SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31,June 30, 2018 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.
N/A Voluntary Filer
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated 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 [ ] (do not check if smaller reporting company)
Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-d of the Exchange Act). Yes [ ] N0No [X]
As of March 31,June 30, 2018, 14,338,855 shares of Common Stock, par value $.03 per
share, were issued and outstanding.
PART I
ITEM 1. FINANCIAL INFORMATION
Original Sixteen to One Mine, Inc.
Condensed Balance Sheet
March 31,Original Sixteen to One Mine, Inc.
Condensed Balance Sheet
June 30, 2018 & December 31, 2017
ASSETS
Current Assets
Cash $ 34,8438,188 $ 6,986
Accounts receivable 67,06584,075 79,917
Inventory 642,426555,732 652,228
Other current assets - -
------- -------
Total current assets 744,334647,995 739,131
------- -------
Mining Property
Real estate and property rights
net of depletion of $524,145 230,401 230,401
Mineral property 47,976 47,976
------- -------
Total Mining Property 278,377 278,377
------- -------
Fixed Assets at Cost
Equipment 885,307 885,307
Buildings 209,487 209,487
Vehicles 171,522 171,522
--------- ---------
Total fixed assets at cost 1,266,316 1,266,316
--------- ---------
Less accumulated depreciation (1,183,813)(1,190,156) (1,177,471)
----------- -----------
Net fixed assets 82,50376,160 88,845
----------- -----------
Other Assets
Bonds and misc. deposits 21,460 21,460
--------- -------
Total Assets $1,126,674$1,123,992 $1,127,813
=========== ==========
Original sixteen to One Mine, Inc.
Condensed Balance Sheet Continued
LIABILITIES & STOCKHOLDERS' EQUITY
March 31,June 30, 2018 & December 31, 2017
Current Liabilities
Accounts payable & accrued expenses $1,226,875$1,235,526 1,197,026
Due to related party 211,032213,243 200,882
Notes payable Short-term 537,914538,558 537,276
-------- -------
Total Current Liabilities 1,975,8211,987,327 1,935,184
-------- -------
Long Term Liabilities
Notes payable due after one year 122,885118,186 127,743
-------- -------
Total Liabilities 2,098,7062,105,513 2,062,927
-------- -------
Stockholders' Equity
Capital stock, par value $.03:
30,000,000 shares authorized: 14,338,855
issued and outstanding as of March 31,2017
and as of December 31, 2016 468,836 468,836
Additional paid-in capital 2,222,892 2,222,892
(Accumulated deficit)
Retained earnings (3,663,760)(3,773,249) (3,626,842)
------------ -----------
Total Stockholders' Equity (972,032)(1,081,521) (935,114)
------------ -----------
Total Liabilities and Stockholders' Equity $1,126,674$1,023,992 $1,127,813
============ ============
See Accompanying Notes
Original Sixteen to One Mine, Inc.
Statement of Operations and Retained Earnings
Three Months Ended March 31, 2017 and March 31, 2017
ThreeEnding June. 30, Six Months Ending March 31,June. 30,
2018 2017 2018 2017
------ ------ ------ -----
Revenues:
Gold & jewelry sales $ 77,288 $ (55,828)Jewelry Sales 12,809 156,999 90,097 101,171
Other Revenue 24,000 24,000 ----------- -----------48,000 48,000
--------- --------- -------- --------
Total revenues 101,288 (31,828)
----------- -----------$ 36,809 $ 180,999 $ 138,097 $ 149,171
--------- --------- -------- --------
Operating expenses:
Salaries and wages 15,000 15,000 30,000 30,000
Contract Labor 67,665 68,968
Telephone & utilities 18,293 16,72262,512 72,962 130,177 141,930
Utilities 22,900 25,217 41,193 41,938
Taxes - property & payroll 4,512 4,0564,028 9,025 8,084
Supplies 4,977 9,2486,741 10,862 11,719 20,110
Insurance 1,902 1,036616 1,091 2,518 2,127
Small equipment & repairs 4,020 18,414622 3,052 4,642 21,466
Drayage 1,660 2,2099,104 5,116 10,764 7,325
Corporate expenses 2,359 1,8404,815 7,341 7,174 9,181
Legal fees and penalties 634 5,918Compliance 1,248 1,404 1,882 7,322
Mine Maintenance & Compliance 4,387 19,3673,118 23,335 7,504 42,702
Depreciation & amortization 6,343 5,542 12,686 11,084
Other operating expenses 888 8921,183 1,928 2,072 2,821
---------- ---------- ------- -------
Total operating expenses 132,640 169,212138,714 176,878 271,356 346,090
---------- ---------- -------- --------
Profit (Loss) from operations (31,352) (201,040)(101,905) 4,121 (133,259) (196,919)
Other Income & Expenses:Income: 1,099 1,642 1,970 3,229
Other Income 870 1,587
Other Expenses 6,433 6,197
-------Expense: 7,084 7,133 13,517 13,330
-------- --------- --------- ---------
Total Other Income (Expense) (5,563) (4,610)income(expense) (5,985) (5,491) (11,547) (10,101)
-------- ---------- ------------------ --------
Profit (Loss) before taxes (36,915) (205,650)(107,890) (1,370) (144,806) (207,020)
-------- ---------- -------------------- ---------
Income Tax Benefit - -tax benefit (expense) (1,600) (800) (1,600) (800)
-------- ---------- --------- --------
Net Profit (Loss)profit (loss) $ (36,915)(109,490) $ (205,650)(2,170) $ (146,406) $ (207,820)
============ =========== ========== ==========
Basic and diluted Gain
(Loss)(loss)
earnings per share $ (.003)(.008) $ (.014)(.0002) $ (.01) $ (.015)
============ ====================== ========= =========
Shares used in the
calculation of net
loss(loss) income per share 14,338,855 14,338,855 14,338,855 14,338,855
============ =========== ========== ===========
See Accompanying Notes
Original Sixteen to One Mine, Inc.
Statement of Cash Flows
ThreeSix Months Ended March 31,June 30, 2017 and March 31, 2016
ThreeJune 30, 2018
Six Months Ended March 31,June 30,
2018 2017
-------------- --------------------------
Net profit (loss) $ (146,406) $ (207,820)
Cash Flows From Operating Activities:
Net profit (loss) $ (36,915) $ (205,650)
operating activities:
Depreciation 6,343 5,542and amortization 12,686 11,084
(Increase)Decrease in
accounts receivable 12,852 37,452(4,158) 36,142
Decrease(Increase) in inventory 9,802 179,10396,496 194,680
(Increase)Decrease in other
current assets - -
(Decrease) increase in accounts payable
and accrued expenses 29,847 (11,377)38,499 (7,255)
(Decrease) increase related-partyin related party loans 10,150 30,92912,360 12,925
(Decrease) increase in short term notes 236 6371,282 1,281
------------ ----------
Net cash (used) provided by
operating activities 32,315 36,63610,759 41,037
------------ ---------------------
Cash Flows From Investing Activities:
(Increase) Decrease Bonds, Misc DepositsFixed Asset Purchases _ -
Proceed from sale real estate - -
------------- ----------Other assets bonds misc. deposits - -
----------- -----------
Net cash (used) provided by
investing activities - -
------------------------ -----------
Cash Flows From Financing Activities
Increase (decrease) notes payable (4,858) (4,583)
(Increase) decrease in notes receivable - -(9,557) (8,607)
Proceeds from sale of common stock - -
Additional paid-in capital - -
------------ ----------------------- -----------
Net cash provided (used) by
financing activities (4,858) (4,583)(9,557) (8,607)
------------ ------------
(Decrease) increase in cash 27,457 32,0531,202 32,430
Cash, beginning of period 6,986 6,956
------------ ----------
Cash, end of period $ 34,4438,188 $ 39,00939,386
============ ============
Supplemental schedule of other cash flows:
Cash paid during the period for:
Interest expense $ 6,32713,091 $ 6,36513,091
============ ===========
Income Taxestaxes $ -800 $ -800
============ =======================
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 The Sixteen to oneOne
mine in Alleghany, California.
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 gold content plus labor cost.
Due to limitations of the Company's accounting software all inventory is
accounted for using average cost.
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 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 March 31,June 30, 2018 and December 31,
2017, the results of operations and cash flows for the three-month and six-
month periods ended March 31,June 30, 2018 and 2017. 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 mineMine 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 than twenty
percent of the deposit has been mined. Production is approximately 1,500,000
ounces of gold.
The Company began a new exploration program this quarter led by a California
registered geologist. The basis is strictly geology: identifying hydrothermal
solution pathways, evaluating the ore potential and mining environment.
There are over thirty 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 classify the
ore underground. This has the positive affect of reducing the volume of rock
taken 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". By industry
wide definition of phases of a mine operation, the operation during this
quarter is rehabilitation. Due to the extensive workings and small size of the
crew, maintenance and rehabilitation must periodically be prioritized over
exploration, development and production. Exploration aims at locating the
presence of economic deposits and establishing their nature, shape and grade.
The investigation may be divided into (1) initial and (2) final. At
the Sixteen to one the search for gold or ore embraces: (1) geological surveys;
(2) geophysical prospecting; (3) boreholes; (4) surface or underground
headings, drifts or tunnels. When operations detect the presence of gold, the
Company evaluates the indicators and if warranted, moves its operation from
exploration to development. When the presence of gold is evaluated, the Company
moves its operation into production. 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 when funds are available.
BALANCE SHEET COMPARISONS
AssetsAssets:
For the three-monthsix-month period ending March 31, 2018, compared tofrom December 31, 2017 cash increasedto June 30, 2018 current
assets decreased by $27,857 (399%$91,135 (12%) primarily due to payments on accounts receivable
combined with sales of inventory.
Accounts Receivable decreased by $12,852 (16%)the decrease in inventory
as customers paid their bills.gold was sold to cover operating expenses.
Other than depreciation expense, fixed assets remained the same.
Liabilities:
Liabilities For the three-month period ending March 31, 2018, compared to December 31,
2017, there were no significant changes to the liabilities.did not change significantly.
STATEMENT OF OPERATIONS
Revenues Gold revenues for the three-month period ending March 31,and six-month periods ended June 30, 2018 increasedwere
$144,190 (80%) and $11,074 (7%)lower respectively than the same periods in
2017 primarily due to lower gold sales in the second quarter of 2018.
Operating expenses for both the three-month and six-month periods ended
June 30,2018 decreased overall by $133,116 (240%)22% compared withto the same period in 2017 due
to the fact that
some material soldless activity in a previous period was returned, negatively impacting
sales in the quarter ended March 31, 2017.
Gold and Jewelry Sales is reflected as a negative number for the previous
period due to the unique nature of gold mining. GAAP for mines permits the
recognition of revenue at the time the gold is pulled from the ground and put
into inventory. Cost of goods sold (COGS) is based on averaged historical gold
prices. Currently the Company's COGS exceeds revenue when gold is sold at spot
price.
The majority of the Company's gold sales exceed spot price because of the
value added for specimen and gemstone material. However, in the first quarter
of 2017 most of the gold sold was in the form of dore shipped to the refinery
and sold at spot price.
Expenses2018.
For the three-month period ended March 31,June 30, 2018 compared to the same period in
2017 total operating expenses decreased by $36,572 (22%) primarily due to a
smaller crew in 2018 compared to 2017.
For the three-month period ended March 31, 2018 compared to the same period in
2017 the company showed a loss of
$36,915$109,490 compared to a loss of $205,650.$2,170 for the same period in 2017. The
$168,7355,000% difference is due less gold revenue in 2018. For the six-month
period ended June 30,2018 the company showed a loss of $146,406 compared to a
loss of $207,820 for the same period in 2017. The 30% difference is
primarily due to the lower operating expenses and increased
revenue in 2018.
LIQUIDITYITEM 3 QUANTITATIVE AND CAPITAL RESOURCESQUALITATIVE DISCLOSURES ABOUT MARKET RISK
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.
ITEM 4 CONTROLS AND PROCEDURES
See notes to financial statements.
PART II
ITEM 1 LEGAL PROCEEDINGS
The State Water Resources Control Board issued Adminstrative Civil Liability
Order R5-2017-0115 on Dec. 8, 2017. The Company filed a timely Petition for
Review. No decision has been issued in this matter.
ITEM 1A RISK FACTORS
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 PROCEEDINGSITEM 2 UNREGISTERED SALES OF EQUITY
None
SUBSEQUENT EVENTSITEM 3 DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 MINE SAFETY DISCLOSURES
For the three-month period ended June 30,2018 8 citations under Section 104(a)
were issued. Five of them were issued as S&S.No citations under 104(b) Orders,
104 (d) S&S Citations Section 110 (b)(2) Violations or Section 107 (a) Orders
were issued.
All of these citations have been contested.
ITEM 5 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-Q.
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 March
31,June
30, 2018.
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.ITEM 6 SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrantregistrant 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 12,2018Sept. 28, 2018