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 JuneSeptember 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 [ ] No [X]
As of JuneSeptember 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
Original Sixteen to One Mine, Inc.
Condensed Balance Sheet
JuneSept. 30, 2018 & December 31, 2017
ASSETS
Current Assets
Cash $ 8,1883,549 $ 6,986
Accounts receivable 84,07572,984 79,917
Inventory 555,732445,700 652,228
Other current assets - -
------- -------
Total current assets 647,995522,233 739,131
------- -------
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 (1,190,156)(1,196,499) (1,177,471)
----------- -----------
Net fixed assets 76,16069,817 88,845
----------- -----------
Other Assets
Bonds and misc. deposits 21,460 21,460
--------- -------
Total Assets $1,123,992$ 891,887 $1,127,813
=========== ==========
Original sixteen to One Mine, Inc.
Condensed Balance Sheet Continued
LIABILITIES & STOCKHOLDERS' EQUITY
JuneSeptember 30, 2018 & December 31, 2017
Current Liabilities
Accounts payable & accrued expenses $1,235,526$1,244,192 1,197,026
Due to related party 213,243220,210 200,882
Notes payable Short-term 538,558 537,276
-------- -------
Total Current Liabilities 1,987,3272,002,960 1,935,184
-------- -------
Long Term Liabilities
Notes payable due after one year 118,186114,008 127,743
-------- -------
Total Liabilities 2,105,5132,116,968 2,062,927
-------- -------
Stockholders' Equity
Capital stock, par value $.03:
30,000,000 shares authorized: 14,338,855
issued and outstanding as of March 31,2017Sept. 30, 2018
and as of December 31, 20162017 468,836 468,836
Additional paid-in capital 2,222,892 2,222,892
(Accumulated deficit)
Retained earnings (3,773,249)(3,916,809) (3,626,842)
------------ -----------
Total Stockholders' Equity (1,081,521)(1,225,081) (935,114)
------------ -----------
Total Liabilities and Stockholders' Equity $1,023,992$ 891,887 $1,127,813
============ ============
See Accompanying Notes
Original Sixteen to One Mine, Inc.
Statement of Operations and Retained Earnings
Three Months Ending June.Sept. 30, SixNine Months Ending June.Sept. 30,
2018 2017 2018 2017
------ ------ ------ -----
Revenues:
Gold & Jewelry Sales 12,809 156,999 90,097 101,171(12,470) 29,853 77,627 131,024
Other Revenue 24,000- 24,000 48,000 48,00072,000
--------- --------- -------- --------
Total revenues $ 36,809(12,470) $ 180,99953,853 $ 138,097125,627 $ 149,171203,024
--------- --------- -------- --------
Operating expenses:
Salaries and wages 15,000 15,000 30,000 30,00045,000 45,000
Contract Labor 62,512 72,962 130,177 141,93053,011 71,540 183,188 213,470
Utilities 22,900 25,217 41,193 41,93824,066 19,183 65,258 61,121
Taxes - property & payroll 4,512 4,028 9,025 8,0848,962 7,837 17,987 15,921
Supplies 6,741 10,862 11,719 20,1104,297 3,820 16,016 23,930
Insurance 616895 1,091 2,518 2,1273,413 3,218
Small equipment & repairs 622 3,052 4,642 21,466678 1,387 8,321 22,853
Mine Maintenance 7,427 45,250 14,343 87,953
Drayage 9,104 5,116 10,764 7,3253,579 4,267 8,646 11,592
Corporate expenses 4,815 7,341 7,174 9,1811,472 1,192 3,382 10,374
Legal and Compliance 1,248 1,404 1,882 7,322
Mine Maintenance 3,118 23,335 7,504 42,7021,500 5,276 11,931 12,598
Depreciation & amortization 6,343 5,542 12,686 11,08419,028 16,626
Other expenses 1,183 1,928 2,072 2,8211,692 1,275 3,765 4,095
---------- ---------- ------- -------
Total operating expenses 138,714 176,878 271,356 346,090128,922 182,660 400,278 528,751
---------- ---------- -------- --------
Profit (Loss) from operations (101,905) 4,121 (133,259) (196,919)operations(141,392) (128,807) (274,651) (325,727)
Other Income: 1,099 1,642 1,970 3,229838 1,979 2,808 5,208
Other Expense: 7,084 7,133 13,517 13,3303,006 7,582 16,523 20,912
-------- --------- --------- ---------
Total Other income(expense) (5,985) (5,491) (11,547) (10,101)(2,168) (5,603) (13,715) (15,704)
-------- ---------- ------- --------
Profit (Loss) before taxes (107,890) (1,370) (144,806) (207,020)(143,560) (134,410) (288,366) (341,431)
-------- ---------- --------- ---------
Income tax benefit (expense) (1,600) (800) (1,600) (800)- 2,517 1,600 (3,317)
-------- ---------- --------- --------
Net profit (loss) $ (109,490)(143,560) $ (2,170)(136,927) $ (146,406)(289,966) $ (207,820)(344,748)
============ =========== ========== ==========
Basic and diluted (loss)
earnings per share $ (.008) $ (.0002)(.01) $ (.01) $ (.015)(.02) $ (.024)
============ ============ ========= =========
Shares used in the
calculation of net
(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
SixNine Months Ended JuneSept. 30, 2018 and Sept. 30, 2017
and June 30, 2018
SixNine Months Ended JuneSept. 30,
2018 2017
-------------- ------------
Net profit (loss) $ (146,406)(289,966) $ (207,820)(344,748)
Cash Flows From Operating Activities:
Depreciation and amortization 12,686 11,08419,028 16,626
(Increase)Decrease in
accounts receivable (4,158) 36,1426,934 61,494
Decrease(Increase) in inventory 96,496 194,680206,528 260,538
(Increase)Decrease in other
current assets - -
(Decrease) increase in accounts payable
and accrued expenses 38,499 (7,255)47,164 3,328
(Decrease) increase in related party loans 12,360 12,92519,328 22,849
(Decrease) increase in short term notes 1,282 1,2812,007
------------ ----------
Net cash (used) provided by
operating activities 10,759 41,03710,298 22,094
------------ ----------
Cash Flows From Investing Activities:
Fixed 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 (9,557) (8,607)(13,735) (12,630)
Proceeds from sale of common stock - -
Additional paid-in capital - -
----------- -----------
Net cash provided (used) by
financing activities (9,557) (8,607)(13,735) (12,630)
------------ ------------
(Decrease) increase in cash 1,202 32,430(3,437) 9,464
Cash, beginning of period 6,986 6,956
------------ ----------
Cash, end of period $ 8,1883,549 $ 39,38616,420
============ ============
Supplemental schedule of other cash flows:
Cash paid during the period for:
Interest expense $ 13,0916,959 $ 13,09120,483
============ ===========
Income taxes $ 8001,600 $ 8003,317
============ ===========
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 One
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 JuneSept. 30, 2018 and December 31,
2017, the results of operations and cash flows for the three-month and six-
month periods ended JuneSept. 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 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 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 thislast 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 oneOne the search for gold or ore embraces: (1) geological surveys;
(2) geophysical prospecting; (3) boreholes; (4) surface or underground
headings, drifts or tunnels. When operationsminers 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.
BALANCE SHEET COMPARISONS
Assets:
For the six-monthnine-month period from December 31, 2017 to JuneSept. 30, 2018 currenttotal
assets decreased by $91,135 (12%)21% primarily due to thea 32% decrease in inventory
as goldinventory.
The corresponding revenue from this decrease was soldused to cover operating expenses.
Other than depreciation expense, fixed assets remainedfund operations.
For the same.
Liabilities:
Liabilities did not change significantly.same nine-month period long-term liabilities decreased by 11%.
STATEMENT OF OPERATIONS
Revenues for the three-month and six-month periodsperiod ended JuneSept. 30, 2018 were
$144,190 (80%)show a negative
amount due to the fact that the gold that was sold this quarter was mined and
$11,074 (7%)lower respectivelytransferred into inventory at a higher price than the same periodscurrent gold market. This
results in 2017 primarily due to lower gold sales"cost of goods sold" which is included in the second quarter"gross income" figure
to exceed total income. The fact that the company's software program uses the
average cost method for cost of 2018.
Operating expensesgoods sold further complicates this problem.
The company cannot afford to purchase a more robust software program at this
time.
Revenues for both the three-month and six-month periodsnine-month period ended June 30,2018 decreased overall by 22%Sept. 30, 2018 compared to the same
period in 2017 were 38% lower due to less activitya higher percentage of sales being
generated by bullion (raw gold) rather than gemstone sales.
Operating expenses for the three-month period ended Sept 30, 2018 were 29%
lower than in 2018.2017 due to the down-sizing of the operation in the absence of
gold production. Operating expenses for the nine-month period ended
Sept 30,2018 decreased by 24% compared to the same period in 2017 for the same
reason.
For the three-month period ended JuneSept. 30, 2018 the company showed a loss of
$109,490$143,560 compared to a loss of $2,170$136,927 for the same period in 2017. The
5,000% difference is due less gold revenue in 2018. For the
six-monthnine-month period ended June 30,2018Sept. 30, 2018 the company showed a loss of $146,406$344,748
compared to a loss of $207,820$289,966 for the same period in 2017. The 30% difference is
primarily due to the lower operating expenses in 2018.
ITEM 3 QUANTITATIVE AND QUALITATIVE 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
Roger Haas, a shareholder and President and main figure in the operation of
Quartzview, a Silicon Valley start-up, filed a petition for Writ of Mandate on
September 6, 2018 for access to the Company's shareholder list. The Company
refused the demand, filing the answer on October 17, 2018. The action is in the
Superior Court of the State of California, County of Sierra.
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.
ITEM 2 UNREGISTERED SALES OF EQUITY
None
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 MINE SAFETY DISCLOSURES
For the three-month period ended June 30,2018 8September 30, 2018 four citations under
Section 104(a) S&S were issued. Five of them were issued as S&S.No citations underNo 104(b) Orders or 104 (d) S&S Citations
Section 110 (b)(2) Violations or Section 107 (a) Orders were issued.
All of theseThese citations have beenare being 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 JuneSept.
30, 2018.
ITEM 6 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: Sept. 28,November 15, 2018