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 September 30, 2016 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 September 30, 2016, 13,399,505 shares of Common Stock, par value $.03 per
share, were issued and outstanding.
<page>
PART I
ITEM 1. FINANCIAL INFORMATION
Original Sixteen to One Mine, Inc.
Original Sixteen to One Mine, Inc.
Condensed Balance Sheet
September 30, 2016 & December 31, 2015
ASSETS
Current Assets
Cash $ 4,442 $ 540,662
Accounts receivable 73,611 71,525
Inventory 426,350 724,050
Other current assets - -
------- -------
Total current assets 504,403 1,336,237
------- -------
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 (1,145,754) (1,129,128)
----------- -----------
Net fixed assets 120,562 137,188
----------- -----------
Other Assets
Bonds and misc. deposits 21,460 5,460
--------- -------
Total Assets $ 924,802 $1,757,262
========== ==========
<page>
Original sixteen to One Mine, Inc.
Condensed Balance Sheet Continued
LIABILITIES & STOCKHOLDERS' EQUITY
September 30, 2016 & December 31, 2015
Current Liabilities
Accounts payable & accrued expenses $1,227,714 1,146,492
Due to related party 346,326 724,649
Notes payable Short-term 534,684 1,030,030
-------- -------
Total Current Liabilities 2,108,724 2,901,171
-------- -------
Long Term Liabilities
Notes payable due after one year 147,101 159,272
-------- -------
Total Liabilities 2,255,825 3,060,443
-------- -------
Stockholders' Equity
Capital stock, par value $.03:
30,000,000 shares authorized: 13,399,505
issued and outstanding as of March 31,2016
and as of December 31, 2015 440,656 440,656
Additional paid-in capital 2,063,202 2,063,202
(Accumulated deficit)
Retained earnings (3,834,881) (3,807,039)
------------ -----------
Total Stockholders' Equity (1,331,023) (1,303,181)
------------ -----------
Total Liabilities and Stockholders' Equity $ 924,802 $1,757,262
============ ============
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,
2016 2015 2016 2015
------ ------ ------ -----
Revenues:
Gold & Jewelry Sales 64,974 379,744 562,797 534,159
Other Revenue 24,000 24,000 72,000 72,000
--------- --------- -------- --------
Total revenues $ 88,974 $ 403,744 $ 634,797 $ 606,159
--------- --------- -------- --------
Operating expenses:
Salaries and wages 15,000 15,000 45,000 45,000
Contract Labor 63,535 64,632 278,084 191,753
Utilities 24,543 16,136 59,184 44,275
Taxes - property & payroll 10,331 5,304 21,359 15,900
Supplies 11,253 15,023 47,813 43,584
Insurance 967 4,046 2,556 13,224
Small equipment & repairs 1,267 958 26,291 4,748
Mine Maintenance 17,316 29,141 57,176 78,126
Drayage 4,007 4,515 10,701 12,696
Corporate expenses 1,272 2,620 10,790 9,397
Legal and Compliance 28,833 5,759 53,279 233,218
Depreciation & amortization 5,542 5,638 16,626 27,510
Other expenses 1,353 924 6,060 4,255
---------- ---------- ------- -------
Total operating expenses 185,219 169,696 634,919 723,686
---------- ---------- -------- --------
Profit (Loss) from operations(96,245) 234,048 (122) (117,527)
Other Income: 800 4,636 3,400 11,813
Other Expense: 6,578 15,264 30,320 46,693
-------- --------- --------- ---------
Total Other income(expense) (5,778) (10,628) (26,920) (34,880)
-------- ---------- ------- --------
Profit (Loss) before taxes (102,023) 223,420 (27,042) (152,407)
-------- ---------- --------- ---------
Income tax benefit (expense) (800) (800)
-------- ---------- --------- --------
Net profit (loss) $ (102,023) $ 223,420 $ (27,842) $ (153,207)
============ =========== ========== ==========
Basic and diluted (loss)
earnings per share $ (.01) $ .02 $ (.002) $ (.03)
============ ============ ========= =========
Shares used in the
calculation of net
(loss) income per share 13,399,505 13,399,505 13,399,505 13,399,505
============ =========== ========== ===========
See Accompanying Notes
<page>
Original Sixteen to One Mine, Inc.
Statement of Cash Flows
Nine Months Ended Sept. 30, 2016 and Sept. 30, 2015
Nine Months Ended Sept. 30,
2016 2015
-------------- ------------
Net profit (loss) $ (27,842) $ (153,206)
Cash Flows From Operating Activities:
Depreciation and amortization 16,626 27,510
(Increase)Decrease in
accounts receivable (2,086) (1,116)
Decrease(Increase) in inventory 297,700 (233,753)
(Increase)Decrease in other
current assets - -
(Decrease) increase in accounts payable
and accrued expenses 81,222 290,303
(Decrease) increase in related party loans (378,323) (58,996)
(Decrease) increase in short term notes (495,346) 177,282
------------ ----------
Net cash (used) provided by
operating activities (508,049) 48,024
------------ ----------
Cash Flows From Investing Activities:
Fixed Asset Purchases _ (21,225)
Proceed from sale real estate - -
Other assets bonds misc. deposits (16,000) -
----------- -----------
Net cash (used) provided by
investing activities (16,000) (21,225)
----------- -----------
Cash Flows From Financing Activities
Increase (decrease) notes payable (12,171) (10,223)
Proceeds from sale of common stock - -
Additional paid-in capital - -
----------- -----------
Net cash provided (used) by
financing activities (12,171) (10,223)
------------ ------------
(Decrease) increase in cash (536,220) 16,576
Cash, beginning of period 540,662 _
------------ ----------
Cash, end of period $ 4,442 $ 16,576
============ ============
Supplemental schedule of other cash flows:
Cash paid during the period for:
Interest expense $ 30,006 $ 44,863
============ ===========
Income taxes $ 800 $ 800
============ ===========
See Accompanying Notes
<page>
NOTES TO THE FINANCIAL STATEMENTS
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 exploration and production 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 and jewelry are 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 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 Sept. 30, 2015 and December 31,
2014, the results of operations and cash flows for the three-month and
nine-month periods ended Sept. 30, 2014 and 2015. 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.
ITEM 2. 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
ore deposit has been mined. Production is approximately 1,500,000 ounces of
gold.
There are over twenty-eight 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
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 exploration. 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
For the nine-month period from December 31, 2015 to Sept. 30, 2016 total
assets decreased by 47% primarily due to a 99% decrease in cash and a 41% de-
crease in inventory. Both the cash and inventory were used to pay down
liabilities.
For the same nine-month period related party payables decreased by 52%
and short-term notes decreased by 48% primarily due the utilizition of cash
and inventory to pay-down these debts as mentioned above.
STATEMENT OF OPERATIONS
Revenues for the three-month period ended Sept. 30, 2016 were 78% lower than
the same period in 2015 primarily due to a lack of gold production in 2016.
Revenues for the nine-month period ended Sept. 30, 2016 compared to the same
period in 2015 were 5% higher as the lack of gold production in 2016 was offset
by the sale of existing inventory.
Operating expenses for the three-month period ended Sept 30,2016 increased
overall by 9% compared to the same period in 2015. Specific categories which
increased substantially include: Taxes property & Payroll 95% due to higher BLM
fees, Legal and Compliance 401% due to penalites and water testing costs,
citations, and utilities 52% due to increased pumping. Categories which
decreased significantly include insurance 76% due to a new insurance carrier
for the company vehicles, Corporate expense 51% due to less board meetings
and mine maintenance 41%.
..
Operating expenses for the nine-month period ended Sept 30,2016 decreased by
12% compared to the same period in 2015. Specific categories which decreased
substantially include: Insurance 81%, drayage 16%, corporate expense 15% and
Legal and Compliance 77% due to a settlement agreement with California Regional
Water Quality Control Board in 2015. Categories which increased substantially
include contract labor 45%, utilties 34%, taxes property and payroll 34%, small
equipment and tools 454%.
Other expenses for the three-month and nine-month periods ended Sept 30,2016
decreased significantly compared to the same periods in 2015 primarliy due to
less interest expense in 2016.
For the three-month period ended Sept. 30, 2016 the company showed a loss of
$102,023 compared to a profit of $223,420 for the same period in 2015. The
146% difference is due to decreased gold production in 2016. For the nine-month
period ended Sept. 30, 2016 the company showed a loss of $27,042 compared to a
loss of $152,407 for the same period in 2015. The 82% difference is primarily
due to the sale of inventory in 2016 combined with lower overall operating
expenses.
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
The Company filed a petition for review with the United States court of Appeals
for the Ninth Circuit, accepted July 12, 2016. File number is: No. 16-72349.
Original Sixteen to One Mine, Inc. (operator) and its miners (WE) have been
adversely affected by an order of the Federal Mine Safety and Health Review
Commission (FMSHRC) under the Federal Mine Safety and Health Act of 1977,
Public Law 91-173 (ACT). WE ask for a review of such order in your court in
our district, the Ninth Circuit. WE pray that the order be modified or set
aside as allowed in Sec.106. (a)(1) of the ACT.
Citations were written outside of the law specified in SEC 4 under the heading,
MINES SUBJECT TO ACT: Each coal or other mine, the products of which enter
commerce, or the operations or products of which affect commerce, and each
operator of such mine, and every miner in such mine shall be subject to the
provisions of the ACT.
The Secretary of Labor is designated to carry out the intents by Congress of
ACT, SEC. 2. Congress declares the importance of our most precious resource
the miner. The Mine Safety and Health Administration (MSHA) was established
to carryout CFR 30 Mineral Resources and issue citations. During the public
hearing for citations, MSHA placed no supportive testimony to refute its
position that Plumbago meets the requirement for regulations under ACT. No
case rulings to support the Administrative Law Judge (ALJ) or FMSHRC decisions
are entered into the record.
While there are instances where SEC. 4. language was challenged by
an operator and the challenge fails, there are no cases or situations that
resemble Plumbago. WE entered over eighty pages of testimony supporting our
position, including the recent decision by the United States Supreme Court
regarding the Affordable Care Act and its effect on interstate commerce.The
argument that at one time, Plumbago was a mine and affected commerce, has
merit.
The argument that the operation at Plumbago meets the requirement of SEC. 4.
during recent times has no standing. MSHA actions followed by the ALJ and
FMSHRC, violates the intent of Congress as written in ACT.
This important law must be honestly enforced in its entirety, not through a
selective interpretational process. This behavior must be severed, not the law
but its abuse. Only the Judicial Branch remains to protect the American miner
from extinction by overreaching power. The Legislative Branch held numerous
public meeting in the 1970s on the subject of mining health and safety in the
industry. Congress passed a law for the Executive Branch to implement. Over a
span of 39 years regulators have drifted away from its stated purposes. WE
pray for relief and support from the Judicial Branch to return the course of
health and safety to the most endangered species in America, the underground
gold miner.
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 September 30, 2016 one citation under Section
104(a) S&S was issued. No citations under 104(b) Orders, 104 (d) S&S Citations
Section 110 (b)(2) Violations or Section 107 (a) Orders were issued.
A total of four citations were issued during the three-month period ended Sept
30, 2016. The total proposed penalties on these four citations is $620.
An appeal to a judges' decision has been filed (see LEGAL PROCEEDINGS above)
for citations issued in previous periods.
Several citations from previous periods are 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 Sept.
30, 2016.
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: November 15, 2016