UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [  ] No

Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accredited filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “Smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [  ]                      

Accelerated filer [  ]

Non-accelerated filer [  ]

Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. [  ] Yes [X] No

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TABLE OF CONTENTS

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PART I — FINANCIAL INFORMATION

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ITEM 1. FINANCIAL STATEMENTS

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ITEM 2. MANAGEMENT’S DISCUSSON AND ANALYSIS OF FINANCIALS CONDITION AND RESULTS OF OPERATIONS  10

PART II — OTHER INFORMATION

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ITEM 1. LEGAL PROCEEDINGS

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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ITEMS 3. DEFAULTS UPON SENIOR SECURITIES

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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

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ITEM 5. OTHER INFORMATION

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None

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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

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SIGNATURES

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PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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The accompanying notes are an integral part of these financial statements.

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The accompanying notes are an integral part of these financial statements.

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The accompanying notes are an integral part of these financial statements.

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SILVERTON ADVENTURES, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2012 (Unaudited)

NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The accompanying consolidated financial statements have been prepared by the Company without audit.  In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at March 31, 2012, and for all periods presented herein, have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted.  It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's June 30, 2011 audited financial statements.  The results of operations for the periods ended March 31, 2012 and 2011 are not necessarily indicative of the operating results for the full years.

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. 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.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. 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 – SIGNIFICANT ACCOUNTING POLICIES

Reclassification

Certain balances in previously issued financial statements have been reclassified to be consistent with the current period presentation.

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.

Recent Accounting Pronouncements

Management has considered all recent accounting pronouncements issued since the last audit of its financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.

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SILVERTON ADVENTURES, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2012 (Unaudited)

NOTE 4 – RELATED-PARTY TRANSACTIONS

As of June 30, 2011, the Company had $14,221 in outstanding receivables from various officers and related parties.  During the nine month period ended March 31, 2012, the Company paid out an additional $102,611 in cash, and received repayments of $56,281, leaving an ending balance of $60,511 in related party receivables at March 31, 2012.  These amounts are unsecured, bear no interest, and are due on demand.  

As of June 30, 2011, the Company had $-0- in outstanding payables due to various related parties.  During the nine month period ended March 31, 2012, the Company borrowed an additional $48,905 in cash, made repayments of $8,525, and had $25,521 of expenses paid on its behalf by related parties, leaving an ending balance of $65,901 in related party payables at March 31, 2012.  These amounts are unsecured, bear no interest, and are due on demand.  

NOTE 5 – ROYALTIES

 

The Company has entered into various royalty agreements wherein the Company acquires rights to licensed media 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. 

 

Under some of these arrangements, the Company pays an upfront royalty fee that is applied to future royalties as the Company consummates sales 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 March 31, 2012 and June 30, 2011, the Company has recorded $9,626 and $5,032 as prepaid royalties, respectively. 

 

The Company has also entered into similar royalty agreements wherein the Company licenses media content rights to third parties in exchange for a royalty fee.  As of March 31, 2012 and June 30, 2011, the Company has recorded $17,133 and $24,708 as royalties payable related to such royalty fees, respectively. 

NOTE 6 – CONVERTIBLE NOTES PAYABLE

On July 20, 2011, the Company entered into a convertible note payable in the amount of $10,000.  The note bears interest at 8.5 percent per annum and has a maturity date of July 20, 2014.  The creditor has the option at any time to convert the principal and any accrued interest into common stock of the Company according to the following stock prices: year one, $0.75 per share; year two, $1.00 per share; and year three, $1.25 per share.  As at March 31, 2012, the note has not been converted to common stock by the note holder.

NOTE 7 – STOCKHOLDERS’ DEFICIT

On December 2, 2011 the Company issued 100,000 shares of Series “A” preferred stock to two unrelated entities for cash at $0.10 per share in exchange for $10,000.  According to the terms of the preferred stock, each share of Series A preferred stock is convertible into shares of the Company’s common stock at a conversion ratio of one hundred (100) shares of common stock for every one (1) share of preferred stock.  The Company’s Series A preferred stock is not entitled to receive any dividends, has no liquidation rights, and is not entitled to any voting rights.

NOTE 8 – SEGMENT DISCLOSURES

Operating segments are defined as components of an enterprise about which separate and discreet financial information is available and is evaluated regularly by the chief operating decision-maker in assessing performance and determining how to best allocate Company resources. The Company’s chief operating decision makers direct the allocation of resources to operating segments based on the profitability and cash flows of each respective segment.

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SILVERTON ADVENTURES, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2012 (Unaudited)

NOTE 8 – SEGMENT DISCLOSURES (CONTINUED)

The Company has three principal operating segments: (1) printing services, (2) media development and distribution, and (3) the corporate operations overseeing each segment and the financial reporting obligations of the combined entity.  These operating segments were delineated based on the nature of the products and services offered.

The Company has determined that there are two reportable segments: (1) printing services and (2) media development and distribution.  The Company evaluates the financial performance of the respective segments based on several factors, of which the primary measure is business segment income before taxes. The accounting policies of the business segments are the same as those described in ‘‘Note 3: Significant Accounting Policies.’’ All significant intercompany transactions and balances have been eliminated. The following tables show the operations of the Company’s reportable segments for the nine periods ended March 31, 2012 and 2011:

		Printing			Media Development
		Services			and Distribution			Consolidated
March 31, 2012
Revenues		$	91,354		$	245,303		$	336,657
Cost of revenues			46,751			47,073			93,824
Operating expenses			65,339			285,715			355,054
Other (expense)			-			18,788			18,788
Net income (loss)		$	(20,736)		$	(70,697)		$	(93,433)
Total assets		$	76,935		$	152,332		$	229,267
March 31, 2011
Revenues		$	65,288		$	187,504		$	252,792
Cost of revenues			12,877			30,430			43,307
Operating expenses			79,382			85,995			165,377
Net income (loss)		$	(26,971)		$	71,079		$	44,108
Total assets		$	61,030		$	129,802		$	190,832

NOTE 9 – SUBSEQUENT EVENTS

In accordance with ASC 855, Company management reviewed all material events through the filing or these financial statements and there are no material subsequent events to report

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MANAGEMENT’S DISCUSSON AND ANALYSIS OF FINANCIALS CONDITION AND RESULTS OF OPERATIONS

This section must be read in conjunction with the unaudited Financial Statements included in this report.

A.

Management’s Discussion

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.

During December 2010, the Company formed a wholly-owned subsidiary named Silverton Printing, Inc. (“Silverton Printing”) whereby it operates place and now operates its original printing and mailing services to companies nationwide. Additionally, on December 30, 2010, the Company acquired 100% of the outstanding common stock of Worldwide Media Organization, Inc. thereby 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.

Company Overview

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. The Company recently leased and took delivery of a high end digital printer (Xerox 700 “V” Press) and contracted with Printing Storefront Solutions (See www. http://www.printingstorefrontsolutions.com) to develop a fully functional web based “Digital Print On-Demand” store front web site for the Silverton Printing, Inc. (Division of SVAD). This is the next step in this divisions plan to become a regional to national player in the online small run, high quality digital print industry commonly referred to as the “Digital Print On-Demand” industry.

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.

Nine months ended March 31, 2012 and 2011

During the nine months ended March 31, 2012, the Company generated revenues of $336,657 while incurring $93,824 in cost of sales resulting in a gross margin of $242,833. After deducting $355,054 for total operating expenses resulted in a net loss from operations of $112,221. While we had an increase in total revenue for the previous nine-months ended March 31, 2011, we had a net loss from operations as of the result of the hiring of new staff and moving into larger facilities in anticipation of expanding both the printing and DVD operations in the coming fiscal year. The negative cash flow for this period is

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attributable primarily to the increase in payroll expense and increased royalty expense from the acquisition of a series of new titles.

Three months ended March 31, 2012 and 2011

During the three months ended March 31, 2012 the Company generated revenues of $72,262 while incurring $22,781 in cost of sales resulting in a gross margin of $49,481. After deducting $103,867 for total operating expenses resulted in a net loss from operations of $54,386. The net loss from operations for this period is a result of the hiring of new staff and moving into larger facilities in anticipation of expanding both the printing and DVD operations in the coming fiscal year. The negative cash flow for this period is attributable primarily to the increase in payroll expense and increased royalty expense from the acquisition of a series of new titles.

The Company has changed its method of marketing its products in both subsidiaries.  

Worldwide Media Organization, Inc. (“WMA”) started marketing its products directly to retailers through major distributors thus lowering its cost of marketing while at the same time increasing its sales.  This has resulted in the third quarter of 2011 being the first quarter whereby the Company has been cash flow positive.  In the future, WMA plans on raising capital in order to increase their DVD products through self-productions and acquisition of DVD catalogs.  We anticipate WMA will continue to increase its revenue stream each quarter as we increase the titles available to our distributors.

Silverton Printing, Inc. has changed the printing services it provides and has focused on marketing to clients low run color jobs, high volume black and white printing, brochures, convention related booklets, and related printing.  We have also started to be more aggressive in our marketing efforts nationwide.

Liquidity and Capital Resources

As of March 31, 2012, the Company had negative working capital of $154,198, which is calculated by subtracting current liabilities from current assets.  This negative working capital is attributable to monies owed for accounts payable, royalties’ payable and to officers for related party payables. The Company’s current assets as of March 31, 2012 consisted of $97,015 in accounts receivable, $60,551 in related party receivables, and $9,626 in prepaid royalties.

SAI has limited capital resources from which to operate.  Without the realization of either significant cash flow from ongoing revenue or additional capital investment, the Company may not be able to continue without short term loans from its current officer and director.  However, the Company’s independent auditors have expressed substantial doubt about the Company's ability to continue as a going concern.

B.

Plan of Operation

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.

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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

Digital Print On-Demand

In an effort to increase our top line revenue and grow the printing division into a national print shop, the Company recently leased and took delivery of a high end digital printer (Xerox 700 “V” Press) and contracted with Printing Storefront Solutions (See www. http://www.printingstorefrontsolutions.com) to develop a fully functional web based “Digital Print On-Demand” store front web site for the Silverton Printing, Inc. (Division of SVAD). This is the next step in this divisions plan to become a regional to

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national player in the online small run, high quality digital print industry commonly referred to as the “Digital Print On-Demand” industry.

Silverton Printing will have the ability to set up store fronts from retail end users who will be able to enter their own pricing into the store front and sell printing services to their client base while all orders will be serviced in house by the division.

WHAT IS “DIGITAL PRINT-ON-DEMAND”?

Digital print-on-demand is a production process that lets you order manuals and brochures online in quantities you need at the moment, and have the output delivered directly to your end-users.  This eliminates administrative cost and hassles, while saving time, space, materials and money.  It’s good for the environment, too.

HOW DIGITAL PRINT-ON-DEMAND WORKS!

Imagine the on-demand production alternative.  Instead of pre-printing:

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Store materials in an online Document Library at Silverton Printing, Inc. facility

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Update them easily by sending new files via a password-protected Customer Portal

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Print them only as needed, ordering anytime in any quantity on your Portal

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Maintain few or no pre-prints in physical storage

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Throw away nothing

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Produce materials in black and white or full color, flat, folded or bound into manuals

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Have orders delivered to your office, show or customers

Switching from long-run to digital print-on-demand can save you a lot of time and money. Basically, each machine does all the work from taking the initial order online by computer, preparing the order internally, and then sending the end product out with mailing labels attached and billing done automatically. The only personnel needed to run is for maintenance (and adding paper and ink) and the boxing the end product for mailing.

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.

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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

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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.

WMO Plans for 2012

IN HOUSE EDUCATIONAL TITLE PRODUCTIONS

WMO plans of self producing a series of educational titles in house for sale to the school and libraries.  These proposed titles will include the following (Cost of about $5,000 to $7,500 per title):

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Spanish American War

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Bolshevik Revolution 1917:  The Rise of Communism

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History of FBI and CIA

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Functions of US Cabinet Departments

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The Great Depression/Great Dust Bowl/Migrations

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Chinese Communist Revolution

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Marshall Plan and Rebuilding of post-WWII Europe

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The Black Plague

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The Renaissance

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Greek Philosophers:  Aristotle, Plato, Socrates

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Aztec/Mayan Empire

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Rise and Fall of Ancient Egyptian Empire

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Rise and Fall of Persian Empire

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Rise and Fall of the British Colonial Empire

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Rise and Fall of the French Empire

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Genghis Khan

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The US-Korean War

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Explorations and Raids of the Vikings

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The History of the Great Crusades

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The Grand Inquisition

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The Rise of Islam

EDUCATIONAL LICENSING PROGRAM

WMO has recently acquired many new titles that include both content for the home video and educational title markets.  These new acquisitions (North American License Rights) include:

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·

Animal Encyclopedia Vol. 1-10 which features footage from the BBC (KM Media Group – Czech Republic)

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Discover the World – 63 volume series which explores the countries of the world (KM Media Group - Czech Republic)

WMO also acquired the North American license rights from Explora Films (Spain) for 58 total programs of varying length which includes some of the following titles:

Anthropology

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Kingdoms of the Himalayas

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Inhabitants of Timeless Africa

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Pygmies, Agony of the Green God

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Himalayan Dwellers

Series

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Isolated (6 episodes)

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Third Planet (26 episodes)

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Seaways (13 episodes)

History

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The Celtic Legacy

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La Joya and the Warriors of the Mist

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Millennial Peru

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The 2nd Day of May

Nature

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Crocodiles:  Last Dragon

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Elephants:  Twilight of the Giants

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Zebras on the Move

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South Georgia:  Life Under the Furious 50

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The Mountains of the Wolf

[Balance of this Page Intentionally Left Blank]

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FAMILY HOME DVD RECENT LICENSING

WMO recently acquired the North American Licensing rights to 16 feature films from Australian Children’s Television Foundation which includes one of the first movies starring a teenage Nicole Kidman. The names of the movies are as follows:

·

Escape from Jupiter

·

Sky Trackers

·

The Gift

·

Top Enders

·

Devil’s Hill

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Princess Kate

·

Peter & Pompey

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Let the Balloon Go

·

Captain Johnno

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Room to Move/On Loan (Nicole Kidman)

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Top Kid/The Other Facts of Life

·

Boys Soldiers/His Masters Goat

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Quest Beyond Time/The Paper Boy

·

Just Friends/The Journey

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Second Childhood/The Big Wish

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Tarflowers/Mr. Edmund

DIGITAL VIDEO DOWNLOAD (STREAMING VIDEO)

WMO also plans on eventually developing a digital streaming website where end-users like schools, libraries, and home schoolers can digitally stream our educational DVD content for a small fee per download. Currently, WMO provides this same digital educational content to AIM/Learn 360 (Pays a percentage of sale semi-annually based upon client usage), a large educational video streaming company.  We are currently in negotiations with Discovery.com (will pay a percentage of sale quarterly based upon client usage) for this same service.

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 markets…in content, packaging and retail pricing.

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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

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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, Wal-Mart, Target, Sam’s 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 Wal-Mart, 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 McClean 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.

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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, shrink-wrap 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.

ITEM 4. CONTROLS AND PROCEDURES

The effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) was evaluated under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, as of the end of the period covered by this quarterly report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are not effective in providing reasonable assurance that the information required to be disclosed in this quarterly report is recorded, processed, summarized and reported within the time period required for the filing of this quarterly report.  This is due to inadequate segregation of duties and the lack of an audit committee.  The Company has plans to address these material weaknesses in internal controls as resources become available.

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended) identified in connection with the evaluation of our internal control performed during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system no matter how well conceived and operated can provide only reasonable, not absolute assurance that the objectives of the control system are met. Further, the design of a control system must

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reflect the fact that there are resource constraints and the benefits of control systems must be considered relative to their cost. As a result of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues of fraud, if any, have been detected.

Based on their most recent review, which was completed within ninety days of the filing of this report, SAI’s Officers have concluded that the Company’s disclosure controls and procedures are not effective to ensure that information required to be disclosed by SAI in the reports it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to SAI’s management, including its Officers, as appropriate to allow timely decisions regarding required disclosure and are effective to ensure that such information is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.  There were no significant changes in SAI’s internal controls or in other factors that could significantly affect those controls subsequent to the date of their evaluation.

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEMS 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)

Exhibits required by Item 601 of Regulation S-B

Exhibit No.:	Description:
3.1(i)	Articles of Incorporation and amendments thereto (1) and (2)
3.1(ii)	Bylaws (1)
14	Code of Ethics (1)
31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act 0f 2002

(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.

 

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(b) Reports on Form 8-K

During the period ended March 31, 2012, SILVERTON ADVENTURES, INC. filed the following Current Reports on Form 8-K:

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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