SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended JuneSeptember 30, 2010 Commission File No. 001-10156
ORIGINAL SIXTEEN TO ONE MINE, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 94-0735390
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporated or organization
Post Office Box 909, Alleghany, CA 95910
(Address of principal executive offices)
(530) 287-3223
(Registrant's telephone number)
(including area code)
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 past 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirement for the past 90 days.
Yes: No: x
As of JuneSeptember 30, 2010, 13,399,505 shares of Common Stock, par value $.03 per
share, were issued and outstanding.
PART I
1. FINANCIAL INFORMATION
Original Sixteen to One Mine, Inc.
Condensed Balance Sheet
JuneSeptember 30, 2010 and December 31, 2009
JuneSeptember 30, 2010 December 31, 2009
ASSETS
Current Assets
Cash $ 2,332307 $ 7,321
Accounts receivable 5,06214,878 3,711
Inventory 429,145376,830 414,331
---------- ----------
Total current assets 436,539392,015 425,363
---------- ----------
Mining Property
Real estate and property rights
net of depletion of $524,145 230,401 230,401
Real estate and mineral property 47,976 345,330
---------- ----------
278,377 575,731
---------- ----------
Fixed Assets at Cost
Equipment 925,243 925,243
Buildings 209,487 209,487
Vehicles 255,128 255,128
---------- ----------
1,389,858 1,389,858
Less accumulated depreciation (1,312,573)(1,316,927) (1,303,866)
---------- ----------
Net fixed assets 77,28572,931 85,992
---------- ----------
Other Assets
Bonds and misc. deposits 7,962 5,460
---------- ----------
Total Assets $ 800,163751,285 $1,092,546
========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable &
accrued expenses 677,087772,187 648,434
Due to related party 272,948293,947 647,555
Notes payable due within one year - 58,700
---------- ----------
Total Current Liabilities 950,0351,066,134 1,354,689
---------- ----------
Long Term Liabilities
Notes payable due after one year 97,236 97,236
---------- ----------
Total Liabilities 1,047,2711,163,370 1,451,925
---------- ----------
Stockholders' Equity
Capital stock, par value $.03:
30,000,000 shares authorized:
13,399,505 shares issued and
outstanding as of JuneSept. 30, 2010 and
13,373,505 as of December 31, 2009 440,656 439,876
Additional paid-in capital 2,063,202 2,005,282
(Accumulated deficit)
retained earnings (2,750,966)(2,915,943) (2,804,537)
---------- ----------
Total Stockholders' Equity (247,108)(412,085) (359,379)
---------- ----------
Total Liabilities and
Stockholders' Equity $800,163$751,285 $1,092,546
========== ==========
See Accompanying Notes
Original Sixteen to One Mine, Inc.
Statement of Operations and Retained Earnings
Three Months Ending JuneSept. 30, SixNine Months Ending JuneSept. 30,
2010 2009 2010 2009
------ ------ ------ -----
Revenues:
Gold & jewelry sales $ 52,10636,779 $ 50,01334,942 $ 63,17499,952 $ 97,346132,288
----------- ----------- -------- --------
Total revenues 52,106 50,013 63,174 97,34636,779 34,942 99,952 132,288
----------- ----------- -------- --------
Operating expenses:
Salaries and wages 74,394 16,958 84,935 34,24067,749 16,476 153,642 50,716
Contract Labor 14,026 15,594 22,819 22,3599,311 8,286 32,130 30,777
Telephone & utilities 24,475 12,895 36,119 21,16121,588 11,424 57,707 32,585
Taxes - property & payroll 10,930 9,116 20,827 18,19210,193 (619) 31,021 17,573
Insurance 13,51317,092 190 14,546 38030,679 570
Supplies 24,750 3,187 48,191 7,75822,307 2,923 70,498 10,681
Small equipment & repairs 4,540 2,112 16,519 7,1665,666 5,309 11,657 10,877
Drayage 7,013 4,294 14,898 5,8188,340 2,829 23,238 8,647
Corporate expenses 5,947 5,300 7,097 8,0752,386 1,655 9,483 9,731
Legal and accounting 512 124 2,972 3692,000 3,223 4,972 3,542
Compliance/Safety 22 258 1,161 330267 587 1,428 967
Depreciation & amortization 4,354 4,898 8,707 9,79613,061 14,693
Other expenses 1,930 2,779 10,804 4,9895,656 1,476 26,987 7,931
---------- ---------- ------- -------
Total operating expenses 186,406 77,705 289,595 140,633176,909 58,657 466,503 199,290
---------- ---------- -------- --------
LossProfit (Loss) from operations (134,300) (27,692) $ (226,421) $ (43,287)(140,130) (23,715) (366,551) (67,002)
Other Income & (Expense):
Other income (expense) 2,412 (19,795) 280,792 (42,968)(24,847) (179,281) 255,945 (222,249)
---------- ----------- ------- --------
Profit (Loss) before taxes (131,888) (47,487) 54,371 (86,255)(164,977) (202,996) (110,606) (289,251)
---------- ----------- --------- ----------
Income tax benefit (expense) - (800) (800) (800)
---------- ----------- --------- ----------
Net profit (loss) $ (131,888)(164,977) $ (48,287)(202,996) $ 53,571(111,406) $ (87,055)(290,051)
============ =========== ========== ==========
Basic and diluted (loss)
Gainearnings per share $ (.01) $ (.004)(.02) $ .004(.01) $ (.007)(.02)
============ ============ ========= =========
Shares used in the
calculation of net
loss(loss) income per share 13,399,505 13,373,505 13,399,505 13,373,505
============ =========== ========== ===========
See Accompanying Notes
Original Sixteen to One Mine, Inc.
Statement of Cash Flows
SixNine Months Ended June 30,2010Sept. 30, 2010 and June 30,2009
SixSept. 30, 2009
Nine Months Ended JuneSept. 30,
2010 2009
-------------- --------------
Net profit (loss) $ (111,406) $ (290,051)
Cash Flows From Operating Activities:
Net (loss) profit $ 53,571 $ (87,055)
operating activities:
Depreciation and amortization 8,707 9,79613,061 14,693
Gain on sale of asset - -
(Increase)Decrease in
accounts receivable (1,351) (1,400)(11,167) (10,946)
Decrease(Increase) in inventory (14,814) 27,75537,501 270,315
(Increase)Decrease in other
current assets - -
(Decrease) increase in accounts payable
and accrued expenses 28,653 317,159123,753 230,703
(Decrease) increase in short term notes (433,307) (259,135)(412,308) (357,045)
------------ ----------
Net cash (used) provided by
operating activities (358,541) 7,120(360,566) (142,331)
------------ -----------
Cash Flows From Investing Activities:
Sale of mining property 300,000 -
CapitalizationRemoval (addition) of mining claims (2,646) 143,263
Proceed from sale real estate 300,000 -
Other assets bonds misc. deposits (2,502) -
------------------------ -----------
Net cash used(used) provided by
investing activities 294,852 -
-------------143,263
----------- -----------
Cash Flows From Financing Activities
Increase (decrease) notes payable - -
Proceeds from sale of common stock 780 -
Additional paid-in capital 57,920 -
----------------------- ------------
Net cash provided (used) by
financing activities 58,700 -
------------ ------------
(Decrease) increase in cash (4,989) 7,120(7,014) 932
Cash, beginning of period 7,321 -0
------------ ----------
Cash, end of period $ 2,332307 $ 7,120932
============ ============
Supplemental schedule of other cash flows:
Cash paid during the period for:
Interest expense $ 5,05833,409 $ 46,82693,549
============ ============
Income taxes $ 800 $ 800
============ ============
See Accompanying Notes
See Accompanying Notes
NOTES TO THE FINANCIAL STATEMENTS
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business: Original Sixteen to One Mine, Inc. (the Company) was
incorporated in 1911 and is actively involved in operating gold mines in
Alleghany, California; currently, in maintenance status.
Inventory: Inventory consists of gold bullion, specimens and jewelry. Gold
bullion and specimens are quoted at the market price for gold bullion.
Jewelry is quoted at the market price for the gold content plus labor cost.
Gold bullion is accounted for using the FIFO method. All other inventory is
accounted for using the specific identification method.
Fixed Assets: Fixed assets are stated at historical cost. Depreciation is
calculated using straight-line and accelerated methods over the following
useful lives: Vehicles 3 to 5 years, Equipment 5 to 7 years, Buildings 18 to
31.5 years.
Depletion Policy: Because of the geological formation in the Alleghany Mining
District, estimates of ore reserves currently cannot be calculated, and
accordingly, a cost per unit depletion factor cannot be determined. Should
estimates of ore reserves become available, the units of production method of
depletion will be used. Until such time, no depletion deduction will be
recorded.
Revenue Recognition: As they are mined, gold specimens are recorded in
inventory and revenue is recognized using quoted market prices for gold.
For income tax purposes revenues are not recognized until the gold is sold.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions. These estimates and assumptions affect the reported amounts
of 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 these estimates.
GENERAL NOTES
1. In accordance with directive from the Securities and Exchange Commission
(SEC)and Industry Guide 7, reference for all intent and purposes to the
Company's employees as miners, its properties as mines or its operation as
mining does not diminish the fact that the Company has no proven reserves and
is in the "exploration state" as defined in Guide 7(a)(4)(iii).
2. In the opinion of management, the financial statements contain all
adjustments (consisting only of normal recurring accruals) necessary to present
fairly the Company's financial position at JuneSept. 30, 2010 and December 31,
2009, the results of operations for the three-month and nine-month periods
ended Sept. 30, 2010 and 2009, and the statement of cash flows for the three-monthnine-
month periods ended JuneSept. 30, 2010 and 2009. The unaudited financial
statements have been prepared in accordance with Generally Accepted Accounting
Principles for interim financial information and with the instructions to Form
10-Q and Item 310(b) of Regulation S-B.
II. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
The Sixteen to One mine in the Alleghany Mining District is a unique mine and
requires a unique operation, which has been recognized by its owners, its
miners, geologists, engineers, and some public agencies during the last decade
of the twentieth century and to the present. It is a traditional high-grade,
hard rock, underground gold mine. The same company owns and operates
(maintains) the mine. Original Sixteen to One Mine Inc, (owner) was incorporated
in California in 1911. Experts estimate that less thanabout twenty percent of the
proven and probable ore
deposit has been mined. Production is approximately 1,500,000 ounces of gold.
There are over twenty-eightthirty miles of horizontal workings and millions of cubic
feet of vertical excavations called stopes. The entire grounds are not
maintained for mining. Once an area is targeted for mining, travel ways and
escape routes are brought into safety compliance. Production miners set up a
heading (face) and begin a drill-blast-muck sequence into the quartz. Gold is
hosted in the quartz vein in exceedingly rich concentrations called "pockets".
Metal detectors are regularly used underground as a tool for guiding the
direction of the work. Metal detectors are also used as a tool to separate the
ore underground. This has the positive affect of reducing the volume of shot
rock from the mine, thereby reducing costs.
In 1992, the company initiated a gold marketing plan of selling gold in quartz
as a gemstone. This produces revenue significantly greater than selling gold
into the spot market. Demand for the Sixteen to One gold-in-quartz gemstone
exceeds supply.
Production has been termed a "feast or famine" situation for over 100 years.
Reserves in a high-grade gold mine cannot be termed as "proven". The company
hoards gold and sells it according to short-term cash needs. This fact
requires an operator to manage its cash flow to operate between pockets. It is
difficult to undertake major expansion plans with an uncertain supply of
capital. The Company has announced general plans to build a new shaft in the
northern section of its Alleghany patented claims.
BALANCE SHEET COMPARISONS
For the six-monthnine-month period from December 31, 2009 to JuneSept. 30, 2010 mining2010:
Accounts receivable increased by $11,167 (301%) due to a note for refund from
an independent contractor who was paid in advance, then declined services.
Mining property decreased by $297,354 (52%) due to the sale of the Brown Bear
Mine in Trinity County (booked value $300,000) combined with an offset of
$2,646 for mining claim location fees that were capitalized.
Bonds and Miscellaneous deposits increased by $2,502 (45%) due to the posting
of a bond with State Fund Insurance Company for Worker's Compensation
Insurance.
Notes due related parties decreased by $374,607 (58%$353,608 (55%) due to the application
of an advance on the sale of the Brown Bear Mine against the purchase. See
2009 10-K notes for more information.
Notes payable due within one year decreased by $58,700 (100%) due to the
conversion of the remaining balance for the Note from Gold Country Lenders
into stock.
STATEMENT OF OPERATIONS
Revenues for the six-monthnine-month period ended JuneSept. 30, 2010 compared to the same
period in 2009 decreased by $34,172 (35%$32,336 (24%) due to no production and decreased
gold sales.
Operating expenses for the three-month and six-monthnine-month periods ended JuneSept 30,2010
increased by $108,700 (140%$118,252 (202%) and $148,962 (106%$267,213 (134%) respectively compared to the
same periods in 2009 as a result of increased maintenance activity in 2010.
Other income (expense)and expense for the three-month period ended JuneSept. 30, 2010
increasedIncreased on the income side by $22,206 (112%$49,224 (286%) primarily due to less interest
expense in 2010 compared to the same period in 2009. For the six-monthnine-month period
ended JuneSept. 30,2010 other income (expense) increased on the income side by
$323,760$478,194 due to the sale of the Brown Bear Mine which was booked in January
combined with lower interest expenses.expenses in 2010.
For the three-month period ended JuneSept. 30, 2010 the company showed a loss of
$131,888$164,977 compared to a loss of $48,287$202,966 for the same period in 2009. The
$83,601 (173%$38,019 (19%) difference is due to higher operatinglower interest expenses in 2010. For the
six-monthnine-month period ended JuneSept. 30, 2010 the company showed a profitloss of $53,571$111,406
compared to a loss of $87,055$290,051 for the same period in 2009. The $140,626 (162%$178,645 (62%)
difference is primarily due to the sale of the Brown Bear Mine in 2010. See
2009 - 10-K for more information.
SUBSEQUENT EVENTS
None
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity is substantially dependent upon the results of
operations. The Company maintains a gold inventory which it liquidates to
satisfy working capital needs. There is no assurance that inventory is
adequate to sustain the Company.
PART II
LEGAL PROCEEDINGS
In July 2009 the Company and its president were served a complaint for damages
in Superior Court of the State of California, County of Sierra by the
California Regional Water Quality Control Board, Central Valley Region.
Discovery is ongoing. The case number is: No. 7019.
On September 3, 2009 the Company filed a complaint against Sierra County for
damages suffered due to a gasoline and diesel leak onto its property. Both
Sides seek settlement. Case number 7068.
On January 6, 2010, the California Department of Conservation, formally the
Division of Mines and Geology filed a complaint for statutory reporting and
mining fees and penalties alleging failures by the Company. Various Public
Resources Code Sections were cited substantially related to surface mining.
On March 24, 2010, the Company filed verified answers denying any wrongdoing.
Discovery is ongoing.
OTHER INFORMATION
The unaudited interim consolidated financial statements of Original Sixteen to
One Mine, Inc. (the Company) have been prepared by management in accordance
with generally accepted accounting practices. Such rules allow the omission of
certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted audited accounting
principles as long as the statements are not misleading.
In the opinion of management, verified by signature below, all adjustments
necessary for a fair presentation of these interim statements have been
included. These adjustments are of a normal recurring nature.
The preparation of the Company's financial statements in conformity with
accounting principles accepted in the United States requires management to make
estimates and assumptions. These estimates and assumptions affect the reported
amounts of assets and liabilities and disclosure of contingent liabilities at
the date of the financial statements, as well as the reported amount of
revenues and expenses during the reporting period. On an ongoing basis,
management evaluates its estimates and assumptions; however, actual amounts
could differ from those based on such estimates and assumptions. No accounting
principle upon which the Company's financial status depends, requires estimates
of proven and probable reserves and/or assumptions of future gold prices.
Commodity prices may significantly affect the company's profitability and cash
flow. No independent accounting firm or auditors have any responsibility for
the accounting and written statements of the Form 10-QSB.
The Company and its president assume responsibility for the accuracy of this
filing and certify the financial statements present fairly in all material
respects, the financial position of Original Sixteen to One Mine, Inc at JuneSept.
30, 2010.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
From time to time the Original Sixteen to One Mine, Inc. (the Company), will
make written and oral forward-looking statements about matters that involve
risks and uncertainties that could cause actual results to differ materially
from projected results. Important factors that could cause actual results to
differ materially include, among others:
- - Fluctuations in the market prices of gold
- - General domestic and international economic and political
conditions
- - Unexpected geological conditions or rock stability conditions
resulting in cave-ins, flooding, rock-bursts or rock slides
- - Difficulties associated with managing complex operations in remote areas
- - Unanticipated milling and other processing problems
- - The speculative nature of mineral exploration
- - Environmental risks
- - Changes in laws and government regulations, including those
relating to taxes and the environment
- - The availability and timing of receipt of necessary governmental
permits and approval relating to operations, expansion of operations,
and financing of operations
- - Fluctuations in interest rates and other adverse financial market conditions
- - Other unanticipated difficulties in obtaining necessary financing with
specifications or expectations
- - Labor relations
- - Accidents
- - Unusual weather or operating conditions
- - Force majeure events
- - Other risk factors described from time to time in the Original Sixteen to One
Mine, Inc., filings with the Securities and Exchange Commission
Many of these factors are beyond the Company's ability to control or predict.
Investors are cautioned not to place undue reliance on forward-looking
statements. The Company disclaims any intent or obligation to update its
forward-looking statements, whether as a result of receiving new information,
the occurrence of future events or otherwise.
SIGNATURE
Pursuant to the requirements 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.
ORIGINAL SIXTEEN TO ONE MINE, INC.
(Registrant)
/s/Michael M. Miller
President and Director
Dated: September 28,2010November 3,2010