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, 2019 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 [ ] N0 [X]
As of March 31, 2019, 14,342,097 shares of Common Stock, par value $.033 per
share, were issued and outstanding.
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Item 1. PART I
Original Sixteen to One Mine, Inc.
Condensed Balance Sheet
December 31, 2019 & December 31, 2018
ASSETS
2019 2018
Current Assets
Cash $ 6,522 $ 3,296
Accounts receivable 67,925 67,175
Inventory (see Note 1) 423,874 429,329
Other current assets - -
------- -------
Total current assets 498,321 499,800
------- -------
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 (see Note 2) 278,377 278,377
------- -------
Fixed Assets at Cost
Equipment 597,602 594,152
Buildings 209,487 209,487
Vehicles 168,925 168,925
--------- ---------
Total fixed assets at cost 976,014 972,564
--------- ---------
Less accumulated depreciation (913,907) (909,387)
----------- -----------
Net fixed assets 62,107 63,177
----------- -----------
Other Assets
Bonds and misc. deposits 21,460 21,460
--------- -------
Total Assets $ 860,265 $ 862,814
========== ==========
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Original sixteen to One Mine, Inc.
Condensed Balance Sheet Continued
LIABILITIES & STOCKHOLDERS' EQUITY
2019 2018
Current Liabilities
Accounts payable & accrued expenses (see Note 3)$ 1,270,002 1,274,559
Due to related party (see Note 4) 235,869 229,472
Notes payable Short-term (see Note 6) 538,558 538,558
-------- -------
Total Current Liabilities 2,044,429 2,042,589
-------- -------
Long Term Liabilities
Notes payable due after one year (see Note 7) 108,799 110,323
-------- -------
Total Liabilities 2,153,228 2,152,912
---------- ---------
Stockholders' Equity
Capital stock, par value $.033:
30,000,000 shares authorized: 14,342,097
issued and outstanding as of Dec. 31, 2018
and as of March 31, 2019
(see Note 8) 473,289 473,289
Additional paid-in capital 2,222,892 2,222,892
(Accumulated deficit)
Retained earnings (3,989,143) (3,986,279)
------------ -----------
Total Stockholders' Equity (1,292,962) (1,290,098)
------------ -----------
Total Liabilities and Stockholders' Equity $ 860,265 $ 862,814
============ ============
See Accompanying Notes
<page>
Original Sixteen to One Mine, Inc.
Statement of Operations and Retained Earnings
Three Months Ended March 31, 2019 and March 31, 2018
Three Months Ending March 31,
2019 2018
------ ------
Revenues:
Gold & jewelry sales $ 116,451 $ 77,288
Other Revenue - 24,000
----------- -----------
Total revenues 116,451 101,288
----------- -----------
Operating expenses:
Salaries and wages 15,000 15,000
Contract Labor 55,287 67,665
Telephone & utilities 19,316 18,293
Taxes - property & payroll 4,379 4,512
Supplies 3,727 4,977
Insurance 1,875 1,902
Small equipment & repairs 2,511 4,020
Drayage 2,512 1,660
Corporate expenses 365 2,359
Legal fees and penalties 880 634
Mine Maintenance & Compliance 3,411 4,387
Depreciation & amortization 4,520 6,343
Other operating expenses 1,468 888
---------- ----------
Total operating expenses 115,251 132,640
---------- ----------
Profit (Loss) from operations 1,200 (31,352)
Other Income & Expenses:
Other Income 1,519 870
Other Expenses 5,284 6,433
------- --------
Total Other Income (Expense) (3,765) (5,563)
---------- -----------
Profit (Loss) before taxes (2,565) (36,915)
---------- -----------
Income Tax Benefit - -
Net Profit (Loss) $ (2,565) $ (36,915)
============ ===========
Basic and diluted Gain
(Loss) per share $ (0.0002) $ (0.003)
============ ==========
Shares used in the
calculation of net
loss income per share 14,342,097 14,338,855
============ ==========
See Accompanying Notes
<page>
Original Sixteen to One Mine, Inc.
Statement of Cash Flows
Three Months Ended March 31, 2019 and March 31, 2018
Three Months Ended March 31,
2019 2018
-------------- --------------
Cash Flows From Operating Activities:
Net profit (loss) $ (2,564) $ (36,915)
operating activities:
Depreciation 4,520 6,343
(Increase)Decrease in
accounts receivable (750) 12,852
Decrease(Increase) in inventory 5,453 9,802
(Increase)Decrease in other
current assets - -
(Decrease) increase in accounts payable
and accrued expenses (4,857) 29,847
(Decrease) increase related-party loans 6,397 10,150
(Decrease) increase in short term notes _ 236
------------ ----------
Net cash (used) provided by
operating activities 8,199 32,315
------------ -----------
Cash Flows From Investing Activities:
(Increase) Decrease Fixed Assets (3,450) -
------------- ----------
Net cash (used) provided by
investing activities (3,450) -
------------ -----------
Cash Flows From Financing Activities
Increase (decrease) notes payable (1,523) (4,858)
(Increase) decrease in notes receivable - -
Proceeds from sale of common stock - -
Additional paid-in capital - -
------------ ------------
Net cash provided (used) by
financing activities (1,523) (4,858)
------------ ------------
(Decrease) increase in cash 3,226 27,457
Cash, beginning of period 3,296 6,986
------------ ----------
Cash, end of period $ 6,522 $ 34,443
============ ============
Supplemental schedule of other cash flows:
Cash paid during the period for:
Interest expense $ 4,611 $ 6,327
Income Taxes $ - $ -
============ ============
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 actively operates 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.
Inventory is accounted for using the average cost 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. Company does not capitalize underground expenses or exploration.
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. No depletion deduction
is recorded.
Revenue Recognition: Revenue is recognized using quoted market prices for gold
when mined. For income tax purposes revenues are not recognized until the gold
is sold.
Use of Estimates: Preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions. Estimates and assumptions affect 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 may 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. Financial statements contain adjustments (consisting only of normal
recurring accruals) necessary to present fairly the Company's financial
position at March 31, 2019 and December 31, 2018, the results of operations
and cash flows for the three-month periods ended March 31, 2019 and 2018.
Unaudited financial statements are prepared in accordance with Generally
Accepted Accounting Principles for interim financial information and with
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 California
high-grade, hard rock, underground gold mine. The Company celebrated its 100
year anniversary on Oct. 9, 2011. It is the oldest gold mining corporation in
the United States. The same company owns and operates (maintains) the mine.
Experts estimate that less than twenty percent of the deposit has been mined.
Production is approximately 1,500,000 ounces of gold.
Over thirty miles of horizontal workings and millions of cubic
feet of vertical excavations called stopes exist. 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 a 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". At the
Sixteen to One the search for gold or ore embraces: (1) historical maps;
(2) geophysical prospecting; (3) underground headings, drifts or tunnels. When
operations detect the presence of gold, the Company evaluates the indicators.
Its operation changes from exploration to development to production rapidly.
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 notes:
Gold inventory is recorded at spot price despite proven additional value for
specimen and gem-stone material which is substantially greater than spot price.
Jewelry inventory is recorded at labor plus gold cost.
No value is recorded on the balance sheet for timber reserves. The company
owns 470 acres of prime forested timberland. No value is recorded on the
balance sheet for the Company owned water-rights. Reduced value is recorded
on the balance sheet for buildings, equipment and land. No value is recorded
on the balance sheet for marketable aggregate and decorative stone currently
stockpiled. No value is recorded on the balance sheet for goodwill. Fixed
assets are recorded at historic cost less depreciation.
BALANCE SHEET COMPARISONS
For the three-month period ended March 31, 2019 there were no significant
changes to the balance sheet.
STATEMENT OF OPERATIONS
Revenues
Gold revenues for the three-month period ending March 31, 2019 increased by
$39,163 (51%) compared with the same period in 2018 due to gold production in
2019.
Expenses
For the three-month period ended March 31, 2019 compared to the same period in
2018 total operating expenses decreased by $17,389 (13%) primarily due to a
smaller crew in 2019 compared to 2018.
For the three-month period ended March 31, 2019 compared to the same period in
2018 the company showed a loss of $2,565 compared to a loss of $36,915.
The $34,350 (93%) difference is due to lower expenses and increased revenue in
2019.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
From time to time Original Sixteen to One Mine, Inc. (the Company), makes
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, political and governmental
conditions
- Unexpected geological conditions or rock stability conditions
resulting in cave-ins, flooding, rock-bursts or rock slides
- The speculative nature of mineral exploration
- Environmental risks
- Changes in laws and government regulations, including those relating to taxes
and the environment
- Fluctuations in interest rates and other adverse financial market conditions
- Labor relations
- Accidents
- Unusual weather or operating conditions
- Force majeure events
- Other risk factors described from time to time in Original Sixteen to One
Mine, Inc., filings with the Securities and Exchange Commission
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 will to update its forward-looking statements,
whether as a result of receiving new information, the occurrence of future
events or otherwise if significant.
ITEM 4: CONTROLS AND PROCEDURES
Security procedures include multiple levels of gold custody, from the mine
to sales. Inventory control procedures were set up by an SEC certified
auditing firm and continue to be followed.
PART II
Item 1 LEGAL PROCEEDINGS
None
Item 1a RISK FACTORS
(a) Price of Gold
The daily spot price of gold has a modest effect on gross revenue if it's
between $1,000 and $1,300 an ounce. A significant drop below $1,000 may have
an adverse effect on the Company's operation. The Company's realized gold
values usually exceed the bullion price due to the jewelry and specimen markets
which are not affected by the spot price of gold.
(b) Lack of Proven Reserves
Because proven reserves are not utilized as a component for evaluating future
earnings or ore values, a sense of uncertainty of existence is perceived by
some. Caution is always recommended in using the doctrines of reserves as an
economic tool for valuing a mining company. While (i) the Company has
recovered over one million ounces of gold and (ii) management knows that
substantial additional virgin veins exists in the Sixteen to One mine, the
Company has no ability to measure potential gold production using the
mathematical tools generally recognized in the mining industry; however, the
company can prove that approximately seventy percent (70%) of its vein systems
have not been developed.
(c) Governmental Regulation
The attached financial statements have not been audited by a Securities
Exchange Commission (SEC) accounting firm. Therefore, the Company is not in
full compliance with this SEC regulation for companies listed on an exchange.
State and federal statutes regulate environmental quality, safety, exploration
procedures, reclamation, employees health and safety, use of explosives, air
quality standards, pollution of stream and fresh water sources, noxious odors,
noise, dust, and other environmental protection controls as well as the rights
of adjoining property owners. Laws may change preventing or delaying the
commencement or continuance of given operations.
The Company is substantially in compliance with all known safety and
environmental standards and regulations, however; it faces reoccuring
unreasonable and illegal demands from the Central Valley Regional Water
Quality Control Board (CVRWCB) or its staff. The Company is forced to expend
working capital and time defending this excessive and punitive behavior. There
can be no assurance that future changes in the laws, regulations or reckless
interpretations thereof will not have a material adverse effect; however during
2018, CVRWCB staff was invited and accepted invitations to visit the mine
property. A definitive plan is under mutual development to re-write the
mine's discharge permit during 2019.
(d) Liquidity
Gold inventory at March 31, 2019, was $423,874 primarily as specimens or
gold held as jewelry. While history of actual cash sales supports an
inventory value exceeding the spot price, no such increases are used to compute
the inventory. All inventory of raw material is recorded at spot price per
troy ounce. In addition, contract manufacturing costs of jewelry are included
in the finished jewelry inventory. Periodic shortfalls in liquidity occur
which are not likely to be bridged by institutional debt financing. Management
addresses these issues as they arise.
(e) Price of Stock
Bids and offers are publicly recorded on the stock page of the Company's web
site and a gray market. Exposure is limited. The price of stock may not
accurately reflect its fair market value because of the limited marketplace
and the existence of a wild and free gray market. The company deferred
programs to support or promote its stock and is currently seeking a suitable
public marketplace.
There are conflicting bids, offers and trades between the Company's website
and the unregulated Pink Sheet Gray Market, ticker symbol OSTO. Because of
these discrepancies the market price is unreliable.
Item 2 UNREGISTERED SALES OF EQUITY
None
Item 3. DEFAULTS ON SECURITIES
None
Item 4. MINE SAFETY DISCLOSURES
For the three-months ended March 31, 2019, the Mine Safety and Health
Administration (MSHA) issued no 104 (a) S&S or 104 (b) orders.
One paperwork citation was issued with a penalty of $121 which was paid.
Additionally, ALL eight S&S Citations issued in calendar year 2018 were
down-graded to non- S&S violations during informal hearing procedures in 2019.
Item 5. OTHER INFORMATION
The unaudited interim consolidated financial statements of the Company are
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 reported
amounts of assets and liabilities and disclosure of contingent liabilities at
the date of financial statements, as well as reported amounts of
revenues and expenses during the reporting period. On an ongoing basis,
management evaluates its estimates and assumptions; however, actual amounts
may differ. 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, 2019.
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: May 15, 2019