U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the Quarter ended March 31, 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: 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
Indicate by check mark whether the issuer: (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act during the
preceding 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 the definitions of "large accelerated filer," "accelerated filer" and
"smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ]
Accelerated filer [ ]
Non-accelerated filer
(Do not check if smaller reporting company) [ ]
Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).
Yes [ ] No [ X ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13, or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ]
Not applicable.
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: The number of shares of
common stock outstanding as of May 6, 2008 was 62,700,000.
<page>
INDEX TO FORM 10-Q
Page No.
PART I
ITEM 1. Condensed Consolidated Financial Statements 3
Balance Sheet 3
Statements of Operations 4
Statements of Cash Flows 5
Notes to Financial Statements 6-9
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 10
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk. 11
ITEM 4T. Controls and Procedures 12
PART II
ITEM 1. Legal Proceedings 13
ITEM 1A. Risk Factors 13
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds. 13
ITEM 3. Defaults Upon Senior Securities 13
ITEM 4. Submission of Matters to a Vote of Security Holders 13
ITEM 5. Other information 14
ITEM 6. Exhibits 14
Signatures 15
2
<page>
PART I
ITEM 1. FINANCIAL STATEMENTS
INVICTA GROUP INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
March 31, 2008
ASSETS
Current assets:
Accounts receivable $2,500
------------
Total current assets 2,500
Property and equipment, net of accumulated depreciation
of $59,216 20,335
Other assets:
Other 1,500
------------
Total other assets 1,500
------------
Total assets $24,335
============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Bank overdraft $1,956
Convertible debentures 435,079
Accounts payable and accrued liabilities 548,228
Accounts payable and accrued liabilities
- discontinued operations 779,129
Notes payable - shareholders 193,141
Accrued compensation 217,754
------------
Total current liabilities 2,175,287
------------
Shareholders' equity (deficit)
Preferred stock series C par value $1.00, 480,000 shares
authorized; 465,000 issued and outstanding 465,000
Preferred stock series D par value $1.00, 100,000 shares
authorized; 100,000 issued and outstanding 100,000
Preferred stock series E par value $1.00, 266,666 shares
authorized; 266,666 issued and outstanding 266,666
Common stock, par value $ .0001, 1,000,000,000 shares
authorized, 19,265,883 issued and outstanding 1,927
Additional paid in capital 5,168,300
Accumulated deficit (8,152,846)
------------
Total shareholders' deficit (2,150,953)
------------
Total liabilities and shareholders' deficit $24,335
============
See accompanying notes to consolidated financial statements
3
<page>
INVICTA GROUP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
<table>
<s> <c> <c>
2008 2007
--------------- ---------------
Revenues earned $10,399 $13,124
Selling, general, and administrative expenses 166,977 257,071
--------------- ---------------
Income (loss) from operations before other income and expense (156,578) (243,947)
Other income and (expense)
Interest income 0 0
Interest expense - related parties (3,500) (4,425)
Interest expense (2,945) (8,587)
Beneficial interest expense (14,937) (36,066)
--------------- ---------------
Net income (loss) before provision for income taxes (177,960) (293,025)
Provision for income taxes - -
--------------- ---------------
Net income (loss) $(177,960) $(293,025)
=============== ===============
Net income (loss) per share weighted average share, basic
and diluted ($0.05) ($8.98)
=============== ===============
Weighted average shares outstanding, basis and diluted 3,249,049 32,615
=============== ===============
</table>
See accompanying notes to consolidated financial statements
4
<page>
INVICTA GROUP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
<table>
<s> <c> <c>
2008 2007
--------------- ---------------
Net income $(177,960) $(293,025)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 1,875 1,875
Amortization 775 12,905
Stock issued for services 19,610 41,500
Beneficial interest 14,937 0
Changes in assets and liabilities:
Accounts receivable and prepaid expenses (2,500) 6,425
Advances to affiliates - 15,000
Other assets - 0
Bank overdraft 1,956
Accounts payable and accrued liabilities 75,348 71,834
--------------- ---------------
Total funds provided by operating activities (65,959) (143,486)
--------------- ---------------
Capital asset expenditures - -
--------------- ---------------
Funds provided by financing activities
Proceeds from long term debt 59,750 144,264
Payments on long term debt (5,512)
--------------- ---------------
Total funds provided by financing activities 59,750 138,752
--------------- ---------------
Net change in cash and cash equivalents (6,209) (4,734)
Cash and cash equivalents, beginning of period 6,209 12,960
--------------- ---------------
Cash and cash equivalents, end of period - $8,226
=============== ===============
Additional Cash Flow Information:
Cash paid during the period for:
Interest $- $3,425
=============== ===============
Income taxes $- $-
=============== ===============
Non-Cash Activities:
Stock issued for redemption of Preferred B stock $- $175,000
=============== ===============
Stock issued for payments on convertible debentures $23,393 $157,323
=============== ===============
</table>
See accompanying notes to consolidated financial statements
5
<page>
INVICTA GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2008
UNAUDITED
NOTE 1. BASIS OF PRESENTATION
ORGANIZATION AND CAPITALIZATION
The accompanying unaudited condensed financial statements have been prepared
in accordance with accounting principles generally accepted in the United
States of America for interim financial information. Accordingly, they do not
include all of the information and footnotes required by accounting principles
generally accepted in the United States of America for complete financial
statements. The preparation requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the
reporting period. Actual results may differ from these estimates. 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 March 31, 2008 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2008.
The financial statements include the accounts of the Company and its wholly-
owned subsidiary. All significant inter-company balances and transactions have
been eliminated.
Certain reclassifications have been made to the prior year financial
statements in order for them to be in conformity with the current year
presentation.
SIGNIFICANT ACCOUNTING POLICIES:
In preparing our unaudited consolidated condensed financial statements and
accounting for the underlying transactions and balances reflected therein, we
have applied the significant accounting policies described in Note 1 to our
consolidated financial statements included in our Annual Report on Form 10-KSB
for the year ended December 31, 2007.
NOTE 2. INCOME PER SHARE
The Company presents "basic" and, if applicable, "diluted" earnings (loss) per
common share pursuant to the provisions of Statement of Financial Accounting
Standards No. 128, "Earnings per Share" ("SFAS 128") and certain other
financial accounting pronouncements. Basic earnings (loss) per common share
are calculated by dividing net income (loss) by the weighted average number of
common shares outstanding during each period. The calculation of diluted
earnings (loss) per common share is similar to that of basic earnings (loss)
per common share, except that the denominator is increased to include the
number of additional common shares that would have been outstanding if all
potentially dilutive common shares, such as those issuable upon the conversion
of debentures, were issued during the period.
NOTE 3. NOTES PAYABLE - SHAREHOLDERS
The note payable to shareholders is uncollateralized and is payable on the
first month after the Company has received $1,000,000 in equity funding. The
monthly installments due to shareholder are approximately $20,000. Invicta is
in default on the payments to the shareholders due to a cash flow shortage.
The shareholder recognizes the default status and has agreed to accept 7%
interest on the note from January 2, 2005 until the note is paid in full. The
Company plans to begin these payments as soon as the necessary cash flow is
available. The entire balance is classified as a current liability.
6
<page>
NOTE 4 - EQUITY
Preferred Stock
The board of directors is authorized to determine, without stockholder
approval, the designations, rights, preferences, powers and limitations of the
Company's 50,000,000 shares of authorized preferred stock. The Company has
designated 480,000 shares as preferred stock series C, par value $1.00 per
share; each share is convertible into common shares totaling an amount equal
to fair market value of the common shares for the preferred share at par value
on the day such preferred stock is converted. The Company has designated
100,000 shares as preferred stock series D, par value $1.00 per share; each
share is convertible into .14 common shares. The Company has designated
266.666 shares as preferred stock series E, par value $1.00 per share; each
share is convertible into 200 common shares.
On March 7, 2008 the Company's Board authorized and issued 266,666 shares of
preferred stock series E in exchange for $160,000 of deferred compensation.
Common Stock
On January 2, 2008, the Company issued 18,248 shares of its common stock as
compensation for consulting services. A charge of $100 was recorded for the
three months ended March 31, 2008, valued at fair market value, in connection
with this transaction. The Company relied upon the exemption from registration
contained in Section 4(2), as the recipients were deemed to be sophisticated
with regard to an investment in the Company.
On January 21, 2008 the Company converted $2,800 of convertible debt into
350,000 shares of common stock in accordance with the terms of the convertible
debenture agreement. The Company relied upon the exemption from registration
contained in Section 4(2), as the recipients were deemed to be sophisticated
with regard to an investment in the Company.
On February 21, 2008 the Company converted $2,000 of convertible debt into
400,000 shares of common stock in accordance with the terms of the convertible
debenture agreement. The Company relied upon the exemption from registration
contained in Section 4(2), as the recipients were deemed to be sophisticated
with regard to an investment in the Company.
On March 8, 2008, the Company issued 5,000 shares of its common stock as
compensation for consulting services. A charge of $10 was recorded for the
three months ended March 31, 2008, valued at fair market value, in connection
with this transaction. The Company relied upon the exemption from registration
contained in Section 4(2), as the recipients were deemed to be sophisticated
with regard to an investment in the Company.
On March 24, 2008, the Company issued 2,750,000 shares of its common stock in
settlement of $8,250 of shareholder loans. The common stock was valued at fair
market value, in connection with this transaction. The Company relied upon the
exemption from registration contained in Section 4(2), as the recipients were
deemed to be sophisticated with regard to an investment in the Company.
On March 31, 2008, the Company issued 4,100,000 shares of its common stock as
compensation for consulting services. A charge of $19,500 was recorded for the
three months ended March 31, 2008, valued at fair market value, in connection
with this transaction. The Company relied upon the exemption from registration
contained in Section 4(2), as the recipients were deemed to be sophisticated
with regard to an investment in the Company.
During the first quarter of 2008 the Company converted $18,593 of convertible
debt into 8,320,000 shares of common stock in accordance with the terms of the
convertible debenture agreement. The Company relied upon the exemption from
registration contained in Section 4(2), as the recipients were deemed to be
sophisticated with regard to an investment in the Company.
Stock Warrants
In connection with the issuance of the certain convertible debentures, the
debenture holder received a warrant to purchase 6,000 shares of common stock
for a price of $500.00 per share. No value was assigned to the warrants in
that there was no intrinsic value at the date of issuance.
7
<page>
Stock Options
A total of 7,765 stock options were granted to employees, non-employee
directors, officers, or consultants during the year ended December 31, 2004.
A total of 6,160,000 stock options were granted to employees, non-employee
directors, officers, or consultants during the three months ended March 31,
2008 valued at $24,640.
At December 31, 2004, the Company had one stock based compensation plan, which
is described below. The Company accounts for the fair value of its grants
under this plan in accordance with FASB 123R. The compensation cost that has
been charged against income for this plan is $24,640 and $0 for the three
months ended March 31, 2008 and 2007.
Stock options outstanding and exercisable at March 31, 2008 are as follows
<table>
<s> <c> <c> <c>
Options Outstanding
Weighted Average Weighted Average
Range of Exercise Price Shares Outstanding Exercise Price Remaining Life
$12,500 to $.004 6,167,765 $.004 3.00
</table>
NOTE 5: EMPLOYMENT AGREEMENTS AND DEFERRED OFFICER'S COMPENSATION
The Company entered into employment agreements with its Chief Executive
Officer and Chief Operating Officer. The agreements are automatically renewed
each year. The annual base salary of each officer will be $120,000. Each
officer will be paid for equity funding equal to 5% of funding.
The Company has accrued for each officer's salaries in deferred officers'
compensation with a balance of $217,754 at March 31, 2008.
NOTE 6: RELATED PARTY TRANSACTIONS
Notes Payable Shareholder's
The note payable to shareholders is uncollateralized and is payable on the
first month after the Company has received $1,000,000 in equity funding. The
monthly installments due to shareholder are approximately $20,000. Invicta is
in default on the payments to the shareholders due to a cash flow shortage.
The shareholder recognizes the default status and has agreed to accept 7%
interest on the note from January 2, 2005 until the note is paid in full. The
Company plans to begin these payments as soon as the necessary cash flow is
available. The entire balance is classified as a current liability.
NOTE 7: 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 approximately $8,152,846 since inception
and the Company had negative working capital of $2,172,787 at March 31, 2008.
These factors raise substantial doubt about the Company's ability to continue
as a going concern.
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.
8
<page>
In addition to the assumption regarding increased revenues, the Company's
management has raised approximately $59,750 during the three months ended
March 31, 2008 in funding from its securities purchase agreement with Golden
Gate Investors, Inc. Invicta estimates it will need $500,000 additional
funding for working capital over the next twelve months.
Management feels that its increase revenues from its Travel Hot Link web-site,
its equity and financing plans and the revenues from the acquisition 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.
NOTE 8- INTERNAL CONTROLS
As directed by Section 404 of the Sarbanes-Oxley Act of 2002 ("SOX 404"), the
Securities and Exchange Commission adopted rules requiring small business
issuers, such as our company, to include a report of management on the
company's internal controls over financial reporting in their annual reports.
Presently, we will become subject to compliance with SOX 404 for our fiscal
year ending December 31, 2008. The independent registered public accounting
firm auditing our financial statements must also attest to and report on
management's assessment of the effectiveness of our internal controls over
financial reporting as well as the operating effectiveness of our internal
controls. We have yet to begin evaluating our internal control systems in
order to allow our management to report on, and our independent auditors
attest to, as presently required. During 2008 we expect to expend significant
resources in developing the necessary documentation and testing procedures
required by SOX 404. In the event we identify significant deficiencies or
material weaknesses in our internal controls that we cannot remedy in a timely
manner or we are unable to receive a positive attestation from our independent
auditors with respect to our internal controls, investors and others may lose
confidence in the reliability of our financial statements and our ability to
obtain financing as needed could suffer.
9
<page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Results of Operations for the Three Months Ended March 31, 2008 Compared to
the Three Months Ended March 31, 2007.
Revenues for the three months ended March 31, 2008 were $10,399 compared with
$13,124 for the three months ended March 31, 2007. This represents a decrease
of $2,725 from 2007. The decrease is due to fewer customers contracting for
advertising campaigns for the three months ended March 31, 2008 compared to
the three months ended March 31, 2007.
Operating expenses for the three months ended March 31, 2008 were $166,977
compared with $257,071 for the three months ended March 31, 2007. This
represents an decrease of $90,094 from 2007. The decrease is due to the write
off of a bad debt during the three months ended March 31, 2007 of amounts
advanced to Maupintour LLC during the period of $73,000. For the three months
ended March 31, 2008 the major expenses were as follows: Payroll $84,640;
Professional fees $33,785. The three months ended March 31, 2007 major
expenses were: Payroll $60,000; Professional fees $30,198; Write of loan to
Maupintour $73,000.
Net other income/expense was an expense of $21,382 for the three months ended
March 31, 2008 which is attributed to interest expense, compared with net
other expense of $49,078 for the three months ended March 31, 2007, a decrease
of $27,696. The decrease is attributable to the decrease in beneficial
interest expense on the Company's convertible debentures.
The net loss for the three months ended March 31, 2008 was $177,960, compared
with a net loss of $293,025 for the three months ended March 31, 2008,
representing a decrease of $115,065.
Liquidity and Capital Resources
The Company had a working capital deficit of $2,188,942 at March 31, 2008.
Net cash used in operating activities was $65,958 for the three months ended
March 31, 2008, as compared to $143,486 for the three months ended March 31,
2007. The primary use of cash from operations in 2008 was to fund operations.
Net cash provided by financing activities was $59,750 for the three months
ended March 31, 2008, as compared to $138,752 for the three months ended March
31, 2007. The Company issued $59,750 of convertible notes in 2008.
The Company's present intentions are to continue selling debt or equity
securities to cover its operating expenses, however, the Company may not
be able to obtain additional funds needed for working capital and operations.
PLAN OF OPERATION
The Company's primary strategy is to establish and grow its core business. The
Company has no plans for capital expenditures for the next twelve months.
Invicta will need a minimum of $300,000 cash during the next twelve months to
assure survival. The Company may consider a business acquisition. A business
combination may involve the acquisition of, or merger with, a company which
does not need substantial additional capital, but which desires to establish a
public trading market for its shares, while avoiding, among other things, the
time delays, significant expense, and loss of voting control which may occur
in a public offering.
Going Concern Concerns
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.
10
<page>
The Company has incurred losses of approximately $8,152,846 since inception
and the Company had negative working capital of $2,172,787 at March 31, 2008.
These factors raise substantial doubt about the Company's ability to continue
as a going concern.
Inflation
Inflation rates in the United States have not had a significant impact on
operating results for the periods presented.
Off-Balance Sheet Transactions
At no time during the three months ended March 31, 2008 did the Company have
any relationships with unconsolidated entities or financial partnerships,
including as entities often referred to as structured finance or special
purpose entities, which would have been established for the purpose of
facilitating off-balance sheet arrangements or other contractually narrow or
limited purposes.
Critical Accounting Policies
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions about future events that affect the amounts reported
in the financial statements and accompanying notes. Future events and their
effects cannot be determined with absolute certainty. Therefore, the
determination of estimates requires the exercise of judgment. Actual results
inevitably will differ from those estimates, and such difference may be
material to the Company's financial statements. The Company believes that the
following discussion addresses its Critical Accounting Policies.
Impairment of Long-Lived Assets and Intangible Assets - The Company makes
reviews for the impairment of long-lived assets and certain identifiable
intangibles whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable under SFAS No. 144. An
impairment loss would be recognized when estimated future cash flows expected
to result from the use of the asset and its eventual disposition is less than
its carrying amount.
Accounting for Contingencies - The Company accrues for contingencies in
accordance with Statement of Accounting Standards ("SFAS") No. 5, "Accounting
for Contingencies," when it is probable that a liability or loss has been
incurred and the amount can be reasonably estimated. Contingencies by their
nature relate to uncertainties that require the company's exercise of judgment
both in assessing whether or not a liability or loss has been incurred and
estimating the amount of probable loss.
The Company accounts for income taxes in accordance with SFAS No.109. The
Company has provided a full valuation allowance against the assets.
The Company accounts for option issues according to FASB Statement No. 123R,
"Share-Based Payment, an Amendment of FASB Statement No. 123" ("FAS No.
123R"). FAS No. 123R requires companies to recognize in the statement of
operations the grant-date fair value of stock options and other equity-based
compensation issued to employees beginning January 1, 2006.
Internal Control Issues
The Company evaluated, under the supervision and with the participation of the
Company's management (including its chief executive officer and with its chief
financial officer), the effectiveness of the design and operation of its
disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e).
Based upon their evaluation of such disclosure controls and procedures, the
Company's chief executive officer and chief financial officer have concluded
as of March 31, 2008 that such controls did operate as designed and would
alert them on a timely basis to any material information relating to the
Company required to be included in the Company's periodic SEC filings.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
N/A. Company is a smaller reporting company as defined by Rule 229.10(f)(1)
and is not required to provide the information required by this Item.
11
<page>
ITEM 4T. CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures
Under the supervision and with the participation of our senior management,
consisting of William G. Forhan, our co-chief executive officer, and David
Scott, our co-chief executive officer and chief financial officer, we
conducted an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-
15(e) under the Securities Exchange Act of 1934, as amended, as of the end of
the period covered by this report (the "Evaluation Date"). Based on this
evaluation, our chief executive officer and chief financial officer concluded,
as of the Evaluation Date, that our disclosure controls and procedures are
effective such that the information relating to us required to be disclosed in
our Securities and Exchange Commission ("SEC") reports (i) is recorded,
processed, summarized and reported within the time periods specified in SEC
rules and forms, and (ii) is accumulated and communicated to our management,
including our chief executive officer and chief financial officer, as
appropriate to allow timely decisions regarding required disclosures.
(b) Management's annual report on internal control over financial reporting.
Management is responsible for establishing and maintaining adequate internal
control over financial reporting for our company. Our internal control over
financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes of accounting principles generally
accepted in the United States. Our internal control over financial reporting
includes those policies and procedures that :
* pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and disposition of our assets;
* provide reasonable assurance that the transactions are recorded as
necessary to permit preparation of the financial statements in accordance with
generally accepted accounting principles and that receipts and expenditures
are being made only with proper authorizations; and
* provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have a
material effect on the financial statements.
Because of 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. Therefore, even
those systems determined to be effective can provide only reasonable assurance
of achieving their control objectives.
Management, including our principal executive officer and principal financial
officer, assessed the effectiveness of our internal control over financial
reporting as of March 31, 2008. In making this assessment, management used the
criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control Over Financial Reporting -
Guidance for Smaller Public Companies. Based on our assessment and those
criteria, our management concluded that our internal control over financial
reporting was effective as of March 31, 2008.
This annual report does not include an attestation report of our registered
public accounting firm regarding internal control over financial reporting.
Managements report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit us to provide only management's report in this annual
report.
(b) Changes in Internal Control over Financial Reporting. There were no
changes in our internal control over financial reporting that occurred during
the last fiscal quarter of the period covered by this report that have
materially affected or are reasonably likely to materially affect our internal
control over financial reporting.
12
<page>
PART II
ITEM 1. LEGAL PROCEEDINGS
None at this time.
ITEM 1A. RISK FACTORS
N/A. Company is a smaller reporting company as defined by Rule 229.10(f)(1)
and is not required to provide the information required by this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
On March 7, 2008 the Company's Board authorized and issued 266.666 shares of
preferred stock series E in exchange for $160,000 of deferred compensation.
Common Stock
On January 21, 2008 the Company converted $2,800 of convertible debt into
350,000 shares of common stock in accordance with the terms of the convertible
debenture agreement. The Company relied upon the exemption from registration
contained in Section 4(2), as the recipients were deemed to be sophisticated
with regard to an investment in the Company.
On February 21, 2008 the Company converted $2,000 of convertible debt into
400,000 shares of common stock in accordance with the terms of the convertible
debenture agreement. The Company relied upon the exemption from registration
contained in Section 4(2), as the recipients were deemed to be sophisticated
with regard to an investment in the Company.
On March 8, 2008, the Company issued 5,000 shares of its common stock as
compensation for consulting services. A charge of $10 was recorded for the
three months ended March 31, 2008, valued at fair market value, in connection
with this transaction. The Company relied upon the exemption from registration
contained in Section 4(2), as the recipients were deemed to be sophisticated
with regard to an investment in the Company.
On March 24, 2008, the Company issued 2,750,000 shares of its common stock in
settlement of $8,250 of shareholder loans. The common stock was valued at fair
market value, in connection with this transaction. The Company relied upon the
exemption from registration contained in Section 4(2), as the recipients were
deemed to be sophisticated with regard to an investment in the Company.
On March 31, 2008, the Company issued 4,100,000 shares of its common stock as
compensation for consulting services. A charge of $19,500 was recorded for the
three months ended March 31, 2008, valued at fair market value, in connection
with this transaction. The Company relied upon the exemption from registration
contained in Section 4(2), as the recipients were deemed to be sophisticated
with regard to an investment in the Company.
During the first quarter of 2008 the Company converted $18,593 of convertible
debt into 8,320,000 shares of common stock in accordance with the terms of the
convertible debenture agreement. The Company relied upon the exemption from
registration contained in Section 4(2), as the recipients were deemed to be
sophisticated with regard to an investment in the Company.
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.
13
<page>
ITEM 5. OTHER INFORMATION
None at this time.
ITEM 5. EXHIBITS
Exhibit No Description of Document
- ----------- -----------------------
3.1(a) Articles of Incorporation of Invicta Group Inc.*
3.1(b) Articles of Amendment*
3.2 Bylaws*
10.1 2002 Equity Compensation Plan*
10.2 Employment Agreement between Invicta Group and William G. Forhan*
10.3 Employment Agreement between Invicta Group and R. David Scott*
10.4 Employment Agreement between Invicta Group and Mercedes Henze*
10.5 Lease for Ft. Lauderdale, Florida Office*
10.6 Stock Purchase Agreement for the Shares of Casino Rated Players. Inc.*
10.8 Promissory Note to William G. Forhan*
31 Certification of the Chief Executive Officer and Chief Financial Officer
pursuant to Rule 13a-14 of the Securities and Exchange Act of 1934 as amended,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32 Certification of the Chief Executive Officer and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
* Indicates previously filed in a Registration on Form SB-2, Commission File
No. 333-102555
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 May 15, 2008
William G. Forhan
Chief Executive Officer and President
By: /s/ Richard David Scott May 15, 2008
Richard David Scott
Chief Financial Officer
15
<page>