SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: April 29, 2004
INVICTA GROUP INC.
(Name of Small Business Issuer in Its Charter)
Nevada 4700 91-2051923
(State or Other Jurisdiction of (Primary Standard (I.R.S. Employer
Incorporation or Organization) Industrial Identification No.)
Classification Number)
9553 Harding Avenue, Suite 301
Miami Beach, FL 33154
(305) 866-6525
(Address and Telephone Number of Principal Executive Offices)
William G. Forhan, President
9553 Harding Avenue, Suite 301
Miami Beach, FL 33154
(305) 866-6525
(Name, Address and Telephone Number of Agent for Service)
ITEM 2. ACQUISITION OF ASSETS
Invicta Group Inc. ("Invicta") has executed, as of February 18, 2004, a
Purchase Agreement (the "Purchase Agreement") with John Latimer and Karen
Latimer, (jointly the "Selling Shareholders") the sole shareholders of AIR PLAN,
INC. (collectively the "Corporations").
The Corporations own certain domain names and two Internet websites, a
database of 3,000 plus Travel Agencies/customers; have an ARC appointment (ARC
number 39812776) and have various bank and credit card merchant accounts.
In consideration of 1,000,000 newly issued shares of its common stock,
Invicta shall acquire all of the outstanding stock and assets of the
Corporations. At the completion of the Closing, each of the Corporations shall
be and become a wholly owned subsidiary of Invicta.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
INDEPENDENT AUDITOR'S REPORT
============================
Airplan, Inc.
2600 Boyce Plaza Road
Pittsburgh, Pennsylvania
We have audited the accompanying balance sheets of Airplan, Inc. (a Pennsylvania
corporation) as of December 31, 2003 and 2002 and the related statements of
income (loss) and retained earnings (deficit) and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Airplan, Inc. as of December
31, 2003 and 2002, and the results of its operations and its cash flows for the
year then ended in conformity with accounting principles generally accepted in
the United State of America.
Our audits were conducted for the purpose of forming an opinion on the basis
financial statements taken as a whole. The supplemental schedule on page 10 is
presented for purposes of additional analysis and is not a required part of the
basic financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements, and in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
The accompanying financial statements have been prepared assuming that the
Company will continued as a going concern. As discussed in Note 7 to the
financial statements, the Company's significant operating losses raise
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ STELMACK DOBRANSKY & EANNACE, LLC
- ------------------------------------------
STELMACK DOBRANSKY & EANNACE, LLC
Pittsburgh, Pennsylvania
March 18, 2004
AIRPLAN, INC.
BALANCE SHEETS
DECEMBER 31, 2003 AND 2002
================================================================================
2003 2002
---------- ----------
ASSETS
------
CURRENT ASSETS
Cash $ 35,625 $ 163,069
Accounts receivable - shareholder 105,000 105,000
Prepaid expenses 4,089 2,978
---------- ----------
Total current assets 144,714 271,047
---------- ----------
PROPERTY, PLANT AND EQUIPMENT
Automobiles 47,582 47,582
Computer and telephone equipment 586,653 599,827
Office furniture and equipment 50,989 57,271
Equipment under capital lease 158,889 158,889
---------- ----------
Total property, plant and equipment 844,113 863,569
Less accumulated depreciation
(accumulated depreciation on capital
leases: 2003 - $96,279; 2002 - $64,501) 698,632 622,329
---------- ----------
Total property, plant and equipment- net 145,481 241,240
---------- ----------
TOTAL ASSETS $ 290,195 $ 512,287
========== ==========
LIABILITIES AND SHAREHOLDER'S EQUITY
---------------------------------------
CURRENT LIABILITIES
Accounts payable $ 291,472 $ 243,564
Bank line of credit - demand (Note 4) 150,000 0
Loan payable - shareholder (Note 5) 69,460 0
Capital lease obligations - amounts due
within one year (Note 2) 43,859 40,908
Deferred revenue 18,526 19,082
Accrued expenses
Accrued salaries and wages 0 26,150
Accrued payroll taxes 0 2,740
---------- ----------
Total current liabilities 573,317 332,444
---------- ----------
LONG-TERM LIABILITIES
Capital lease obligations - amounts due
after one year (Note 2) 5,692 49,441
---------- ----------
SHAREHOLDER'S EQUITY (DEFICIT)
Capital stock, $1 par value per share,
1,000 shares authorized, 501 shares
issued and outstanding 501 501
Additional paid-in capital 27,436 27,436
Retained earnings (deficit) (316,751) 102,465
---------- ----------
Total shareholder's equity (deficit) (288,814) 130,402
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDER'S
EQUITY $ 290,195 $ 512,287
========== ==========
See Independent Auditor's Report and Notes to the Financial Statements
----------------------------------------------------------------------
AIRPLAN, INC.
STATEMENTS OF INCOME (LOSS) AND RETAINED EARNINGS (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
=================================================================================================
------------2003----------- ------------2002-----------
AMOUNT PERCENT AMOUNT PERCENT
------------ ----------- ------------ -----------
SALES $ 7,849,047 100.0% $ 13,760,708 100.0%
COST OF SALES 7,219,657 92.0 12,494,758 90.8
------------ ----------- ------------ -----------
GROSS PROFIT ON SALES 629,390 8.0 1,265,950 9.2
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 1,049,067 13.4 1,361,394 9.9
INCOME (LOSS) FROM OPERATIONS (419,677) (5.4) (95,444) (0.7)
OTHER INCOME - Interest 461 0.0 9,160 0.1
------------ ----------- ------------ -----------
NET INCOME (LOSS) (419,216) (5.4)% (86,284) (0.6)%
============ =========== ============ ===========
RETAINED EARNINGS - Beginning
of year 102,465 426,659
LESS SHAREHOLDER DISTRIBUTIONS 0 (237,910)
------------ ----------- ------------ -----------
RETAINED EARNINGS (DEFICIT)
- - End of year $ (316,751) $ 102,465
============ =========== ============ ===========
See Independent Auditor's Report and Notes to the Financial Statements
----------------------------------------------------------------------
AIRPLAN, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
================================================================================
2003 2002
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (419,216) $ (86,284)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 95,758 143,502
(Increase) decrease in
Prepaid expenses (1,111) (2,978)
Accounts receivable 0 (105,000)
Increase (decrease) in
Accounts payable 47,908 23,788
Deferred revenue (556) 19,082
Accrued expenses (28,890) 8,763
---------- ----------
Net cash provided by (used in) operating
activities (306,107) 873
---------- ----------
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES
Purchase of fixed assets 0 (70,460)
---------- ----------
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
New borrowings:
Bank line of credit 150,000 0
Shareholder loans 69,460 0
Capitalized lease obligations 0 70,460
Debt reductions:
Capitalized lease obligations (40,797) (40,191)
Distributions to shareholder 0 (237,910)
---------- ----------
Net cash provided by (used in) financing
activities 178,663 (207,641)
---------- ----------
NET INCREASE (DECREASE) IN CASH (127,444) (277,228)
CASH - Beginning of year 163,069 440,297
---------- ----------
CASH - End of year $ 35,625 $ 163,069
========== ==========
SUPPLEMENTAL INFORMATION
Interest paid $ 0 $ 7,790
Income taxes paid $ 0 $ 0
Non cash investing and financing activities:
Capitalized lease obligation incurred in
connection with the acquisition of equipment $ 0 $ 70,460
See Independent Auditor's Report and Notes to the Financial Statements
----------------------------------------------------------------------
AIRPLAN, INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
The Company
- ------------
Airplan, Inc. was organized and incorporated under the laws of the state of
Pennsylvania in July 1989. The Company is involved nationwide in the air travel
business, specifically involving the overseas discount ticket market.
Accounting Method
- ------------------
These financial statements are prepared using the accrual method of accounting.
Cash and Cash Equivalents
- ----------------------------
Cash and cash equivalents consist of deposits with banks and financial
institutions which are unrestricted as to withdrawal or use, and which have an
original maturity of three months or less. The carrying amount approximates fair
value because of the short maturity of those instruments.
Use of Estimates
- ------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues, expenses and
certain disclosures in the financial statements. Actual results could differ
from those estimates and ultimately affect the reported amounts and disclosures
in the financial statements.
Fixed Assets
- -------------
Fixed assets are recorded at cost.
Major improvements and betterments to the fixed assets are capitalized.
Expenditures for maintenance and repairs which do not extend the lives of the
applicable assets are charged to expense as incurred. When fixed assets are
sold, retired or otherwise disposed of, the cost and accumulated depreciation
are removed from the respective accounts with any resulting gains or losses
being reflected in income.
Depreciation is computed using the straight-line method over the following
estimated useful lives:
Years
---------
Office furniture and equipment 7 to 10
Computer and telephone equipment 5 to 10
Automobiles 5
(Continued)
AIRPLAN, INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Income Taxes
- -------------
The Company has elected S Corporation status for federal and Pennsylvania income
tax purposes. Under S corporation status, all items of revenue, expenses, and
credits will be included in the personal income tax returns of the stockholders.
Accordingly, the Company will not incur federal or Pennsylvania income tax
obligations, and the financial statements do not include provisions for federal
or Pennsylvania income taxes.
Depreciation is computed using the various accelerated methods as allowed by the
income tax regulations in effect when the property is placed in service.
Cash Flow Information
- -----------------------
The Company considers all short-term investments with an original maturity of
three months or less to be cash equivalents.
Concentration of Credit Risk
- -------------------------------
Financial instruments which potentially subject the Company to a concentration
of credit risk, as defined by Financial Accounting Statement No. 105, consist
principally of cash. The Company's cash accounts are maintained at a high
quality financial institution. At times such accounts are in excess of FDIC
insurance limits but pose no significant concentration of credit risk.
2. CAPITAL LEASE OBLIGATIONS
Capital lease obligations from equipment consists of the following:
2003 2002
---------- ----------
Capital lease obligation payable in
monthly installments of $1,799,
including interest at 8.1%, through
February 2005;secured by telephone
equipment $ 25,182 $ 46,766
Capital lease obligation payable in
monthly installments of $2,030,
including interest at 6.0%, through
February 2005; secured by telephone
equipment 26,395 50,760
---------- ----------
Total 51,577 97,526
Less amount representing interest 2,026 7,177
---------- ----------
Present value of net minimum lease payments 49,551 90,349
Less principal amounts due within one year 43,859 40,908
---------- ----------
Principal amounts due after one year $ 5,692 $ 49,441
========== ==========
(Continued)
AIRPLAN, INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
================================================================================
2. CAPITAL LEASE OBLIGATIONS, CONTINUED
Maturities of the capital lease obligations are as follows:
Year Ended
December 31, Amount
------------- --------
2004 $ 45,949
2005 5,628
--------
Total 51,577
Less amounts representing interest 2,026
--------
Present value of net minimum lease payments $ 49,551
========
3. OPERATING LEASES
The Company conducts its operations from facilities that are leased under an
operating lease which expires in April 2006 and which provides for an optional
annual rental escalation percentage of 11.66%. Rental payments are $3,455 per
month.
The Company also leases three automobiles under operating lease agreements which
expire in 2004 and 2005.
The future annual minimum lease obligations are as follows:
Year Ended
December 31, Amount
------------- --------
2004 $ 53,504
2005 43,947
2006 10,364
2007 0
--------
Total $107,815
========
4. BANK LINE OF CREDIT
Airplan, Inc. currently has a revolving line of credit agreement totaling
$150,000 with Citizens Bank that expires May 1, 2004. Borrowings under the line
of credit for the years ended December 31, 2003 and 2002 amounted to $150,000
and $0, respectively. The balance is payable on demand with interest payable
monthly at 4.5%. The line of credit is secured by a personal asset of the
shareholder. The bank line of credit was paid off on February 16, 2004 when the
shareholder loaned the Company the money to pay it off.
5. SHAREHOLDER NOTE PAYABLE
Shareholder note payable represents an unsecured note payable to the shareholder
and represents a direct investment into the Company for working capital from the
shareholder. The note has no fixed principal repayment schedule and no interest
payable.
On February 16, 2004, the shareholder loaned the Company an additional $150,000
which was used to pay off the bank line of credit.
(Continued)
AIRPLAN, INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
================================================================================
6. RELATED PARTY
The Company is related through common ownership with Fareline International,
Inc.
Fareline is an agent for Airplan, Inc. and receives a commission for ticket
sales. Commissions for the years ended December 31, 2003 and 2002 amounted to
$10,392 and $10,581, respectively.
7. GOING CONCERN
As shown in the accompanying financial statements, the Company incurred net
losses for the years ended December 31, 2003 and 2002 in the amount of $419,216
and $86,284, respectively. As of December 31, 2003 and 2002, the Company's
current liabilities exceeded its current assets by $428,603 and $61,397,
respectively. These factors, as well as uncertain conditions of the economic
airline travel market create an uncertainty as to the Company's ability to
continue as a going concern. Management believes that the 2003 loss was
primarily the result of the Iraq war and the 2002 loss was primarily the result
of September 11, 2001. Prior to 2002, the revenues and profit for the preceding
three years were:
Year Revenues Net Income
---- -------------- -----------
2001 $ 16,242,210 $ 348,826
2000 19,059,230 322,948
1999 13,333,989 178,950
The financial statements do not include any adjustments that might be necessary
should the Company be unable to continue as a going concern.
Revenues through March 31, 2004 are approximately $4,221,236 which is 53% more
than revenues for the same period in 2003.
8. ACQUISITION
As of February 23, 2004, Airplan, Inc. has been purchased by Invicta Group,
Inc., a NASDAQ listed company.
Schedule of Exhibits. The following exhibits are furnished in accordance
----------------------
with the provisions of Item 601 of Regulation S-B:
Exhibit No. Exhibit
- ----------- -------
99.1 Purchase Agreement, dated as of February 18, 2004. *
- ---- ----------------------------------------------------
* Previously filed with 8-K on March 11, 2004
SIGNATURE
Pursuant to the requirements 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.
Date: April 29, 2004
By: /s/ William G. Forhan
------------------------
William G. Forhan, President