U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB/A
AMENDMENT NO.1
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 for the quarterly period ended March 31, 2004
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the transition period from _______ to _______
INVICTA GROUP, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 91-2051923
(State of incorporation) (IRS Employer identification No.)
9553 Harding Avenue, Miami Beach, Florida 33154
(Address of principal executive offices)
(305) 866- 6525
(Issuer's telephone number)
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 [ ]
Number of shares of common stock outstanding as of May 1, 2004: 52,392,279
shares
Number of shares of preferred stock outstanding as of May 15, 2004: None
1
INDEX TO FORM 10-QSB
Page No.
--------
PART I
ITEM 1. Financial Statements
Balance Sheet 3
Statements of Operations 4
Statements of Cash Flows 5
Notes to Financial Statements 6-8
ITEM 2. Management's Discussion and Analysis 9-12
ITEM 3. Controls and Procedures 13
ITEM 4. Quantitative and Qualitative Disclosures on Market Risk 13
PART II
ITEM 1. Legal Proceedings 14
ITEM 2. Changes in Securities 14
ITEM 3. Defaults Upon Senior Securities 14
ITEM 4. Submission of Matters to a Vote of Security Holders 14
ITEM 5. Other Information 14
ITEM 6. Exhibits 15
2
INVICTA GROUP INC.
CONSOLIDATED BALANCE SHEET
MARCH 31, 2004
UNAUDITED
================================================================================
ASSETS
Current assets:
Cash and cash equivalents $ 319,826
Prepaid Expenses 4,089
-----------
Total current assets 323,915
-----------
Property and equipment, net of accumulated depreciation
of $ 699,646 524,985
Other assets:
Surety Bond Deposit $ 71,410
Intangible assets, net of accumulated
amortization of $ 81,124 616,253
-----------
Total Assets $ 1,536,563
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 678,115
Notes payable and convertible debentures 107,999
Deferred officer compensation 85,025
-----------
Total current liabilities 871,139
Long-term debt
Notes Payable - shareholders 369,549
-----------
Total Liabilities 1,240,688
-----------
Shareholders' Equity:
Preferred stock par value $ .001 10,000,000
shares authorized; none outstanding 0
Common stock, par value $.001, 190,000,000 shares
authorized, 51,590,282 issued and outstanding 51,597
Additional paid in capital 2,647,246
Notes Receivable related to stock sales
and Subscriptions Receivable (78,000)
Retained (Deficit) (2,324,968)
-----------
Total Shareholders' Equity 295,875
-----------
Total Liabilities and Shareholders' Equity $ 1,536,563
===========
3
INVICTA GROUP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003
UNAUDITED
================================================================================
2004 2003
---------- ----------
Revenues $2,213,411 $ 3,089
Cost of sales 2,085,590
---------- ----------
Gross Profit 127,821 3,089
Selling, general, and administrative
Expenses 602,597 145,986
---------- ----------
Operating loss (474,776) (142,897)
NET LOSS (474,776) (142,897)
========== ==========
Net loss per weighted average share, basic $ (0.010) $ (0.005)
========== ==========
Net loss per weighted average share, diluted $ (0.009) $ (0.005)
========== ==========
Weighted average shares, basic 45,340,316 31,682,200
========== ==========
Weighted average shares, diluted 54,958,398 31,682,200
========== ==========
4
INVICTA GROUP INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003
UNAUDITED
================================================================================
2004 2003
---------- ----------
Cash flows from operating activities:
Net (Loss) $ (474,776) $ (142,897)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 14,260 2,250
Amortization 13,950 10,800
Stock issued for services 233,000
Changes in assets and liabilities:
Accounts receivable and prepaid expenses 37,353
Stock subscription receivable (70,000)
Other assets (71,410)
Accounts payable and accrued expenses 163,394 75,078
---------- ----------
Net Cash (used) by Operating Activites $ (191,582) $ (17,416)
---------- ----------
Cash flows used in investing activities:
Capital asset expenditures $ - $ -
---------- ----------
Net Cash (used in) Investing Activities $ - $ -
---------- ----------
Cash flows from financing activities:
Proceeds from long term debt $ 34,000 $ 35,446
Proceeds from sale of common stock 484,595 800
Payments on long term debt (367,782) (22,277)
---------- ----------
Net Cash provided by Financing
Activities $ 150,813 $ 13,969
---------- ----------
Net change in cash and cash equivalents (40,769) (3,447)
Cash and cash equivalents, beginning of period 360,595 4,528
---------- ----------
Cash and cash equivalents, end of year $ 319,826 $ 1,081
========== ==========
ADDITIONAL CASH FLOW INFORMATION:
CASH PAID DURING THE YEAR FOR:
Interest (non capitalized) $ 896 $ -
========== ==========
INCOME TAXES $ - $ -
========== ==========
NON-CASH ACTIVITIES:
Stock issued for acquisitions $ 510,000 $ -
========== ==========
Stock issued for deferred
compensation payable $ 621,225 $ -
========== ==========
5
INVICTA GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2004
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 March 31,
2004 are not necessarily indicative of the results that may be expected for the
year ended December 31, 2004.
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, 2003.
NOTE B. CHANGES IN STOCKHOLDERS' (DEFICIT) FOR THE THREE MONTHS ENDED MARCH
31, 2004
----------------------------------------------------------------------
Common Stock Additional Paid
Shares $ in capital Deficit
---------- ------------ --------------- -------------
BALANCE DECEMBER 31, 2003 34,629,970 $ 34,637 $ 815,386 $ (1,850,192)
Stock issued for cash 5,205,000 5,205 479,390
Stock issued for services 2,890,000 2,890 230,110
Stock issued for acquisitions 1,100,000 1,100 508,900
Stock issued to officers in exchange
for prior years deferred compensation 7,765,312 7,765 613,460
Net loss for the period ended
December 31, 2002 (474,776)
---------- ------------ --------------- -------------
BALANCE MARCH 31, 2004 51,590,282 $ 51,597 $ 2,647,246 $ (2,324,968)
========== ============ =============== =============
NOTE C. INCOME PER SHARE
------------------
Basic Earnings per Share ("EPS") is computed by dividing net income available to
common stockholders by the weighted average number of common stock shares
outstanding during the year. Diluted EPS is computed by dividing net income
available to commons stockholders by the weighted average number of common stock
shares outstanding during the year plus potential dilutive instruments such as
stock options and warrants. The effect of stock options on diluted EPS is
determined through the application of the treasury stock method, whereby
proceeds received by the Company based on assumed exercises are hypothetically
used to repurchase the Company's common stock at the average market price during
the period.
6
INVICTA GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2004
UNAUDITED
NOTE D. ACQUISITIONS
------------
ISIP Telecom, Inc.
- --------------------
On January 8, 2004, the Company used the purchase method to acquire all of the
common stock of ISIP Telecom, Inc., a Florida Corporation formed in 2003, in
exchange for 100,000 restricted shares of the Company's common stock with a
value of $.10 per share resulting in a total purchase price of $10,000. ISIP
Telecom is a voice over internet protocol telecommunications company that will
market long distance services over the internet to worldwide telephones and will
be sold to the travel industry. The Company's 2004 consolidated results include
the operations of ISIP Telecom, Inc. from the date of acquisition.
Airplan, Inc.
- --------------
On February 23, 2004, the Company acquired all of the outstanding capital stock
of Airplan, Inc., a Pennsylvania Corporation organized in 1989, for 1,000,000
shares of the Company's common stock of which 700,000 shares are restricted.
Additionally, the Company will guarantee the value of the stock given as
consideration to be at least $500,000 at 180 days after closing the transaction.
If the value of the stock is less than $500,000, then additional shares will be
issued based on the current market value to a total of $500,000. Airplan, Inc.
is involved in the wholesale and retail travel industry. The acquisition was
accounted for as a purchase of a wholly-owned subsidiary and the results of its
operations were included in the consolidated results of the Company from the
date of acquisition. In addition, the selling shareholders have a 5 year Earn
Out Agreement offering an earn out of 10% of EBITDA of Airplan, Inc. for each of
the fiscal years ending December 31, 2004 through December 31, 2008.
The acquisition activity for the three months ended March 31, 2004 is summarized
in the following table. Property, plant and equipment of approximately $534,000
will be depreciated on a straight-line basis over a 5 year life. Purchased
intangible assets of approximately $535,000 will be amortized on a straight-line
basis over lives ranging from 5 to 10 years (weighted average life of 8.8
years).
Three Months Ended
March 31, 2004 Activity
Assets (Liabilities) ISIP Telecom, Total
At Fair Value Inc. Airplan, Inc. Activity
- -------------------------- ------------- ------------ ----------
Cash and other current assets $ - $ 362,925 $ 362,925
Property, plant equipment - net - 534,112 534,112
Purchased intangible assets 10,000 525,078 535,078
Accounts payable and other current
liabilities - (922,115) (922,115)
------------- ------------ ----------
Net Assets Acquired $ 10,000 $ 500,000 $ 510,000
============= ============ ==========
Fair values were determined by management's estimates without independent
appraisal.
7
INVICTA GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2004
UNAUDITED
The unaudited pro forma information for the three months ended March 31, 2004
and 2003 assumes the acquisitions occurred as of the beginning of each
respective year, 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 results of operations that may occur in the future or that
would have occurred had the acquisitions been effected at the beginning of each
period presented.
Pro Forma Information for Acquisitions:
Three Months Ended
MARCH 31, MARCH 31,
2004 2003
---------- ----------
Gross Revenues $4,224,275 $2,223,434
Net Income (Loss) (501,150) (206,908)
Earnings (Loss) Per Share (.011) (.007)
NOTE E. DEFERRED OFFICER'S COMPENSATION AND STOCK OPTIONS
------------------------------------------------------
On January 6, 2004, the Company entered into an agreement with its officers to
issue restricted common stock and options in lieu of the deferred salary owed to
the officers. The board approved and authorized the issuance of 765,313
shares of its common stock, and granted options for and additional 3,882,656
shares, in exchange for approximately $621,000 of deferred compensation. The
stock issued is restricted for one year. The exercise price of the options are
$.25, and are for a period of 5 years.
NOTE F. 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.
However, the Company has not generated any income and is unable to predict when
its operations will generate income. The Company has raised over $350,000 in
equity funding in 2004 and expects to be able to raise an additional $700,000 to
aggressively market and staff the subsidiaries currently owned. Management plans
to continue to look for acquisitions to enhance revenues and profitability. The
Company is also negotiating a $6 million equity line-of-credit that will become
effective when a new SEC registration is approved which should be about July,
2004. Management feels that its equity and line-of-credit funding will provide
the working capital to allow it to continue as a going concern, however, there
can be no assurances that additional funding will become available when
required.
8
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS,
LIQUIDITY AND FINANCIAL CONDITION SEPTEMBER 30, 2003
MANAGEMENT'S DISCUSSION AND ANALYSIS
- ---------------------------------------
BACKGROUND
- ----------
INVICTA GROUP INC. began its business operations in July 2001 with
advertising of discount air travel tickets in newspapers in South Florida, which
resulted in limited sales beginning in September of that year . See explanation
below of accounting treatment of reverse acquisition, which reflects no sales in
2001 based on the results of operations of Casino Rated Players. Although it
introduced its web site, www.dontpayfullfare.com in January 2002, ticket
-----------------------
sales have remained confined primarily to the telephone from inception to the
date hereof. In early 2002 Invicta Group initiated negotiations for the
acquisition of its wholly owned subsidiary, Casino Rated Players, which was
completed on July 15, 2002.
ACQUISITIONS
- ------------
CASINO RATED PLAYERS began its operations in July 2000, with sales of
airline tickets and tour packages. Casino Rated Players introduced its web site,
www.casinoratedplayers.com , in March 2001 but did not generate any
- --------------------------
commission revenues from casinos during that year. During 2001 and 2002, Casino
Rated Players revenues were derived almost entirely from sale of airline tickets
and general travel packages, and not from what was intended to be its primary
focus the sale of casino tour packages, which it has not had funding to
advertise. During 2002, Casino Rated Players earned approximately $1,800 in
casino commissions as a result of casino patrons who discovered
casinoratedplayers.com by doing their own web searches. Invicta Group intends to
begin marketing Casino Rated Players casino travel packages in the month of June
2004 and expects casino travel package products and casino player commissions to
become a significant part of its business.
The acquisition of Casino Rated Players by Invicta Group was treated as a
purchase in a reverse acquisition in which the subsidiary, Casino Rated Players,
is the survivor for accounting purposes, even though Invicta Group is the
survivor for legal purposes. Invicta Group issued 13,151,000 of its shares in
exchange for the issued and outstanding shares of Casino Rated Players held by
that company's stockholders and an additional one million shares to Mr. Forhan
in payment of $500,000 in accrued and unpaid compensation due to him from that
company; stock valued at $.50 per share. Mr. Forhan joined the management of
Invicta Group. Accordingly The results of operations prior to July 15, 2002
presented in the financial statements and discussed below are the results of
Casino Rated Players only, which commenced its business on January 27, 2000. The
following table presents information to assist the reader in understanding the
historical operations conducted by each of Invicta Group and Casino Rated
Players, separately, even though the information for Invicta Group prior to the
acquisition is excluded from the financial statements presented in this report
as a result of the reverse acquisition accounting treatment.
INVICTA GROUP CASINO RATED PLAYERS
-------------- ----------------------
2001 2002 2003 2001 2002 2003
-------- -------- -------- -------- -------- --------
Revenues $ 0 $ 6,445 $ 7,806 $439,234* $ 1,800 $ 0
Gross profit $ 0 $ 6,445 $ 7,806 $ 33,315 $ 1,800 $ 0
* Primarily derived from sale of air travel and not the sale of casino
packages.
9
ISIP TELECOM GROUP .was acquired January 9, 2004 for 100,000 shares of
--------------------
restricted shares of Invicta valued at $.21/share. ISIP provides the ability to
make telephone calls worldwide using the internet, receiving clear reception at
low rates. The platform is based on Cisco Powered network with a robust platform
specifically designed to accommodate the delivery of IP-based communication
services, includes long distance, IP phone and enhanced services.
February 25, 2004 ISIP announced a strategic technology partner, Oronoco
Networks Inc. ISIP VoIP services will be offered to Oronoco's 35,000 database
customers. April 29,2004 ISIP Telecom, announced it had finalized its interface
with its "IPhone" a USB connected telephone, and is ready to start marketing its
products in North and South America.
ISIP's intention is to market to the 25,000 travel agents that Invicta has in
its opt in data base through our subsidiary Airplan. Invicta has already
mentioned the VoIP services, to several members of the travel industry, and
they are keen to have the opportunity to market this inexpensive worldwide phone
service.
The retail price of the phone is $49.99, which will include the USB telephone
and 200 long distance minutes to select cities in the world. The phone and
service can be purchased online, and a listing of USA and International rates:
www.isiptelecom.com
- -------------------
AIRPLAN INC was acquired February 18,2004 for $500,000 in Invicta stock and
-----------
acceptance of $440,000 debt; the shares issued were 1 million. If the value of
the stock is not $500,000 by August 18, 2004 Invicta will issue additional
shares. Established in 1989, Airplan is a leading international Airline Ticket
Consolidator serving: Europe, Asia, The Middle East, Africa and Australasian
areas. Revenues in 2003 exceeded $7 million. Airplan has over 6,500 customers
(travel agents) that buy airline tickets online 24/7. The management is lead by
John Latimer, a 20 year veteran in the airline consolidator industry, John will
remain as President of Airplan and report to David Scott, COO of Invicta Group
Inc.
March 19,2004 Airplan announced the expansion into South America after signing
contracts with two of South America's largest airlines. The contracts will be
added to Airplan Inc.'s inventory of travel products on behalf of their 6,500
travel agents.TAM BRAZILIAN is South America's second largest airline servicing
routes throughout Brazil, North America and the world. TAM currently operates an
impressive fleet of 53 state-of-the-art airbus aircraft - the most modern fleet
in operation in the industry today. AEROLINEAS ARGENTINAS services South America
and the world, with routes to/from Asia, North America, Europe, and Australasia.
Airplan is one of the leading wholesale sellers of discount tickets for
international leisure travel. Offering more than 2 million non-published
airfares on more than 27 major airlines, Airplan sells directly to travel agents
through its Call Center. Invicta intends to expand sales of discounted airline
tickets to the travel agents (aka B2B) as well as immediately commence sales to
the general public (aka B2C). Additionally, we foresee that opening two
retail/wholesale offices, one in Los Angeles as the Pacific Rim gateway and the
other in Miami as the Latin America gateway; within six months of acquisition
will greatly expand the Company's abilities to generate significantly more
business across all time zones.
Within six months of the acquisition, the Company intends to add a full catalog
of domestic and international fares to Airplan's existing fare database. This
will broaden the range of airline offerings to the Company's clients.
Within the first 12 months, the combined Company will sell its non-published
fares through the internet fortified by a dynamic interface with the call
centers that will allow the Company to increase margins significantly.
Additionally, the Company will have the resources and the requisite
relationships to broaden the product-lines to generate revenue streams outside
airline fares, such as: insurance, auto rental rates, hotels rates, and
cruises.
The acquisition activity for the three months ended March 31, 2004 is summarized
in the following table. Property, plant and equipment of approximately $534,000
will be depreciated on a straight-line basis over a 5 year life. Purchased
intangible assets of approximately $535,000 will be amortized on a straight-line
basis over lives ranging from 5 to 10 years (weighted average life of 8.8
years).
Three Months Ended
March 31, 2004 Activity
Assets (Liabilities) ISIP Telecom, Total
At Fair Value Inc. Airplan, Inc. Activity
- -------------------------- ------------- ------------ ----------
Cash and other current assets $ - $ 362,925 $ 362,925
Property, plant equipment - net - 534,112 534,112
Purchased intangible assets 10,000 525,078 535,078
Accounts payable and other current
liabilities - (922,115) (922,115)
------------- ------------ ----------
Net Assets Acquired $ 10,000 $ 500,000 $ 510,000
============= ============ ==========
Fair values were determined by management's estimates without independent
appraisal.
10
NEW SUBSIDIARY START UP
- --------------------------
LAS VEGAS EXCITEMENT INC. March 15, 2004/ Invicta Group Inc. announced the
-------------------------
opening of its Las Vegas office. Invicta is setting up a inbound tour operation
which will offer Las Vegas rooms, car rentals, air transportation, show tickets,
limos, sightseeing tours and free rooms to casino qualified players;
reservations can be made by phone or on the internet 24/7.The name of the newest
subsidiary is "Las Vegas Excitement Inc." and can be found online at
www.lasvegasexcitement.com. April 5, 2004 Las Vegas Excitement Inc. announced it
- --------------------------
has entered into services agreements with 18 hotels in Las Vegas to provide
hotel rooms for its packages to this exciting city. Las Vegas Excitement has
also entered into arrangements with various sightseeing and tour operators who
will provide tours by air, and motor coach and private limousines to the various
sites in and around Las Vegas
REGISTRATIONS APPROVED:
- ------------------------
Invicta filed a post effective amendment SB-2 Registration issuance of
12,000,000 shares of common stock, par value $.001. The SB-2 Registration became
effective on February 5, 2004. The selling price of the stock was $.11 per share
with a 10% increase or 10% decrease ($.10 - $.12 per share). The equity funds
will be used for Invicta's working capital.
SHARES ISSUED 1ST QUARTER:
- -----------------------------
IVGA issued 17,255,312 shares from January 1, 2004 to March 31,2004 and
cancelled 3,265,000; resulting in 13,990,312 new shares issued. The total shares
outstanding 3/31/04 are 51,892,279.
The shares issued and cancelled were all common stock, and were a combination of
restricted and free trading:
ISSUED SHARES:
1) 4,200,000 SB-2 shares were sold, netting $414,000 for working capital
2) 3,200,000 S-8 shares were issued: 1,800,000 for consulting fees; 300,000
for legal fees; 1,100,000 for Options: (650,000 shares at $.08; 450,000
shares at $.07; 100,000 shares at $.12); netting $89,595.
3) 9,855,312 Restricted Shares were issued: 7,765,312 to Invicta management
for $621,000 deferred compensation; 1,000,000 for acquisition of Airplan
Inc.; 640,000 shares for services, and 450,000 shares for options.
CANCELED SHARES:
1) 2,515,000 issued twice by Transfer Agent
2) 750,000 for terminated acquisition
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 for the quarter ended March 31 2004 were $2,213,411 as compared to
revenues of $3,089 for the Quarter ended March 31, 2003. The revenues in both
periods were derived principally from the sale of airline tickets. The primary
reason for the increase in 2004 over 2003 was the acquisition of Airplan Inc.
Revenues of Airplan were driven principally by marketing to their 6,500 travel
agents with Fax and Email communication of international airline seats on sale.
Airplan also markets print ads in travel trade publications' generating new
clients and revenuesTheir revenues are generated from their B-2B website and
their call center located in Pittsburgh, PA.
11
COST OF REVENUES:
- -------------------
Revenues are the gross sales earned from airline tickets and travel
products, and the cost of revenues are the net fares charged by the airlines and
travel suppliers. The net fare for 1st quarter 2004 was 94% of revenues. The
competitive market place and airlines fare price wars has decreased gross
operating profits margins from 9% to 6%. Management will seek to add new travel
products: hotels, cruise, tour packages, and car rental services in an effort to
increase margins and enhance revenues.
EXPENSES:
- ---------
The major components of selling, general and administrative expenses for
the three months ended March 31, 2004 are professional fees $42,811, the
market awareness campaign of the new public company totaling $235,000, and
salaries of $90,000; totaling $367,811. The total G&A expenses for the period
were $602,597
NET LOSSES:
- ------------
Net loss increased for the first quarter ended March 31, 2004, to:
$474,776; loss per share: $0.01---compared to a net loss of $142,897; loss
per share $0.005 for the first quarter March 31, 2003. The increase in loss was
principally due to professional fees of $42,811 and $235,000 cost for market
awareness of IVGA.
Pro Forma Information for Acquisitions:
- ------------------------------------------
Three Months Ended
MARCH 31, MARCH 31,
2004 2003
---------- ----------
Gross Revenues $4,224,275 $2,223,434
Net Income (Loss) (501,150) (206,908)
Earnings (Loss) Per Share (.011) (.007)
LIQUIDITY:
- ----------
At March 31, 2004 and 2003, Invicta Group's current ratios are .372% and
..007%, respectively. Invicta Group has not generated sufficient revenue in any
period to carry its costs of operations, realizing a negative cash flow from
operations of $191,582 for the first quarter 2004 compared to a negative cash
flow of $17,418 for March 31, 2003. Invicta Group has derived its liquidity
principally from a loan from Mr. Forhan in the amount of $320,671 in 2000, the
sale of its common stock by Invicta Group Inc. and Casino Rated Players for an
aggregate of $493,700 in 2000 thru 2002, $76,800 raised in 2003 from the sale of
common stock, deferred executive compensation of $668,250 through December 31,
2003; and $503,595 equity funding from the sale of 5,400,000 shares of common
stock in the first quarter.
Invicta Group owes $302,703 to Mr. Forhan and David Scott $41,443 in loan
repayments. Invicta Group will not make any payments to Mr. Forhan or Mr.
Scott of deferred compensation or repayment of loans until it has obtained
more than $1 million from the sale of its shares.
Invicta has an effective SB-2 Registration that has 7,800,000 free trading
shares for sale at $.10 - $12 per share. The sale of the stock will provide
$780,000 additional liquidity to the company.
CAPITAL RESOURCES:
- -------------------
Invicta Group has substantially all the capital resources required to
conduct its core business, consisting of its five web sites and search engine
for air fares, casino players, cruise and tour packages, and travel related
services, such as rental cars and lodging accommodations. Invicta Group
anticipates $75,000 to $100,000 is needed for capital resources in 2004. Invicta
will use the $780,000 of equity funding generated from SB-2 Registration to
invest up to $100,000 in capital resources, expand its marketing activities, add
personnel, and target acquisitions of airline consolidators and casino
representative companies; using cash and stock.
12
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, 2003, (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.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK:
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.
13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits and Index of Exhibits
31.1(a) and (b) Rule 13a-14(a)/15d-14(a) Certifications pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 and 32.2 Section 1350 Certification pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K.
On January 16, 2004, the Company filed a current report on form 8-K in
connection with the execution of a Purchase Agreement with ISIP Telecom, Inc.,
and acquisition of all of the outstanding stock of ISIP Telecom, in exchange for
100,000 shares of the Company's common stock.
On March 11, 2004, the Company filed a current report on form 8-K in
connection with the execution of a Purchase Agreement with John Latimer and
Karen Latimer, the sole shareholders of AIR PLAN, INC. and acquisition of all of
the outstanding stock and assets of AIR PLAN, INC., In consideration of
1,000,000 newly issued shares of the Company's common stock.
On March 26, 2004, the Company filed a current report on form 8-K in
connection with the change of its Certifying Accountant from Dreslin Financial
to Wolfe & Wolfe of Miami, Florida. Dreslin did not resign over any disagreement
with management or changes in accounting policy.
On March 26, 2004, the Company filed a current report on form 8-K in
connection with the amendment of Article 3. of its Articles of Incorporation to
provide for a total of 190,000,000 authorized common shares, par value $.001 per
share and 10,000,000 authorized preferred shares, par value $.001 per share.
14
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, thereunto duly authorized.
INVICTA GROUP INC.
(Registrant)
Date: June 17, 2004 /s/ WILLIAM FORHAN
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WILLIAM FORHAN
Chief Executive Officer
Date: June 17, 2004 /s/ David Scott
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David Scott
Chief Operating Officer