Sovereign Exploration Associates International, Inc. (SVXA)

Sovereign Exploration Associates International, Inc. was incorporated in 1980. In 2004 the corporation chose to become a business development company (a company that invests in eligible portfolio companies that are in need of funding). As of October 17, 2005 Sovereign Exploration entered into exchange agreement with CALI holdings, Inc. A newly formed company now engages in exploration, discovery and recovery of shipwrecks of historic value. The company works through subsidiaries and controlled companies. Sovereign exploration has licenses to over 400 shipwrecks.

Sovereign Exploration’s subsidiaries generally lease all major equipment, including dive ships, for only the period of time it is actually needed for operation. The company buys equipment only if it is advantageous to do so. Sovereign Exploration operated through part-time and contracted explorers, divers, historians, marine archaeologists, and other personnel. The company has only 7 full-time employees.

Sovereign Exploration generally finances recovery efforts through a system of project finance. That means they search for investors to fund company’s operations. Such investors may be collectors who seek a share of recovered items, individuals who are attracted by the opportunity to participate in a historically significant recovery effort, or investors attracted by potentially large gains.

The company hasn’t generated any revenue for the past 3 quarters. Also they have been only losing money since the entrance into exploration business. The net loss varies but in general it seems to be increasing over time. Sovereign Explorations is delinquent with their SEC filing so the results of their activities for the second quarter of 2007 are unknown to date. Over the first quarter stockholders equity increased by 20% but still remains a negative value ($-728 thousand). Tangible assets decreased by 8% to approximately $-4 million.

The company has a business partner – Principle Pictures, Inc. a company engaged in creation of documentaries. Companies plan on the creation of at least five television documentaries and a series of books, educational tools, and interactive websites.

On July 2007 the company announced it will be forming a not-for-profit foundation that will allow high school students to participate in the research, recovery and preservation process of a shipwreck.

According to the company‘s statements it should take 2 to 3 year for the company to begin gaining revenue on its recoveries. Sovereign Explorations also expects some revenues from documentaries.