SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the fiscal year ended June 30, 1998
Commission File No. 2-85845-D
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SILVERTHORNE PRODUCTION COMPANY
(Exact name of Registrant as specified in its charter)
COLORADO 84-0189377
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
16053 Via Viajera, Rancho Santa Fe, CA 92091 (619) 759-9123
(Current address of principal executive office) (Registrant's telephone No.
with area code)
Securities pursuant to Section 12(b) of the Act: None
Securities pursuant to Section 12(g) of the Act: None
Indicate by check mark whether 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 for such shorter period that Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[x] Yes [ ] No
The aggregate market value of the Registrant's common stock held by
non-affiliates of the Registrant, computed by reference to the average of the
closing bid and asked prices of such stock on June 30, 1998 was not determinable
because there was no significant trading even though there were listed
quotations of $.125 bid - $.125 ask on the OTC Bulletin Board as of that date or
60 days prior to the date of filing.
The number of shares outstanding of each class of Registrant's classes of
Common Stock ($.001 par value) as of end of period covered by report was:
June 30, 1998: 15,757,047
<PAGE>
PART I
------
ITEM 1. BUSINESS.
- ------- ---------
GENERAL DEVELOPMENT OF BUSINESS. Company was incorporated May 6, 1983, in
Colorado. Company made a public offering of its common stock pursuant to a
Registration Statement effective November 23, 1983, and closed that initial
public offering with the sale of 10,000,000 Units (each Unit consisting of one
share of common stock and one common stock purchase Warrant), and received net
proceeds therefrom in the approximate amount of $175,000. Company was formed for
a specific purpose of engaging in the manufacture, assembly, licensing and sale
of cellular radio and communications equipment and accessories, acquire real and
personal property and to engage in any business permitted by Colorado law.
In 1984, Company acquired S & R Telecommunications, Inc., a privately held
Colorado corporation engaged in telecommunications installations services, in
exchange for shares restricted common stock, which shares were returned to the
treasury in the third fiscal quarter of 1985 when the business proved
unprofitable and was terminated. Also, in 1984, Company created a subsidiary,
CRS Broadcasting of Mississippi, Inc., a Mississippi corporation, which acquired
the business and assets of radio station. The subsidiary defaulted on its loan
obligations and in the third fiscal quarter of 1985. The lender foreclosed on
its note and obtained possession and ownership of the assets of said subsidiary
of Company. Contingent liability, if any, from the subsidiary to Company is
barred by the Statute of Limitations. After the failure of S & R
Telecommunications, Inc., and of CRS Broadcasting of Mississippi, Inc.,
Company's day to day business operations ceased until April, 1988.
In May, 1988, Company was recapitalized. Company acquired oil producing
properties located in Allan County, KS, implemented a 1 for 20 reverse stock
split and commenced business operations. Pursuant to that acquisition, Company
executed a promissory note and conducted operations for eight months,
terminating on or about March 15, 1989, when Company disposed of its Allan
County, KS, oil properties. A loss of substantially all of Company's assets
resulted. In June, 1989, Company creditors forgave indebtedness of Company
totalling approximately $100,000, which had resulted from accrued salaries,
plus, promissory notes and attorney fees owed to Company's officers and
directors. Since the failure and the loss resulting from disposal of the oil
properties, Company's day to day business operations ceased. Company has
returned to a developmental stage company. Company, again, has been without
revenue and operating capital and is in arrears on its filings with the
Securities and Exchange Commission.
FINANCIAL CONDITIONS. Company had not generated any revenues for fiscal
years ended June, 1984, 1985, 1986, 1987 and 1988. As of March 31, 1988, Company
was more than two years in arrears on its filings with the Securities and
Exchange Commission, had contingent liabilities and had no assets. Company was
insolvent and non-operational. Company obtained capital to bring the financial
statements and SEC reports current and enabled Company to hold a shareholders'
meeting approving acquisition of assets and commencement of business activities.
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<PAGE>
Commencing in July, 1988, and through the end of its fiscal year, June 30,
1989, Company generated gross revenues in the amount of $27,098 resulting from
sales of oil produced from its properties, which properties were exchanged in
liquidation of Company's related contingent liabilities and outstanding debt.
Prior to engaging in the oil business Company had an accumulated deficit of
approximately $243,000. Company's oil business had an additional accumulated
deficit of approximately $386,000. Company president obtained funds from certain
shareholders to pay for professional services, from time to time, to prepare the
financial audits of Company, including this report. By fiscal year ending June
30, 1998, Company had a total accumulated deficit of approximately $767,000.
DESCRIPTION OF BUSINESS. Company's day to day business operations have
ceased. Company has been seeking a business opportunity which it can acquire by
stock exchange or merger. Substantially all of the expenses paid during this
fiscal year have occurred maintaining a transfer agent or in pursuit of such
acquisition or merger through the efforts of the Chief Executive Officer. No
officer or director has been paid for the extensive hours of services rendered
on behalf of the Company. As of June 30, 1998, such acquisition or merger have
not been resulted.
ITEM 2. PROPERTIES. None.
- ------- -----------
ITEM 3. LEGAL PROCEEDINGS.
- ------- ------------------
Company is not presently a party to any legal proceeding and is not subject
to any known administrative or judicial proceeding or investigation arising
under any federal, state or local provision.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None.
- ------- ----------------------------------------------------
PART II
-------
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
- ------- --------------------------------------------------------------------
MATTERS.
--------
Company's common stock has been publicly traded and the price quoted on
the OTC Bulletin Board. Even though maintaining a current listing, no known
significant trading occurred during this fiscal year. As of June 30, 1998, there
were approximately 1,240 shareholders of record of Company's common stock.
Pursuant to The Insider Trading and Securities Fraud Enforcement Act of 1988,"
the Company's securities fall within the definition of Designated Security" as
of January 1, 1990. Company believes the Act has increased its difficulty in
attracting new market makers and has contributed to the increased unwillingness
of market makers to maintain inventory of Company's shares, therefore, Company's
shareholders may experience significant difficulty in disposing of or acquiring
shares. Company has never paid any dividends and does not expect to pay any
dividends during the next fiscal year. Company has never generated sufficient
profits to pay any dividends. Company's common stock could be deemed no to have
a public trading market.
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<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
- ------- ------------------------
Company has not engaged in any revenue producing operations during fiscal
year ended June 30, 1998. Company's selected financial information is included
in the financial statements which form a part of this report and which are
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- ------- -----------------------------------------------------------------------
OF OPERATION.
-------------
As of March 31, 1989, Company had returned to a developmental stage
company. Company's financial condition did not change materially during the
fiscal year ended June 30, 1998, except that accounts payable and note payable
of $153,150 were reclassified to acquisition of capital stock. Said holders
agreed to convert the subject accounts payable and note payable with interest
thereon to Company stock at the rate of $.0125 instead of $.001 par value, which
benefitted Company by $140,898 capital paid in excess of par resulting from the
debt reduction. In addition the reclassification was made to assist Company's
pursuit of mergers by elimination of substantially all corporate indebtedness.
LIQUIDITY. Company's liquidity did not change during the fiscal year ended
June 30, 1998. Company had no material liquid assets at the beginning nor at the
ending. Company had one account payable to the stock transfer agent in the
amount of approximately $7,000 as of year ended June 30,1998.
CAPITAL RESOURCES. Company had no commitments for any capital expenditures
nor increases in capital resources during the fiscal year ended June 30, 1998,
except for the reclassification of said accounts payable and note payable stated
hereinabove.
RESULTS OF OPERATION. Company has not had any business operations during
the fiscal year ended June 30, 1998. Company's pursuit of business operations
through acquisition by stock exchange or merger continue,s but has not
materialized. No mergers are pending.
CHANGE IN CORPORATE OFFICERS, MANAGEMENT AND DIRECTORS. No change in this
fiscal year.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
- ------- --------------------------------------------
(see following pages)
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<PAGE>
SILVERTHORNE PRODUCTION COMPANY
INDEX TO FINANCIAL STATEMENTS
PAGE
Independent Auditor's Report 6
Financial Statements
Balance Sheet 7
Statement of Operations 8
Statement of Cash Flow 9
Statement of Stockholders' Equity 10
Notes to Financial Statements 11-12
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<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Stockholders and Board of Directors,
SILVERTHORNE PRODUCTION COMPANY
I have audited the accompanying balance sheet of SILVERTHORNE PRODUCTION
COMPANY ( a Colorado Corporation) as of June 30, 1998 and 1997 and the related
statements of operations, stockholders, equity and cash flows for each of the
two years in the period ended June 30, 1998 and 1997. These financial statements
are the responsibility of the Company's management. My responsibility is to
express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial presentation. I believe
that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of SILVERTHORNE PRODUCTION
COMPANY as of June 30, 1998 and 1997, and the results of its operations and its
cash flows for each of the two years in the period ended June 30, 1998 and 1997,
in conformity with generally accepted accounting principles.
/s/ Daniel Jankowski
Daniel Jankowski
Certified Public Accountant
332 S. Juniper St, Suite 203
Escondido, CA 92025
September 29, 1998
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<PAGE>
<TABLE>
<CAPTION>
SILVERTHORNE PRODUCTION COMPANY
(A Developmental Stage Company)
COMPARATIVE BALANCE SHEET
For fiscal years ended June 30, 1998 and 1997
Amended 1
Year ended Year ended
Notes June 30, 1998 June 30, 1997
----- ------------- -------------
ASSETS
- ------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash $ 0 $ 26
--------- ---------
TOTAL ASSETS: $ 0 $ 26
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES
Notes Payable 3 $ 0 $ 22,000
Accrued interest 3 0 10,828
Accounts Payable 4 7,018 33,364
--------- ---------
TOTAL CURRENT LIABILITIES: $ 7,018 $ 66,192
--------- ---------
SHAREHOLDERS' EQUITY
Common Stock, par value $.001 per share;
authorized 50,000,000 shares; of which
15,757,047 shares are issued and outstanding8 $ 15,757 $ 3,505
Capital paid in excess of par 748,230 607,332
RETAINED EARNINGS DEFICIT:
From regular operations (617,286) (617,286)
Accumulated during developmental stage 7 (153,719) ( 59,717)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) $( 7,018) $( 66,166)
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 0 $ 26
========= =========
The accompanying notes are an integral part of these financial statements.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SILVERTHORNE PRODUCTION COMPANY
(A Developmental Stage Company)
STATEMENT OF OPERATIONS
For fiscal years ended June 30, 1998 and 1997
Amended 1
Year ended Year ended
Notes June 30, 1998 June 30, 1997
----- ------------- -------------
<S> <C> <C> <C>
MISCELLANEOUS INCOME:
Reversal of accounts payable 4 $ 0 $ 44,127
--------- ---------
EXPENSES:
Administrative expenses: $ 15,736 $ 12,087
Interest 3 6,906 2,583
Legal Fees 5 69,800 0
Auditing Fees 1,560 0
--------- ---------
Total Expenses 3 $ 94,002 $ 14,670
--------- ---------
NET INCOME (LOSS) $ (94,002) $ 29,457
========= =========
EARNINGS PER SHARE:
Net income from operations 6 $ .0098 $ .0084
Weighted average common
shares outstanding 9,631,047 3,505,047
========= =========
The accompanying notes are an integral part of these financial statements.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SILVERTHORNE PRODUCTION COMPANY
(A Developmental Stage Company)
STATEMENT OF CASH FLOW
For fiscal years ended June 30, 1998 and 1997
Amended 1
Year ended Year ended
June 30, 1998 June 30, 1997
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) $(94,002) $ 29,457
Increase (decrease) in accounts payable 4 0 12,122
Non-cash write-off notes/account payable (44,127)
Increase in accrued interest 2,583
-------- --------
Net cash flows from operation $(94,002) $ 35
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt converted to common stock 5 $ 93,976 $ 0
-------- --------
CASH FLOWS FOR INVESTMENT ACTIVITIES: $ 0 $ 0
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENT $( 26) $ 35
Cash or bank overdraft at beginning of period 26 ( 9)
-------- --------
$ 0 $ 26
======== ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SILVERTHORNE PRODUCTION COMPANY
(A Developmental Stage Company)
STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
For fiscal years ended June 30, 1998 and 1997
Common Stock Total
---------------------- Additional Accumulated shareholders'
Shares Amount Paid-in capital deficit equity (deficit)
---------- -------- --------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
BALANCES, June 30, 1996 #3,580,047 $ 3,580 $ 907,257 $(706,460) $ 204,377
NET INCOME (LOSS)
from fiscal year ended
June 30, 1997 29,457 29,457
June 30, 1998 12,252,000 $12,252 140,898 ( 94,002) 59,148
---------
Redemption/reversal ( 75,000) ( 75) (299,925) (300,000)
----------- ------- --------- --------- ---------
BALANCE June 30, 1998 #15,757,047 $15,757 $ 748,230 $(771,005) $( 7,018)
=========== ======= ========= ========= =========
The accompanying notes are an integral part of these financial statements.
</TABLE>
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<PAGE>
SILVERTHORNE PRODUCTION COMPANY
(A Developmental Stage Company)
NOTES TO FINANCIAL STATEMENTS
For fiscal years ended June 30, 1998 and 1997
NOTE 1 - AMENDMENT TO NUMBERS ON THE AUDIT REPORT FOR JUNE 30, 1997
- -------------------------------------------------------------------
As a result of an unintentional oversight, the auditor failed to make
several corrections to certain numbers appearing on the final audit report for
year ended June 30, 1997. The corrections are set forth in the respective
columns of these financial statements.
NOTE 2 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------------
ORGANIZATION: Company was incorporated in May 1983 in the State of
Colorado, to engage in the cellular radio and communications business; and to
engage in any other lawful activity permitted." In June 1988, Company changed
its name to Silverthorne Production Company and commenced operations in the oil
an gas industry. During 1993-96, Company attempted to locate acquisition
prospects and negotiate acquisition or exchange of assets, including activity in
the fuel industry. Company's pursuit of business opportunities through
acquisition by stock exchange or merger has not materialized.
BASIS OF FINANCIAL STATEMENT PRESENTATION: Company evaluated its total
financial position in anticipation of returning to a publicly held shell so that
it is more attractive to potential business opportunities through acquisition by
stock exchange or mergers. Company has no operations and is critically short of
cash. Its ability to continue development stage activities is in question,
except for the efforts of the current officers/directors. Company is a
development stage company. To benefit Company's pursuit of acquisitions or
mergers certain creditors of Company agreed to reclassify their subject accounts
payable by Company into capital stock. Prior agreements between Company and
holders of the accounts payable were published in prior audited financial
statements indicating the indebtedness or claim for consideration may be
converted to payment for acquisition of additional shares of Company stock at
par value. Said holders agreed to convert the subject accounts payable, plus
note payable with interest thereon to Company stock at the rate of $.0125
instead of $.001 par value, which benefitted Company by $140,898 capital paid in
excess of par.
NOTE 3 - NOTES PAYABLE
- ----------------------
The $22,000 note, plus compound interest thereon was converted to payment
for acquisition of shares of Company stock. Company's liability thereon was
satisfied. This note had accrued interest in the amount of $16,974 as of year
ended June 30, 1998.
NOTE 4 - ACCOUNTS PAYABLE
- -------------------------
Accounts payable of Company increased by Company's liability for legal and
other services tendered by the current President/CEO/Director from April 1989
through current date, which were previously agreed, at his option, to be
converted to payment or acquisition of shares of Company stock at par value. As
stated in preceding footnotes, certain creditors agreed convert the subject
accounts payable to Company stock at the rate of $.0125 instead of $.001 par
value which benefitted Company approximately twelve times par by capital paid in
excess of par. American Securities Transfer, Inc. (AST), debt is the only
accounts payable of Company.
NOTE 5 - RELATED PARTY TRANSACTIONS
- -----------------------------------
Company officers from time to time obtained funds from shareholders to pay
for expenses, including this audit, as well as pursuit of Company business
opportunities. Company's current President/CEO/Director acted as General Legal
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<PAGE>
SILVERTHORNE PRODUCTION COMPANY
(A Developmental Stage Company)
NOTES TO FINANCIAL STATEMENTS
For fiscal years ended June 30, 1998 and 1997
Counsel and provided Company corporate legal services without billing for such
services from April 1989 to 1997 on the condition Company shall pay for said
services when billed, payable at his option with any combination of funds or
issuance of Company stock. Said legal services and consultation were, as stated
above, converted to Company stock at the rate of $.0125 instead of $.001 par
value, which benefitted Company approximately twelve times par value by capital
paid in excess of par.
NOTE 6 - EARNINGS PER SHARE
- ---------------------------
Earnings per share is calculated by dividing the net income (loss) from
operations, by total weighted shares outstanding at June 30, 1998.
NOTE 7 - INCOME TAXES
- ---------------------
In the cellular radio communications business, Company accumulated a loss
carry forward of about $243,000. Company's loss carry forward from the oil and
gas industry increased by approximately $376,000. From 1989 through June 30,
1997, development stage activities in pursuit of acquisition and merger
opportunities, Company accumulated an additional loss carry forward of
approximately $148,000. Therefore the total loss carry forward is approximately
$767,000 through June 30, 1998. Company may not be able to utilize part of these
loss carry forwards, depending on the nature of future operations. Company has
prepared and is filing its federal income tax returns for the years June 30,
1991 through June 30, 1998, contemporaneously with publication of this audited
report.
NOTE 8 - CHANGE IN CONTROL OF THE COMPANY
- -----------------------------------------
Issuance of Company shares for the reclassified accounts payable and notes
payable $153,150, at the rate of $.0125 instead of $.001 par value $12,252,
total 12,252,000 shares issued. Company benefitted by approximately twelve times
par value by capital paid in excess of par. Shares issued 10,536,720 and
previously held by President/CEO/Director, plus spouse's and minor daughter held
which are attributable to him as beneficial owner total approximately 69% of the
outstanding stock of the Company.
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<PAGE>
ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTING AND FINANCIAL DISCLOSURES.
- ------- ----------------------------------------------------------------------
During the fiscal year ended June 30, 1998, Company did not change
accountants or have any disagreements with its accountant on any matter of
accounting principals or practices, financial statement disclosure, or auditing
scope or procedure. The accountant's reports on the financial statements for
Company did not contain an adverse opinion or disclaimer of opinion and was not
qualified as to uncertainty, audit scope or accounting principles.
PART III
--------
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
- -------- ---------------------------------------------------
Directors and executive officers of Company during fiscal year ended June
30, 1998:
Name: Age: Position:
----- ---- ---------
David L. Jackson 60 President/CEO/Director and Chairman
P.A. Jackson 50 Director
Tiffany M. Jackson 31 Secretary/Director
BUSINESS EXPERIENCE. The following is a brief account of business
experience during at least the past five years of each director and executive
officer, indicating the principal business or the organizations in which such
occupation and employment were carried on:
D.L. JACKSON: President/Director and Chairman of Board of Directors of
Company from April, 1990, to January, 1992, but continued as corporate General
Legal Counsel. In February 1995, Mr Jackson was re-appointed as a Company
Director and elected as Vice-President. He receive his BA degree from Northwest
Nazarene College; earned a Juris Doctor degree at the University of Denver,
College of Law, 1971; received the American Jurisprudence Award for excellence
in corporations; and practiced law in the United States Courts and Colorado
State Courts until 1997. He was an officer and director of Jackson Brothers
Industries, Inc., a publicly held Nevada corporation, until 1991. He has been a
licensed real estate broker in California since 1991. He has been from time to
time an adjunct college professor teaching Real Estate Law, Business Law, Human
Resource Management and Strategic Management, Point Loma Nazarene University,
San Diego, CA. He serves as an arbitrator resolving disputes in commercial law
and labor law. He served on the national panel of the American Arbitration
Association; received Certificate of Accomplishment from the Federal Labor
Relations Authority; and was admitted to the national roster of arbitrators of
the Federal Mediation and Conciliation Services, Washington, D.C.
T.M. JACKSON: Secretary/Director of Company since April, 1990. She is
experienced in sales management, business consultant, and currently employed in
San Jose, CA, as a consultant in the telemarketing industry. She earned a
Bachelor of Science degree, Business Administration from the University of
Denver. She studied law at the University of Denver, College of Law, 1988-89.
Each director holds office until the next annual meeting of shareholders or
until a successor is elected and qualified. Currently all directorships are
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<PAGE>
filled. Each officer holds office until a successor is elected by the Board of
Directors.
ITEM 11. EXECUTIVE COMPENSATION.
- -------- -----------------------
During the fiscal year ended June 30, 1998, there were no salaries, no
bonuses and no other forms of compensation paid it directors or officers, even
though heretofore authorized. The Board of Directors has authority to set
salaries for officers and/or pay directors on a day to day basis for services
rendered to Company, in amounts to be determined at the discretion of the
Directors. Once business operations commence, compensation will be determined
retroactively.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
- -------- ---------------------------------------------------------------
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS. The following itemization
sets forth the number of shares of Company's voting securities, Common Stock, by
each person who was known by Company to own beneficially more than 5% of
Company's outstanding voting stock as of June 30, 1998.
<TABLE>
<CAPTION>
Name & address: Amount & nature of beneficially owned: % of Class:
--------------- -------------------------------------- -----------
<S> <C> <C>
David L. & Patricia A. Jackson (1) 10,887,151 Common 69.09%
16053 Via Viajera
Rancho Santa Fe, CA 92067
Eric & Susan Sundsvold (2) 2,149,480 Common 13.64%
5121 S. Ironton St
Englewood, CO 80111
</TABLE>
(1) DLJ was issued 10,536,720 shares of Company's Common Stock as a result
of reclassification of accounts payable and note payable in the amount of
$132,175, June 1998. DLJ agreed to reclassify the subject accounts payable
and note payable with interest thereon to Company stock at the rate of
$.0125 instead of $.001 par value, which benefitted Company by $121,638
capital paid in excess of par resulting from the debt reduction. In
addition the reclassification was made to assist Company's pursuit of
mergers by elimination of substantially all corporate indebtedness. PAJ has
held 175,231 shares of Company's Common Stock as her sole/separate
property, and minor daughter has held 175,200 shares of Common Stock of
Company as her sole/separate property. Tiffany M. Jackson 175,200 shares
(1.11%), Kellie R. Jackson 175,200 shares (1.11%) and Traci L. Jackson
175,100 shares (1.11%), offspring of DLJ and PAJ, are holders of Company's
Common Stock. Their respective shares are not attributable to DLJ and PAJ
inasmuch as said offspring have obtained majority, are not living in the
home of, and are not under the direct or indirect control of, nor had any
contract, arrangement, understanding or otherwise had any voting or
disposition power with parents.
(2) EJS was issued 1,715,280 shares of Company's Common Stock as a result
of reclassification of accounts payable in the amount of $20,975, June
1998. EJS agreed to reclassify the subject accounts payable to Company
stock at the rate of $.0125 instead of $.001 par value, which benefitted
Company by $19,260 capital paid in excess of par resulting from the debt
reduction. In addition the reclassification was made to assist Company's
pursuit of mergers by elimination of substantially all corporate
indebtedness. EJS has held 206,000 shares of Company's Common Stock in his
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<PAGE>
own name and holds 11,000 shares (0.007%) of Company's Common Stock as
UTMA/trustee for Shawn N. Sundsvold, offspring not having obtained majority
and living in the home of EJS and SS. Shawn N. Sundsvold holds 50,000
shares (0.03%) of Company's Common Stock in his own name. Susan Sundsvold
holds 167,200 shares (0.01%) of Company's Common Stock in her own name.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL MANAGEMENT. The following table
sets forth the number of shares of Company's voting securities, Common Stock, by
each director and by all officers and directors of Company to own beneficially
more than 5% of Company's outstanding voting stock and as of June 30, 1998.
<TABLE>
<CAPTION>
Name & address: Amount & nature of beneficially owned: % of Class:
--------------- -------------------------------------- -----------
<S> <C> <C>
David L. Jackson (3) 10,536,720 Common 69.09%
PO Box 180329,
Coronado, CA 92178
Patricia A. Jackson (3) 175,231 Common 1.11%
16053 Via Viajera
Rancho Santa Fe, CA 92067
Tiffany M. Jackson (4) 175,200 Common 1.11%
335 Elan Villager Dr #409
San Jose, CA 92713
</TABLE>
(3) DLJ including attribution percentage for spouse and minor daughter; PAJ
holds 175,231 shares of Company's Common Stock (1.11%) as her sole/separate
property, and minor daughter holds 175,200 shares of Common Stock of
Company (1.11% %) as her sole/separate property (see note 1, above).
(4) TMJ is a holder of 175,200 shares of Company's Common Stock (1.11%),
however said shares are not attributable to DLJ and PAJ inasmuch as she has
obtained majority, is not living in the home, and is not under the direct
or indirect control of, nor had any contract, arrangement, understanding or
otherwise had any voting or disposition power with parents.
ITEM 13. CERTAIN RELATIONS AND RELATED TRANSACTION.
- -------- ------------------------------------------
Company officers from time to time obtained funds from shareholders to pay
for expenses, including this audit, as well as pursuit of Company business
opportunities. Company General Legal Counsel has provided Company corporate
legal services without billing for such services from April 1989 to date on the
condition Company shall pay for said services when billed, payable at his option
with any combination of funds or issuance of Company stock at par value. DLJ
agreed to reclassify the subject accounts payable, which included billing for
legal and consulting services rendered, and note payable with interest thereon
to Company stock at the rate of $.0125 instead of $.001 par value, which
benefitted Company by $121,638 capital paid in excess of par resulting from the
debt reduction. In addition the reclassification was made to assist Company's
pursuit of mergers by elimination of substantially all corporate indebtedness.
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<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
- -------- ----------------------------------------------------------------
Exhibits.
---------
Exhibit 23 Consent of Independent Certified Public Accountant,
Daniel Jankowski
Exhibit 27 Financial Data Schedule
Financial Statements and Supplementary Schedules.
-------------------------------------------------
See Index to Financial Statement, included above.
Reports on Form 8-K. Company's Form 8-K Report, June 30, 1998, issued
contemporaneously herewith concerns the change of ownership resulting from DLJ
agreed to reclassify the subject accounts payable, which included billing for
legal and consulting services rendered, and note payable with interest thereon
to Company stock at the rate of $.0125 instead of $.001 par value, which
benefitted Company by $121,638 capital paid in excess of par resulting from the
debt reduction. DLJ was issued 10,536,720 shares of Company's Common Stock. As a
result of the shares issued to DLJ, plus shares attributable for spouse and
minor daughter, DLJ's beneficially owned shares total 10,887,151 Common stock
which is approximately 69.09% of the Company's total shares issued and
outstanding.
SIGNATURES
----------
Pursuant to the requirements of the Securities and Exchange Act of
1934, Registrant has duly caused this report to be signed on its behalf by the
officers, undersigned, thereunto duly authorized.
SILVERTHORNE PRODUCTION COMPANY
Dated: September 29, 1998 By: /s/ David L. Jackson
------------------ ------------------------------------
David L. Jackson, President,
Chief Executive Officer and
Director
Dated: September 29, 1998 By: /s/ T.M. Jackson
------------------ ------------------------------------
T.M. Jackson, Secretary and Director
No annual report or proxy material has been sent to securities holders in
Registrant's fiscal year ended June 30, 1989 through June 30, 1998.
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANT
I hereby consent to the use in Silverthorne Production Company's Form
10-K for my audited report, dated September 29, 1998, relating to the Financial
Statements of Silverthorne Production Company, for the years ending June 30,
1998 and 1997.
September 29, 1998
/s/ Daniel Jankowski
Daniel Jankowski
Certified Public Accountant
332 S. Juniper St, Suite 203,
Escondido, CA 92025
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30, 1998 AND IS QUALIFIED
IN ITS ENTIRETY TO SUCH FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> JUN-30-1998
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0
0
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<INCOME-PRETAX> (94,002)
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