AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 30, 1998
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.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 52-1490422
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Identification
Organization) Number)
Clifford G. Brockmyre
Infinite Group, Inc.
2364 Post Road
Warwick, RI 02886
(401) 738-5777
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Executive Offices)
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Clifford G. Brockmyre
Infinite Group, Inc.
2364 Post Road
Warwick, RI 02886
(401) 738-5777
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
Please send copies of all correspondence to:
Kenneth S. Rose, Esq.
Morse, Zelnick, Rose & Lander, LLP
450 Park Avenue
New York, New York 10022-2605
Telephone No. (212) 838-5030
Fax No. (212) 838-9190
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
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If the only securities being registered on this Form are to be offered
pursuant to dividend or interest 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, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box |X|.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Proposed Proposed
Title of Each Maximum Maximum Amount of
Class of Securities Amount to be Offering Price Aggregate Offering Registration
To be Registered Registered Per Share Price Fee(1)
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<S> <C> <C> <C> <C>
Common Stock (2) (2) (2) $100.00
$.001 par value
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(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457.
(2) Includes an indeterminate number of shares of Common Stock in connection
with market making transactions in such securities by H.J. Meyers & Co.,
Inc.
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, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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SUBJECT TO COMPLETION, DATED JUNE 30, 1998
PROSPECTUS
INFINITE GROUP, INC.
Shares of
Common Stock, $.001 Par Value
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This Prospectus will be used by H.J. Meyers & Co., Inc. in connection with
offers and sales iN market-making transactions in the Common Stock, par value
$.001, of Infinite Group, Inc. (the "Company"). H.J. Meyers & Co., Inc. may act
as a principal or agent in such transactions. The Common Stock may be offered in
negotiated transactions or otherwise. Sales will be made at prices related to
prevailing market prices at the time of sale.
None of the proceeds from the sale of Common Stock hereunder will be
received by the Company.
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THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
See "Risk Factors" at page 5.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
No dealer, salesman or other person has been authorized to give any information
or to make any representations other than those contained in this prospectus in
connection with the offering made hereby, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or by any other person. Neither the delivery of this prospectus
nor any sale made hereunder shall, under any circumstances, create any
implication that information herein is correct as of any time subsequent to the
date hereof. This prospectus does not constitute an offer to sell or a
solicitation of an offer to buy the shares to any person or by anyone in any
jurisdiction in which such offer or solicitation may not lawfully be made.
The date of this Prospectus is , 1998.
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AVAILABLE INFORMATION
The Company is subject to the informational and reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed with the Commission by the Company may be
inspected and copied at the public reference facilities maintained by the
Commission at its principal offices at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511, and 7 World Trade Center, Suite 1300, New York, New York 10048. Such
reports, proxy statements and other information may also be obtained from the
web site that the Commission maintains at http://www.sec.gov. Copies of these
materials can also be obtained at prescribed rates from the Public Reference
Section of the Commission at its principal offices in Washington, D.C., set
forth above.
The Company has filed a Registration Statement on Form S-3 (including all
amendments and supplements thereto, the "Registration Statement") with the
Commission under the Securities Act with respect to the Shares offered hereby.
This Prospectus, which forms a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement and the
exhibits filed therewith, certain parts of which have been omitted in accordance
with the rules and regulations of the Commission. Statements contained herein
concerning the provisions of such documents are not necessarily complete and, in
each instance, reference is made to the Registration Statement or to the copy of
such document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission. Each such statement is qualified in its entirety by
such reference. Copies of the Registration Statement and the exhibits thereto
can be obtained upon payment of a fee prescribed by the Commission or may be
inspected free of charge at the public reference facilities and regional offices
referred to above.
REPORTS TO SECURITY HOLDERS
The Company intends to furnish to its stockholders annual reports
containing audited financial statements. In addition, the Company is required to
file periodic reports on Forms 8-K, 10-QSB and 10-KSB with the Commission and
make such reports available to its stockholders.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated in this Prospectus by reference:
(1) Annual Report on Form 10-KSB, as amended (the "Form 10-KSB") for the
fiscal year ended December 31, 1997 filed pursuant to the Exchange
Act;
(2) Quarterly Report on Form 10-QSB, as amended for the quarter ended
March 31, 1998 filed pursuant to the Exchange Act; and
(3) Proxy Statement dated November 13, 1997, filed pursuant to Section
14 of the Exchange Act.
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Each document filed subsequent to the date of this Prospectus pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of this offering shall be deemed to be incorporated in this Prospectus by
reference and to be a part hereof from the date of the filing of such documents.
Any statement contained in a document incorporated or deemed to be incorporated
herein by reference shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any document incorporated
by reference in this Prospectus (other than exhibits unless such exhibits are
specifically incorporated by reference in such documents). Requests should be
directed to Infinite Group, Inc. 2364 Post Road, RI 02886 (401) 738-5777
Attention: Daniel Landi, Secretary.
FORWARD-LOOKING STATEMENTS
Certain statements made in or incorporated by reference to this
Registration Statement on Form S-3 are "forward-looking statements" (within the
meaning of the Private Securities Litigation Reform Act of 1995) regarding the
plans and objectives of management for future operations. Such statements
involve known and unknown risks, uncertainties and other factors that may cause
actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. The forward-looking statements made
in or incorporated by reference to this Form are based on current expectations
that involve numerous risks and uncertainties. The Company's plans and
objectives are based, in part, on assumptions involving the growth and expansion
of business. Assumptions relating to the foregoing involve judgments with
respect to, among other things, future economic, competitive and market
conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond the control of the
Company. Although the Company believes that its assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could prove
inaccurate and, therefore, there can be no assurance that the forward-looking
statements made in or incorporated by reference to this Form will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements made in or incorporated by reference to this Form,
particularly in view of the Company's early stage of operations, the inclusion
of such information should not be regarded as a representation by the Company or
any other person that the objectives and plans of the Company will be achieved.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information appearing elsewhere in this Prospectus and the documents
incorporated herein by reference. Investors should carefully consider the
information set forth under "Risk Factors" prior to making an investment in the
shares offered hereby.
THE COMPANY
The Company was organized pursuant to the laws of the State of Delaware on
October 14, 1986. On January 7, 1998, the Company changed its name to Infinite
Group, Inc. from Infinite Machines Corp. Its executive offices are located 2364
Post Road, Warwick, Rhode Island 02886; telephone number and its telephone
number is (401) 738-5777.
THE OFFERING
Common Stock outstanding.................. 13,377,516 shares.
NASDAQ Symbol ............................ IMCI
Use of Proceeds(1) ....................... None of the proceeds from the sale
of Common Stock offered hereby will
be received by the Company.
Risk Factors ............................. An investment in the Securities
offered hereby is speculative and
involves a high degree of risk.
This Prospectus contains
forward-looking information which
involves risk and uncertainties.
The Company's actual results could
differ materially from those
anticipated by such forward-looking
information as a result of various
factors, including those discussed
under "Risk Factors" in this
Prospectus. See "Risk Factors."
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(1) This Prospectus is being utilized by H.J. Meyers & Co., Inc. in connection
with offers and sales in market-making transactions in the Company's Common
Stock. Accordingly, the Company will not receive any proceeds from the
transactions contemplated hereby.
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RISK FACTORS
An investment in the securities offered hereby is highly speculative and
subject to a high degree of risk and only those who can bear the risk of the
entire loss of their investment should participate. Prospective investors should
carefully consider the following factors, in analyzing this offering.
Accumulated Deficit; Working Capital Deficit; Independent Auditor's Report
Comments Regarding Company's Ability to Continue as a Going Concern; Need For
Additional Financing
At December 31, 1997, the Company had an accumulated deficit of
$17,296,766. The Company also experienced approximately $417,000 and $4.3
million of operating losses, respectively, during the three months ended March
31, 1998 and the year ended December 31, 1997. No assurance can be given that
the Company will not continue to incur operating losses. There can be no
assurance that the Company will ever have significant revenues or achieve
profitable operations. The Company requires additional working capital to fund
its operations. There is no assurance that the Company will be successful in its
capital raising efforts, the failure of which may require the Company to scale
back its operations. The Company current working capital will, in management's
belief, be adequate to fund operations at current levels for six months
following the date of this Prospectus.
Possibility of Delays or Inability to Sell and Deliver Initial Product and
Proposed Products
The Company has been engaged in product development since its formation in
October 1986. Potential investors should be aware of the problems, delays,
expenses and difficulties encountered in product development, many of which may
be beyond the Company's control. These include, but are not limited to,
unanticipated problems relating to product development, testing, regulatory
compliance, manufacturing delays and costs, the competitive and regulatory
environment in which the Company plans to operate, marketing problems and
additional costs and expenses that may exceed current estimates. There can be no
assurance that the Company's products or services will prove to be commercially
viable or can be successfully marketed, or that the Company will ever achieve
significant revenues.
Liquidity Problems; Additional Financing Requirements
The Company currently lacks the liquid assets to discharge its operating
expenses. In the past the Company has met its capital and operating requirements
through public and private sales of equity and through borrowings from a
shareholder and unaffiliated lenders. The Company's continued operations will
depend upon revenues, if any, from operations and the availability of equity or
debt financing. The Company has no commitments for additional financing.
Further, there can be no assurance that the Company will be able to generate
levels of revenues and cash flows sufficient to fund operations or that the
Company will be able to obtain additional financing on satisfactory terms, if at
all. If such be the case the Company would be forced to curtail or even suspend
its remaining operations.
Vulnerability of Service Businesses
The Company's sole revenues are generated by the services offered by the
Company's divisions, namely, laser contract material processing services and
laser consulting services. Most of these services are being rendered under
short-term contracts which can be terminated or not renewed
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by the party or parties receiving the services. In addition, the business of
providing services is always subject to interruptions by external factors, such
as customer's eliminating products, unavailability of materials or customer's
developing internal capacity to perform specialized laser services, which can
further impair revenues. For all of these reasons there can be no assurance that
the Company's revenues from its service businesses will improve or even that its
existing revenues will be maintained.
Uncertainty of Laser Business
The Company's current laser business is subject to a number of risks
including the need for additional financing to fund acquisitions and expansion,
technical obsolescence of its processes and equipment, increased competition and
dependence upon, and need for, qualified personnel. There is no assurance that
the Company's current laser business will operate profitable in future periods.
Dependence Upon, and Need for, Key Personnel; Possible Adverse Effect if Key
Personnel Are Not Retained
The Company's success will depend, in large part, on its continued ability
to attract and retain highly qualified engineering, marketing and business
personnel. Competition for qualified personnel may be intense and the Company
will be required to compete for such personnel with companies having
substantially greater financial and other resources. The Company's inability to
attract and retain such personnel could have a material adverse effect upon its
business. Further, the Company is dependent on certain management personnel for
the operation and development of its business, particularly Clifford G.
Brockmyre, the President, Chief Executive Officer and a principal beneficial
shareholder of the Company. The Company does not maintain key man insurance on
the life of Mr. Brockmyre, or any of its other officers or employees. The loss
or a reduction in the time devoted by Mr. Brockmyre to the Company's business
could have a material adverse effect on the Company's business.
Intense Competition and Rapid Technological Change
The Company is engaged in rapidly evolving and highly competitive fields.
Competition is intense and expected to increase. Most of the companies in
competition with the Company have substantially greater capital resources,
research and development staffs, facilities and experience in the furnishing of
services. These companies, or others, could undertake extensive research and
development in laser technology and related fields which could result in
technological changes not yet adopted by the Company. There can be no assurance
that the Company's competitors will not succeed in developing technologies in
these fields which will enable them to offer laser services more advanced and
less costly than any offered by the Company or which could render the Company's
technologies obsolete.
Lack of Patent Protection; Patent Infringement
The Company holds no patents for its technology or products. The Company
employs various methods, including confidentiality agreements with employees to
protect its proprietary know-how. Such methods may not afford complete
protection, however, and there can be no assurance that these agreements will
not be breached, that the Company would have adequate remedies for any breach or
that the Company's trade secrets will not otherwise become known to or
independently developed by competitors. If patent applications are filed by the
Company, there can be no assurance that any patents will be granted, or that if
granted such patents would provide the Company with meaningful
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protection from competition. In addition, there can be no assurance that the
application of the Company's technologies will not infringe upon the patent
rights of others. The Company has not conducted any patent searches or obtained
an opinion of patent counsel regarding its technologies. The Company may be
forced to expend substantial resources if it is required to defend against any
such infringement claims.
Control of the Company
The officers, directors and principal shareholders of the Company control
an aggregate of approximately 60% of the Company's outstanding Shares, and thus
are effectively able to elect all of the Company's directors and to control the
affairs of the Company.
Loss Carryforward
At December 31, 1997, the Company had approximately $13.6 million in
available net operating losses for federal tax reporting purposes which may be
carried forward to offset future years taxable income subject to certain
limitations. Due to a greater than 50% change in stock ownership during 1993 the
utilization of net operating loss carryforward generated to the date of such
change is limited. Moreover, other shareholder changes including the possible
issuance by the Company of additional shares in one or more financings may
further limit the utilization of the operating loss carryforward.
Issuance of Preferred Stock Barriers to Takeover.
The Board of Directors may issue one or more series of Preferred Stock
without any action on the part of the stockholders of the Company, the existence
and/or terms of which may adversely affect the rights of holders of Common
Stock. Further, the issuance of Preferred Stock may be used as an
"anti-takeover" device without further action on the part of the stockholders.
Issuance of Preferred Stock, which may be accomplished through a public offering
or a private placement to parties favorable to current management, may dilute
the voting power of holders of Common Stock (such as by issuing Preferred Stock
with super voting rights) and may render more difficult the removal of current
management, even if such removal may be in the stockholders' best interest.
Absence of Dividends.
The Company does not expect to pay cash or stock dividends on its Common
Stock in the foreseeable future. To the extent the Company has earnings in the
future, it intends to retain such earnings in the business operations of the
Company.
Limitation on Director Liability.
As permitted by the Delaware General Corporation Law ("DGCL"), the
Company's Certificate of Incorporation limits the liability of directors to the
Company or its shareholders for monetary damages for breach of a director's
fiduciary duty, except for liability in four specific instances. These are for
(i) any breach of the director's duty of loyalty to the Company or its
shareholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or knowing violations of law, (iii) unlawful payments of
dividends or unlawful stock purchases or redemption's as provided in Section 174
of the Delaware General Corporation Law, or (iv) any transaction from which the
director derived an improper personal benefit. As a result of the
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Company's charter provision and the DGCL, shareholders may have more limited
rights to recover against directors for breach of fiduciary duty.
Delaware Anti-Takeover Statute; Issuance of Preferred Stock; Barriers to
Takeover.
The Company is a Delaware corporation and is subject to the prohibitions
imposed by Section 203 of the DGCL, which is generally viewed as an
anti-takeover statute. In general, this statute prohibits the Company from
entering into certain business combinations without the approval of its Board of
Directors and, as such, could prohibit or delay mergers or other attempted
takeovers or changes in control with respect to the Company. Such provisions may
discourage attempts to acquire the Company. In addition, the Company's
authorized capital consists of thirty-one million shares of capital stock of
which thirty million shares are designated as Common Stock and one million
shares are designated as Preferred Stock. No class other than the Common Stock
is currently designated and there is no current plan to designate or issue any
such securities. The Board of Directors, without any action by the Company's
shareholders, is authorized to designate and issue shares in such classes or
series (including classes or series of Preferred Stock) as it deems appropriate
and to establish the rights, preferences and privileges of such shares,
including dividends, liquidation and voting rights. The rights of holders of
Preferred Stock and other classes of Common Stock that may be issued, may be
superior to the rights granted to the holders of the existing classes of Common
Stock. Further, the ability of the Board of Directors to designate and issue
such undesignated shares could impede or deter an unsolicited tender offer or
takeover proposal regarding the Company and the issuance of additional shares
having preferential rights could adversely affect the voting power and other
rights of holders of Common Stock. Issuance of Preferred Stock, which may be
accomplished through a public offering or a private placement to parties
favorable to current management, may dilute the voting power of holders of
Common Stock (such as by issuing Preferred Stock with super voting rights) and
may render more difficult the removal of current management, even if such
removal may be in the stockholders' best interests. Any such issuance of
Preferred Stock could prevent the holders of Common Stock from realizing a
premium on their shares.
Authorized or Outstanding Options and Warrants
As of the date of this Prospectus there outstanding options to purchase
559,526 shares of Common Stock pursuant to the Company's stock option plans at
exercise prices ranging from $1.38 to $3.00 and outstanding Common Stock
purchase warrants to purchase 228,820 shares of Common Stock at exercise prices
of $1.00 to $8.70, and a weighted average exercise price of $6.57. To the extent
that the outstanding stock options and warrants are exercised, dilution to the
interest of the Company's shareholders will occur. Moreover, the terms upon
which the Company will be able to obtain additional equity capital may be
adversely affected since the holders of the outstanding options and warrants can
be expected to exercise them at a time when the Company would, in all
likelihood, be able to obtain any needed capital on terms more favorable to the
Company than those provided in the outstanding options and warrants.
Possible Delisting of Common Stock from Nasdaq System
The Company's Common Stock is currently listed on the Nasdaq Small Cap
Market. The continued listing criteria for the Nasdaq Small Cap Market include,
among other things, $2 million in net tangible assets, a public float of 500,000
shares with a market value equal to $1 million, two market makers and a minimum
bid price of $1 per share of Common Stock. While the Company currently meets
each of the continued listing requirements of the Nasdaq Small Cap Market
system,
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there is no assurance that it will continue to meet such requirements.
Accordingly, no assurance can be given that the Company's securities will
continue to be listed on the Nasdaq Small Cap Market.
"Penny Stock" Regulations May Impose Certain Restrictions on Marketability of
Securities.
The Commission has adopted regulations which generally define "penny
stock" to be any equity security that has a market price (as defined) of less
than $5.00 per share, subject to certain exceptions. If the Securities offered
hereby are removed from listing on NASDAQ at any time following the Effective
Date, the Securities may become subject to rules that impose additional sales
practice requirements on broker-dealers who sell such Securities to persons
other than established customers and accredited investors (generally, those
persons with assets in 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 Securities 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 Securities
and may affect the ability of purchasers in this offering to sell the Securities
in the secondary market.
Risks Associated with Forward-Looking Statements Included in this Prospectus.
This Prospectus contains certain forward-looking statements regarding the
plans and objectives of management for future operations. The forward-looking
statements included herein are based on current expectations that involve
numerous risks and uncertainties. The Company's plans and objectives are based,
in part, on assumptions involving the continued expansion of business.
Assumptions relating to the foregoing involve judgments with respect to, among
other things, future economic, competitive and market conditions and future
business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Company. Although the
Company believes that its assumptions underlying the forward-looking statements
are reasonable, any of the assumptions could prove inaccurate and, therefore,
there can be no assurance that the forward-looking statements included in this
Prospectus will prove to be accurate. In light of the significant uncertainties
inherent in the forward-looking statements included herein, particularly in view
of the Company's early stage operations, the inclusion of such information
should not be regarded as a representation by the Company or any other person
that the objectives and plans of the Company will be achieved.
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THE COMPANY
The following is a brief summary of the Company's business. Reference is made to
the information contained in (a) Item 1 of the Company's Annual Report on Form
10-KSB for the year ended December 31, 1996, as amended, and the financial
statements and notes contained therein, and (b) the Company's Quarterly Reports
and other reports incorporated herein by reference for a more thorough
presentation of the Company's business and financial condition.
Infinite Group, Inc., (the "Company") does business in the fields of laser
material processing, advanced manufacturing methods, and laser-application
technology. Laser Fare is the main operating subsidiary, which is wholly owned
and was acquired in July 1994 for stock. Additionally, Infinite has two
operating divisions of Laser Fare, the Advance Technology Group ("ATG"), engaged
in contract research and development, and ExpressTool Corp., ("ExpressTool"),
created to exploit high productivity production tooling and rapid manufacturing.
The Company is also the largest shareholder of Spectra Science, which was formed
in August 1996.
RECENT DEVELOPMENTS
Change in Officers.
Effective January 1, 1998, Clifford G. Brockmyre was appointed to the
position of Chief Executive Officer of the Company.
Recent Financing Transactions
In June 1998, the Company consummated a financing transaction whereby its
Chief Executive Officer and President, Clifford G. Brockmyre, loaned to the
Company an aggregate of $1 million. The note evidencing the loan is for a term
of fifteen years and bears interest at the rate of 9.0% for the first twelve
months and adjusts annually thereafter to a rate equal to the one-year T-Bill
rate plus 3.5%. Mr. Brockmyre also loaned the Company $250,000 earlier this
year. In consideration for the loans, the Company granted to Mr. Brockmyre
warrants to purchase 2,680,000 shares of Company Common Stock exercisable at
$1.12 per share. In the event the notes are prepaid within the first year, up to
one-half of such warrants are cancelable.
USE OF PROCEEDS
This Prospectus is being utilized by H.J. Meyers & Co. Inc. in connection
with offers and sales in marketing making transactions in the Common Stock of
the Company. Accordingly, the Company will not receive any proceeds of the
transactions contemplated hereby.
PLAN OF DISTRIBUTION
This Prospectus will be used by H.J. Meyers & Co. Inc. in connection with
offers and sales in market-making transactions in the Common Stock of the
Company. H.J. Meyers & Co. Inc. may act as a principal or agent in such
transactions. The Common Stock and Warrants may be offered in negotiated
transactions or otherwise. Sales will be made at prices related to prevailing
market prices at the time of sale. H.J. Meyers & Co. Inc. has no obligation to
make a market in the Common Stock
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and may discontinue its market-making activities at any time without notice, in
its sole discretion. Northeast Hampton Holdings, LLC, an affiliate of H.J.
Meyers & Co. Inc. is a principal shareholder of the Company.
CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION
Limitation of Director Liability; Indemnification
The Company's Certificate of Incorporation provides that a director of the
Company will not be personally liable to the Company or its stockholders for
monetary damages for breach of the fiduciary duty of care as a director,
including breaches which constitute gross negligence. By its terms and in
accordance with the Delaware General Corporation Law, however, this provision
does not eliminate or limit the liability of a director of the Company (i) for
breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law (relating to unlawful payments or dividends or
unlawful stock repurchases or redemptions), (iv) for any improper benefit or (v)
for breaches of a director's responsibilities under the Federal securities laws.
The Company' Certificate of Incorporation also provides that each director
or officer of the Corporation serving as a director or officer shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the General Corporation Law, against all expense liability and
loss (including attorney's fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith.
Section 203 of Delaware General Corporation Law
The Company is governed by the provisions of Section 203 of the General
Corporation Law of Delaware, an anti-takeover law enacted in 1988. In general,
the law prohibits a Delaware public corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interest stockholder,
unless it is approved in a prescribed manner. As a result of Section 203,
potential acquirors of the Company may be discouraged from attempting to effect
acquisition transactions with the Company thereby possibly depriving holders of
the Company's Securities of certain opportunities to sell or otherwise dispose
of such securities at above-market prices pursuant to such transactions.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the small
business issuer pursuant to the foregoing provisions, or otherwise, the small
business issuer has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for the
Company by Morse, Zelnick, Rose & Lander, LLP, 450 Park Avenue, New York, New
York 10022.
11
<PAGE>
EXPERTS
The financial statements of the Company for the year ended December 31,
1997 incorporated in this Prospectus by reference to the Form 10-KSB have been
so incorporated in reliance on the report of Freed Maxick Sachs & Murphy, PC
independent accountants, given on the authority of such firms as experts in
accounting and auditing.
TRANSFER AGENT
The Transfer Agent and Registrar for the Shares is American Stock Transfer
Company, 40 Wall Street, 46th Floor, New York, New York 10005.
12
<PAGE>
No dealer, salesperson or any other person has been authorized to give any
information or to make any representation not contained in this Prospectus with
respect to the offering made hereby. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any of the securities offered
hereby to any person or by anyone in any jurisdiction in which such offer or
solicitation may not lawfully be made. Neither the delivery of this Prospectus
nor any sale made hereunder shall, under any circumstances, create any
implication that there has been no change in the information set forth herein or
in the business of the Company since the date hereof.
----------------------
TABLE OF CONTENTS
Page
Available Information ..................................................... 2
Reports to Security Holders ............................................... 2
Incorporation of Certain Documents
by Reference ............................................................ 2
Forward-Looking Statements ................................................ 3
Prospectus Summary ........................................................ 4
Risk Factors .............................................................. 5
The Company ............................................................... 10
Recent Developments ....................................................... 10
Use of Proceeds ........................................................... 10
Plan of Distribution ...................................................... 10
Certain Provisions of the Certificate
of Incorporation and By-Laws ............................................ 11
Legal Matters ............................................................. 11
Experts ................................................................... 12
Transfer Agent ............................................................ 12
Shares of Common Stock
INFINITE GROUP, INC.
______________________
PROSPECTUS
______________________
, 1998
13
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Expenses in connection with the issuance and distribution of the
securities being registered hereunder other than underwriting commissions and
expenses, are estimated below. The Selling Stockholders will not pay any of
these expenses.
SEC Registration Fee $ 100
Printing expenses $ 300*
Accounting fees and expenses $ 1,000*
Legal fees and expenses $ 3,000*
Miscellaneous expenses $ 600*
Total $ 5,000*
=========
* estimated
Item 15. Indemnification of Directors and Officers
Sections 145 of the Delaware General Corporation Law grants to the Company
the power to indemnify the officers and directors of the Company, under certain
circumstances and subject to certain conditions and limitations as stated
therein, against all expenses and liabilities incurred by or imposed upon them
as a result of suits brought against them as such officers and directors if they
act in good faith and in a manner they reasonably believe to be in or not
opposed to the best interests of the Company and, with respect to any criminal
action or proceeding, have no reasonable cause to believe their conduct was
unlawful.
The Company's certificate of incorporation provides as follows:
"NINTH: 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) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit.
TENTH: (a) Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer,
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the General Corporation Law, as the same exists or may hereafter
be amended (but, in the case of any such amendment, only to the extent that such
amendment permits the
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<PAGE>
Corporation to provide broader indemnification rights than said law permitted
the Corporation to provide prior to such amendment), against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that, except as provided in
paragraph (b) hereof, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board of Directors of the Corporation. The right to indemnification conferred in
this Section shall be a contract right and shall include the right to be paid by
the Corporation the expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that, if the General
Corporation Law requires, the payment of such expenses incurred by a director or
officer (in his or her capacity as a director or officer and not in any other
capacity in which service was or is rendered by such person while a director or
officer, including, without limitation, service to an employee benefit plan) in
advance of the final disposition of a proceeding, shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of such director
or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
this Section or otherwise. The Corporation may, by action of its Board of
Directors, provide indemnification to employees and agents of the Corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a) of
this Section is not paid in full by the Corporation within thirty days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law for the Corporation to
indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
General Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard or conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
(c) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the
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<PAGE>
Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law."
Item 16. Exhibits
Exhibit No. Description
- ----------- -----------
5.1 Opinion of Morse, Zelnick, Rose & Lander, LLP as to legality
of the securities being registered.*
23.1 Consent of Freed Mexick Sachs & Murphy, PC*
23.2 Consent of Morse, Zelnick, Rose & Lander, LLP (included in
Exhibit 5.1)
24.1 Power of Attorney (included in signature page)*
- ----------
* Filed herewith.
Item 17. Undertakings
A. The undersigned Registrant hereby undertakes to:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any additional or changed material information on the plan of
distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
B. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses incurred or
paid by a director, officer or controlling person of the small business issuer
in the successful defense of any action, suit of proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the small business issuer 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 Act and will be governed by the final
adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in Warwick, Rhode Island on
the 30th day of June, 1998.
INFINITE GROUP, INC.
By: /s/ Clifford G. Brockmyre
--------------------------------------
Clifford G. Brockmyre
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Clifford G. Brockmyre, Kenneth S. Rose, or either
one of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all pre- or post-effective amendments to
this Registration Statement, and to file the same with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or either of them, or
their or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities indicated on June 30, 1998.
Signatures Title
- ---------- -----
/s/ Clifford G. Brockmyre President, Chief Executive Officer
- ------------------------- And Director
Clifford G. Brockmyre
/s/ Daniel Landi Chief Financial Officer (principal
- ------------------------- financial and accounting officer)
Daniel Landi
/s/ Paul Watson Director
- -------------------------
Paul Watson
/s/ Robert Sherwood Director
- -------------------------
Robert Sherwood
- ------------------------- Director
Michael Smith
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EXHIBIT 5.1
MORSE, ZELNICK, ROSE & LANDER
A LIMITED LIABILITY PARTNERSHIP
450 PARK AVENUE
NEW YORK, NEW YORK 10022-2605
212 838 1177
FAX 212 838 9190
June 30, 1998
Infinite Group, Inc.
300 Metro Center Boulevard
Warwick, Rhode Island 02886
Re: Registration Statement on Form S-3
Dear Sirs:
We have acted as counsel to Infinite Group, Inc., a Delaware corporation
(the "Company"), in connection with the preparation of a registration statement
on Form S-3 (the "Registration Statement") filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the "Act"),
with respect to shares of Common Stock, par value $.001 per share (the "Common
Stock"), of the Company.
In this regard, we have reviewed the Certificate of Incorporation of the
Company, as amended, resolutions adopted by the Company's Board of Directors,
resolutions adopted by the Company's Shareholders, the Registration Statement,
the other exhibits to the Registration Statement and such other records,
documents, statutes and decisions as we have deemed relevant in rendering this
opinion. Based upon the foregoing we are of the opinion that:
Each share of Common Stock included in the Registration Statement has been
duly and validly issued and is fully paid and non-assessable.
We hereby consent to the use of this opinion as Exhibit 5A to the
Registration Statement. In giving this opinion, we do not hereby admit that we
are acting within the category of persons whose consent is required under
Section 7 of the Act or the rules and regulations of the SEC thereunder.
Very truly yours,
/s/ Morse, Zelnick, Rose & Lander, LLP
--------------------------------------
Morse, Zelnick, Rose & Lander, LLP
EXHIBIT 23.1
INDEPENDENT AUDITOR'S CONSENT
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report, dated March 11, 1998, which appears in the
Annual Report on Form 10-KSB, as amended, of Infinite Group, Inc. (formerly
Infinite Machines Corp.) for the year ended December 31, 1997. We also consent
to the reference to us under the heading "Experts" in such Registration
Statement.
/s/ FREED, MAXICK, SACHS & MURPHY, PC
-------------------------------------
FREED, MAXICK, SACHS & MURPHY, PC
June 30, 1998
Buffalo, New York
