ITEM 1. BUSINESS
Business Summary
Silverton Adventures, Inc. ("SAI" or the "Company"), was originally incorporated in the State of Nevada on May 31, 2006 as Mor Travel, Inc. (“Mor”). On December 26, 2007, the Company changed its name to Silverton Adventures, Inc.
The Company recently formed a new wholly owned subsidiary named Silverton Printing, Inc. (“Silverton Printing”) whereby it operates its original printing and mailing services to companies nationwide. On December 30, 2010, the Company acquired 100% of the outstanding common stock of Worldwide Media Organization, Inc. making it a wholly owned subsidiary (“Worldwide Media”). Worldwide Media is a marketing, production and distribution company with its principal business objective being the production, acquisition (through exclusive licensing arrangements with independent producers worldwide), sale and distribution of special interest, family oriented, inspirational and children’s DVDs and programs. Video distribution is made by a non-theatrical home video retailer, catalog, mass-merchant and rack-jobber markets (including specialty markets such as gift and museum shops, premium and direct response markets). WMO also licenses to the television broadcast markets, as well as the educational, school and public library markets, both nationally and worldwide. This distribution includes emerging venues such as digital downloads via Internet, video-on-demand (VOD) and download streaming on various platforms, among others.
Operation Summary
The Company operates two wholly owned subsidiaries. Through Silverton Printing, the Company has a principal business objective of providing printing and mailing services to companies nationwide. Through Worldwide Media, the Company has a principal business objective of the production, acquisition (through exclusive licensing arrangements with independent producers worldwide), sale and distribution of special interest, family oriented, inspirational and children’s DVDs and programs.
SILVERTON PRINTING, INC.
Business Segment Summary
Silverton Printing has a principal business objective of providing printing and mailing services to companies nationwide. The Company plans on completing the printing and mailing from its corporate offices depending on the size of the job. In other cases, the Company has developed accounts with wholesale printers who are more equipped to handle large print and mailing orders. Our mission is to provide the highest quality print and mail services to our clients.
Since inception, we have generated consistent revenues and have incurred a cumulative net loss as reflected in the financial statements. The Company has never been party to any bankruptcy, receivership or similar proceeding, nor has it undergone any material reclassification, merger,
consolidation, purchase or sale of a significant amount of assets not in the ordinary course of business.
Product Development
Silverton Printing’s mission is to provide small and large businesses a printing and mailing services of a wide variety of products (See list below). Also, the Company will provide a mailing service which will include Automated Presort and Insert and Address. This service will be primarily for companies that want to save money on postage. Instead of paying $0.42 for a first class letter, Silverton will sort the mail pieces by zip codes saving the customer almost 50% in postage costs. The following are print and mail services offered by the Company:
• Business Cards
• Carbonless Forms
• Catalogs/Booklets
• Flyers
• Posters
• Graphic Design
• Automated Presort
• Brochures
• Copying
• Envelopes
• Letterhead
• Postcards
• Presentation Folders
• Insert and Address
Marketing
Silverton Printing is gearing up to be a direct marketer of printing and mailing to businesses nationwide. The Company will be placing Yellow Page advertisements offering our services under the classification of printers and mailers in major cities throughout the United States. Even though the Company maintains its facility in Las Vegas, Nevada, the Company will ship all orders directly to the customer for a small shipping charge. Additionally, the Company plans to constantly mail postcards throughout the United States to new and upcoming businesses that have been recently approved for a business license.
WORLDWIDE MEDIA ORGANIZATION, INC.
Business Segment Summary
Worldwide Media is a marketing, production and distribution company with its principal business objective being the production, acquisition (through exclusive licensing arrangements with independent producers worldwide), sale and distribution of special interest, family oriented, inspirational and children’s DVDs and programs. Distribution is made into the non-theatrical home video retailer, catalog, mass-merchant and rack-jobber markets (including specialty markets such as gift and museum shops, premium and direct response markets). Worldwide
Media also licenses to the television broadcast markets, as well as the educational, school and public library markets, both nationally and worldwide. This distribution includes emerging venues such as digital downloads via Internet, video-on-demand (VOD) and download streaming on various platforms, among others.
Product Development
There are two key product development strategies for general market sale and distribution that Worldwide Media is involved in; inexpensive, but high quality and high-perceived value productions and, strategic partnership exclusive acquisition of other quality programs from outside producers.
First, Worldwide Media has established relationships with talented, highly experienced producers, writers and editors that contract with Worldwide Media to produce low-cost but high quality productions that are suitable for sale into Worldwide Media’s market niches. One strategy Worldwide Media has developed in this regard is what is called in the industry “theatrical drafting” wherein smaller independent producers under contract with Worldwide Media create low budget, ancillary and parallel programs that tie into subjects and/or events dealing with current major theatrical releases, thereby taking advantage of the consumer interest and “buzz” caused by the multi-million dollar budget advertising campaigns major studios spend to successfully market their big-budget films, by tapping into this interest without the enormous financial expenditures associated in creating this “Buzz”, hence “drafting” in the studios wake. This was done with Worldwide Media’s production of The Extraordinary Life of Amelia Earhart (following the Hillary Swank biopic, “Amelia”), The Mystery of Sherlock Holmes (following the Robert Downey blockbuster “Sherlock Holmes”) and the upcoming The True Legend of Robin Hood (in anticipation of the big budget 3D release of Russell Crowe’s “Robin Hood” later this year). Worldwide Media is continually researching the upcoming film release announcements to anticipate these various potential hits. Along with this, Worldwide Media is continually producing timely biographies and documentaries that would have interest in both the general consumer market, as well as the educational markets, including recent productions dealing with Great Women Leaders In World History, The Life of Albert Einstein, Famous Explorers, Joan of Arc (upcoming), the Korean War (upcoming) and a documentary on the life of, and conquest of Everest by, Sir Edmund Hillary (in anticipation of an upcoming feature film starring Liam Neeson, about the mysterious death and controversy surrounding George Mallory, who supposedly summited Everest 30 years before Hillary’s attempt.).
Secondly, Worldwide Media is also strategically acquiring various films, programs and series that meet its market niches. There is a vast source of quality programming produced by numerous independent producers worldwide, that simply do not have the resources, nor ability, to distribute their product and profitably into the market. Worldwide Media negotiates distribution contracts with these producers for the distribution of their programs in niche markets, often with little or no advance monies paid up front, providing instead the producers royalties on actual per unit sales. This is a favorable situation for both Worldwide Media (in providing the marketplace with a steady stream of finished quality programs at virtually no upfront costs, other than package design, that are fresh and appealing to the markets that Worldwide Media services), and to the producer (in that, they now have an effective distribution
partner, allowing them to continue producing quality programming, while realizing a steady stream of royalty revenue from their productions). A good example of this is Worldwide Media’s recent acquisition of a series of entertaining inspirational feature films with a leading Christian producer, Eternal Pictures; and the imminent agreement with one of the industry’s leading independent family friendly production companies, Grizzly Adams Productions, Inc. These are but two examples. There are numerous others either consummated or in-negotiation. To better effect this critical growth strategy, and in conjunction with e-mail and direct mail solicitations for programs, Worldwide Media also attends several key international film conventions throughout the year featuring independent producers, and is bringing unique, family friendly, inspirational and educational programs to the market from these sources.
Marketing and Industry Analysis
Market research and analysis reveals that the population is gradually becoming older, thereby more conservative, with the aging of the baby boom generation. With the increase in recreational and discretionary time that this maturing generation will have, along with their greater flexible spending ability, all indications point to even greater desire by the consumer for more family-friendly and special quality programming that is inexpensive and can be enjoyed by a wide demographic in society. History has shown time and time again that G/PG and family films consistently do well at the box office both in audience attendance and revenue. Furthermore, this programming has excellent “shelf life” in that these are generally films people want to watch over and over again, thereby driving greater sales (versus rental) of these types of DVD’s for home DVD collections. Children’s programming in general can do particularly well. Another area that can do well, is the special interest niche market, such as travel, history, military, art, biography, and of course, wildlife and nature programming.all genres that have unique and devoted viewers and collectors served by different catalogs, specialty stores, retail chains and internet sites. Worldwide Media’s product mix, both through acquisition and production, is specifically targeted for these marketsin content, packaging and retail pricing.
Worldwide Media has also pursued the inspirational DVD market, which is a vastly underserved market. Surveys consistently show that over 85% of the population defines itself as spiritual in some way. The usual Hollywood market has simply not addressed that market; which is numerous and broad-based, best described as mid-America having traditional family values, and highly desirous of programming that reflects those values. Reasons for this lack of product content through traditional DVD venues may reside in the industry’s lack of understanding, or perhaps dismissiveness in general, of the potential of the market. Worldwide Media is positioned to serve that market with general quality light inspirational programming provided through the traditional home video distribution venues consumers generally frequent (such as home catalogs, retail stores and mass-merchants, warehouse chains), and feels that Worldwide Media can become a leading brand and label for that market. Furthermore, current management has extensive experience in servicing that market niche through previous business affiliations, thereby further solidifying understanding the needs of that market and how best to serve it with proper content.
Worldwide Media management also has extensive experience in creating high-perceived value combo, specialty DVD packs for price conscious consumers, thereby serving the mass market,
all the while maintain maximum gross and net profit margins. These “collection sets” are very popular in the sell-thru, versus rent-thru, markets, which relates back directly to Worldwide Media’s business model.
Worldwide Media is becoming an established brand in the educational, public library and home-school markets. The principles have over 25 years experience in servicing the needs of that particular market, with quality documentary, special interest and educational programs suited for the K-12 grade levels. Education is a consistent priority in terms of funding and curriculum quality on the local, state and federal levels. There is a constant need in the market for relevant and new programming to meet those requirements. Worldwide Media is uniquely positioned in that regard, having relationships with hundreds of independent producers worldwide that have relevant quality content for the educational market, but lack the means to distribute it on a wide scale. Worldwide Media has the distribution means in place either directly through direct solicitation or through strategic relationships with several of the top wholesalers and re-sellers into the educational/library markets. Worldwide Media has also entered into strategic alliances with several companies in providing educational programming for on-line streaming and closed circuit broadcast into digital libraries serving schools and libraries throughout North America, a technology growing exponentially.
Growth Strategy of the Company
The home video/DVD/educational markets are broad, complex and fragmented into different distribution channels and niches: retail, mass merchants (box stores), catalog, internet, resellers that purchase from wholesalers and producers, specialty chains and stores (gift stores, museum shops, airport stores, etc.), and, of course, individual consumers served directly by web advertising, schools, libraries, and school districts, among others. The time required establishing profitable relationships with these various venues and buyers directly can be both time consuming and capital intensive, in terms of direct face-to-face meetings, attending trade shows and constantly forwarding market material and press releases to generate interest in particular programs and films. Worldwide Media’s management has made a strategic decision that, rather than expending the time, energy and resources in cultivating those markets, Worldwide Media’s business interests and growth strategies are better served by leveraging key relationships with a handful of well-established, well respected and aggressive sub-distributors, resellers and sub-licensors that have established, personal and solid vendor relationships and established SKU’s and vendor accounts with all of the key players and buyers in these various market niches and accounts. By maintaining above average gross margins in the discount pricing provided to these resellers, Worldwide Media is able to penetrate the market more quickly, efficiently, cost effectively and deeply with its programs without the expenditures of time and resources noted above. Examples of some of the key relationships are listed below:
Allegro Media Group - a direct premium independent distributor into the retail home video music CD’s, and digital content market with over 25 years in representing a handful of labels into the general retail market and over 400 direct vendor/buyer account relationships; including but not limited to, Walmart, Target, Sams Clubs, Anderson Merchandising, Costco, Amazon, Netflix, Barnes & Noble, Baker & Taylor, Ingram (serving over 5,000 individual stores), Best
Buy, Critics Choice, Movies Unlimited, AAFES (Navy PX’s), Eurpac (military PX’s worldwide), Waxworks, Library Video, Midwest Tape, Blockbuster, Borders, VPD, etc. (complete account list available).
Total Content - a sub-licensor dealing with top catalogers with 20+ years experience; including, but not limited to: Publishers Clearing House, Readers Digest, Avon, Carol Wright, Johnson Smith, Colombia House, Miles Kimball, Christian Book Distributors (serving over 25 million home schoolers), Discovery Catalog, Guideposts, Doubleday Direct, Harriet Carter, Wireless, Taylor Gifts, etc. (complete account list available).
Echo Bridge - sub licensor with proprietary displays and end caps in a large number of grocery, retail, drugstores chains, mass merchants, specializing in very high volume (“tonnage”) discount videos/DVD sales for the consumer mass market; including, but not limited to Walmart, Safeway, a number of Midwest grocery chains and hardware/drug store chains, specialty catalogs, etc. Echo Bridge is very focused and selective in product acquisition; and, when distributing, can generally move in excess of several thousand units per title. Echo Bridge has licensed six family films from Worldwide Media and is considering a number of others.
Cerebellum - market’s leading distributor for educational media with 15+ years experience serving all major distributors and resellers into the educational, K-12, university, and public library markets; including but not limited to, Follett, Library Video, Barnes Noble, Christian Book Distributors (educational division), Brodarts, Midwest Tapes, Mackin Distributors, Quality Books, Scholastic Media, Discovery, AIM, Learn 360 (digital downstreaming into individual classrooms nationwide), etc. (complete account list available).
John McLean Media - major distributor and licensor into the international television and DVD markets, with over 20 years experience and relationships cultivated with all major players in all broadcast and media markets worldwide. Worldwide Media has entered into an exclusive licensing arrangement to have JMM represent all current, and future, productions into this sizable and very lucrative market. Our current mix includes five of Worldwide Media’s productions, with a commitment for acquiring licensing rights to an additional twelve to thirteen productions, along with future productions still in developmental phase.
In addition to the above relationships, Worldwide Media has signed distribution agreements with major players in specialty markets, including:
Starcrest Catalog - major specialty catalog with mailings to over 26 million homes 4 to 6 times a year. This brand is popular with buyers of family/special interest programs.
5min Media - an innovative 5 year-old company in the business as internet content provider that has established contracts with all major search engines whereby millions of users are directed to informational and themed streaming videos, based on their queries on-line, and whereby Worldwide Media is then paid a royalty for each “hit” on line. Additionally links on the site are provided to drive the user directly to Worldwide Media’s various websites, leading to further consumer direct sales.
To control outside costs with key vendors, Worldwide Media has entered into relationships with large, fully licensed and industry professional duplication/replication companies to manufacture, assemble, shrinkwrap and ship its DVD programs: CDI Media in Salt Lake City, Utah and VEA Associates in Irvine, CA. Worldwide Media has negotiated very favorable most-favored-nation pricing for its manufacturing and shipping needs. Worldwide Media is negotiating with a third lab, RLX Media, in Coral Gables, FL. as well; in order to cover all US retail and catalog drop-ship locations in the most cost effective way possible.
Competitor Analysis
Direct competition for Worldwide Media is hard to pinpoint and fragmented. Worldwide Media’s management feels it is in a superior position to affectively seize market share in its niche over and above its competitors, due to Worldwide Media’s unique business paradigm and diversification into a number of distribution venues; its ability to leverage relationships in a highly favorable and profitable way with both independent production companies and major distributors in the industry; its control of overhead by having key production and marketing support elements in-house, including the ability to produce and edit high quality programs for very low cost, and print and reconfigure all packaging and ancillary marketing material quickly; a warehouse and duplication capabilities in house to handle smaller incremental orders for product; and finally, and perhaps most importantly, extensive experience in the industry on a senior management and sales.
Competition
The Company will compete against established companies with significantly greater financial, marketing, research and development, personnel, and other resources than the Company. Such competition could have a material adverse effect on the Company's profitability.
Government Regulation
There are no government regulations regulating the business of printing and mailing services for business and other organizations or the educational and home video DVD sales.
ITEM 1A.
ITEM 1A. RISK FACTORS
Not applicable.
ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS
There are no unresolved staff comments.
ITEM 2.
ITEM 2. PROPERTIES
Our principal Nevada executive offices are located at 5070 Arville Street, Suite 7, Las Vegas, NV 89118 and our phone number is (702) 876-1539. This facility is currently being provided to the Company pursuant to a sub-lease from its officers and directors. There are currently no proposed programs for the renovation, improvement or development of the facilities currently in use.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
We are not currently involved in any legal proceedings nor do we have any knowledge of any threatened litigation.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
No matters were submitted to a vote of security holders during the fiscal year ended June 30, 2011.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
On September 24, 2010, our common stock was approved for listing on the OTCBB® under the ticker symbol SVAD. As of the date of this filing, there have been few trades for our common stock and it remains relatively illiquid. Below is a list of the trading high, low and quarter end of our common stock of our most recent three quarter ends:
Additionally, the Company does not anticipate that any significant trading will occur until our common stock has been approved by the Depository Trust Company (“DTC”) for clearing of transactions electronically. We do not know when such approval by DTC will occur. Additionally, once trading begins, the Company does not guarantee that a meaningful trading market will develop. Silverton Adventures, Inc. and its management make no representation about the present or future value of our common stock. We have not registered our class of common stock for resale under the blue sky laws of any state and current management does not anticipate doing so. The holders of shares of common stock, and persons who may desire to purchase shares of our common stock in any trading market that might develop in the future, should be aware that, in addition to transfer restrictions imposed by federal securities laws, significant state blue sky law restrictions may exist which could limit the ability of stockholders to sell their shares and limit potential purchasers from acquiring our common stock. We are not obligated by contract or otherwise to issue any securities and there are not outstanding any securities that are convertible into or exchangeable for shares of our common stock.
Holders
As of June 30, 2011, we had 17,800,000 shares of common stock, par value $0.001, issued and outstanding held by approximately 30 shareholders of record. The stock transfer agent for our securities is Holladay Stock Transfer, 2939 North 67th Place, Scottsdale, AZ 85251-6015 - Telephone: (480) 481-3940 and Facsimile: (480) 481-3941.
Dividends
There are no restrictions in our Articles of Incorporation or Bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:
1.
We would not be able to pay our debts as they become due in the usual course of business; or
2.
Our total assets would be less than the sum of the total liabilities plus the amount that would be needed to satisfy the rights of stockholders who have preferential rights superior to those receiving the distribution.
The Company has not declared any dividends, and does not plan to declare any dividends in the foreseeable future.
Recent Sales of Unregistered Securities
The Company has authorized 75,000,000 shares of common stock with a par value of $.001, and no preferred stock. Since inception, the Company has issued the following 17,800,000 shares of common stock that is restricted. The Company has issued the following shares of restricted common stock since the filing of its last annual statement for fiscal year ended June 30, 2010:
·
On or about July 19, 2010, 500,000 shares of common stock issued to a consultant were rescinded by the Company for breach of contract.
·
On December 30, 2010, the Company acquired Worldwide Media Organization, Inc., a Nevada corporation (“Worldwide Media”) pursuant to a share exchange agreement (the “Share Exchange”). Pursuant to the Share Exchange, the Company issued 7,050,000 shares of Common Stock, par value $0.001, for all for all of the outstanding Common Stock of Worldwide. At the close of this transaction, Worldwide Media became a wholly-owned subsidiary of the Company. There is no change in control of the Company as a result of this transaction. This common stock paid pursuant to this transaction was issued to the following individuals or entities: Ronald M. Miller - 6,500,000 shares of Common Stock; Grow Public, Inc. - 500,000 shares of Common Stock; and Brad McAlpin 50,000 shares of Common Stock. This transaction was exempt from the registration provisions of the Securities Act of 1933, as amended, pursuant to Section 4(2).
Securities Authorized for Issuance under Equity Compensation Plans
We do not have any equity compensation plans and accordingly we have no securities authorized for issuance thereunder.
Purchases of Equity Securities by the Registrant and Affiliated Purchasers
We did not purchase any of our shares of common stock or other securities during the year ended June 30, 2011.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The following table includes select data extracted from, and should be examined in conjunction with, the audited financial statements and footnotes for the year ended June 30, 2011 and 2010 found under Item 8 of this annual report.
ITEM 7.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following plan of operation should be read in conjunction with our financial statements and the notes thereto included elsewhere in this annual report. Statements contained herein which are not historical facts are forward-looking statements, as that term is defined by the Private Securities Litigation Reform Act of 1995, including statements relating to our plans, objectives, expectations and intentions. Although we believe that the expectations reflected in such forward-looking statements are reasonable, forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those projected. We caution investors that any forward-looking statements made by us are not guarantees of future performance and that actual result may differ materially from those in the forward-looking statements. Such risks and uncertainties include, without limitation: established competitors who have substantially greater financial resources and operating histories, regulatory delays or denials, ability to compete as a start-up company in a highly competitive market, and access to sources of capital.
Results of Operations
The following table provides selected financial data about our company for the year ended June 30, 2011 and 2010, respectively.
Plan of Operation
We have developed a plan of operation reflecting our objectives and anticipated growth for the next 12 months and beyond. In our plan, we identify our cash requirements, our new product development, and our required staffing and additional funding requirements to fulfill our business objectives.
Cash Requirements
We estimate that we require a minimum of approximately $50,000 and a maximum of
approximately $100,000 to grow our operations for the next 12 months from the date of this annual report. The minimum of $50,000 is required for operating expenses and general operational overhead. The maximum will be required to fully implement our business plan which will include the following marketing of our services, new copiers, additional staff, purchase of educational and family video programs, and general working capital associated with the growth of the Company.
Revenues
The Company has recorded $475,262 and $61,883 in revenues from operations as of June 30, 2011 and 2010, respectively, which was generated from client printing (mainly color printing), mailing, sales of educational and family oriented DVD programs (through our acquired subsidiary Worldwide Media Organization, Inc.), and related services. Cost of sales for June 20, 2011 and 2010 respectively are $91,202 and $11,253, resulting in a gross margin of $384,060 and $50,630, respectively for such same time periods.
Operating and General & Administrative Expenses
The Company’s operating expenses consisting of depreciation expense, advertising expense, bad debt expense, royalty expense, payroll, professional fees, and general and administrative expenses totaling $385,105 and 107,000, respectively, for June 30, 2011 and 2010 resulting in a net loss from operations of $1,045 and $56,370 for such same time periods.
Income Taxes
The Company does not anticipate having to pay income taxes in the upcoming years due to our absence of net profits.
Capital and Liquidity
As of June 30, 2011 and 2010, we had total current assets of $88,199 and $775 respectively, and total current liabilities of $170,287 and $85,635, respectively.
We had cash on hand of $4,943 and $775 as of June 30, 2011 and 2010, respectively. We do not have sufficient cash to meet our short-term expansion needs over the next 12 months, which are to sell our printing and mailing services on a more regional basis and acquire more DVD titles, and hire more employees and staff. We are currently upgrading our ecommerce web site at www.silvertoninc.com for our subsidiary Silverton Printing, Inc. and at www.mediahomevideo.com for our subsidiary Worldwide Media Organization, Inc. in order to increase our revenues. We intend to bring in new client through Internet and more traditional advertising means and attract customers by lowering our margins in hopes of increasing our capacity.
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ITEM 8
ITEM 8 Financial Statements and Supplementary Data
SILVERTON ADVENTURES, INC.
AUDIT REPORT OF INDEPENDENT ACCOUNTANTS
AND
CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2011 and 2010
SILVERTON ADVENTURES, INC.
Page
Audit Report of Independent Accountants
Consolidated Balance Sheets - June 30, 2011 and 2010
Consolidated Statements of Operations for the years ended June 30, 2011 and 2010
Consolidated Statements of Stockholders’ Deficit for the years ended June 30, 2011 and 2010
Consolidated Statements of Cash Flows for the years ended June 30, 2011 and 2010
Notes to Consolidated Financial Statements
_______________________________________
SADLER, GIBB & ASSOCIATES, L.L.C.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Silverton Adventures, Inc.
We have audited the accompanying consolidated balance sheets of Silverton Adventures, Inc. as of June 30, 2011 and 2010, and the related consolidated statements of operations, stockholders’ deficit and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Silverton Adventures, Inc. as of June 30, 2011 and 2010, and the results of their operations and cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company had accumulated losses of $116,026 for the period from inception through June 30, 2011 which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Sadler, Gibb & Associates, LLC
Sadler, Gibb & Associates, LLC
Salt Lake City, UT
October 13, 2011
SILVERTON ADVENTURES, INC.
Balance Sheets
The accompanying notes are an integral part of these financial statements.
SILVERTON ADVENTURES, INC.
Statements of Operations
The accompanying notes are an integral part of these financial statements.
SILVERTON ADVENTURES, INC.
Statements of Stockholders' Equity (Deficit)
The accompanying notes are an integral part of these financial statements.
SILVERTON ADVENTURES, INC.
Statements of Cash Flows
The accompanying notes are an integral part of these financial statements.
SILVERTON ADVENTURES, INC.
Statements of Cash Flows
The accompanying notes are an integral part of these financial statements.
SILVERTON ADVENTURES, INC.
Notes to the Financial Statements
June 30, 2011 and 2010
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business and Organization
Silverton Adventures, Inc. (the "Company"), was originally incorporated in the State of Nevada on May 31, 2006 as Mor Travel, Inc. On December 26, 2007, the Company changed its name to Silverton Adventures, Inc. The Company currently operates under the DBA Silverton Print and Mail in Clark County, Nevada. The Company’s principal business objectives are the licensing and distribution of educational and family media content to distributors and end consumers, and providing printing and mailing services to companies nationwide.
On December 30, 2010, the Company acquired Worldwide Media Organization, Inc. (“Worldwide”). Worldwide is the owner or licensee of media content and also has important relationships with media distributers that the Company felt would allow significant growth in the media content and royalty business. Worldwide operates as a wholly owned subsidiary of the Company.
On June 30, 2011 the Company formed Silverton Printing, Inc., a Nevada corporation, as a wholly-owned subsidiary. The Company plans to operate its printing and mailing services through this subsidiary.
Accounting Basis
The Company’s financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States. The Company has elected a June 30 fiscal year end.
Principles of Consolidation
The accompanying consolidated financial statements for the years ended June 30, 2011 and 2010 include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The company considers all highly liquid investments with original maturities of three months or less to be cash or cash equivalents
Concentrations of Risk
The Company’s bank accounts are held by insured institutions. The funds are insured up to $250,000. At June 30, 2011, the Company’s bank deposits did not exceed the insured amounts.
Two customers make up 57 percent of total sales and five vendors account for 61.5 percent of total purchases.
SILVERTON ADVENTURES, INC.
Notes to the Financial Statements
June 30, 2011 and 2010
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounts Receivable
The Company’s accounts receivable are presented net of the allowance for estimated doubtful accounts. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts represents the Company’s best estimate of the amount of probable credit losses in the existing accounts receivable balance. The Company determines the allowance for doubtful accounts based upon historical write-off experience and current economic conditions. The Company reviews the adequacy of its allowance for doubtful accounts on a regular basis. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
The Company’s accounts receivable, net of the allowance for doubtful accounts, was $64,003 at June 30, 2011. At June 30, 2010, there was no allowance for doubtful accounts.
Property and Equipment
Property and equipment is recorded at cost. Major additions and improvements are capitalized and depreciated over their estimated useful lives. Depreciation of property and equipment is determined using the straight-line method over their useful lives, which ranges from three to five years. Gains or losses on the sale or disposal of property and equipment are included in the statements of operations. Maintenance and repairs that do not extend the useful life of the assets are expensed as incurred.
Valuation of Long-Lived Assets
The Company follows ASC 360 regarding the valuations and carrying values of its long-lived assets. Long-lived tangible assets and definite-lived intangible assets are reviewed for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company uses an estimate of undiscounted future net cash flows of the assets over the remaining useful lives in determining whether the carrying value of the assets is recoverable. If the carrying values of the assets exceed the expected future cash flows of the assets, the Company recognizes an impairment loss equal to the difference between the carrying values of the assets and their estimated fair values. For the years ended June 30, 2011 and 2010, no impairment of fixed assets was recognized.
Fair Value of Financial Instruments
The carrying amounts reported in the balance sheets for cash, accounts payable, notes payable, loans payable - related parties and accrued interest approximate their fair market value based on the short-term maturity of these instruments.
Revenue Recognition
The Company's revenues are generated from the printing and mailing services and from royalties on rights to media owned or licensed by the Company, primarily film rights. The Company follows guidance found in ASC 605, which provides guidance on the recognition, presentation and disclosure of revenue in financial statements and ASC 926 which provides guidance on the recognition of revenue from the sales or licensing of films by producers or distributors of films.
SILVERTON ADVENTURES, INC.
Notes to the Financial Statements
June 30, 2011 and 2010
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue Recognition (continued)
ASC 605 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. In general, the Company recognizes revenue related to goods and services provided when the following conditions are met:
a)
Persuasive evidence of an arrangement exists,
b)
Delivery has occurred or services have been rendered,
c)
The fee is fixed or determinable,
d)
Collectability is reasonably assured.
Revenues from printing and reproduction, such as photo copies, catalogue printing or reproduction, DVD duplication or other similar services are recognized under ASC 605.
The Company's royalty revenues are generated by licensing rights to media owned or licensed by the Company and is recognized under ASC 926 which states that a sale occurs when the Company transfers control of the master copy of a film or other media content and all the associated rights that accompany it. The following conditions are required before the Company recognizes revenue from a sale or licensing arrangement of a film or other media content:
a)
Persuasive evidence of a sale or licensing arrangement with a customer exists,
b)
The film or other media content is complete and, in accordance with the terms of the arrangement, has been delivered or is available for immediate and unconditional delivery,
c)
The license period of the arrangement has begun and the customer can begin its exploitation, exhibition, sale or license of the film or media content,
d)
The arrangement fee is fixed or determinable,
e)
Collection of the arrangement fee is reasonably assured.
Advertising Costs
The Company’s policy regarding advertising is to expense advertising when incurred. The Company incurred $15,223 and $4,782 in advertising expense for the years ended June 30, 2011 and 2010.
Stock-based Compensation
The Company follows the provisions of ASC 718 which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. The Company uses the Black-Scholes pricing model for determining the fair value of stock-based compensation.
Equity instruments issued to non-employees for goods or services are accounted at fair value when the service is complete or a performance commitment date is reached, whichever is earlier.
SILVERTON ADVENTURES, INC.
Notes to the Financial Statements
June 30, 2011 and 2010
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
The Company accounts for income taxes in accordance with accounting guidance now codified as ASC 740, "Income Taxes," which requires that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities.
Income Taxes (continued)
A valuation allowance is recorded when it is more likely than not that some or all deferred tax assets will not be realized.
The Company applies the provisions of ASC 740, “Accounting for Uncertainty in Income Taxes”. The ASC clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements. The ASC prescribes 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. The ASC provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company did not identify any material uncertain tax positions on returns that have been filed or that will be filed. The Company did not recognize any interest or penalties for unrecognized tax benefits during the years ended June 30, 2011 and 2010, nor were any interest or penalties accrued as of June 30, 2011.
Basic Loss per Share
Basic loss per share is calculated by dividing the Company’s net loss applicable to common stockholders by the weighted average number of common shares during the period. Diluted loss per share is calculated by dividing the Company’s net loss available to common stockholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are no such common stock equivalents outstanding as of June 30, 2011 or 2010.
Recent Accounting Pronouncements
Management has considered all recent accounting pronouncements issued since the last audit of our consolidated financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s consolidated financial statements.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. During the year ended June 30, 2011, the Company realized a net loss of $1,045 and has incurred an accumulated deficit of $116,026. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
SILVERTON ADVENTURES, INC.
Notes to the Financial Statements
June 30, 2011 and 2010
NOTE 2 - GOING CONCERN (Continued)
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plans to obtain such resources for the Company include (1) obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses, and (2) seeking out and completing a merger with an existing operating company. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 3 - PROPERTY AND EQUIPMENT
As of June 30, 2011 and 2010, property and equipment consisted of the following:
Depreciation expense for the years ended June 30, 2011 and 2010 was $8,932 and $1,509, respectively.
NOTE 4 - RELATED PARTY TRANSACTIONS
Various general and administrative expenses of the Company as well as loans for operating purposes have been paid for or made by related parties of the Company. The related party payable totaled $-0- and $28,590 at June 30, 2011 and 2010 respectively. These amount payable bear no interest, are uncollateralized and due on demand.
During the year ended June 30, 2011 and 2010, expenses paid for on behalf of the Company totaled $23,259, cash proceeds from related parties totaled $175,742, and cash repayments of related party payables totaled $228,470. On June 30, 2011, two related party debt holders agreed to cancel debts totaling $13,897.
A related party provides the Company office and production space. No written agreement exists and no fixed monthly rent is charged. The Company pays rent on demand as decided upon by both parties.
SILVERTON ADVENTURES, INC.
Notes to the Financial Statements
June 30, 2011 and 2010
NOTE 5 - ROYALTIES
The Company entered into several royalty agreements wherein the Company acquired rights to licensed content. The Company intends to either reproduce and distribute the media or sublicense the rights to another party. The agreements require the Company to pay an upfront royalty fee and then ongoing royalty fees of 15 to 30 percent of gross sales receipts over the life of the licensing agreement. The agreements vary in length from three to five years. Royalty expenses totaled $35,766 and $-0- for the years ended June 30, 2011 and 2010, respectively. As of June 30, 2011 and 2010, royalty payables under these agreements totaled $24,708 and $-0-, respectively.
Under some of these arrangements, the Company pays an upfront royalty fee that is applied to future royalties as the Company achieves sale and incurs corresponding royalty expense. The upfront fees that are to be applied against future royalty expense are capitalized and amortized as royalty expenses are applied. As of June 30, 2011 and 2010, the Company has recorded $5,032 and $-0- as prepaid royalties, respectively.
The Company has also entered into similar royalty agreements wherein the Company licenses contentrights to third parties in exchange for a royalty fee. During the years ended June 30, 2011 and 2010, the Company recognized royalty revenue of $297,476 and $-0-, respectively.
NOTE 6 - ACQUISITION OF SUBSIDIARY
On December 30, 2010 the Company acquired Worldwide Media Organization, Inc., a Nevada Corporation (“Worldwide”) pursuant to a share exchange agreement whereby the Company issued 7,050,000 shares of common stock in exchange for 100 percent of the issued and outstanding common stock of Worldwide. At the close of the transaction, Worldwide became a wholly-owned subsidiary of the Company. The acquisition was accounted for as a purchase.
At the time of acquisition, both entities were under common control and thus the acquisition was accounted for under ASC 845 which requires that transfers of nonmonetary assets between shareholders in exchange for stock should be recorded at the transferors’ historical costs basis. Accordingly, the assets and liabilities transferred have been recorded at their carrying amounts at the date of transfer and the Company has recorded the acquisition price as equal to book value of Worldwide, or $47,439, on the date of acquisition.
A breakdown of the assets acquired and their book values at acquisition is as follows:
Assets and liabilities acquired:
Cash and cash equivalents
$
6,570
Accounts receivable, net
35,168
Inventory
3,035
Fixed assets, net
5,587
Accounts payable and other liabilities
(2,921)
Net assets on acquisition
$
47,439
Purchase price
47,439
Excess of fair value of net assets over purchase price
$
-
NOTE 7 - STOCKHOLDERS’ DEFICIT
The Company is authorized to issue two classes of stock. The total number of shares authorized to be issued by the Company is 10,000,000 shares of preferred stock at a par value of $0.001 per share and 75,000,000 shares of common stock at a par value of $0.001. As of June 30, 2011, the Company has no preferred stock issued or outstanding and 17,800,000 common share issued and outstanding.
On July 19, 2010 the Company cancelled 500,000 shares of common stock due to non-performance of service.
SILVERTON ADVENTURES, INC.
Notes to the Financial Statements
June 30, 2011 and 2010
On June 30, 2011, the Company issued 7,050,000 shares of common stock to acquire its now wholly owned subsidiary, Worldwide Media Organization, Inc. The shares were valued at $47,439 based on the net book value of Worldwide Media Organization, Inc. on the date of acquisition (see Note 5).
On June 30, 2011, two related party debt holders agreed to cancel debts totaling $13,897. The forgiveness of debt was recorded as contributed capital from related parties.
NOTE 8 - INCOME TAXES
The Company’s provision for income taxes was $-0- for the years ended June 30, 2011 and 2010, respectively, since the Company has accumulated taxable losses from operations. ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the Company’s opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a full valuation allowance equal to the deferred tax asset has been recorded.
The total deferred tax asset is calculated by multiplying a 34 percent marginal tax rate by the cumulative Net Operating Loss (“NOL”). At June 30, 2011, the Company has available $106,127 of NOL’s which expire in various years beginning in 2026 and carrying forward through 2031.
The tax effects of significant items comprising the Company's net deferred taxes as of June 30, 2011 and 2010 were as follows:
The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 34 percent to net loss before provision for income taxes for the following reasons:
The Company files federal and Nevada income tax returns subject to statutes of limitations. The years ended June 30, 2011, 2010, and 2009 are subject to examination by federal and state tax authorities.
SILVERTON ADVENTURES, INC.
Notes to the Financial Statements
June 30, 2011 and 2010
NOTE 9 - COMMITMENTS AND CONTINGENCIES
Lease Agreements
A related party currently provides the Company office and production space. No written agreement exists and no fixed monthly rent is charged. The Company pays rent as determined by both parties. Rent expense totaled $16,850 and $5,250 for the years ended June 20, 2011 and 2010, respectively.
Royalty Agreements
The Company entered into several royalty agreements wherein the Company acquired rights to licensed content. The Company intends to either reproduce and distribute the media or sublet the rights to another party. The agreements require the Company to pay royalties of 15 to 30 percent of gross sales receipts over the life of the licensing agreement. The agreements vary in length from three to five years. Royalty expenses totaled $35,766 and $-0- for the years ended June 30, 2011 and 2010, respectively.
Legal Proceedings
The Company may be party to various legal actions arising in the ordinary course of business. Matters that are probable of unfavorable outcomes to the Company and which can be reasonably estimated are accrued. Such accruals are based the Company’s estimates of the outcomes of such matters and its experience in contesting, litigating and settling similar matters. There is no litigation or contingencies that require accrual or disclosure as of June 30, 2011.
NOTE 10 - SUBSEQUENT EVENTS
In accordance with ASC 855, Company management reviewed all material events through the date of this filing, and there are no material subsequent events to report other than those reported.
SILVERTON ADVENTURES, INC.
Notes to the Financial Statements
June 30, 2011 and 2010
Item 9
Item 9 Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9AT -Controls and Procedures
Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and the principal financial officer, we have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the period covered by this report. Based on this evaluation, Ron Miller (Our President, Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer), concluded as of the evaluation date that our disclosure controls and procedures were not effective such that the material information required to be included in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, and was made known to us by others within those entities, particularly during the period when this report was being prepared.
Management’s Annual Report on Internal Control Over Financial Reporting.
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The internal control process has been designed, under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America.
Management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting as of June 30, 2011, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring, based on the framework in Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). As of June 30, 2011, management has determined that the Company’s internal control over financial reporting as of June 30, 2011 was not effective. We are in the process of developing new policies and procedures with regards to internal control over financial reporting.
Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that accurately and fairly reflect, in reasonable detail, transactions and dispositions of assets; and provide reasonable assurances that: (1) transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States; (2) receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and (3) unauthorized acquisitions, use, or disposition of the Company’s assets that could have a material effect on the Company’s financial statements are prevented or timely detected.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparations and presentations. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
SILVERTON ADVENTURES, INC.
Notes to the Financial Statements
June 30, 2011 and 2010
Changes in Internal Control Over Financial Reporting.
There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the evaluation date.
Item 9B. Other Information
No items required to be reported on Form 8-K during the fourth quarter ended June 30, 2011 covered by this report were not previously reported on Form 8-K.
PART III
Item 10. Directors, Executive Officers, and Corporate Governance.
Set forth below is the name and age of each individual who was a director or executive officer of Silverton Adventures, Inc. as of June 30, 2011, together with all positions and offices of the Company held by each and the term of office and the period during which each has served:
Biographical Information
The following paragraphs set forth brief biographical information for the aforementioned director and executive officer:
Ron Miller - President, Treasurer, and Chairman of the Board - Mr. Miller has a vast amount of experience in publishing, producing and marketing. Mr. Miller is a 1975 graduate of La Verne University in La Verne, California with a degree in business administration. He has produced and marketed over 70 educational programs since 1992. From 1989 to 1991, Mr. Miller, through a privately owned company called Entertainment Clearinghouse, operated a business of the distribution of paperback books from major publishers. He has published books such as “The American Dream: Shadow and Substance”, “The Breaking of a President”, and “The Gambia”. Also, Mr. Miller has been an executive producer of several educational videos which include:
·
The Rise and Fall of the Soviet Union
·
The History and Mystery of China
·
Japan: Land of the Rising Sun
·
The Life and Times of Ronald Reagan
·
World War I: Cause and Effect
·
The History and Function of Congress
·
The Extraordinary Life of Amelia Earhart
·
When Women Ruled: Great Women Leaders in World History
·
Einstein
·
The Mystery of Sherlock Holmes
·
Great American Landmarks
·
Helen Keller
Sarit Mor - Secretary, Treasurer, and Director - Ms. Mor is a career leadership professional with insight, vision, and enthusiasm necessary to inspire her team to garner impressive results with more than 20 years. With history leaning in manufacturing of printed material and operations management she has significant expertise in the Printing industry that allows her performance and assessments to carry throughout her career. Ms. Mor graduated from the University of Tel Aviv with her Bachelors of Science degree in Psychology.
Involvement in Certain Legal Proceedings
To our knowledge, during the past five years, no present or former director or executive officer of our company: (1) filed a petition under the federal bankruptcy laws or any state insolvency law, nor had a receiver, fiscal agent or similar officer appointed by a court for the business or present of such a person, or any partnership in
which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer within two years before the time of such filing; (2) was convicted in a criminal proceeding or named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting the following activities: (i) acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, associated person of any of the foregoing, or as an investment advisor, underwriter, broker or dealer in securities, or as an affiliated person, director of any investment company, or engaging in or continuing any conduct or practice in connection with such activity; (ii) engaging in any type of business practice; (iii) engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodity laws; (4) was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described above under this Item, or to be associated with persons engaged in any such activity; (5) was found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission to have violated any federal or state securities law and the judgment has not been subsequently reversed, suspended or vacated; or (6) was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated.
Compliance with Section 16(a) of the Exchange Act
Because we do not have a class of equity securities registered pursuant to Section 12 of the Exchange Act, our executive officers, directors and persons who beneficially own more than 10% of our common stock are not required to file initial reports of ownership and reports of changes in ownership with the SEC under Section 16(a) of the Exchange Act.
Audit Committee and Audit Committee Financial Expert Disclosure
The Company’s Board of Directors does not have a separately designated audit committee or an “audit committee financial expert.” Audit committee functions are performed by our Board of Directors. None of our directors is deemed independent. All directors also hold positions as our officers. Our audit committee is responsible for: (1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls, and auditing matters; (3) establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee.
The Board of Directors does not have an audit committee financial expert at this time due to the fact that the Company has only limited operations and no revenues. We believe the cost related to retaining a financial expert at this time is prohibitive. Further, because of our limited operations, we believe the services of a financial expert are not warranted.
Code of Ethics
We have adopted a corporate code of ethics. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code.
Item 11. Executive Compensation
(a) Since Silverton Adventures, Inc.’s incorporation on May 31, 2006, we have not paid any compensation to any officer, director or employee. We do not have employment agreements. Any future compensation to be paid will be determined by the Board of Directors, and, as appropriate, an employment agreement will be executed. We do not currently have plans to pay any compensation until such time as it maintains a positive cash flow.
(b) There are no annuity, pension, or retirement benefits proposed to be paid to officers, directors, or employees of the Corporation in the event of retirement at normal retirement date pursuant to any presently existing plan provided or contributed to by the Corporation.
Director Compensation
The Directors of the Company do not receive compensation at this time.
Item 12 - Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth the beneficial ownership of the Company's officers, directors, and persons who own more than five percent of the Company's common stock as of June 30, 2011. Under relevant provisions of the Exchange Act, a person is deemed to be a "beneficial owner" of a security if he or she has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is also deemed to be a beneficial owner of any securities of which that person has the right to acquire beneficial ownership in 60 days. More than one person may be deemed to be a beneficial owner of the same securities. The percentage ownership of each stockholder is calculated based on 17,800,000 total outstanding shares of our common stock as of October 13, 2011.
Amount and Nature of Beneficial Ownership as of June 30, 2011:
Item 13 - Certain Relationships and Related Transactions, Director Independence
Various general and administrative expenses of the Company as well as loans for operating purposes have been paid for or made by related parties of the Company. During the years ended June 30, 2011 and 2010 the Company borrowed $175,742 and $58,810 and repaid $228,470 and $50,584, respectively. The related party payables total $0 and $28,589 as of June 30, 2011 and 2010, respectively. These notes bear no interest, are uncollateralized and due on demand.
Item 14 - Principal Accountant Fees and Services
Audit Fees: All fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements and the review of interim financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years.
2011: $ 19,000
2010:
$ 9,500
Audit-Related Fees: All fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of the registrant's financial statements and are not reported under Item 9(e)(f1) of Schedule 14A.
2011: $ 0
2010:
$ 0
Tax Fees: The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning:
2011: $ 0
2010: $ 0
All Other Fees:
2010:
$ 0
2008: $ 0
(5) Our audit committee's pre-approval policies and procedures described in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X were that the audit committee pre-approve all accounting related activities prior to the performance of any services by any accountant or auditor.
(6) The percentage of hours expended on the principal accountant's engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees was 0%.
PART IV
Item 15 - Exhibits, Financial Statement Schedules
The following exhibits are included with this filing:
(1)
Filed with the Securities and Exchange Commission on September 23, 2008 as an exhibit numbered as indicated above, to the Registrant’s registration statement on Form S-1 (file no. 333-153626 which exhibit is incorporated herein by reference.
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.
October 13, 2011
Silverton Adventures, Inc.
By:
/s/ Ron Miller
Ron Miller, President (Principal Executive and Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates included.
October 13, 2011
By:
/s/ Ron Miller
Ron Miller, President
Principal Executive Officer
Principal Financial Officer
Principal Accounting Officer
Chairman of the Board of Directors
Item 9B. Other Information
No items required to be reported on Form 8-K during the fourth quarter ended June 30, 2011 covered by this report were not previously reported on Form 8-K.
PART III
Item 10.
Item 10. Directors, Executive Officers, and Corporate Governance.
Set forth below is the name and age of each individual who was a director or executive officer of Silverton Adventures, Inc. as of June 30, 2011, together with all positions and offices of the Company held by each and the term of office and the period during which each has served:
Biographical Information
The following paragraphs set forth brief biographical information for the aforementioned director and executive officer:
Ron Miller - President, Treasurer, and Chairman of the Board - Mr. Miller has a vast amount of experience in publishing, producing and marketing. Mr. Miller is a 1975 graduate of La Verne University in La Verne, California with a degree in business administration. He has produced and marketed over 70 educational programs since 1992. From 1989 to 1991, Mr. Miller, through a privately owned company called Entertainment Clearinghouse, operated a business of the distribution of paperback books from major publishers. He has published books such as “The American Dream: Shadow and Substance”, “The Breaking of a President”, and “The Gambia”. Also, Mr. Miller has been an executive producer of several educational videos which include:
·
The Rise and Fall of the Soviet Union
·
The History and Mystery of China
·
Japan: Land of the Rising Sun
·
The Life and Times of Ronald Reagan
·
World War I: Cause and Effect
·
The History and Function of Congress
·
The Extraordinary Life of Amelia Earhart
·
When Women Ruled: Great Women Leaders in World History
·
Einstein
·
The Mystery of Sherlock Holmes
·
Great American Landmarks
·
Helen Keller
Sarit Mor - Secretary, Treasurer, and Director - Ms. Mor is a career leadership professional with insight, vision, and enthusiasm necessary to inspire her team to garner impressive results with more than 20 years. With history leaning in manufacturing of printed material and operations management she has significant expertise in the Printing industry that allows her performance and assessments to carry throughout her career. Ms. Mor graduated from the University of Tel Aviv with her Bachelors of Science degree in Psychology.
Involvement in Certain Legal Proceedings
To our knowledge, during the past five years, no present or former director or executive officer of our company: (1) filed a petition under the federal bankruptcy laws or any state insolvency law, nor had a receiver, fiscal agent or similar officer appointed by a court for the business or present of such a person, or any partnership in
which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer within two years before the time of such filing; (2) was convicted in a criminal proceeding or named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting the following activities: (i) acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, associated person of any of the foregoing, or as an investment advisor, underwriter, broker or dealer in securities, or as an affiliated person, director of any investment company, or engaging in or continuing any conduct or practice in connection with such activity; (ii) engaging in any type of business practice; (iii) engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodity laws; (4) was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described above under this Item, or to be associated with persons engaged in any such activity; (5) was found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission to have violated any federal or state securities law and the judgment has not been subsequently reversed, suspended or vacated; or (6) was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated.
Compliance with Section 16(a) of the Exchange Act
Because we do not have a class of equity securities registered pursuant to Section 12 of the Exchange Act, our executive officers, directors and persons who beneficially own more than 10% of our common stock are not required to file initial reports of ownership and reports of changes in ownership with the SEC under Section 16(a) of the Exchange Act.
Audit Committee and Audit Committee Financial Expert Disclosure
The Company’s Board of Directors does not have a separately designated audit committee or an “audit committee financial expert.” Audit committee functions are performed by our Board of Directors. None of our directors is deemed independent. All directors also hold positions as our officers. Our audit committee is responsible for: (1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls, and auditing matters; (3) establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee.
The Board of Directors does not have an audit committee financial expert at this time due to the fact that the Company has only limited operations and no revenues. We believe the cost related to retaining a financial expert at this time is prohibitive. Further, because of our limited operations, we believe the services of a financial expert are not warranted.
Code of Ethics
We have adopted a corporate code of ethics. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code.
Item 11.
Item 11. Executive Compensation
(a) Since Silverton Adventures, Inc.’s incorporation on May 31, 2006, we have not paid any compensation to any officer, director or employee. We do not have employment agreements. Any future compensation to be paid will be determined by the Board of Directors, and, as appropriate, an employment agreement will be executed. We do not currently have plans to pay any compensation until such time as it maintains a positive cash flow.
(b) There are no annuity, pension, or retirement benefits proposed to be paid to officers, directors, or employees of the Corporation in the event of retirement at normal retirement date pursuant to any presently existing plan provided or contributed to by the Corporation.
Director Compensation
The Directors of the Company do not receive compensation at this time.
Item 12
Item 12 - Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth the beneficial ownership of the Company's officers, directors, and persons who own more than five percent of the Company's common stock as of June 30, 2011. Under relevant provisions of the Exchange Act, a person is deemed to be a "beneficial owner" of a security if he or she has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is also deemed to be a beneficial owner of any securities of which that person has the right to acquire beneficial ownership in 60 days. More than one person may be deemed to be a beneficial owner of the same securities. The percentage ownership of each stockholder is calculated based on 17,800,000 total outstanding shares of our common stock as of October 13, 2011.
Amount and Nature of Beneficial Ownership as of June 30, 2011:
Item 13
Item 13 - Certain Relationships and Related Transactions, Director Independence
Various general and administrative expenses of the Company as well as loans for operating purposes have been paid for or made by related parties of the Company. During the years ended June 30, 2011 and 2010 the Company borrowed $175,742 and $58,810 and repaid $228,470 and $50,584, respectively. The related party payables total $0 and $28,589 as of June 30, 2011 and 2010, respectively. These notes bear no interest, are uncollateralized and due on demand.
Item 14
Item 14 - Principal Accountant Fees and Services
Audit Fees: All fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements and the review of interim financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years.
2011: $ 19,000
2010:
$ 9,500
Audit-Related Fees: All fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of the registrant's financial statements and are not reported under Item 9(e)(f1) of Schedule 14A.
2011: $ 0
2010:
$ 0
Tax Fees: The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning:
2011: $ 0
2010: $ 0
All Other Fees:
2010:
$ 0
2008: $ 0
(5) Our audit committee's pre-approval policies and procedures described in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X were that the audit committee pre-approve all accounting related activities prior to the performance of any services by any accountant or auditor.
(6) The percentage of hours expended on the principal accountant's engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees was 0%.
PART IV
Item 15
Item 15 - Exhibits, Financial Statement Schedules
The following exhibits are included with this filing:
(1)
Filed with the Securities and Exchange Commission on September 23, 2008 as an exhibit numbered as indicated above, to the Registrant’s registration statement on Form S-1 (file no. 333-153626 which exhibit is incorporated herein by reference.
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.
October 13, 2011
Silverton Adventures, Inc.
By:
/s/ Ron Miller
Ron Miller, President (Principal Executive and Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates included.
October 13, 2011
By:
/s/ Ron Miller
Ron Miller, President
Principal Executive Officer
Principal Financial Officer
Principal Accounting Officer
Chairman of the Board of Directors