- Current report filing (8-K)
19 November 2008 - 11:31PM
Edgar (US Regulatory)
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
Current
Report Pursuant to Section 13 or 15(d) of
The
Securities Exchange Act of 1934
Date of
report (Date of earliest event reported): November 18, 2008
SOVEREIGN
EXPLORATION ASSOCIATES INTERNATIONAL, INC.
(Exact
name of registrant as specified in its charter)
Utah
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333-29903
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30-0123229
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|
|
|
(State
or other jurisdiction of
incorporation
or organization)
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(Commission
File Number)
|
(I.R.S.
Employer
Identification
No.)
|
110 South
State Street, Suite 200
Newtown,
Pennsylvania 18940
(Address
of principal executive offices and zip code)
Registrant's
telephone number, including area code: 215-968-0200
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
r
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
r
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
r
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
|
r
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
Item
4.02
Non-Reliance
on Previously Issued Financial Statements or a Related Audit Report or Completed
Interim Report
On
November 18, 2008, Chief Executive Officer and the Board of Directors concluded
that the previously issued statements for the fiscal year ended June 30, 2007,
should no longer be relied upon because the acquisition of Lavelle Holdings,
Inc. on June 11, 2007 was not accounted for in accordance with SFAS no. 141. In
addition, the previously issued audited financial statements included the full
year of operating results as opposed to the operating results commencing on the
date of acquisition of Lavelle Holdings, Inc., a wholly-owned subsidiary of the
Company.
Pursuant
to the requirements of SFAS no. 154, the Company is restating the financial
statements at the earliest possible date, which is as of and for the fiscal year
ended June 30, 2007.
The following table represents the fair value of the
net assets acquired along with the corresponding calculation of
goodwill:
Fair value of the net
assets acquired
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Cash
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$
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74,830
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Accounts
receivable
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323,493
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Investment
- Reds Caribbean
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51,962
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Accounts
payable and accrued expenses
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(237,196
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)
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Total
identifiable assets
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213,089
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Goodwill
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311,911
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Total
cash consideration paid at closing
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525,000
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Total
contingent consideration (1)
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-
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Total
consideration as of the measurement date
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$
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525,000
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(1)
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the
agreement requires contingent consideration, to be paid nineteen months
after closing based on certain milestones being
achieved.
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CORRECTION OF ERRORS IN
PREVIOUSLY ISSUED STATEMENTS
The
Company determined that the following is the impact of the correction for the
acquisition of Lavelle Holdings, Inc. on June 11, 2007:
restated consolidated balance sheet as of June 30,
2007:
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2007
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2007
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As
Corrected
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Change
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Current
assets
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Cash
and cash equivalents
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$
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542,336
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$
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542,336
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$
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-
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Accounts
receivable
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|
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323,493
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|
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323,493
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|
|
|
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-
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Inventory
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2,132,820
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2,132,820
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|
|
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-
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Total
current assets
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2,998,649
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2,998,649
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-
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Equipment,
net of depreciation
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100,000
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100,000
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-
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Total
property and equipment
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100,000
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100,000
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-
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Other
assets
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Goodwill
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311,901
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-
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A
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311,901
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Licenses
and permits, net of amortization
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1,480,946
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1,480,946
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-
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Investments,
net of allowance of $173,868
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51,962
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51,962
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-
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Notes
receivable, net of allowance of $832,849
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-
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-
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-
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Total
other assets
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1,844,809
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1,532,908
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311,901
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Total
assets
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$
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4,943,458
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4,631,557
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$
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311,901
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Liabilities and
Deficiency in Assets
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Current
liabilities
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Accounts
payable and accrued expenses
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$
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752,657
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$
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752,657
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$
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-
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Related
party notes payable
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3,459,359
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3,459,359
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-
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Due
to related parties
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1,237,726
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1,237,726
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-
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Convertible
notes payable
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1,000,000
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1,000,000
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-
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Debentures
payable
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99,174
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99,174
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-
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Total
current liabilities
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6,548,916
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6,548,916
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-
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Total
liabilities
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6,548,916
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6,548,916
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-
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Commitments
and contingencies
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-
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-
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-
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Deficiency in
assets
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Class
A - Preferred stock, no par value, 10,000 shares authorized,
none
issued and outstanding
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-
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-
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-
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Class
B - Preferred stock, no par value, 10,000 shares authorized,
none
issued and outstanding
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-
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-
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-
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Class
C - Convertible Preferred stock, $.001 par value, 10,000 shares
authorized,
none
issued and outstanding
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-
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-
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-
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Class
D - Preferred stock, no par value, 10,000 shares authorized,
none
issued and outstanding
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-
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-
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-
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Preferred
stock - Series A, $0 par value, 100,000,000 shares
authorized;
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-
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none
issued and outstanding as of June 30, 2007
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-
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-
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-
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Common
stock - $.001 par value, 250,000,000,000 shares authorized;
29,842,017
issued and outstanding
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29,842
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29,842
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-
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Additional
paid-in capital
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20,530,447
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20,119,147
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411,300
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Minority
interest
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(803,530
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)
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(803,530
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)
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-
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Accumulated
deficit
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(21,362,218
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)
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(21,262,818
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)
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B
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(99,400
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)
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Total
deficiency in assets
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(1,605,459
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)
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(1,917,359
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)
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311,900
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Total
liabilities and deficiency in assets
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$
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4,943,457
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$
|
4,631,557
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$
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311,900
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A
- Entry to record goodwill for the acquisition of Lavelle Holdings, Inc.
in June 2007
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B
- To record the elimination of the net income in Lavelle Holdings, Inc for
the fiscal year ended June 30, 2007
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C
- To record the net effect of these two transactions (A & B) on the
additional paid in capital as of June 30, 2007
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|
restated consolidated balance sheet as of June 30,
2007:
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2007
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2007
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As
Corrected
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Change
|
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Revenue
|
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$
|
-
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$
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1,860,442
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|
$
|
(1,860,442
|
)
|
A
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Cost
of sales
|
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|
-
|
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1,474,632
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(1,474,632
|
)
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Gross
profit
|
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|
-
|
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385,810
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(385,810
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)
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Operating expenses
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Salaries
and wages
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446,403
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562,547
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(116,144
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)
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A
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General
and administrative
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435,282
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585,304
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(150,020
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)
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A
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Legal
and professional fees
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298,251
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318,497
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(20,246
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)
|
A
|
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Total
operating expenses
|
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1,179,936
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1,466,348
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(286,410
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)
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A
|
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Loss
from operations
|
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(1,179,936
|
)
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(1,080,538
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)
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(99,400
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)
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A
|
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Other income (expenses)
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|
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|
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|
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|
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Depreciation
and amortization
|
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(226,970
|
)
|
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(226,970
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)
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|
-
|
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Interest
income
|
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|
1,351
|
|
|
|
1,351
|
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|
|
-
|
|
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Interest
expense
|
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(144,532
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)
|
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|
(144,532
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)
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|
-
|
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Total
other (income) expenses
|
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(370,151
|
)
|
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|
(370,151
|
)
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|
-
|
|
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Operating
loss before income taxes
|
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(1,550,087
|
)
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(1,450,689
|
)
|
|
|
(99,400
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)
|
A
|
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Provision
for income taxes
|
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|
-
|
|
|
|
-
|
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|
-
|
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Net
loss
|
|
$
|
(1,550,087
|
)
|
|
$
|
(1,450,689
|
)
|
|
$
|
(99,400
|
)
|
A
|
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|
|
|
|
|
|
|
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Net loss per common share
|
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|
|
|
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|
|
|
|
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|
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Basic
|
|
$
|
(0.06
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.01
|
)
|
B
|
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|
|
|
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|
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Weighted
average of common shares outstanding - Basic
|
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|
27,580,209
|
|
|
|
27,580,209
|
|
|
|
27,580,209
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
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|
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A -
Entry to eliminate the operating activity for Lavelle Holdings, Inc. for
the fiscal year
ended
June 30, 2007, which had a net effect of elimination net income of
$99,400.
|
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|
|
|
|
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|
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B -
The net effect of the elimination of Lavelle Holdings, Inc. net income of
$99,400 for
the
fiscal year ended June 30, 2007 had a net effect on the net loss per
common share of ($0.01)
|
SIGNATURES
Pursuant
to the Securities Act of 1934, the Company has duly caused this report to be
signed on its behalf.
|
SOVEREIGN
EXPLORATION ASSOCIATES INTERNATIONAL, INC.
|
|
|
|
|
|
November
19, 2008
|
By:
|
|
|
|
|
Robert
D. Baca, Chief Executive Officer
|
|
|
|
|
|
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