UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest reported): March 10, 2004
INVICTA GROUP INC.
(Exact name of registrant as specified in charter)
Nevada 333-102555 91-2051923
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
9553 Harding Avenue, Suite 301
Miami Beach, Florida 33154
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (305) 866-6525
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
THE PURCHASE AGREEMENT
- ------------------------
On February 18, 2004, Invicta Group Inc., a Nevada corporation (the
"Company"), entered into a Purchase Agreement (the "Agreement") with John
Latimer and Karen Latimer, sole stockholders of Air Plan, Inc., a Pennsylvania
corporation ("Air Plan"), whereby the Company acquired all of the issued and
outstanding shares of common stock of Air Plan in exchange for 1,000,000 shares
of common stock of the Company. Upon the closing of the transactions
contemplated by the Agreement, Air Plan became a wholly owned subsidiary of the
Company.
The 1,000,000 shares of common stock issued pursuant to the Agreement were
not registered under the Securities Act of 1933, as amended (the "Act") and were
issued in reliance upon the exemption from registration provided by section 4(2)
of the Act. All certificates evidencing the shares bear a customary form of
investment legend and may not be sold, pledged, hypothecated or otherwise
transferred unless first registered under the Act or pursuant to an available
exemption from such registration requirements.
DESCRIPTION OF BUSINESS
- -------------------------
The Company was incorporated in June 2000 as a Nevada corporation and began
its operations in July 2001. The Company offers airline tickets and other
travel-related products and services over the telephone and has expanded to
offering them over the Internet. The travel related services include hotel
rooms, car rentals, cruises, casino packages and vacation packages. The
Company's web sites are located at www.dontpayfullfare.com and
www.casinoratedplayers.com. At these websites, Internet users can view and
compare air fares and book airplane tickets, hotel rooms, car rentals, cruises,
casino packages and vacation packages. The Company's "ontheflyfaring"
proprietary search engine software includes these features. This software
searches domestic and international published airfares and air consolidators'
unpublished databases. Based on its search of the published and unpublished
airfares, the software automatically calculates the price offered to the
Internet user, which such price is within the range of the Company's cost and
the price the Internet user could obtain from most other sources on the Internet
with whom the Company competes, including fares offered directly by the air
carriers.
Air Plan Business Overview
- -----------------------------
Air Plan is principally engaged in the sale of discount tickets for
international leisure travel. A majority of its gross bookings have historically
come from the sale of non-published fares, which Air Plan acquires from airlines
and resells to the travel industry at a profit. Air Plan purchases non-published
fares only when it resells them to clients, so that it has no inventory carrying
costs. On these fares, Air Plan sets its resale prices to meet the demands of
leisure travelers who are looking for the lowest price. Air Plan also sells
published fares for which it receives commissions from the airlines. Sales of
non-published fares generally carry higher margins as a percentage of gross
bookings than commissions on published fare bookings.
Air Plan's revenue historically has been generated by ticket sales through
one call center. In April 2002, Air Plan broadened its ticket distribution by
offering online booking. Air Plan believes online gross bookings and online
revenue will represent an increasing portion of gross bookings and revenue in
future periods.
Products and Services
- -----------------------
Leisure Airline Tickets. Air Plan has the right to acquire non-published
fares pursuant to contracts from carriers. Air Plan then resells these tickets
at profit margins. The prices Air Plan offers to clients are generally at a
substantial discount to published fares. Air Plan purchases these fares only
when it resells them to clients, so that it does not have inventory carrying
costs. Air Plan's non-published fares are not available to consumers directly
from the airlines and are not published, except as advertised by Air Plan or
other companies that offer similar discount tickets. Availability of
non-published fares varies from route to route based on availability from the
airline carriers. Air Plan currently offers approximately 2 million
non-published fares at any given time, covering most major international routes.
Air Plan sells these tickets with limitations and restrictions that make them
unappealing for full fare travelers, who seek the convenience of tickets that
can be exchanged or canceled and do not have advance purchase or minimum stay
requirements.
For clients who are unable to find a non-published fare for a particular
itinerary, Air Plan also offers a full menu of regularly published fares. For
published fares, Air Plan receives commissions on gross bookings. Air Plan
receives commissions from a select group of carriers, and with many carriers,
receives a higher commission if it has negotiated more favorable commission
rates. In addition, Air Plan frequently benefits from performance-based override
commissions.
Call Center Operations. Air Plan has approximately 20 reservation agents
and other call center employees at its call center. Reservation agents at this
call center receive all in-bound calls to Air Plan's toll free number. On
average, the call center receives approximately 400 calls per day. Reservation
agents currently conduct fare searches for requested itineraries, sell airline
tickets, and explain rules and restrictions applicable to fares and ticket
delivery details. Air Plan uses an intelligent call routing and interactive
voice response technology that enables callers to direct inquiries in an
automated phone-based environment. By automating caller activities, Air Plan
seeks to maximize agent productivity.
Internet Operations. Air Plan has begun accepting online reservations and
provides ticketing service through its website at "www.airplan.com." On the
website, travel agents can access information on schedules, availability and
non-published fares and book their own travel arrangements at their convenience.
The web site is designed to provide travel agents with quick, efficient and
flexible service in a manner that facilitates comparison-shopping. Air Plan's
online service automates the processing of client orders, interacts with the
systems of third-party travel suppliers, and allows Air Plan to gather, store
and use client and transaction information in a comprehensive and cost-efficient
manner. The web site requires users to complete a profile before searching for
fares. The web site permits Air Plan to expand its client base through better
service while reducing transactional costs. The web site contains customized
software applications that interface the website with an electronic booking
system and database that allow reservation agents to see what the user is
seeing.
Strategic Relationships
- ------------------------
Airline Relationships. Air Plan currently has contracts with more than 20
airlines. For the year ended December 31, 2003, approximately 90% of sales of
non-published fares came from tickets acquired from 10 airlines. Air Plan sells
non-published fares purchased under these contracts, with minimum stay and
advance purchase requirements, as non-refundable, non-endorsable and
non-changeable tickets and some without frequent flyer mileage or upgrades.
Generally, the airline contracts range from one to one and a half years in
length and can be cancelled on short notice. None of these carriers has any
obligation to renew the contracts at their expiration. Management believes that
Air Plan's track record of selling excess capacity without compromising the
airlines' fare structures provides a strong incentive for the airlines to
continue to use Air Plan for the sale of International non- published fares.
Although Air Plan has a consistent history of renewing its contracts, there are
no assurances that any one or several of them will be renewed.
SABRE Relationship. SABRE is a world leader in the electronic distribution
of travel-related products and services and is a leading provider of information
technology solutions for the travel and transportation industry. SABRE's
electronic booking system and database contains flight schedules, availability,
and published fare information for more than 440 airlines, 50 auto rental
companies, 47,000 hotel properties, and dozens of railways, tour companies,
passenger ferries, and cruise lines located throughout the world. Through the
SABRE reservations system, Air Plan offers millions of published airfares,
including those of all major domestic and international commercial airlines.
Competition
- -----------
Competition for Non-Published Fares
Sellers of Non-Published Fares. Air Plan's existing direct competition for
non-published fares comes largely from online companies that specialize in the
distribution of discounted fares. Online competition has developed rapidly from
a small number of sellers to a large number of sellers. Competition in the sale
of non-published fares also continues to come from a large number of other
sellers, primarily using call centers or the Internet, or a combination of both.
The market for the sale of non-published discounted fares for international
routes is more competitive than that for domestic routes. As the leisure travel
market evolves, other competitors could increase their share of the market, or
new ones could enter the market.
Online Travel Companies. Online travel companies traditionally have
established a strong market presence primarily based on the sale of published
fares. Some of these companies also sell non-published fares. Two primary online
competitors have emerged in the sale of non-published fares. The leading online
competitor is Priceline.com, which sells tickets in an auction-based process
where the client offers a price and Priceline.com then seeks to find a ticket to
match the client's offer. The other online competitor is Hotwire.com, which
began operations in September of 2000. Hotwire acquires non-published fares
primarily from five domestic airlines that are Hotwire shareholders. Hotwire
sells tickets in an opaque environment in which the client identifies a city and
date for travel and Hotwire displays a fare. The client then has 30 minutes to
accept the fare, without knowing the carrier brand, schedule, connections or
equipment type. If the client chooses not to accept the fare, he or she is
restricted from using Hotwire for the same city and date for 72 hours. By
contrast, the Air Plan client immediately can buy a fare posted on the Air Plan
website or available through a call center, and unlike both Priceline and
Hotwire, an Air Plan client can choose a specific airline and learn the
schedule, connections, if any, and equipment prior to making the purchase.
Notwithstanding the difference in purchase procedures, Priceline and Hotwire
have emerged as vigorous competitors. Other start-up online companies are also
attempting to enter the market by acquiring non-published fares by offering
airlines equity participations in their companies.
Airlines and Travel Agents. Airlines do not generally offer non-published
fares directly or indirectly through affiliates or travel agents for regularly
scheduled travel, presumably to prevent the erosion of their published fare
structure. Many airlines do offer limited special discounted fares through their
Internet sites that are not generally made available to travel agents. These
fares are typically offered only on a last-minute, "special sale" basis. In
addition, some airlines offer special promotion fares, percentage discount off
of the published fare, bonus frequent flier mileage, or the ability to combine
frequent flier miles with a low base fare when purchased on their respective
Internet sites. Airlines may expand their offering of special promotional fares,
enter the non-published fare market or sell non-published tickets through travel
agents.
Certain Competitive Factors Affecting Non-Published Fares. Published fares
also compete with Air Plan's non-published fares. They effectively establish
price ceilings for Air Plan' non-published fares. From time to time, airlines
also offer special fares, which may compete directly with Air Plan discounted
non-published fares. Direct competition also comes from the airlines when fare
wars break out.
Competition for Published Fares
In the sale of published fares, Air Plan currently competes with airlines,
online travel services and travel industry reservation databases. The online
travel services market is rapidly evolving and intensely competitive, and Air
Plan expects such competition to intensify in the future. In the online travel
services market, Air Plan competes for published fares with similar commercial
websites of other companies, such as Expedia, which is operated by USA networks
Corporation, Orbitz, Travelocity, Cheap Tickets, and TravelWeb, which is
operated by Pegasus, Internet Travel Network, TheTrip.com, among others. Several
traditional travel agencies, including larger travel agencies such as American
Express Travel Related Services Co. Inc., Uniglobe Travel and Carlson Wagonlit
Travel, have established, or may establish in the future, commercial websites
offering online travel services. Several airlines also have established
commercial websites to sell their tickets and offer other online travel
services. A number of Air Plan's competitors possess larger client bases,
greater brand recognition and significantly greater financial, marketing and
other resources than Air Plan.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of May 10, 2004, certain information
concerning beneficial ownership of shares of common stock of the Company after
entering into the Agreement with respect to the following
- - each person known to the Company to own 5% or more of the outstanding
shares of Common Stock,
- - each director of the Company,
- - the executive officers of the Company, and
- - all directors and officers of the Company as a group:
Name of Beneficial Owner Common Stock Percentage of
Beneficially Owned Common Stock(1)
- -------------------------- ------------------ ----------------
William G. Forhan (2) 13,050,000 24.09%
- -------------------------- ------------------ ----------------
Richard David Scott (2) 8,873,750 16.93%
- -------------------------- ------------------ ----------------
Mercedes Henze (2) 8,571,562 16.36%
- -------------------------- ------------------ ----------------
All executive officers and 30,495,312 58.27%
directors (3 persons)
- -------------------------- ------------------ ----------------
* Less than 1% of the outstanding common stock.
(1) Beneficial Ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of common stock subject
to options or warrants currently exercisable or convertible, or exercisable
or convertible within 60 days of May 10, 2004 are deemed outstanding for
computing the percentage of the person holding such option or warrant but
are not deemed outstanding for computing the percentage of any other
person. Percentages are based on a total of 52,392,279 shares of common
stock outstanding on April 26, 2004, and the shares issuable upon the
exercise of options and warrants exercisable on or within 60 days of May
10, 2004.
(2) Executive officer and/or director.
The address of each beneficial owner in the table set forth below is care of
Invicta Group Inc., 9553 Harding Avenue, Suite 301, Miami Beach, Florida 33154.
Mr. Scott and Ms. Henze are married. The shares legally owned by one are
treated as being beneficially owned by the other, but have not been
presented in this way in the table above in order to avoid possible
confusion.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of businesses acquired.
Audited Financial Statements of Air Plan, Inc. for the years ended December 31,
2003 and December 31, 2002. (Previously filed with the Securities and Exchange
Commission as an exhibit to Form 8-K Current Report on April 29, 2004).
(b) Proforma Financial Information
INVICTA GROUP, INC.
PROFORMA CONSOLIDATED BALANCE SHEET
31-DEC-03
=====================================================================================================================
Invicta
Stock Consolidation Consolidated
Invicta Airplan Issuance Adj. Totals
------------ ---------- ---------- ------------- ------------
ASSETS
Cash 1,759.00 35,625.00 37,384.00
Prepaid Expense 4,089.00 4,089.00
Fixed Assets, Net 5,132.00 145,481.00 400,000.00 550,613.00
Intangible Assets, Net 95,125.00 493,814.00 588,939.00
------------ ---------- ---------- ------------- ------------
Total 102,016.00 185,195.00 893,814.00 1,181,025.00
============ ========== ========== ============= ============
LIABILITIES & SHAREHOLDERS EQUITY
Accounts Payable & Accrued Expenses 43,689.00 291,472.00 335,161.00
Deferred Revenue 18,526.00 18,526.00
Notes Payable & Debentures 54,100.00 199,551.00 253,651.00
Deferred Officer Comp 668,250.00 668,250.00
Notes Payable Shareholders 344,146.00 69,460.00 413,606.00
------------ ---------- ---------- ------------- ------------
Total Liabilities 1,110,185.00 579,009.00 1,689,194.00
Equity Investment Airplan (500,000.00) 500,000.00 0.00
Common Stock 34,637.00 501.00 1,000.00 (501.00) 35,637.00
Additional Paid In Capital 815,386.00 27,436.00 499,000.00 (27,436.00) 1,314,386.00
Notes Receivable Relating to Stock Sales (8,000.00) (8,000.00)
Retained Deficit (1,850,192.00) (421,751.00) 421,751.00 (1,850,192.00)
------------ ---------- ---------- ------------- ------------
Total Shareholders Equity (1,008,169.00) (393,814.00) 0.00 893,814.00 (508,169.00)
------------ ---------- ---------- ------------- ------------
Total 102,016.00 185,195.00 0.00 893,814.00 1,181,025.00
============ ========== ========== ============= ============
INVICTA GROUP, INC.
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDING DECEMBER 31, 2003
=====================================================================================================================
Consolidation Consolidated
Invicta Airplan Adj. Totals
------------ ------------ ---------- ------------- ------------
Commissions Earned - Revenues 7,806.00 7,849,047.00 7,856,853.00
Cost of Sales (7,219,657.00) (7,219,657.00)
Selling, General & Adminstrative (818,208.00) (1,049,067.00) (156,000.00) (2,023,275.00)
Asset Impairment Charge (95,000.00) (95,000.00)
------------ ------------ ---------- ------------- ------------
Income (Loss) From Operations (905,402.00) (419,677.00) (156,000.00) (1,481,079.00)
Interest Income 461.00 461.00
------------ ------------ ---------- ------------- ------------
Net Income (Loss) (905,402.00) (419,216.00) (156,000.00) (1,480,618.00)
============ ============ ========== ============= ============
Net Loss Per Weighted Average Share $ (0.028) $ (0.045)
============ ============ ========== ============= ============
Weighted Average Shares 32,088,263 33,088,263
============ ============ ========== ============= ============
(1) The above unaudited pro forma financial information for the Year Ended
12/31/03 assumes the Airplan acquisition occurred as of 01/01/03, after
giving effect to certain adjustments, including amortization and
depreciation based upon the adjustments to the fair values of intangibles
and property, plant, and equipment acquired. The pro forma results have
been prepared for comparative purposes only and are not necessarily
indicative of the financial condition or the results of operations that may
occur in the future or that would have occurred had the acquisition of
Airplan been affected on January 1, 2003.
(c) Exhibits.
Exhibit No. Description
- ------------ -----------
10.1 Purchase Agreement dated February 18, 2004 (Previously
filed with the Securities and Exchange Commission as an
exhibit to Form 8-K Current Report on March 11, 2004).
SIGNATURES
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 hereunto duly authorized.
INVICTA GROUP INC.
Date: May 12, 2004 /s/ William G. Forhan
------------------------
William G. Forhan,
Chief Executive Officer