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 June 30, 2017 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 June 30, 2017, 14,338,855 shares of Common Stock, par value $.03 per
share, were issued and outstanding.
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PART I
ITEM 1. FINANCIAL INFORMATION
Original Sixteen to One Mine, Inc.
Condensed Balance Sheet
June 30, 2017 & December 31, 2016
ASSETS
Current Assets
Cash $ 39,386 $ 6,956
Accounts receivable 69,275 105,417
Inventory 815,533 1,010,213
Other current assets - -
------- -------
Total current assets 924,194 1,122,586
------- -------
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 (1,162,380) (1,151,296)
----------- -----------
Net fixed assets 103,936 115,020
----------- -----------
Other Assets
Bonds and misc. deposits 21,460 21,460
--------- -------
Total Assets $1,327,967 $1,537,443
========== ==========
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Original sixteen to One Mine, Inc.
Condensed Balance Sheet Continued
LIABILITIES & STOCKHOLDERS' EQUITY
June 30, 2017 & December 31, 2016
Current Liabilities
Accounts payable & accrued expenses $1,180,665 1,187,920
Due to related party 188,458 175,533
Notes payable Short-term 535,973 534,691
-------- -------
Total Current Liabilities 1,905,096 1,898,144
-------- -------
Long Term Liabilities
Notes payable due after one year 135,842 144,449
-------- -------
Total Liabilities 2,040,938 2,042,593
-------- -------
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 (3,404,699) (3,196,878)
------------ -----------
Total Stockholders' Equity (712,971) (505,150)
------------ -----------
Total Liabilities and Stockholders' Equity $1,327,967 $1,537,443
============ ============
See Accompanying Notes
<page>
Original Sixteen to One Mine, Inc.
Statement of Operations and Retained Earnings
Three Months Ending June. 30, Six Months Ending June. 30,
2017 2016 2017 2016
------ ------ ------ -----
Revenues:
Gold & Jewelry Sales 156,999 183,657 101,171 497,824
Other Revenue 24,000 24,000 48,000 48,000
--------- --------- -------- --------
Total revenues $ 180,999 $ 207,657 $ 149,171 $ 545,824
--------- --------- -------- --------
Operating expenses:
Salaries and wages 15,000 15,000 30,000 30,000
Contract Labor 72,962 122,291 141,930 214,549
Utilities 25,217 14,510 41,938 34,642
Taxes - property & payroll 4,028 5,348 8,084 11,028
Supplies 10,862 9,079 20,110 36,560
Insurance 1,091 1,007 2,127 1,589
Small equipment & repairs 3,052 3,697 21,466 25,024
Drayage 5,116 3,757 7,325 6,694
Corporate expenses 7,341 5,617 9,181 9,517
Legal and Compliance 1,404 21,993 7,322 24,446
Mine Maintenance 23,335 14,700 42,702 39,861
Depreciation & amortization 5,542 5,542 11,084 11,084
Other expenses 1,928 1,191 2,821 4,706
---------- ---------- ------- -------
Total operating expenses 176,878 223,732 346,090 449,700
---------- ---------- -------- --------
Profit (Loss) from operations 4,121 (16,075) (196,919) 96,124
Other Income: 1,642 1,155 3,229 1,955
Other Expense: 7,133 8,573 13,330 23,098
-------- --------- --------- ---------
Total Other income(expense) (5,491) (7,418) (10,101) (21,143)
-------- ---------- ------- --------
Profit (Loss) before taxes (1,370) (23,493) (207,020) 74,981
-------- ---------- --------- ---------
Income tax benefit (expense) (800) (800) (800)
-------- ---------- --------- --------
Net profit (loss) $ (2,170) $ (23,493) $ (207,820) $ 74,181
============ =========== ========== ==========
Basic and diluted (loss)
earnings per share $ (.0002) $ .002 $ (.015) $ .006
============ ============ ========= =========
Shares used in the
calculation of net
(loss) income per share 14,338,855 13,399,505 14,338,855 13,399,505
============ =========== ========== ===========
See Accompanying Notes
<page>
Original Sixteen to One Mine, Inc.
Statement of Cash Flows
Six Months Ended June 30, 2017 and June 30, 2016
Six Months Ended June 30,
2017 2016
-------------- ------------
Net profit (loss) $ (207,820) $ 74,182
Cash Flows From Operating Activities:
Depreciation and amortization 11,084 11,084
(Increase)Decrease in
accounts receivable 36,142 16
Decrease(Increase) in inventory 194,680 221,831
(Increase)Decrease in other
current assets - -
(Decrease) increase in accounts payable
and accrued expenses (7,255) 20,194
(Decrease) increase in related party loans 12,925 (354,273)
(Decrease) increase in short term notes 1,281 (496,643)
------------ ----------
Net cash (used) provided by
operating activities 41,037 (523,609)
------------ ----------
Cash Flows From Investing Activities:
Fixed Asset Purchases _ -
Proceed from sale real estate - -
Other assets bonds misc. deposits - 460
----------- -----------
Net cash (used) provided by
investing activities - 460
----------- -----------
Cash Flows From Financing Activities
Increase (decrease) notes payable (8,607) (7,203)
Proceeds from sale of common stock - -
Additional paid-in capital - -
----------- -----------
Net cash provided (used) by
financing activities (8,607) (7,203)
------------ ------------
(Decrease) increase in cash 32,430 (530,352)
Cash, beginning of period 6,956 540,662
------------ ----------
Cash, end of period $39,386 $ 10,310
============ ============
Supplemental schedule of other cash flows:
Cash paid during the period for:
Interest expense $ 13,091 $ 22,301
============ ===========
Income taxes $ 800 $ 800
============ ===========
See Accompanying Notes
<page>
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 June 30, 2017 and December 31,
2016, the results of operations and cash flows for the three-month and six-
month periods ended June 30, 2017 and 2016. 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.
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
Assets:
For the six-month period from December 31, 2016 to June 30, 2017 cash increased
by $32,430 (466%) and Accounts Receivable decreased by $36,142 (34%) due to
payments on account by customers.
For the same six-month period inventory decreased by $194,680 (19%) due to the
sale of inventory combined with a lack of gold-production. No gold production
is anticipated while the company focuses its efforts on rehabilitation of the
49 winze.
Liabilities:
Liabilities did not change significantly.
STATEMENT OF OPERATIONS
Revenues for the three-month and six-month periods ended June 30, 2017 were
$26,658 (13%) and $396,653 (73%)lower respectively than the same periods in
2016 primarily due to less gold sales in 2017 and higher cost-of-goods sold
as more material was sold as bullion rather than value-added jewelry material
in 2017.
Operating expenses for the three-month period ended June 30,2017 decreased
overall by 21% compared to the same period in 2016. Specific categories which
decreased substantially include: Contract Labor 40% due to a smaller crew in
2017, Legal & Compliance 94% due to penalties in 2016, Mine Maintenance 59%
due to a smaller operation as noted above.
Operating expenses for the six-month period ended June 30,2017 decreased by
23% compared to the same period in 2016 due to changes in the categories
listed above.
For the three-month period ended June 30, 2017 the company showed a loss of
$2,170 compared to a loss of $23,493 for the same period in 2016. The
94% difference is due to lower operating expenses in 2017. For the six-month
period ended June 30,2017 the company showed a loss of $207,820 compared to a
profit of $74,181 for the same period in 2016. The 380% difference is
primarily due to the lack of gold production in 2017 combined with higher cost-
of-goods sold (COGS).
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.
On May 30, 2017, the Company attorney contacted the governments attorneys and
suggested Original Sixteen to One Mine, Inc (The Company) would consider a
voluntary dismissal with each party to bear its own costs and fees. The
attorneys for MSHA and the Secretary of Labor agreed and a stipulated motion
for voluntary dismissal and granted by the Ninth Circuit on June 6, 2017. The
illegality surrounding Section 4 of the Mine Act is an important subject for
all miners. The Ninth Circuit is often characterized as an outlier court that
is frequently reversed by the Supreme Court. Perhaps it would understand this
issue and (as outlier) rule for The Company.
President Miller has given careful consideration to this issue. The time
arrived to move MSHA into accountability in the 21st century regarding the
law. Plumbago presented overwhelming facts that the Plumbago did not meet the
intent of Congress in passing An Act in 1977. A Court challenge, however,
must wait due to the Utah prairie dog.
The Tenth Circuit (Denver) on March 29, 2017 affirmed an Endangered Species Act
(ESA) challenge that the intrastate Utah prairie dog required protection
because: Interstate travelers stimulate interstate commerce through
recreational observation and scientific study of endangered or threatened
species. This decision added fuel to a burning California issue of the delta
smelt, which the Ninth Circuit reasoned also affected interstate commerce
(2014).
The Tenth Circuit expressly approved the Ninth Circuits reasoning in the delta
smelt case, and similarly found the ESA had a substantial relation to
interstate commerce even if the prairie dog itself did not. [We] conclude that
Congress had a rational basis to believe that providing for the regulation of
take of purely intrastate species like the Utah prairie dog is essential to
ESAss comprehensive regulatory schemes. The Tenth Circuit ultimately therefore
found that federal regulation of the purely intrastate prairie dog was within
the federal power under the Commerce Clause.
The prairie dog case is recent and may lead to a request for review with the
Supreme Court. Seeking review by the U.S. Supreme Court is always a time-
consuming and expensive proposition, particularly since it requires 16/1 to go
through the Ninth Circuit appellate process. The Company sees no chance of
prevailing due to judicial affirmation of travelers admiring the Utah prairie
dog over property rights of Utah residents.
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 30,2017 no citations 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.
One citation was issued during the three-month period ended June 30, 2017.
The penalty has not been assessed yet.
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 June
30, 2017.
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: August 15, 2017