U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the 2nd Quarter ended June 30, 2006.
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: 333-102555
INVICTA GROUP INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
Nevada 91-2051923
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
2400 East Commercial Blvd. Suite 618
Ft. Lauderdale, FL 33308
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
Registrant's telephone number, including area code: 954-771-0650
Securities Registered Pursuant to Section 12(b) of the Act:
Common Stock par value $.0001 per share
Securities Registered Pursuant to Section 12(g) of the Act: None
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
QSB or any amendment to this Form 10-QSB. [ X ]
The aggregate market value of the Common Stock held by non-affiliates of the
Registrant, based upon the average of the closing bid and ask price of the
Common Stock on the OTC Bulletin Board system on July 18, 2006 of $.0012, was
approximately $815,653. Shares of Common Stock held by each officer and
director and by each person who may be deemed to be an affiliate have been
excluded.
The number of shares of common stock outstanding as of July 18, 2006 was
679,711,589
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INDEX TO FORM 10-QSB
Page No.
PART I
ITEM 1. Financial Statements
Balance Sheet 3
Statements of Operations 4
Statements of Cash Flows 6
Notes to Financial Statements 7
ITEM 2. Management's Discussion and Analysis 10
ITEM 3. Quantitative and Qualitative Disclosures on Market Risk 11
ITEM 4. Controls and Procedures 11
PART II
ITEM 1. Legal Proceedings 11
ITEM 2. Changes in Securities 11
ITEM 3. Defaults Upon Senior Securities 11
ITEM 4. Submission of Matters to a Vote of Security Holders 11
ITEM 5. Exhibits 12
Signatures 12
2
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PART I
ITEM 1. FINANCIAL STATEMENTS
INVICTA GROUP INC.
CONSOLIDATED BALANCE SHEET
June 30, 2006
(UNAUDITED)
ASSETS
Property and equipment, net of accumulated depreciation
of $41,716 21,605
Other assets:
Security Deposits 1,500
Advances to affiliates 39,845
Intangible assets, net of accumulated
amortization of $ -0- 42,400
-----------------
Total Assets $ 105,350
=================
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Notes payable and convertible debentures $ 612,127
Accounts payable and accrued liabilities 861,859
Accrued expenses and other liabilities 400,579
Deferred officer compensation 308,217
-----------------
Total current liabilities 2,182,782
Long-term debt
Notes Payable - shareholders 250,810
-----------------
Total Liabilities 2,433,592
-----------------
Shareholder Deficit:
Preferred stock series B par value $1.00 175,000 shares
authorized; 175,000 issued and outstanding 175,000
Preferred stock series C par value $1.00 330,000 shares
authorized; 330,000 issued and outstanding 330,000
Common stock, par value $ .0001, 1,000,000,000 shares
authorized, 616,211,589 issued and outstanding 61,621
Additional paid in capital 3,469,127
Retained (Deficit) Accumulated (6,363,990)
-----------------
Total Shareholder deficit (2,328,242)
-----------------
Total Liabilities and Shareholders' Equity $ 105,350
=================
3
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INVICTA GROUP INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Three Three
Months Ending Months Ending
June 30, June 30,
2005 2006
-------------- --------------
Revenues earned $ 41,439 $ 51,700
Cost of sales 631
-------------- --------------
Gross profit 40,808 51,700
Selling, general, and administrative
expenses 280,034 129,435
-------------- --------------
(Loss) from Operations before other
income or expenses (239,226) (77,735)
Other income and (expense)
Interest income 566 183
Sale of Intangible Assets 10,000
Net loss $ (228,660) $ (77,552)
=============== ===============
Net loss per share weighted average
share, basic and diluted ($0.001) ($0.000)
=============== ===============
Weighted average shares outstanding,
basis and diluted 197,299,773 495,985,781
=============== ===============
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INVICTA GROUP INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Six Six
Months Ending Months Ending
June 30, June 30,
2005 2006
-------------- --------------
Revenues earned $ 81,433 $ 76,761
Cost of sales 4,151
-------------- --------------
Gross profit 77,282 76,761
Selling, general, and administrative
expenses 679,783 307,662
Asset impairment charge
-------------- --------------
(Loss) from Operations before
other income or expenses (602,501) (230,901)
Other income and (expense)
Interest income 566 183
Sale of Intangible Assets 10,000
-------------- --------------
Net loss $ (591,935) $ (230,718)
=============== ===============
Net loss per share weighted average
share, basic and diluted ($0.003) ($0.000)
=============== ===============
Weighted average shares outstanding,
basic and diluted 169,271,308 470,954,884
=============== ===============
5
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INVICTA GROUP INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Six Six
Months Ending Months Ending
June 30, June 30,
2005 2006
-------------- --------------
Cash flows from operating activities:
Net income $ (591,935) $ (230,718)
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation 3,750 3,750
Amortization 8,250
Stock issued for services 178,970 64,500
Changes in assets and liabilities:
Accounts receivable and prepaid
expenses 12,970 (39,845)
Other assets 28,794 (42,400)
Accounts payable & accrued liabilities 120,713 18,200
-------------- --------------
(238,488) (226,513)
-------------- --------------
Cash flows used in investing activities:
Capital asset expenditures (6,880) (7,029)
Cash flows used in financing activities:
Proceeds from long term debt 97,000 235,500
Proceeds from sale of comon stock 157,500 29,600
Payments on long term debt (130,600) (30,261)
-------------- --------------
123,900 234,839
-------------- --------------
Net change in cash and cash equivalents (121,468) 1,297
Cash and cash equivalents, beginning of
period 145,472 (1,297)
-------------- --------------
Cash and cash equivalents, end of period $ 24,004 $ -
=============== ==============
Additional Cash Flow Information:
Cash paid during the period for:
Interest (non capitalized)
=============== ==============
IncomeTaxes $ 0 $ 0
=============== ==============
Non-Cash Activities:
Stock issued for acquisitions
=============== ==============
Stock issued for deferred compensation
payable $ 175,000
Stock issued for stock subscriptions
receivable $ 236,000
=============== ==============
Stock issued for stock subscriptions
receivable
=============== ==============
6
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INVICTA GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2006
UNAUDITED
NOTE A. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the three month period ended June 30, 2006 are not necessarily indicative of
the results that may be expected for the year ended December 31, 2006.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Registrant Company and Subsidiaries' annual
report on Form 10-K for the year ended December 31, 2005.
NOTE B. GOING CONCERN
The Company's financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business.
The Company has incurred losses of $6,364,000 since inception and the Company
had negative working capital of $2,142,940 at June 30, 2006. These factors
raise substantial doubt about the Company's ability to continue as a going
concern.
During the next 12 months, management believes that it will be able to
generate cash sufficient to support its operations. Management believes that
it can generate this cash and ultimately profits from advertising revenues on
its website travelhotlink.com. Travel Hot Link has no involvement with the
reservation; its revenues are generated from the Travel Supplier that
advertises its travel products online. It is estimated that Travel Hot Link
will reach a potential 40 million travel enthusiasts that are seeking travel
bargains online.
In addition to the assumption regarding increased revenues, in the 1st
quarter of 2006, the Company's management has raised $235,000 in equity
funding in 2006 from its securities purchase agreement with Golden Gate
Investors, Inc.
Management feels that its increase revenues from its Travel Hot Link web-
site, its equity and financing plans will provide the working capital to
allow it to continue as a going concern, however, there can be no assurances
the Company will be successful in its efforts to secure additional equity
funding, financing or attain profitable operations. The accompanying
consolidated financial statements do not include any adjustments that might
result should the Company be unable to continue as a going concern.
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INVICTA GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2006
UNAUDITED
NOTE C. CHANGES IN STOCKHOLDERS' (DEFICIT) FOR THE SIX MONTHS ENDED JUNE
30, 2006
Common Stock Additional Paid
Shares Amount in Capital Deficit
Balance December 31, 2005 239,569,367 $ 23,957 $3,181,691 $(6,133,272)
Stock issued for cash 36,766,000 3,677 25,923
Stock issued for legal and
marketing services 57,654,000 5,765 53,735
Stock issued in exchange for
Payment of convertible
debentures 282,222,222 28,222 207,778
Net loss for the six months
Ended June 30, 2006 ___________ ________ __________ (230,718)
Balance June 30, 2006 616,211,589 $ 61,621 $3,469,127 $(6,363,990)
NOTE D. INCOME PER SHARE
Basic net loss per share was computed based on the weighted average shares of
common stock outstanding and excludes any potential dilution. Diluted net
loss per share reflects the potential dilution from the exercise or
conversion of all dilutive securities, such as convertible debentures, into
common stock and stock purchase options. The Company's outstanding
convertible debentures and options are not included in the computation of
basic or diluted net loss per share since they are anti-dilutive. At June
30, 2006 potentially dilutive securities consist of convertible debentures
that could be converted into 450,000 common shares and options that could be
converted into 3,882,656 common shares.
NOTE E. CAPITAL LEASE
The capital lease liability is for leased phone equipment for Aiplan that was
to expire on March 31, 2005. Since the Company did not notify the lessor in
writing of its intent to cancel the lease was automatically renewed for a
period of two years. The lessor has confirmed receipt of a verbal
cancellation notice, but is still contending no written cancellation was
received. Because of this the Company is disputing this amount. Management
has forwarded the Company's current financial information to the lessor's
attorneys indicating that no assets exist to pay this liability, and since
the operations of the Company have been ceased they have requested them to
stop pursuing payment on this amount
8
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INVICTA GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2006
UNAUDITED
NOTE F. NOTES PAYABLE - SHAREHOLDERS
Note payable to shareholders, uncollateralized, payable on the first month
after the Company has received $1,000,000 in equity funding in monthly
installments of approximately $20,000. Invicta is in default on the payments
to shareholders due to a cash flow shortage. Shareholder recognizes default
status and will accept 7% interest on note from 1/2/05 until paid in full.
The Company plans to begin these payments as soon as the necessary cash flow
is available which management expects to be in 2006. Therefore, the entire
balance of $ 250,810 is classified as long-term debt for 2006 and $327,766
for 2005. Invicta owes seller of Airplan, Inc. $60,000, but does not intend
to pay due to termination of employment contract.
NOTE G. RELOCATION OF CORPORATE OFFICE
Effective May 1, 2006, the Company has moved its headquarters from its
office in Miami to a new office location in Ft. Lauderdale.
The Company will lease its office space under a five-year, non-cancelable
operating lease for approximately $3700 per month.
Obligations under the non-cancelable operating leases are as follow:
Year ending December 31,
2006 $ 29,600
2007 46,000
2008 48,400
2009 50,800
Thereafter 56,800
$ 231,600
NOTE H. INCREASE IN CAPITAL STOCK
The Company adopted the Amendment to increase its authorized capital stock by
authorizing an increase in Common Stock to 1 Billion shares of Common Stock
and Preferred Stock to 50,000,000 shares. The majority stockholders of the
Company as of February 8, 2005, have consented to the increase in authorized
shares of Common Stock, which will became effective on February 28, 2005 (the
"Effective Date").
NOTE I. SUBSEQUENT EVENT - STRATEGIC ALLIANCES
The company entered into 2 strategic alliances, in an effort to increase
revenues, profits and customer loyalty.
Effective July 1, 2006 the Company entered into an agreement with ZDirect,
Inc. an electronic customer relationship management company that creates
profiles of e-mail databases. The company database will be broken down via
state and personal interests (golfer, cruiser, gambler etc.). ZDirect will
be managing Travel Hot Link's Email database daily.
On July 11, 2006 the Company signed an agreement with IQWARE, Inc. IQWARE
will be a reseller of Travel Hot Link's internet media to the 500 hoteliers
that use the IQWARE software for internet reservations and marketing.
9
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ITEM 2. Management's Discussion and Analysis or Plan of Operation.
The following discussion and analysis should be read in conjunction with
Invicta Group's consolidated financial statements included in this report.
Results of Operations
Revenues
Revenues are net commission and fees, there are no cost of sale. Revenues for
the quarter ended June 30, 2006 were $51,700 compared to revenues of $41,439
for the quarter ended June 30, 2005. The revenues in 2006 versus 2005 were
generated from Internet Media Advertising vs. 2005 revenues were from airline
commissions. Revenues for six months 2005 were $77,282 and six months 2006
were $76,761.
Expenses
The major components of expenses are general and administrative expenses. The
three months ended June 30, 2006 major expenses were: Payroll $62,825;
Internet design $18,489; Professional fees $5,269; the total G&A expenses for
the quarter were $129,435
Net Losses
Net loss for the quarter ended June 30, 2006 was ($77,552); loss per share:
($0.0001) compared to a net loss of ($228,660); loss per share ($0.001) for
the quarter ended June 30, 2005. The six months losses were ($230,718); loss
per share ($0.0001 ) for June 30, 2006 and ($591,935): loss per share
($0.003) for six months 2005.
Airplan Inc Liability
Invicta has a liability to the seller of Airplan Inc, a subsidiary of
Invicta, totaling $400,000. The amount represents $340,000 for the purchase
and $60,000 shareholder loan that was on the Balance Sheet acquired. Invicta
does not plan to pay this liability due to the seller defaulting on a signed
5 year employment agreement causing the failure of the business. The seller
departed after 7 months, resulting in the loss of airline contracts that
represented over 50% of the companies revenue. Invicta has not heard from the
Seller and has not proceeded with any legal action against the Seller to
date.
Funding
2nd Quarter 2006, the Company received additional equity advances of $92,600
and issued 115,750,000 shares. Invicta has received equity funding advances
as of 6/30/06 totaling $492,527: Prepaid Warrant balance is $264,590 and
Debenture balance is $227,937.
Liquidity
June 30, 2006 and 2005, Invicta Group's current ratios were (.048%) and
(.02%) respectively. Invicta Group has not generated sufficient revenue in any
period to carry its costs of operations. Invicta has derived its liquidity
principally from the sale of stock.
10
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Common Stock Issued 2006
Invicta issued 102,734,000 common shares in the 1st Quarter of 2006;
38,918,332 shares were issued for $40,500 consulting, 13,815,668 were issued
for professionals fees of $14,000 and 50 million shares were issued to raise
$43,000 equity funds. Invicta issued 2nd Quarter shares totaling 273,988,222;
5 million were for Legal fees and the balance were for payments of advanced
equity funding. The total number of shares outstanding on 6/30/2006 were
616,211,589
Capital Resources
Invicta needs additional capital invested in the company to assure
survival. Invicta will need to increase revenues to a minimum of $45,000 per
month to have positive cash flow and assure survival. Invicta source of
working capital is generation of revenues and the sale of common stock.
ITEM 3. Quantitative & Qualitative Disclosures on Market Risks
We do not have any material risk with respect to changes in foreign
currency exchange rates, commodities prices or interest rates. We do not
believe that we have any other relevant market risk with respect to the
categories intended to be discussed in this item of this report.
Item 4. Controls and Procedures
Invicta Group's Chief Executive Officer and Chief Financial Officer,
after evaluating the effectiveness of Invicta Group's disclosure controls and
procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities
Exchange Act of 1934, as amended) as of December 31, 2005, (the "Evaluation
Date"), have concluded that, as of the Evaluation Date, Invicta Group's
disclosure controls and procedures were effective to ensure the timely
collection, evaluation, and disclosure of information relating to Invicta
Group that would potentially be subject to disclosure under the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
under the Act. There were no significant changes in Invicta Group's internal
controls or in other factors that could significantly affect the internal
controls subsequent to the Evaluation Date.
PART II
ITEM 1. Legal Proceedings
None at this time
ITEM 2. Changes in Securities
None at this time
ITEM 3. Defaults Upon Senior Securities
None at this time
Item 4. Submission of Matters to a Vote of Security Holders.
None at this time
11
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ITEM 5. Exhibits
None at this time
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
INVICTA GROUP INC.
By: /s/ William G. Forhan
William G. Forhan
Chief Executive Officer and President
By: /s/ Richard David Scott
Richard David Scott
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ William G. Forhan Chief Executive Officer, 8-7-06
William G. Forhan President and Director
/s/ Richard David Scott Chief Operating Officer, 8-7-06
Richard David Scott Principal Accounting and
Financial Officer and Director
12
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