short sales against the box,
puts and calls and other transactions in our securities or derivatives of our
securities and may sell or deliver shares in connection
19
with these trades. The selling stockholders may pledge their shares to their
brokers under the margin provisions of customer agreements. If a selling
stockholder defaults on a margin loan, the broker may, from time to time, offer
and sell the pledged shares.
Broker-dealers engaged by the selling stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The selling stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
We will pay all of the expenses relating to the registration of the shares
covered by this prospectus except for selling commissions. These expenses are
estimated at $22,000.00.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon by
Morse, Zelnick, Rose & Lander, LLP. Members of Morse, Zelnick, Rose & Lander,
LLP own options to purchase 65,000 shares of our common stock.
EXPERTS
The financial statements of Infinite Group, Inc. as of December 31, 2000,
and for the year then ended, are incorporated by reference in this prospectus
and in the registration statement in reliance upon the report of McGladrey &
Pullen, LLP, independent certified public accountants, incorporated by reference
herein, upon the authority of said firm as experts in accounting and auditing.
The financial statements of Infinite Group, Inc. as of December 31, 1999,
and for the year then ended, are incorporated by reference in this prospectus
and in the registration statement in reliance upon the report of Freed Maxick
Sachs & Murphy, P.C., independent certified public accountants, incorporated by
reference herein, upon the authority of said firm as experts in accounting and
auditing.
20
PROSPECTUS
INFINITE GROUP, INC.
665,918 Shares
Common Stock
Dated: ______________________, 2002
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The fees and expenses we incurred in connection with the offering are
payable by us and, other than registration, filing and listing fees, are
estimated as follows:
SEC registration fee..................................................... $489
Accounting fees and expenses............................................. *
Legal fees and expenses.................................................. *
Printing costs........................................................... *
Miscellaneous expenses................................................... *
----
Total.............................................................. $ *
====
*To be provided by amendment.
Item 15. Indemnification of Officers and Directors
Our Certificate of Incorporation provides that the indemnification
provisions of Sections 102(b)(7) and 145 of the Delaware General Corporation Law
shall be utilized to the fullest extent possible. Further, the Certificate of
Incorporation contains provisions to eliminate the liability of our directors to
Infinite or its stockholders to the fullest extent permitted by Section
102(b)(7) of the Delaware General Corporation Law, as amended from time to time.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with any threatened, pending or completed actions, suits or
proceedings in which such person is made a party by reason of such person being
or having been a director, officer, employee or agent of the corporation. The
Delaware General Corporation Law provides that Section 145 is not exclusive of
other rights to which those seeking indemnification may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or otherwise.
Section 102(b)(7) of the Delaware General Corporation Law permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
unlawful payments of dividends or unlawful stock repurchases, redemptions or
other distributions, or (iv) for any transaction from which the director derived
an improper personal benefit. Our Certificate of Incorporation provides for such
limitation of liability.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, is permitted for our directors, officers or controlling
persons, pursuant to the above mentioned statutes or otherwise, we understand
that the Securities and Exchange Commission is of the opinion that such
indemnification may contravene federal public policy, as expressed in said Act,
and therefore, may be unenforceable. Accordingly, in the event that a claim for
such indemnification is asserted by any of our
II-1
directors, officers or controlling persons, and the Commission is still of the
same opinion, we (except insofar as such claim seeks reimbursement from us of
expenses paid or incurred by a director, officer of controlling person in
successful defense of any action, suit or proceeding) will, unless the matter
has theretofore been adjudicated by precedent deemed by our counsel to be
controlling, submit to a court of appropriate jurisdiction the question whether
or not indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
At present, there is no pending litigation or proceeding involving any of
our directors, officers or employees as to which indemnification is sought, nor
are we aware of any threatened litigation or proceeding that may result in
claims for indemnification.
Item 16. Exhibits
The following exhibits are filed with this Registration Statement:
Exhibit No. Description
------------ ------------------------------------------------------------------
5.1 Opinion and consent of Morse, Zelnick, Rose & Lander, LLP**
23.1 Consent of Freed Maxick Sachs & Murphy, P.C.*
23.2 Consent of McGladrey & Pullen, LLP*
23.2 Consent of Morse, Zelnick, Rose & Lander, LLP (included in Exhibit
5.1)
24 Power of Attorney*
----------
* Filed herewith.
** To be provided by amendment.
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represent no
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more than 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in
the effective registration statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do not apply
if the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, that are incorporated by reference in this
Registration Statement.
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof; and
(3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of this offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Warwick, State of Rhode Island and Providence
Plantations on this 17th day of December, 2001
INFINITE GROUP INC.
By: /s/ Clifford G. Brockmyre, II
-------------------------------------
Clifford G. Brockmyre II,
President, Chief Executive Officer
And Chairman of the Board
POWER OF ATTORNEY
KNOW ALL MEN AND WOMEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Clifford G. Brockmyre II as his true and
lawful attorney-in-fact and agent, with full power of substitution, for him and
in his name, place and stead, in any and all capacities, to sign any or all
amendments or post-effective amendments to this Registration Statement, and to
file the same, with all exhibits thereto, which amendments may make such changes
in this Registration Statement as such agent deems appropriate, and to file any
new registration statement (and any post-effective amendment thereto) which
registers additional securities of the same class and for the same offering as
this Registration Statement in accordance with Rule 462(b) under the Securities
Act (each, a "462(b) Registration Statement"), and the Registrant and each such
person hereby appoints each such Agent as attorney-in-fact to execute in the
name and on behalf of the Registrant and each such person, individually and in
each capacity stated below, any such amendments to this registration statement
and any such 462(b) Registration Statements, and other documents in connection
therewith, with the Commission.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated on December 17, 2001.
Signature Title
------------------------------------ ----------------------------------------
/s/ Clifford G. Brockmyre II President, Chief Executive Officer and
------------------------------------ Chairman of the Board (Principal
Clifford G. Brockmyre II Executive Officer)
/s/ Bruce J. Garreau Chief Financial Officer
------------------------------------ (Principal Financial and Accounting
Bruce J. Garreau Officer)
/s/ J. Terence Feeley Director
------------------------------------
J. Terence Feeley
/s/ Brian Q. Corridan Director
------------------------------------
Brian Q. Corridan
/s/ Michael S. Smith Director
------------------------------------
Michael S. Smith
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