UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR QUARTERLY PERIOD ENDED JUNE 30, 2008
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Transition period from _______________ to ______________
COMMISSION FILE NUMBER: 814-00708
INFINITY CAPITAL GROUP, INC.
------------------------------------
(Exact name of registrant as specified in its charter)
MARYLAND 16-1675285
------------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
80 BROAD STREET, 5TH FLOOR, NEW YORK, NY 10004
-----------------------------------------------
(Address of principal executive offices) (Zip Code)
(212) 962-4400
------------------------------
Registrant's telephone number, including area code
--------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the proceeding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [_X_] No[__]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check One).
Large accelerated filer [___] Accelerated filer [___]
Non-accelerated filer [___] Smaller reporting company [_X_]
(Do not check if a smaller
reporting company)
Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes[__] No[_X_]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
As of August 11, 2008 the number of shares outstanding of the registrant's class
of common stock was 6,472,899.
TABLE OF CONTENTS
PAGE
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 2
Balance Sheets as of June 30, 2008 (unaudited) and December 31, 2007 (audited) 3
Statements of Operations (unaudited) for the three and six months ended
June 30, 2008 and 2007 4
Statements of Cash Flows (unaudited) for the six months ended
June 30, 2008 and 2007 5
Schedule of Investments as of June 30, 2008 6
Statements of Changes in Net Assets 7
Notes to Financial Statements (unaudited) 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk 15
Item 4. Controls and Procedures 15
Item 4T. Controls and Procedures 16
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - NOT APPLICABLE 17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 17
Item 3. Defaults upon Senior Securities - NOT APPLICABLE 17
Item 4. Submission of Matters to a Vote of Security Holders - NOT APPLICABLE 17
Item 5. Other Information - NOT APPLICABLE 17
Item 6. Exhibits 17
Signatures 18
-1-
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
For financial information, please see the financial statements and the notes
thereto, attached hereto and incorporated by this reference.
The financial statements have been adjusted with all adjustments which, in the
opinion of management, are necessary in order to make the financial statements
not misleading.
The financial statements have been prepared by Infinity Capital Group, Inc.
without audit pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnotes disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted as allowed by such rules
and regulations, and management believes that the disclosures are adequate to
make the information presented not misleading. These financial statements
include all the adjustments which, in the opinion of management, are necessary
for a fair presentation of financial position and results of operations. All
such adjustments are of a normal and recurring nature. These financial
statements should be read in conjunction with the audited financial statements
at December 31, 2007, included in the Company's Form 10-KSB.
-2-
INFINITY CAPITAL GROUP, INC.
Balance Sheets
June December
30, 2008 31, 2007
--------------- --------------
(Unaudited) (Audited)
Assets
Investments in noncontrolled affiliates (Cost - $314,389 and $94,064) $ 1,854,838 $ 94,660
Controlled investments (Cost - $232,000 and $136,326) 232,000 200,809
Promissory note 25,980 50,000
Cash 598 67,609
Deferred offering costs 36,664 36,664
Other assets 3,005 6,991
--------------- --------------
Total assets $ 2,153,085 $ 456,733
=============== ==============
Liabilities
Accounts payable and credit cards $ 242,794 $ 193,932
Accrued interest and expenses payable 41,509 26,027
Deferred taxes payable 284,088 -
Notes payable 278,000 132,020
--------------- --------------
Total liabilities 846,391 351,979
--------------- --------------
Net Assets $ 1,306,694 $ 104,754
=============== ==============
Composition of net assets
Preferred stock, $0.001 par value,
10,000,000 shares authorized,
none issued or outstanding.
Common Stock. $0.001 par value,
100,000,000 shares authorized
6,422,274 and 6,170,774 issued and outstanding $ 6,422 $ 6,171
June 30, 2008 and December 31, 2007, respectively
Additional paid-in capital 695,681 534,892
Accumulated income (deficit)
Accumulated net operating (deficit) (636,586) (695,859)
Net realized gain on investments, net of tax 215,348 207,466
Net unrealized increase of investments, net of tax 1,025,829 52,084
--------------- --------------
Net Assets $ 1,306,694 $ 104,754
=============== ==============
Net Asset Value Per Share $ 0.20 $ 0.02
=============== ==============
The accompanying notes are an integral part of the financial statements
-3-
INFINITY CAPITAL GROUP, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended For the Six Months Ended
June 30, June 30,
2008 2007 2008 2007
------------- -------------- ------------- --------------
Investment Income
Investment fees $ - $ - $ - $ -
Interest income 465 1 466 1
Consulting fees - - - 100,000
Other - -
------------- -------------- ------------- --------------
Total Investment Income 465 1 466 100,001
------------- -------------- ------------- --------------
Expenses
Salaries and wages 6,000 - 12,000 -
Management fees 14,544 19,675 25,234 25,004
Professional fees 28,943 12,208 48,865 21,346
Insurance 1,159 14,222 4,519 25,353
General and administrative 15,960 13,304 24,329 19,977
Interest & settlement costs 2,941 1,876 47,843 3,932
------------- -------------- ------------- --------------
Total Expenses 69,547 61,285 162,790 95,612
------------- -------------- ------------- --------------
Net investment (loss) income before taxes (69,082) (61,284) (162,324) 4,389
------------- -------------- ------------- --------------
Provision for income tax (22,485) - (221,598) -
------------- -------------- ------------- --------------
Net investment income (loss) (46,597) (61,284) 59,274 4,389
Net realized and unrealized gains (losses):
Net realized gain on investments
net of tax 546 - 7,882 -
Net change in unrealized increase (decrease),
net of tax 466,683 39,008 973,745 65,282
------------- -------------- ------------- --------------
Net realized and unrealized gains (losses) 467,229 39,008 981,627 65,282
------------- -------------- ------------- --------------
Net increase (decrease) in net assets
from operations $ 420,632 $ (22,276) $ 1,040,901 $ 69,671
============= ============== ============= ==============
Net increase (decrease) in net assets per share
from continuing operations
Basic $ 0.07 $ (0.00) $ 0.17 $ 0.01
Diluted $ 0.07 $ (0.00) $ 0.16 $ 0.01
============= ============== ============= ==============
Weighted average number of shares outstanding
Basic 6,292,417 6,000,297 6,269,508 6,000,297
Diluted 6,332,917 6,078,524 6,310,008 6,077,997
============= ============== ============= ==============
The accompanying notes are an integral part of the financial statements
-4-
INFINITY CAPITAL GROUP, INC.
Statement of Cash Flows
(Unaudited)
For the Six Months ended
June 30,
2008 2007
-------------- ---------------
Cash Flows from Operating Activities:
Net increase in net assets from operations $ 1,040,901 $ 69,671
Adjustments to reconcile net increase (decrease) in net assets
from operations to net cash used in operating activities
Change in net unrealized (increase) of investments, pre-tax (1,475,372) (65,282)
Proceeds from disposition of investment securities 33,960 -
Net realized gain on investments, pre-tax (11,942) -
Investment securities received for services - (85,000)
Purchase of investments (338,016) -
Loan receivable 24,020 -
Depreciation and amortization 462 -
Deferred offering costs - (7,239)
Accounts receivable - (15,000)
Other assets 3,524 -
Accounts payable 48,862 21,384
Accrued interest and expenses payable 15,482 (2,341)
Deferred taxes payable 284,088 -
Deposits payable - 66,220
-------------- ---------------
Net cash used for operating activities (374,031) (17,587)
-------------- ---------------
Cash Flows from Financing Activities
Proceeds from notes payable 145,980 -
Payments on notes payable - (30,000)
Stock issued to purchase investment 82,000 -
Stock issued pursuant to settlement 39,840 -
Sale of stock 39,200 39,668
-------------- ---------------
Net cash provided by financing activities 307,020 9,668
-------------- ---------------
Decrease in Cash (67,011) (7,919)
-------------- ---------------
Cash and Cash Equivalents - Beginning of Period 67,609 13,168
Cash and Cash Equivalents - end of Period $ 598 $ 5,249
============== ===============
The accompanying notes are an integral part of the financial statements
-5-
INFINITY CAPITAL GROUP, INC.
SCHEDULE OF INVESTMENTS
June 30, 2008
Original
Date of Original Fair
Shares Warrants Acquisition Cost Value
--------- ---------- -------------- ------------ ------------
Common stock in controlled affiliates,
18% of net assets
6,203,960 Jun-08 NPI08, Inc. publicly traded over the counter, $ 232,000 $ 232,000
18% of net assets, former education and college
preparation company (1)
------------ ------------
Subtotal $232,000 $ 232,000
------------ ------------
Noncontrol Affiliate Investments,
142% of net assets
528,125 (2) Nov-04 Strategic Environmental & Energy Resources Inc $ 115,198 $ 1,298,786
125,000 (3) Mar-08 publicly traded over the counter, 81,526 308,882
125,000 Mar-08 provider of technology-based industrial services 24,490 193,478
in the environmental, energy and rail transport,
138% of net assets (4)
817,500 Aug-04 Lumonall, Inc. publicly traded over the counter, $ 8,175 $ 15,824
global supplier of photoluminescent products,
1% of net assets (5)
21,250 Apr-07 Fluid Music Canada, Inc. publicly traded on the $ 85,000 $ 37,868
Toronto Stock Exchange, 3% of net assets,
music aggregation and distribution company (6)
------------ ------------
Subtotal $ 314,389 $ 1,854,838
------------ ------------
TOTAL INVESTMENTS $ 546,389 $ 2,086,838
============ ============
-------------------------------------
(1) Acquired for a total of $150,000 cash and 102,500 shares of Infinity
common stock
(2) Company reverse split the stock at 1 for 4 shares January 22, 2008
(3) Note plus $50,000 cash exchanged for Shares and Warrants of SENR
(4) Formerly Strategic Organizing Systems, Inc.
(5) Formerly Midland International Corporation
(6) Formerly Fluid Media Networks, Inc.
The accompanying notes are an integral part of the financial statements
-6-
INFINITY CAPITAL GROUP, INC.
Statements of Changes in Net Assets
Six-months
Ended Year Ended
June 30, Dec. 31,
2008 2007
------------------ -------------------
Unaudited (Audited)
Changes in net assets from operations:
Net investment income (loss) $ 59,274 $ (21,327)
Net realized gain (loss) on investments, net of tax 7,882 32,816
Net change in unrealized increase (decrease), net of tax 973,744 20,324
------------------ -------------------
Net increase in net assets from operations 1,040,900 31,813
------------------ -------------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from issuance of common stock 161,040 109,596
Issuance of common stock for debt - 36,272
------------------ -------------------
Net increase in net assets from stock transactions 161,040 145,868
------------------ -------------------
Net increase in net assets 1,201,940 177,681
Net assets at beginning of year 104,754 (72,927)
------------------ -------------------
Net assets at end of period $ 1,306,694 $ 104,754
================== ===================
The accompanying notes are an integral part of the financial statements
-7-
INFINITY CAPITAL GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008
(Unaudited)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
Infinity Capital Group, Inc. ("ICG" and/or the "Company"), was incorporated in
the State of Maryland on July 8, 2003. ICG is a non-diversified, closed-end
management investment company that has elected to be treated as a Business
Development Company ("BDC") under the Investment Company Act of 1940 ("1940
Act").
On April 29, 2005, the Company entered into a Plan of Merger with Fayber Group,
Inc. ("Fayber"). The Company acquired all of the outstanding shares of Fayber
for the purposes of accomplishing the Merger of the Company and Fayber. All
shares of Fayber were retired by virtue of the merger. The Merger was completed
on May 2, 2005 with the Company as the surviving corporation. The Company
acquired 100% of Fayber in exchange for 100,000 shares of common stock and a
$20,000 Promissory Note.
As a BDC, the Company must be primarily engaged in the business of furnishing
capital and making available managerial assistance to companies that generally
do not have ready access to capital through conventional financial channels.
Such companies are termed "portfolio" companies.
The Company invests in portfolio companies that management identifies as
emerging growth companies positioned to benefit from additional financing and
managerial assistance. The portfolio companies frequently have little or no
prior operating history. The Company intends on investing in emerging growth
companies, defined as (A) publicly traded companies whose market for their
securities are thinly traded which may be caused by a shift in business
direction, change in market or industry in which they operate, or various other
factors causing their stock and trading in their stock to not be in or fall out
of favor; (B) publicly traded companies that have non-marginable securities and
seek expansion or mezzanine capital to implement growth strategies executable
within 12-24 months; and (C) private companies seeking expansion or mezzanine
financing and which wish to access the equity capital markets within the next 12
months.
BASIS OF PRESENTATION:
The accompanying financial statements have been prepared by the Company without
audit. In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position as of
June 30, 2008, and the results of operations and cash flows for all periods
presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted. These financial
statements should be read in conjunction with the audited financial statements
and related notes and schedules included in the Company's 2007 Annual Report,
dated December 31, 2007. The results of operations for the periods ended June
30, 2008 and 2007 are not necessarily indicative of the operating results for
the full years.
-8-
INFINITY CAPITAL GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008
(Unaudited)
ACCOUNTING PRONOUNCEMENTS
In December 2007, the FASB issued SFAS No. 141 (Revised 2007), BUSINESS
COMBINATIONS, or SFAS No. 141R. SFAS No. 141R will change the accounting for
business combinations. Under SFAS No. 141R, an acquiring entity will be required
to recognize all the assets acquired and liabilities assumed in a transaction at
the acquisition-date fair value with limited exceptions. SFAS No. 141R will
change the accounting treatment and disclosure for certain specific items in a
business combination. SFAS No. 141R applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008.
Accordingly, any business combinations we engage in will be recorded and
disclosed following existing GAAP until January 1, 2009. We expect SFAS No. 141R
will have an impact on accounting for business combinations once adopted but the
effect is dependent upon acquisitions at that time. We are still assessing the
impact of this pronouncement.
Effective January 1, 2008, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 157, FAIR VALUE MEASUREMENTS as it relates to financial
assets and liabilities recognized or disclosed on a recurring basis. The
effective date of this Statement for non-financial assets and liabilities that
are not recognized or disclosed on a recurring basis has been delayed to fiscal
years beginning after November 15, 2008. SFAS No. 157 defines fair value,
establishes a framework for measuring fair value in accordance with generally
accepted accounting principles, and expands disclosures about fair value
measurements. The adoption of the effective portion of SFAS No. 157 expanded the
Company's disclosures regarding the fair value measurements of its investments.
Effective January 1, 2008, the Company adopted SFAS No. 159, THE FAIR VALUE
OPTION FOR FINANCIAL ASSETS AND FINANCIAL LIABILITIES - including an amendment
of FASB Statement No. 115. SFAS No. 159 expands the use of fair value
measurement by permitting entities to choose to measure many financial
instruments and certain other items at fair value that are not currently
required to be measured at fair value. The Company's most significant financial
instruments are its investments, which are currently carried at fair value. The
Company did not elect the fair value option under SFAS No. 159 for any other of
its financial assets or liabilities.
In December 2007, the FASB issued SFAS No. 160, "NONCONTROLLING INTERESTS IN
CONSOLIDATED FINANCIAL STATEMENTS--AN AMENDMENT OF ARB NO. 51, OR SFAS NO. 160".
SFAS No. 160 establishes new accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. SFAS No. 160 is effective for fiscal years beginning on or after
December 15, 2008. We believe that SFAS 160 should not have a material impact on
our financial position or results of operations.
In March 2008, the FASB issued SFAS No. 161, DISCLOSURES ABOUT DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES. SFAS No. 161 requires additional disclosures
related to the use of derivative instruments, the accounting for derivatives and
the financial statement impact of derivatives. SFAS No. 161 is effective for
fiscal years beginning after November 15, 2008. The adoption of SFAS No. 161
will not impact the Company's financial statements.
-9-
INFINITY CAPITAL GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008
(Unaudited)
NOTE 2 - INVESTMENTS
As of June 30, 2008, the Company has made investments in five target companies
that total approximately $593,000 in funded capital. We have completed the
following transactions:
PORTFOLIO COMPANY DATE INVESTMENT COST
--------------------------------- ------------------------ ---------------------- -------------------
Strategic Environmental & November 2004 Common stock $121,336
Energy Resources, Inc.*
Strategic Environmental & March 2008 Common stock 75,510
Energy Resources, Inc.*
Strategic Environmental & March 2008 Warrants 24,490
Energy Resources, Inc.*
Heartland Inc. September 2004 Common stock 12,500
Fluid Media Networks May 2007 Common stock 85,000
Lumonall, Inc.** August 2004 Common stock 42,100
NPI08, Inc. June 2008 Common stock 232,000
-------------------
TOTAL $592,936
===================
*In January 2008, Satellite Organizing Solutions, Inc. changed its name to
Strategic Environmental & Energy Resources, Inc.
**On July 18, 2005, Azonic Corporation changed its name to Midland International
Corporation. On August 16, 2007 Midland International Corporation changed its
name to Lumonall, Inc.
Investments are stated at "value" as defined in the 1940 Act and in the
applicable regulations of the Securities and Exchange Commission. Value, as
defined in Section 2(a) (41) of the 1940 Act, is (i) the market price for those
securities for which a quotation is readily available and (ii) the fair value as
determined in good faith by, or under the direction of, the Board of Directors
for all other assets.
The Company, as a BDC, will generally invest in illiquid and restricted
securities. The Company's investments may be subject to certain restrictions on
resale and may have no ready trading market. The Company values substantially
all of its investments at fair value as determined in good faith by the Board of
Directors in accordance with the Company's valuation policy. The Company
determines fair value to be the amount for which an investment could be
exchanged in orderly disposition over a reasonable period of time between
willing parties rather than in a forced or liquidation sale. Factors that the
Board of Directors may consider in determining fair value of an individual
investment are financial performance and condition, business plan and progress
towards plan, restrictions on the investment securities, liquidity, trading
activity, financing activity and relative valuation to comparable companies.
-10-
INFINITY CAPITAL GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008
(Unaudited)
With respect to our investments for which market quotations are not readily
available and/or investments subject to restrictions, our Board of Directors
recently adopted a multi-step valuation process for each quarter as described
below:
1) Management reviews all investments and summarizes current
status:
2) An independent valuation firm conducts independent appraisals
of all investments;
3) The audit committee of our board of directors reviews the
managements summary and the report of the independent
valuation firm and supplements with additional comments; and
4) The Board of Directors discusses valuation and determines the
fair value of each investment in our portfolio in good faith
based on the input of management, the independent valuation
firm and the audit committee.
This policy became effective for the quarter ending September 30, 2006. Previous
to adopting this process management communicated informally with the independent
valuation firm whose report was submitted to the board of directors for review
and comment. The audit committee was formed in April 2006 and has reviewed the
valuation reports and financial statements beginning with the quarter ended
March 31, 2006.
Without a readily available market value, the value of the Company's portfolio
of equity securities may differ significantly from the values that would be
placed on the portfolio if there existed a ready market for such equity
securities. All equity securities owned at June 30, 2008 and December 31, 2007,
are stated at fair value as determined by the Board of Directors, in the absence
of readily available fair values. The Company uses the first-in, first-out
(FIFO) method of accounting for sales of its investments.
NOTE 3 - RELATED PARTY TRANSACTIONS
The Company for the six months ended June 30, 2008 and 2007 incurred expenses of
approximately $25,234 and $25,004 through a company affiliated to the Company
through an Officer and Director for management fees and expenses.
NOTE 4 - NOTES PAYABLE & INTEREST EXPENSE
During the six months ended June 30, 2008, the Company retired notes payable in
the amount of $24,020, issued a new note for $120,000, bearing interest at 7%,
to Theodore A. Greenberg, an officer of the Company, issued a new 30-day
interest-free note for $25,000 in connection with the purchase of common stock
in NPI08, Inc. and issued another new 60 day note, bearing interest at 7%, for
$25,000.
Additionally, the Company reached a settlement agreement with two debtors on
over due loans calling for the Company to immediately pay $50,000 in cash and
issue 100,000 shares of Infinity common stock. The debtors are still owed
$75,000 and in accordance with the loan terms received 78,125 shares in
Strategic Environmental & Energy Solutions, Inc. The value of the shares issued
to the debtors was charged as an expense and is included in the statement of
operations on the interest expense and settlement costs line. As of June 30,
2008, $108,000 in notes payable plus related accrued interest are in default for
lack of repayment by their due date. $75,000 of the notes in default are secured
by the Company's investment in Strategic Environmental & Energy Solutions, Inc.
For the six month period ended June 30, 2008, the Company incurred interest
expense and settlement costs on notes payable of $47,843.
-11-
INFINITY CAPITAL GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008
(Unaudited)
NOTE 5 - STOCKHOLDERS' EQUITY
During the six months ended June 30, 2008, the Company issued 100,000 shares as
part of the settlement agreement described in Note 4.
During the six months ended June 30, 2008, the Company raised $39,200 through
the sale of 49,000 shares of its common stock under its Regulation E offering.
During the six months ended June 30, 2008, the Company issued 102,500 shares of
stock in connection with the purchase of common stock in NPI08, Inc. The shares
issued had a value of $82,000.
NOTE 6 - EMPLOYMENT CONTRACTS
On April 20, 2006, Gregory Laborde and Theodore A. Greenberg signed employment
contracts with the Company with annual compensation set at $90,000 for each. Mr.
Greenberg has agreed to reduced compensation of $2,000 per month until the
Company has completed its planned Regulation E offering for at least $1,500,000
and to defer a proportionate amount of his compensation if the offering raises
less than $3,000,000. Such deferral until the Company has raised additional
capital or sufficient income from fees and/or investments is achieved. In lieu
of Mr. Laborde's salary, management fees have been paid to a company he is
affiliated with. These fees have been in an amount lower than the contractual
amount. Mr. Laborde and Mr. Greenberg have agreed to waive all salary amounts
due under their contracts which were not paid or accrued by June 30, 2008.
NOTE 7 - FINANCIAL HIGHLIGHTS
The following is a schedule of financial highlights for the six month period
ended June 30, 2008 and the year ended December 31, 2007.
Six Months Year Ended
Ended June 30, Dec. 31,
2008 2007
----------- ------------
Per share information
Net asset value, beginning of period 0.02 (0.01)
----------- ------------
Net investment income (loss) (1) 0.01 (0.00)
Net realized and unrealized gain (loss) (1) 0.14 0.01
----------- ------------
Net increase (decrease) in net assets
resulting from operations (1) 0.15 0.01
Issuance of common stock, warrants
and other new equity (1) 0.03 0.02
----------- ------------
Net asset (deficit) value, end of year 0.20 0.02
=========== ============
Per share market value, end of year (2) N/A N/A
Total Return Based Upon Net Asset Value (3) 750% N/A
Ratios and Supplemental Data
Net assets (deficit), end of year 1,306,694 104,754
Common shares outstanding at end of period 6,422,274 6,140,774
Diluted weighted average number of
shares outstanding during the year 6,310,008 6,103,745
Ratio of expenses to average net assets (4)(5) 45% 1531%
Ratio of net increase (decrease) in net assets
from operations to average net assets (4)(5) 287% 314%
Average Debt Outstanding 189,340 134,509
Average Debt Per Share (1) 0.03 0.02
----------------------------------------
(1) Calculated based on diluted weighted average number of shares outstanding
during the period.
(2) Not applicable - prior to public trading of shares
(3) 2007 did not start with positive net assets so cannot compute
(4) Average net assets were low in 2007 resulting in calculation out of scale
(5) Annualized for interim period
-12-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR UNAUDITED
FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED HEREIN. IN CONNECTION WITH, AND
BECAUSE WE DESIRE TO TAKE ADVANTAGE OF, THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, WE CAUTION READERS REGARDING
CERTAIN FORWARD LOOKING STATEMENTS IN THE FOLLOWING DISCUSSION AND ELSEWHERE IN
THIS REPORT AND IN ANY OTHER STATEMENT MADE BY, OR ON OUR BEHALF, WHETHER OR NOT
IN FUTURE FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. FORWARD-LOOKING
STATEMENTS ARE STATEMENTS NOT BASED ON HISTORICAL INFORMATION AND WHICH RELATE
TO FUTURE OPERATIONS, STRATEGIES, FINANCIAL RESULTS OR OTHER DEVELOPMENTS.
FORWARD LOOKING STATEMENTS ARE NECESSARILY BASED UPON ESTIMATES AND ASSUMPTIONS
THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND OUR CONTROL AND MANY
OF WHICH, WITH RESPECT TO FUTURE BUSINESS DECISIONS, ARE SUBJECT TO CHANGE.
THESE UNCERTAINTIES AND CONTINGENCIES CAN AFFECT ACTUAL RESULTS AND COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD LOOKING
STATEMENTS MADE BY, OR ON OUR BEHALF. WE DISCLAIM ANY OBLIGATION TO UPDATE
FORWARD-LOOKING STATEMENTS.
OVERVIEW
Infinity Capital Group is a non-diversified, closed-end management investment
company that has elected to be treated as a Business Development Company ("BDC")
under the Investment Company Act of 1940 ("1940 Act"). As a BDC, the Company
must be primarily engaged in the business of furnishing capital and making
available managerial assistance to companies that generally do not have ready
access to capital through conventional financial channels. Such companies are
termed "portfolio" companies.
During the six months ended June 30, 2008, we acquired 6,203,960 shares of
NPI08, Inc. The shares were purchased for a combination of $150,000 cash and
102,500 shares of our common stock valued at $82,000. In connection with the
purchase, we issued a $25,000 promissory note to the escrow agent for the
transaction. The promissory note has a term of 30 days and is interest free.
NPI08, Inc. was formerly involved in education and college preparation. NPI08,
Inc. trades on the pink sheets under the symbol "NPIE."
The Company has no plans at this time for purchases or sales of fixed assets
which would occur in the next twelve months.
The Company has no expectation or anticipation of significant changes in number
of employees in the next twelve months; it may acquire or add employees of an
unknown number in the next twelve months.
RESULTS OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED JUNE 30, 2008 COMPARED TO
THE THREE MONTH PERIOD ENDED JUNE 30, 2007.
During the three-month period ending June 30, 2008, the Company had $466 in
investment income compared to $1 for the same period in 2007.
The Company had an increase in change in unrealized gains from investments, net
of tax, of $466,683 during the three months ended June 30, 2008 compared to an
increase in the change in unrealized gains from investments, net of tax, of
$39,008 during the three months ended June 30, 2007. The increase in change in
unrealized gains from investments during the three months ended June 30, 2008 is
largely a result of the Company's investment in Strategic Environmental & Energy
Solutions.
The Company incurred $218,209 in deferred taxes during the three months ended
June 30, 2008, which relates to unrealized gains on the Company's holdings in
Strategic Environmental & Energy Solutions. During the three months ended June
30, 2007 all taxes were offset by the Company's net operating losses which had
accumulated since inception resulting in no deferred taxes.
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During the three months ended June 30, 2008, the Company incurred expenses for
professional fees in the amount of $28,943 compared to $12,208 during the three
months ended June 30, 2007. The increase of $16,735 is due to consulting
services related to the Company's investment in Strategic Environmental & Energy
Solutions.
The Company incurred insurance costs of $1,159 during the three months ended
June 30, 2008 compared to $14,222 during the three months ended June 30, 2007.
Insurance costs consist mainly of costs related to Directors and Officers
insurance. The Company has reduced coverage levels on insurance to more
appropriate levels resulting in a reduction in insurance costs.
During the three months ended June 30, 2008, the Company incurred management
fees in the amount of $14,544 compared to $19,675 during the three months ended
June 30, 2007.
Other general and administrative expenses for the three months ended June 30,
2008 totaled $15,960 compared to $13,304 during the three months ended June 30,
2007.
The Company had a net increase in net assets from operations of $420,632 for the
three months ended June 30, 2008 as compared to a decrease in net assets from
operations of $22,276 for the three months ended June 30, 2007. This represents
an increase of $442,908. The increase in net assets per share from operations
for the three months ended June 30, 2008 was $0.07 compared to neither a
decrease or increase for the three months ended June 30, 2007.
RESULTS OF OPERATIONS FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2008 COMPARED TO
THE SIX MONTH PERIOD ENDED JUNE 30, 2007.
During the six months ended June 30, 2008, the Company had investment income of
$466 compared to $100,000 for the six months ended June 30, 2007. The decrease
of $99,534 was due to consulting services to Fluid Media Networks for which the
Company received $15,000 in cash and $85,000 in stock during the six months
ended June 30, 2007.
During the six months ended June 30, 2008, the Company realized $7,882 in gains
from sale of investments, net of tax, compared to $0 for the six months ended
June 30, 2007.
During the six months ended June 30, 2008, the Company had an increase in change
in unrealized gains from investments, net of tax, of $973,745 compared to
$65,282 for six months ended June 30, 2007. The increase in change in unrealized
gains from investments during the six months ended June 30, 2008 is largely a
result of the Company's investment in Strategic Environmental & Energy
Solutions.
The Company incurred $284,088 in deferred taxes during the six months ended June
30, 2008, which relates to unrealized gains on the Company's holdings in
Strategic Environmental & Energy Solutions. The deferred tax amount is after
allowing for the Company's net operating losses which had accumulated since
inception. During the six months ended June 30, 2007 all taxes were offset by
the Company's net operating losses resulting in no deferred taxes.
The Company incurred expenses for professional fees in the amount of $48,865
during the six months ended June 30, 2008 compared to $21,346 for the same
period in 2007. The increase of $27,519 is due to consulting services related to
the Company's investment in Strategic Environmental & Energy Solutions.
The Company incurred insurance costs of $4,519 for the six months ended June 30,
2008 compared to $25,353 for the six months ended June 30, 2007. The majority of
the insurance costs are for Directors and Officers insurance. The Company has
reduced coverage levels on insurance to more appropriate levels resulting in a
reduction in insurance costs.
Management fees and salaries during the six months ended June 30, 2008 totaled
$25,234 compared to $25,208 for the six months ended June 30, 2007.
Other general and administrative expenses for the six months ended June 30,
2008, totaled $24,329 compared to $19,977 for the six months ended period June
30, 2007.
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The Company had a net increase in net assets from operations of $1,040,901 for
the six months ended June 30, 2008 as compared to a net increase of $69,671 for
the six months ended June 30, 2007. This represents an increase of $971,230. The
increase in net assets per share for the six months ended June 30, 2008 was
$0.17 compared to an increase of $0.01 for the six months ended June 30, 2007.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash on hand of $598 at June 30, 2008. The Company owns stock in
three small public companies which it may sell in increments for capital. The
Company has current liabilities of $562,303. The Company expects to raise
capital in connection with its Regulation E offering and anticipates that the
funds available from the offering and sale of stock investments will provide
required working capital for the next twelve months.
The notes payable of the Company increased during the quarter from $158,000 to
$278,000 and are included in current liabilities.
GOING CONCERN
Prior to January 1, 2008, the Company had accumulated significant losses form
operations and in all likelihood will be required to make significant future
expenditures in connection with continuing acquisition and marketing efforts
along with general administrative expenses. The Company's most valuable assets
are investment securities with limited liquidity. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
Management plans to fund operations of the Company through non-interest bearing
advances from existing shareholders and the sale of its securities including as
part of the Company's Regulation E offering, until such time as a business
combination or other profitable investment may be achieved. There are no written
agreements in place for such funding, and there can be no assurance that such
funding will be available in the future.
NEED FOR ADDITIONAL FINANCING
No commitments to provide additional funds have been made by management or other
stockholders. Accordingly, there can be no assurance that any additional funds
will be available to the Company to allow it to cover expenses as they may be
incurred. The Company filed its final Regulation E offering circular with the
Securities and Exchange Commission and is actively seeking capital. This final
offering was amended from an offering of up to 1,250,000 Units at $2.40 per Unit
to an offering of 6,062,500 shares for a maximum aggregate price of $4,850,000
or $0.80 per share.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable
ITEM 4. CONTROLS AND PROCEDURES
Disclosures Controls and Procedures
The Company maintains a system of disclosure controls and procedures that are
designed for the purposes of ensuring that information required to be disclosed
in our SEC reports is recorded, processed, summarized, and reported within the
time periods specified in the SEC rules and forms, and that such information is
accumulated and communicated to our management, including the Chief Executive
Officer as appropriate to allow timely decisions regarding required disclosure.
Management, after evaluating the effectiveness of the Company's disclosure
controls and procedures as defined in Exchange Act Rules 13a-14(c) as of June
30, 2008 (the "Evaluation Date") concluded that as of the Evaluation Date, the
Company's disclosure controls and procedures were effective to ensure that
material information relating to the Company would be made known to them by
individuals within those entities, particularly during the period in which this
annual report was being prepared and that information required to be disclosed
in our SEC reports is recorded, processed, summarized, and reported within the
time periods specified in the SEC's rules and forms.
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ITEM 4T. CONTROLS AND PROCEDURES
Management's Quarterly Report on Internal Control over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting for the company in accordance with as defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control
over financial reporting is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles. Our internal control over financial reporting includes
those policies and procedures that:
(i) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and
dispositions of our assets;
(ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and
that our receipts and expenditures are being made only in
accordance with authorizations of our management and
directors; and
(iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of
our assets that could have a material effect on our financial
statements.
Management's assessment of the effectiveness of the Registrant's internal
control over financial reporting is as of the quarter ended June 30, 2008. We
believe that internal control over financial reporting is effective. We have not
identified any, current material weaknesses considering the nature and extent of
our current operations and any risks or errors in financial reporting under
current operations.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
This quarterly report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the Company to provide only management's
report in this annual report.
There was no change in our internal control over financial reporting that
occurred during the fiscal quarter ended June 30, 2008, that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the six month period ended June 30, 2008, 100,000 shares of the Company's
restricted common stock were issued as part of a settlement agreement with an
existing note holder.
During the six month period ended June 30, 2008, 102,500 shares of the Company's
restricted common stock were issued in connection with the purchase of common
stock in NPI08, Inc., $32,000 of the shares were issued to the selling
shareholders of NPI08, Inc. and $50,000 of the share were issued to NPI08,
Inc.'s to utilize in settling its liabilities .
Exemption From Registration Claimed
All of the sales by the Company of its unregistered securities were made by the
Company in reliance upon Section 4(2) of the Securities Act of 1933, as amended
(the "1933 Act"). The individual and/or entity listed above that received the
unregistered securities was known to the Company and its management, through
pre-existing business relationships. The individual and/or entity was provided
access to all material information, which was requested, and all information
necessary to verify such information and were afforded access to management of
the Company in connection with the issuance. The individual and/or entity of the
unregistered securities acquired such securities for investment and not with a
view toward distribution, acknowledging such intent to the Company. All
certificates or agreements representing such securities that were issued
contained restrictive legends, prohibiting further transfer of the certificates
or agreements representing such securities, without such securities either being
first registered or otherwise exempt from registration in any further resale or
disposition.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
The following is a complete list of exhibits filed as part of this Form 10-Q.
Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of
Regulation S-K.
EXHIBIT NO. DESCRIPTION
------------------ -----------------------------------------------------
31.1 Section 302 Certification - CEO
31.2 Section 302 Certification - CFO
32.1 Section 906 Certification - CEO
32.2 Section 906 Certification - CFO
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
INFINITY CAPITAL GROUP, INC.
----------------------------
(Registrant)
Dated: August 13, 2008 By: /s/Gregory H. Laborde
-------------------------
Gregory H. Laborde,
Principal Executive Officer,
President & Chief Executive Officer
Dated: August 13, 2008 By: /s/Theodore A. Greenberg
----------------------------
Theodore A. Greenberg,
Principal Accounting Officer,
Chief Financial Officer,
Chief Investment Officer &
Secretary
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