SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended September 30, 2009 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: x No: As of September 30, 2009, 13,373,505 shares of Common Stock, par value $.03 per share, were issued and outstanding. <page> PART I 1. FINANCIAL INFORMATION Original Sixteen to One Mine, Inc. Condensed Balance Sheet September 30, 2009 and December 31, 2008 September 30, 2009 December 31, 2008 ASSETS Current Assets Cash $ 932 $ - Accounts receivable 14,212 3,266 Inventory 361,537 631,852 Other current assets - - ---------- ---------- Total current assets 376,681 635,118 ---------- ---------- Mining Property Real estate and property rights net of depletion of $524,145 230,401 218,287 Real estate and mineral property 345,330 500,707 ---------- ---------- 575,731 718,994 ---------- ---------- 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 (1,298,968) (1,284,275) ---------- ---------- Net fixed assets 90,890 105,583 ---------- ---------- Other Assets Bonds and misc. deposits 5,460 5,460 ---------- ---------- Total Assets $1,048,762 $1,465,155 ========== ========== LIABILITIES & STOCKHOLDERS' EQUITY Current Liabilities Accounts payable & accrued expenses $ 715,400 484,697 Due to related party 269,682 626,727 Notes payable due within one year 400,000 400,000 ---------- ---------- Total Current Liabilities 1,385,082 1,511,424 ---------- ---------- Long Term Liabilities Notes payable due after one year 97,236 97,236 ---------- ---------- Total Liabilities 1,482,318 1,608,660 ---------- ---------- Stockholders' Equity Capital stock, par value $.03: 30,000,000 shares authorized: 13,373,505 shares issued and outstanding as of Sept. 30, 2009 and 12,905,505 shares issued and outstanding as of December 31, 2008 439,876 439,876 Additional paid-in capital 2,005,282 2,005,282 (Accumulated deficit) retained earnings (2,878,714) (2,588,663) ---------- ---------- Total Stockholders' Equity (433,556) (143,505) ---------- ---------- Total Liabilities and Stockholders' Equity $1,048,762 $1,465,155 ========== ========== See Accompanying Notes <page> Original Sixteen to One Mine, Inc. Statement of Operations and Retained Earnings Three Months Ending Sept. 30, Nine Months Ending Sept. 30, 2009 2008 2009 2008 ------ ------ ------ ----- Revenues: Gold & jewelry sales $ 34,942 $ (21,207) $ 132,288 $ 99,213 ----------- ----------- -------- -------- Total revenues 34,942 (21,207) 132,288 99, 213 ----------- ----------- -------- -------- Operating expenses: Salaries and wages 16,476 21,827 50,716 69,794 Contract Labor 8,286 7,065 30,777 18,710 Telephone & utilities 11,424 12,503 32,585 35,341 Taxes - property & payroll (619) 10,201 17,573 29,020 Insurance 190 191 570 1,228 Supplies 2,923 7,984 10,681 19,858 Small equipment & repairs 5,309 3,341 10,877 9,479 Drayage 2,829 3,750 8,647 16,364 Corporate expenses 1,655 1,050 9,731 10,895 Legal and accounting 3,223 60 3,542 88,632 Compliance/Safety 587 327 967 473 Depreciation & amortization 4,898 4,902 14,693 14,706 Other expenses 1,476 1,911 7,931 6,858 ---------- ---------- ------- ------- Total operating expenses 58,657 75,112 199,290 321,358 ---------- ---------- -------- -------- Profit (Loss) from operations (23,715) (96,319) (67,002) (222,145) Other Income & (Expense): Other income (expense) (179,281) (31,985) (222,249) (85,212) ---------- ----------- ------- -------- Profit (Loss) before taxes (202,996) (128,304) (289,251) (307,357) ---------- ----------- --------- ---------- Income tax benefit (expense) (800) (800) ---------- ----------- --------- ---------- Net profit (loss) $ (202,996) $ (128,304) $ (290,051) $ (308,157) ============ =========== ========== ========== Basic and diluted (loss) earnings per share $ (.015) $ (.01) $ (.02) $ (.02) ============ ============ ========= ========= Shares used in the calculation of net (loss) income per share 13,373,505 12,905,505 13,373,505 12,905,505 ============ =========== ========== =========== See Accompanying Notes <page> Original Sixteen to One Mine, Inc. Statement of Cash Flows Nine Months Ended Sept. 30, 2009 and Sept. 30, 2008 Nine Months Ended Sept. 30, 2009 2008 -------------- -------------- Cash Flows From Operating Activities: Net profit (loss) Operating activities: $ (290,051) $ (308,157) Depreciation and amortization 14,693 14,706 Gain on sale of asset - - (Increase)Decrease in accounts receivable (10,946) (607) Decrease(Increase) in inventory 270,315 61,224 (Increase)Decrease in other current assets - 625 (Decrease) increase in accounts payable and accrued expenses 230,703 181,029 (Decrease) increase in short term notes (357,045) 31,513 ------------ ---------- Net cash (used) provided by operating activities (142,331) (19,667) ------------ ----------- Cash Flows From Investing Activities: Removal of mining claims 143,263 - Proceed from sale of fixed asset - - Other assets bonds misc. deposits - - ----------- ----------- Net cash (used) provided by investing activities 143,263 - ----------- ----------- Cash Flows From Financing Activities Increase (decrease) notes payable - 5,943 Proceeds from sale of common stock - 459 Additional paid-in capital - 13,005 ----------- ------------ Net cash provided (used) provided by financing activities - 19,407 ------------ ------------ (Decrease) increase in cash 932 (260) Cash, beginning of period 0 642 ------------ ---------- Cash, end of period $ 932 $ 382 ============ ============ Supplemental schedule of other cash flows: Cash paid during the period for: Interest expense $ 84,900 $ 93,549 ============ ============ Income taxes $ 800 $ 800 ============ ============ See Accompanying Notes <page> 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 a gold mine in Alleghany, California; currently on maintenance-only status. 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). Inventory: Inventory consists of gold bullion, specimens and jewelry. Gold bullion and specimens are quoted at the market price for gold bullion. (PM London Fix on the last day of the quarter.) The quarterly valuation adjustment to inventory is recorded as an expense when the value decreases and as revenue when the value increases and is combined with Gold Sales Revenue on the Condensed Income Statement. This serves the dual purpose of fairly presenting the value of the gold inventory on the balance sheet and adjusts Cost of Goods Sold to the spot gold price. Jewelry is quoted at the market price for the gold content plus labor cost. Gold Bullion and jewelry are accounted for using the FIFO method. Specimens are 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. 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 September 30, 2009 and December 31, 2008, the results of operations and cash flows for the three-month & nine-month periods ended Sept. 30, 2009 and 2008. 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-QSB 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 the mine. Original Sixteen to One Mine Inc, (owner) was incorporated in California in 1911. Experts estimate that less than twenty percent of the proven and probable ore deposit has been mined. Production is approximately 1,500,000 ounces of gold. General accounting principles do not allow the Company to adjust its real estate to reflect market value, which has increased substantially. Standing timber values are not included as assets on the balance sheet. These unreported assets will significantly increase the Company's net worth. 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 separate the ore underground. This has the positive affect of reducing the volume of shot rock from the mine, thereby reducing cost. 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. It announced specific data including a Vision Statement, Executive Summary, Use of Proceeds, Performa Statement and critical review of the Company's strengths, weaknesses, opportunities and threats. This is available upon request. In December of 2007, management elected to discontinue its exploration program at the Sixteen to One Mine in favor of focusing its attention on surface and underground repairs and maintenance. BALANCE SHEET COMPARISONS For the nine month period ended September 30, 2009: Inventory decreased by $270,315 (43%) and Notes Due Related parties decreased by $357,045 (57%) as a long-time creditor of the Company exchanged his debt for gold. The Company has an option to buy back the material. Additionally a portion of Notes Due Related parties was moved to Accounts Payable and Accrued Expenses. This was done to separate Michael Miller's accrued wages, from his loans to the company. Mineral property decreased by $143,263 (20%) due to the removal of the unpatented mining claims from the Company's balance sheet. STATEMENT OF OPERATIONS Gold & jewelry sales for the three-month period ended Sept. 30, 2009 increased by $56,149 (265%) compared to the same period in 2008 due to the change in the value of the gold inventory based on the spot price of gold for the three- months ended Sept. 30, 2008 combined with relatively low sales. A decrease of $32,642 was recorded which exceeded the three-month revenue of $11,435 resulting in negative net revenue for that period. For the three-month period ended Sept. 30, 2009 the valuation adjustment was a decrease of $20,323. The valuation adjustment serves the dual purpose of correcting the booked value of inventory as well as adjusting the cost of goods sold to reflect actual gold prices. Changes in the Company's operating expenses are reflected as follows: For the three-month period ended Sept. 30, 2009 operating expenses decreased by $16,455 (22%) compared to the same period in 2008 primarily due to a decrease adjustment in accrued property tax expense related to the disposition of the mining claims. For the nine-month period ended Sept. 30, 2009 operating expenses decreased by $122,068 (38%) due to the adjustment to accrued expenses explained above as well as legal fees booked in 2008 related to the lawsuit with the California District Attorney Association. (See 2008 reports for details). Other expenses increased by $49,224 (285%) for the three-month period and increased by $137,037 (160%) for the nine-month period ended Sept. 30, 2009 compared to the same periods in 2008 primarily due to the loss of $143,263 recorded as a result of the write-off of the Company's mining claims in 2009. SUBSEQUENT EVENTS LIQUIDITY AND CAPITAL RESOURCES The Company's liquidity is substantially dependent upon the results of its operations. Because of the unpredictable nature of the gold mining business, the Company cannot provide any assurance with respect to long-term liquidity. In addition, if the Company's operation does not produce meaningful additions to inventory, the Company may determine it is necessary to satisfy its working capital needs by selling gold in bullion form. The Company is dependent on continued recovery of gold and sales of gold from inventory to meet its cash needs. Although the Company has historically located an annual average of $848,000 of gold over a five year period, there can be no assurance that the Company's efforts in any particular period will provide sufficient funding for the Company to continue operations. If the Company's cash resources are inadequate and its gold inventory is depleted, the Company may seek debt or equity financing on the most reasonable terms available. PART II LEGAL PROCEEDINGS In July 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. Both defendants filed an answer on August 20, 2009 denying that the state is entitled to any damages. A case management hearing is scheduled for January 5, 2010. The case number is: No. 7019. 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 September 30, 2009. 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: March 17, 2010