Utah
|
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)
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(I.R.S.
Employer
Identification
No.)
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r
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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r
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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r
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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r
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Fair value of the net
assets acquired
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||||
Cash
|
$ | 74,830 | ||
Accounts
receivable
|
323,493 | |||
Investment
- Reds Caribbean
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51,962 | |||
Accounts
payable and accrued expenses
|
(237,196 | ) | ||
Total
identifiable assets
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213,089 | |||
Goodwill
|
311,911 | |||
Total
cash consideration paid at closing
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525,000 | |||
Total
contingent consideration (1)
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- | |||
Total
consideration as of the measurement date
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$ | 525,000 |
(1)
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the
agreement requires contingent consideration, to be paid nineteen months
after closing based on certain milestones being
achieved.
|
restated consolidated balance sheet as of June 30,
2007:
|
2007
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2007
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|||||||||||||
As
Corrected
|
Change
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|||||||||||||
Current
assets
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||||||||||||||
Cash
and cash equivalents
|
$ | 542,336 | $ | 542,336 | $ | - | ||||||||
Accounts
receivable
|
323,493 | 323,493 | - | |||||||||||
Inventory
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2,132,820 | 2,132,820 | - | |||||||||||
Total
current assets
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2,998,649 | 2,998,649 | - | |||||||||||
Equipment,
net of depreciation
|
100,000 | 100,000 | - | |||||||||||
Total
property and equipment
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100,000 | 100,000 | - | |||||||||||
Other
assets
|
||||||||||||||
Goodwill
|
311,901 | - | A | 311,901 | ||||||||||
Licenses
and permits, net of amortization
|
1,480,946 | 1,480,946 | - | |||||||||||
Investments,
net of allowance of $173,868
|
51,962 | 51,962 | - | |||||||||||
Notes
receivable, net of allowance of $832,849
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- | - | - | |||||||||||
Total
other assets
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1,844,809 | 1,532,908 | 311,901 | |||||||||||
Total
assets
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$ | 4,943,458 | 4,631,557 | $ | 311,901 | |||||||||
Liabilities and
Deficiency in Assets
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||||||||||||||
Current
liabilities
|
||||||||||||||
Accounts
payable and accrued expenses
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$ | 752,657 | $ | 752,657 | $ | - | ||||||||
Related
party notes payable
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3,459,359 | 3,459,359 | - | |||||||||||
Due
to related parties
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1,237,726 | 1,237,726 | - | |||||||||||
Convertible
notes payable
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1,000,000 | 1,000,000 | - | |||||||||||
Debentures
payable
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99,174 | 99,174 | - | |||||||||||
Total
current liabilities
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6,548,916 | 6,548,916 | - | |||||||||||
Total
liabilities
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6,548,916 | 6,548,916 | - | |||||||||||
Commitments
and contingencies
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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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- | - | - | |||||||||||
Class
B - Preferred stock, no par value, 10,000 shares authorized,
none
issued and outstanding
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- | - | - | |||||||||||
Class
C - Convertible Preferred stock, $.001 par value, 10,000 shares
authorized,
none
issued and outstanding
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- | - | - | |||||||||||
Class
D - Preferred stock, no par value, 10,000 shares authorized,
none
issued and outstanding
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- | - | - | |||||||||||
Preferred
stock - Series A, $0 par value, 100,000,000 shares
authorized;
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- | |||||||||||||
none
issued and outstanding as of June 30, 2007
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- | - | - | |||||||||||
Common
stock - $.001 par value, 250,000,000,000 shares authorized;
29,842,017
issued and outstanding
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29,842 | 29,842 | - | |||||||||||
Additional
paid-in capital
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20,530,447 | 20,119,147 | 411,300 | |||||||||||
Minority
interest
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(803,530 | ) | (803,530 | ) | - | |||||||||
Accumulated
deficit
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(21,362,218 | ) | (21,262,818 | ) | B | (99,400 | ) | |||||||
Total
deficiency in assets
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(1,605,459 | ) | (1,917,359 | ) | 311,900 | |||||||||
Total
liabilities and deficiency in assets
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$ | 4,943,457 | $ | 4,631,557 | $ | 311,900 | ||||||||
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:
|
2007
|
2007
|
|||||||||||||
As
Corrected
|
Change
|
|||||||||||||
Revenue
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$ | - | $ | 1,860,442 | $ | (1,860,442 | ) | A | ||||||
Cost
of sales
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- | 1,474,632 | (1,474,632 | ) | ||||||||||
Gross
profit
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- | 385,810 | (385,810 | ) | ||||||||||
Operating expenses
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||||||||||||||
Salaries
and wages
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446,403 | 562,547 | (116,144 | ) | A | |||||||||
General
and administrative
|
435,282 | 585,304 | (150,020 | ) | A | |||||||||
Legal
and professional fees
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298,251 | 318,497 | (20,246 | ) | A | |||||||||
Total
operating expenses
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1,179,936 | 1,466,348 | (286,410 | ) | A | |||||||||
Loss
from operations
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(1,179,936 | ) | (1,080,538 | ) | (99,400 | ) | A | |||||||
Other income (expenses)
|
||||||||||||||
Depreciation
and amortization
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(226,970 | ) | (226,970 | ) | - | |||||||||
Interest
income
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1,351 | 1,351 | - | |||||||||||
Interest
expense
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(144,532 | ) | (144,532 | ) | - | |||||||||
Total
other (income) expenses
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(370,151 | ) | (370,151 | ) | - | |||||||||
Operating
loss before income taxes
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(1,550,087 | ) | (1,450,689 | ) | (99,400 | ) | A | |||||||
Provision
for income taxes
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- | - | - | |||||||||||
Net
loss
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$ | (1,550,087 | ) | $ | (1,450,689 | ) | $ | (99,400 | ) | A | ||||
Net loss per common share
|
||||||||||||||
Basic
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$ | (0.06 | ) | $ | (0.05 | ) | $ | (0.01 | ) | B | ||||
Weighted
average of common shares outstanding - Basic
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27,580,209 | 27,580,209 | 27,580,209 | |||||||||||
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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||||||||||||||
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)
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SOVEREIGN
EXPLORATION ASSOCIATES INTERNATIONAL, INC.
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November
19, 2008
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By:
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Robert
D. Baca, Chief Executive Officer
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