-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N7qZjeic1J0qcEDZhL84I0chKGYJr3M7tFhQJv3Kd+0mIpSmL97gK72zUGGNANVK LXGUGKLJtRqvwiC+fTHjjw== 0001212570-07-000018.txt : 20071207 0001212570-07-000018.hdr.sgml : 20071207 20071207165637 ACCESSION NUMBER: 0001212570-07-000018 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20070930 FILED AS OF DATE: 20071207 DATE AS OF CHANGE: 20071207 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INVICTA GROUP INC CENTRAL INDEX KEY: 0001212570 STANDARD INDUSTRIAL CLASSIFICATION: TRANSPORTATION SERVICES [4700] IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 333-102555 FILM NUMBER: 071293222 BUSINESS ADDRESS: STREET 1: 9553 HARDING AVE STREET 2: SUITE 301 CITY: MIAMI BEACH STATE: FL ZIP: 33154 BUSINESS PHONE: 3058666525 MAIL ADDRESS: STREET 1: 9553 HARDING AVE STREET 2: SUITE 301 CITY: MIAMI BEACH STATE: FL ZIP: 33154 10QSB 1 ivit10qsb093007b.txt U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934. For the 1st Quarter ended September 30, 2007. OR [ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from __________ to _________. Commission File Number: 333-102555 INVICTA GROUP INC. (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER) Nevada 91-2051923 (STATE OR OTHER JURISDICTION OF (IRS EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 2400 East Commercial Blvd. Suite 618 Ft. Lauderdale, FL 33308 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) Registrant's telephone number, including area code: 954-771-0650 Securities Registered Pursuant to Section 12(b) of the Act: Common Stock par value $.0001 per share Securities Registered Pursuant to Section 12(g) of the Act: None Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ] The aggregate market value of the Common Stock held by non-affiliates of the Registrant, based upon the average of the closing bid and ask price of the Common Stock on the OTC Bulletin Board system on November 21, 2007 of $.05 was approximately $96,844. Shares of Common Stock held by each officer and director and by each person who may be deemed to be an affiliate have been excluded. The number of shares of common stock outstanding as of November 21, 2007 was 1,976,883. Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ X ] INDEX TO FORM 10-QSB Page No. PART I ITEM 1. Condensed Consolidated Financial Statements 3 Balance Sheet 3 Statements of Operations 4-5 Statements of Cash Flows 6-7 Notes to Financial Statements 8-13 ITEM 2. Management's Discussion and Analysis or Plan of Operations 14-16 ITEM 3. Controls and Procedures 16-17 PART II ITEM 1. Legal Proceedings 18 ITEM 2. Changes in Securities 18 ITEM 3. Defaults Upon Senior Securities 18 ITEM 4. Submission of Matters to a Vote of Security Holders 18 ITEM 5. Exhibits 18 Signatures 19 2 PART I ITEM 1. FINANCIAL STATEMENTS INVICTA GROUP INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEET September 30, 2007 (UNAUDITED) ASSETS Current assets: Cash and cash equivalents $6,340 ------------- Total current assets 6,340 Property and equipment, net of accumulated depreciation of $51,091 11,057 Other assets: Advances to affiliates 17,467 Intangible assets, net of accumulated amortization of $36,335 74,945 ------------- Total other assets 92,412 ------------- Total assets $109,809 ============= LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Current liabilities: Notes payable and convertible debentures $304,401 Accounts payable and accrued liabilities 746,457 Accounts payable and accrued liabilities - discontinued operations 779,129 Notes payable - shareholders 249,995 Accrued compensation - related parties 342,676 ------------- Total current liabilities 2,422,658 ------------- Shareholders' equity (deficit) Preferred stock series C par value $1.00 480,000 shares authorized; 480,000 issued and outstanding 15,000 Preferred stock series D par value $1.00 100,000 shares authorized; 100,000 issued and outstanding 100,000 Common stock, par value $ .0001, 1,000,000,000 shares authorized,1,807,803 issued and outstanding 181 Additional paid in capital 5,185,771 Accumulated deficit (7,613,800) ------------- Total shareholders' equity (deficit) (2,312,849) ------------- Total liabilities and shareholders' equity (deficit) $109,809 ============= See accompanying notes to unaudited condensed consolidated financial statements 3 INVICTA GROUP INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) Three Three Months Ending Months Ending September September 2007 2006 ------------- ------------- Revenues earned $3,460 $39,840 Cost of sales - - ------------- ------------- Gross margin 3,460 39,840 Selling, general, and administrative expenses 331,611 159,918 ------------- ------------- Income (loss) from operations before other income and expense (328,151) (120,078) Other income and (expense) Interest expense - related parties (6,558) (4,359) Interest expense (13,252) (6,391) Beneficial interest expense (119,462) (22,405) ------------- ------------- Net income (loss) before provision for income taxes (467,423) (153,233) Provision for income taxes - - ------------- ------------- Net income (loss) $(467,423) $(153,233) ============== ============= Net income (loss) per share weighted average share, basic and diluted ($1.52) ($9.13) ============== ============= Weighted average shares outstanding, basis and diluted 308,484 16,779 ============== ============= See accompanying notes to unaudited condensed consolidated financial statements 4 INVICTA GROUP INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) Nine Nine Months Ending Months Ending September September 2007 2006 ------------- ------------- Revenues earned $57,473 $116,601 Cost of sales - - ------------- ------------- Gross margin 57,473 116,601 Selling, general, and administrative expenses 783,173 463,080 ------------- ------------- Income (loss) from operations before other income and expense (725,700) (346,479) Other income and (expense) Interest income - 183 Interest expense - related parties (15,383) (13,475) Interest expense (26,389) (13,871) Beneficial interest expense (196,205) (80,638) ------------- ------------- Net income (loss) before provision for income taxes (963,677) (454,280) Provision for income taxes - - ------------- ------------- Net income (loss) $(963,677) $(454,280) ============== ============= Net income (loss) per share weighted average share, basic and diluted ($3.99) ($38.18) ============== ============= Weighted average shares outstanding, basis and diluted 241,803 11,899 ============== ============= See accompanying notes to unaudited condensed consolidated financial statements 5 INVICTA GROUP INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) Nine Nine Months Ending Months Ending September 30, September 30, 2007 2006 ------------- ------------- Cash flows from operating activities: Net income $(963,677) $(454,280) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 5,625 5,625 Amortization 26,585 2,120 Stock issued for services 126,358 68,000 Data base aquired for accounts receivable (52,600) Changes in assets and liabilities: Accounts receivable and prepaid expenses - (71,258) Advances to affiliates 19,386 - Other assets (1,750) (10,000) Accounts payable and accrued liabilities 339,756 174,454 ------------- ------------- (447,717) (337,939) ------------- ------------- Cash flows provided by (used in) investing activities: Capital asset expenditures 1,173 (7,029) ------------- ------------- Cash flows provided by financing activities: Proceeds from notes payable and convertible debentures 393,887 265,000 Proceeds from sale of common stock 69,176 123,900 Proceed from shareholder notes 24,993 - Payments on shareholder notes (31,127) - Payments on notes payable and convertible debentures (17,005) (42,010) ------------- ------------- 439,924 346,890 ------------- ------------- Net change in cash and cash equivalents (6,620) 1,922 Cash and cash equivalents, beginning of period 12,960 (1,297) ------------- ------------- Cash and cash equivalents, end of period $6,340 $625 ============== ============= See accompanying notes to unaudited condensed consolidated financial statements 6 INVICTA GROUP INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (Continued) Nine Nine Months Ending Months Ending September 30, September 30, 2007 2006 ------------- ------------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest (non capitalized) $9,508 $- ============== ============= Income taxes $- $- ============== ============= Non-Cash Activities: Stock issued for redemption of Preferred B stock $175,000 $- ============== ============= Stock issued for redemption of Preferred C stock $465,000 $- ============== ============= Preferred stock issued for deferred compensation $- $150,000 ============== ============= Stock issued for payments on convertible debentures $558,032 $301,002 ============== ============= Stock issued for payments on accounts and notes payable $38,096 $- ============== ============= See accompanying notes to unaudited condensed consolidated financial statements 7 INVICTA GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2007 UNAUDITED NOTE A. 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 and with the instructions of Form 10-QSB and Item 310 of Regulation S-B. 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 nine month period ended September 30, 2007 are not necessarily indicative of the results that may be expected for the year ending December 31, 2007. "Pursuant to the disclosures in the Registrant's Form 8-K filed March 29, 2007, as amended March 30, 2007, the Registrant executed, as of March 1, 2007, and closed, a Purchase Agreement (the "Purchase Agreement") to acquire the stock of Maupintour LLC ("Maupintour"), a Nevada corporation, from William Kirby and Extraordinary Vacations USA Inc. ("EXVG"), a Nevada corporation, (jointly the "Selling Shareholders"). Pursuant to the terms of the Purchase Agreement, the Consideration of the acquisition was $1 cash and assumption of debt of $900,000. The Consideration further stated "If the audit shows a larger debt than $900,000..., the Buyer [Registrant] has the right to return the Corporation [Maupintour] to the Selling Shareholders and forgive money that was invested in the Corporation." An audit was never performed on the company. Management has determined that debt was exceeding $1,200,000 and that Maupintour has two creditors seeking combined payments of over $200,000 through litigation. Accordingly, the Registrant's Board of Directors has voted to rescind the transaction effective August 31, 2007. Pursuant to the disclosures in the Registrant's Form 8-K filed March 29, 2007, as amended March 30, 2007, and the Form 8-K filed August 6, 2007, the Registrant disclosed that it was to perform an audit of the Maupintour financials and file them on EDGAR. However, because of the rescinding of the Maupintour transaction, no such audit will be completed or filed. The company realized the Form 10-QSB's for the first and second quarters needed to be amended as revenues from Maupintour were included in the filings, plus the balance sheet assets and liabilities included the accounts of Maupintour." 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, 2006. During the nine months ended September 30, 2007, we updated our significant accounting policies as follows: 8 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. Income Taxes Effective January 1, 2007, we adopted Financial Accounting Standard Board ("FASB") Interpretation No. ("FIN") 48, "Accounting for Uncertainty in Income Taxes," or "FIN 48," which clarifies the accounting for uncertainty in income taxes recognized in the financial statements in accordance with Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes," or "SFAS No. 109." We utilize a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. NOTE B. CHANGES IN STOCKHOLDERS' (DEFICIT) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 INVICTA GROUP INC. CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT) For the Nine Months Ended September 30, 2007 Common Stock Additional paid Shares $ in capital Deficit ------------- ------------- ------------- ------------- Balance December 31, 2006 10,655,488 $1,066 $3,753,223 ($6,650,123) Stock issued for cash 28,080,769 230 68,946 Stock issued for services 29,925,000 2,993 123,365 Issuance of Common Stock for the payment on convertible debentures exercised. 355,382,231 38,166 519,866 Commom stock issued for the conversion of Preferred B stock 8,750,000 875 174,125 Commom stock issued for the payment of accounts payable and notes payable 5,608,000 560 37,536 Commom stock issued for the conversion of Preferred C stock 465,000,000 46,500 418,500 500 for 1 reverse stock split (901,593,685) (90,209) 90,209 Net loss for the period ended September 30, 2007 (963,677) ------------- ------------- ------------- ------------- Balance September 30, 2007 1,807,803 $181 $5,185,770 ($7,613,800) ============= ============= ============= ============= 9 NOTE C. INCOME PER SHARE Basic net loss per share was computed based on the weighted average shares of common stock outstanding and excludes any potential dilution. Diluted net loss per share reflects the potential dilution from the exercise or conversion of all dilutive securities, such as convertible debentures, into common stock and stock purchase options. The Company's outstanding convertible debentures and options are not included in the computation of basic or diluted net loss per share since they are anti-dilutive. At September 30, 2007 potentially dilutive securities consist of convertible debentures that could be converted into 900 common shares and options that could be converted into 7,765 common shares. NOTE D. 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. NOTE E - EQUITY On September 4, 2007, the Company's 1 for 500 common stock split took effect. As a result, $90,209 was transferred from common stock to additional paid in capital. All per share amounts have been adjusted to reflect this reverse stock split. 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 2 common shares. 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. During the third quarter 2007 the Company converted $223,891 of debt into 509,000 shares of common stock. 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 July 2, 2007, the Company issued 4,000 shares of its common stock as compensation for consulting services. A charge of $6,000 was recorded for the nine ended September 30, 2007, 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. In July 2007, the Company issued 30,000 shares of its common stock as compensation for accounting services. A charge of $24,233 was recorded for the nine ended September 30, 2007, 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. PREFERRED STOCK, SERIES C During the third quarter 2007 the Company converted $465,000 of Preferred Stock, Series C into 930,000 shares of common stock. On October 22, 2007 the Company rescinded the conversion of its preferred stock, series C by recalling and retiring the 930,000 shares of common stock issued during the third quarter and re-issuing 465,000 shares of its preferred stock, series C with the same terms and conditions. 10 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. NOTE F - 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. 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 $0 for the nine months ended September 30, 2007 and 2006. For 2006 and 2007 transactions, the Company accounted for options issued 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. There were no options issued in 2006 and 2007. Prior to 2006, the Company accounted for its employee stock option plans under the intrinsic value method, in accordance with the provisions of Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees" and related interpretations. Compensation expense related to the granting of employee stock options is recorded over the vesting period only if, on the date of grant, the fair value of the underlying stock exceeds the option's exercise price. Stock options outstanding and exercisable at September 30, 2007 are as follows Options Outstanding Weighted Average Weighted Average Range of Exercise Price Shares Outstanding Exercise Price Remaining Life $125 7,765 $125.00 2.00 NOTE G - INCOME TAXES As of September 30, 2007, the Company had federal and state net operating losses of approximately $7,700,000 that are subject to annual limitations through 2025. The temporary differences that give rise to deferred tax asset and liability at September 30, 2007 are as follows: 2007 Net operating losses $3,003,000 Less valuation allowance (3,003,000) Net deferred tax asset $0 In assessing the amount of deferred tax asset to be recognized, management considers whether it is more likely than not that some portion or the entire deferred tax asset will not be realized. It is not possible at this time to determine that the deferred tax asset is more likely to be realized than not. Accordingly, a full valuation allowance has been established for all periods presented. 11 The Tax Reform Act of 1986 imposed substantial restrictions on the utilization of net operating losses and tax credits in the event of an "ownership change", as defined by the Internal Revenue Code. Federal and state net operating losses are subject to limitations as a result of these restrictions. The Company experienced a substantial change in ownership exceeding 50%. As a result, the Company's ability to utilize its net operating losses against future income has been significantly reduced. The effective tax rate for the periods ended September 30, 2007 and 2006, respectively, are as follows: U.S. statutory tax rate 35% State and local taxes 4 Less valuation reserve (39) Effective tax rate 0 We adopted the provisions of Financial Accounting Standards Board ("FASB") Interpretation No. 48, "Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109" ("FIN 48"), on January 1, 2007. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with FASB Statement 109, "Accounting for Income Taxes", and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Based on our evaluation, we have concluded that there are no significant uncertain tax positions requiring recognition in our financial statements. Our evaluation was performed for the tax years ended December 31, 2003, 2004, 2005 and 2006, the tax years which remain subject to examination by major tax jurisdictions as of September 30, 2007. We may from time to time be assessed interest or penalties by major tax jurisdictions, although any such assessments historically have been minimal and immaterial to our financial results. In the event we have received an assessment for interest and/or penalties, it has been classified in the financial statements as selling, general and administrative expense. NOTE H. 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 $7,613,800 since inception and the Company had negative working capital of $2,416,318 at September 30, 2007. 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. In addition to the assumption regarding increased revenues, the Company's management has raised approximately $394,000 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. 12 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 I : SUBSEQUENT EVENTS On October 22, 2007 the Company rescinded the conversion of its preferred stock, series C by recalling and retiring the 930,000 shares of common stock issued during the third quarter and re-issuing 465,000 shares of its preferred stock, series C with the same terms and conditions. 13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. Results of Operations for the Nine Months Ended September 30, 2007 Compared to the Nine Months Ended September 30, 2006 Revenues for the nine months ended September 30, 2007 were $57,473 compared with $116,601 for the nine months ended September 30, 2006. This represents a decrease of $59,128 from 2006. The decrease is due to fewer customers contracting for advertising campaigns for the nine months ended September 30, 2007 compared to the nine months ended September 30, 2006. Operating expenses for the nine months ended September 30, 2007 were $783,173 compared with $463,080 for the nine months ended September 30, 2006. This represents an increase of $320,093 from 2006. The majority of the increase is due to the write off of a bad debt advanced to Maupintour LLC during the period of $158,932. For the nine months ended September 30, 2007 the major expenses were as follows: Payroll $180,400; Internet design $40,143; Professional fees $135,256; Write of loan to Maupintour $103,434. The nine months ended September 30, 2006 major expenses were: Payroll $190,160; Professional fees $72,129. Net other income/expense was an expense of $237,977 for the nine months ended September 30, 2007 which is attributed to interest expense, compared with net other expense of $107,801 for the nine months ended September 30, 2006, a increase of $130,176. The increase is attributable to the increase in beneficial interest expense on the Company's convertible debentures. The net loss for the nine months ended September 30, 2007 was $963,677, compared with a net loss of $454,280 for the nine months ended September 30, 2006, representing an increase of $509,397. Results of Operations for the Three Months Ended September 30, 2007 Compared to the Three Months Ended September 30, 2006 Revenues for the three months ended September 30, 2007 were $3,460 compared with $39,840 for the three months ended September 30, 2006. This represents a decrease of $36,380 from 2006. The decrease is due to fewer customers contracting for advertising campaigns for the three months ended September 30, 2007 compared to the three months ended September 30, 2006. Operating expenses for the three months ended September 30, 2007 were $331,611 compared with $159,918 for the three months ended September 30, 2006. This represents an increase of $171,693 from 2006. The majority of the increase is due to the write off of a bad debt advanced to Maupintour LLC during the period of $40,498. For the three months ended September 30, 2007 the major expenses were as follows: Payroll $60,000; Internet design $14,811; Professional fees $68,931; Write of loan to Maupintour $40,498; Interest Expense $139,272. The three months ended September 30, 2006 major expenses were: Payroll $66,335; Professional fees $35,293. Net other income/expense was an expense of $139,292 for the three months ended September 30, 2007 which is attributed to interest expense, compared with net other expense of $33,155 for the three months ended September 30, 2006, a increase of $106,137. The increase is attributable to the increase in beneficial interest expense on the Company's convertible debentures. The net loss for the three months ended September 30, 2007 was $467,423, compared with a net loss of $153,233 for the three months ended September 30, 2006, representing an increase of $314,190. Liquidity At September 30, 2007 Invicta Group's current working capital deficit was $2,416,318. Invicta Group has not generated sufficient revenue in any period, to carry its costs of operations. Invicta has derived its liquidity principally from the sale of stock. 14 Funding Invicta has received equity funding advances from an Institutional Investor totaling $393,887 for the nine months ended September 30, 2007 and Invicta paid off $17,005 of debt in that same period. An additional $558,032 of debt was converted into common stock during the nine months ended September 30, 2007. The debenture balance due as of September 30, 2007 totaled $304,401. On September 4, 2007, the Company's 1 for 500 common stock split took effect. As a result, $90,209 was transferred from common stock to additional paid in capital. All per share amounts have been adjusted to reflect this reverse stock split. During the third quarter 2007 the Company converted $223,891 of debt into 509,000 shares of common stock. On July 2, 2007, the Company issued 4,000 shares of its common stock as compensation for consulting services. A charge of $6,000 was recorded for the nine ended September 30, 2007, 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. In July 2007, the Company issued 30,000 shares of its common stock as compensation for accounting services. A charge of $24,233 was recorded for the nine ended September 30, 2007, 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. Capital Resources Additional capital needs to be invested in the company. Invicta will need a minimum of $500,000 cash to assure the working capital is available to the company to implement its business plan.. Going Concern Concerns The Company has incurred losses of approximately $7,762,533 since inception and the Company had negative working capital of $2,565,051 at September 30, 2007. 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. In addition to the assumption regarding increased revenues, the Company's management has raised approximately $394,000 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. 15 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 nine months ended September 30, 2007 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. During the three months ended September 30, 2007, the Company did not issue any employee stock options nor did any employee stock options vest. 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 September 30, 2007, that such controls did not operate as designed and did not 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. Management continues its focus on the issue of internal control in particular. In October of 2007 a CPA firm was hired to work with management and the company's auditors to improve controls. Management will continue to evaluate and test present and new measures while at the same time reviewing areas that may require improvement. Additionally, it continues the process of hiring persons with the skill sets appropriate to fill the Company's needs as they have evolved. 16 PART II ITEM 1. LEGAL PROCEEDINGS None at this time ITEM 2. CHANGES IN SECURITIES On September 4, 2007, the Company's 1 for 500 common stock split took effect. As a result, $90,209 was transferred from common stock to additional paid in capital. All per share amounts have been adjusted to reflect this reverse stock split. During the third quarter 2007 the Company converted $223,891 of debt into 509,000 shares of common stock. 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 July 2, 2007, the Company issued 4,000 shares of its common stock as compensation for consulting services. A charge of $6,000 was recorded for the nine ended September 30, 2007, 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. In July 2007, the Company issued 30,000 shares of its common stock as compensation for accounting services. A charge of $24,233 was recorded for the nine ended September 30, 2007, 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. 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 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 17 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. INVICTA GROUP INC. By: /s/ William G. Forhan William G. Forhan Chief Executive Officer and President December 7, 2007 By: /s/ Richard David Scott Richard David Scott Chief Financial Officer December 7, 2007 18 EX-31.1 2 ivit10qsb093007ex311.txt Exhibit 31.1 CERTIFICATION Certification required by Rule 13a-14(a) or Rule 15d-14(a) Section 302 of the Sarbanes-Oxley Act of 2002 I, William G. Forhan, certify that: 1. I have reviewed this Quarter Report on Form 10-QSB of Invicta Group, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. By: /s/ William G. Forhan William G. Forhan President and Chief Executive Officer Date: December 7, 2007 EX-31.2 3 ivit10qsb093007ex312.txt Exhibit 31.2 CERTIFICATION Certification required by Rule 13a-14(a) or Rule 15d-14(a) And under Section 302 of the Sarbanes-Oxley Act of 2002 I, Richard David Scott, certify that: 1. I have reviewed this Quarter Report on Form 10-QSB of Invicta Group, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. By: /s/ Richard David Scott Richard David Scott Chief Financial Officer Date: December 7, 2007 EX-32.1 4 ivit10qsb093007ex321.txt Exhibit 32.1 CERTIFICATION Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 In connection with the Quarterly Report of Invicta Group, Inc. (the "Company") on Form 10-QSB for the quarter ended September 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, William G. Forhan, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and 2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods presented in this Report. By: /s/ William G. Forhan William G. Forhan President and Chief Executive Officer Date: December 7, 2007 EX-32.2 5 ivit10qsb093007ex322.txt Exhibit 32.2 CERTIFICATION Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 In connection with the Quarterly Report of Invicta Group, Inc. (the "Company") on Form 10-QSB for the quarter ended September 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Richard David Scott, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002, that: 1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and 2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods presented in this Report. By: /s/ Richard David Scott Richard David Scott Chief Financial Officer Date: December 7, 2007 -----END PRIVACY-ENHANCED MESSAGE-----