0000074925-18-000004.txt : 20181002 0000074925-18-000004.hdr.sgml : 20181002 20181002140340 ACCESSION NUMBER: 0000074925-18-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20180630 FILED AS OF DATE: 20181002 DATE AS OF CHANGE: 20181002 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ORIGINAL SIXTEEN TO ONE MINE INC /CA/ CENTRAL INDEX KEY: 0000074925 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 940735390 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10156 FILM NUMBER: 181100646 BUSINESS ADDRESS: STREET 1: P O BOX 1621 CITY: ALLEGHENY STATE: CA ZIP: 95910 BUSINESS PHONE: 9162873223 MAIL ADDRESS: STREET 1: PO BOX 1621 STREET 2: PO BOX 1621 CITY: ALLEGHANY STATE: CA ZIP: 95910 10-Q 1 tenqjuneeighteen.txt 2ND QUARTER 10-Q 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, 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 June 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 June 30, 2018 & December 31, 2017 ASSETS Current Assets Cash $ 8,188 $ 6,986 Accounts receivable 84,075 79,917 Inventory 555,732 652,228 Other current assets - - ------- ------- Total current assets 647,995 739,131 ------- ------- 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) (1,177,471) ----------- ----------- Net fixed assets 76,160 88,845 ----------- ----------- Other Assets Bonds and misc. deposits 21,460 21,460 --------- ------- Total Assets $1,123,992 $1,127,813 =========== ========== Original sixteen to One Mine, Inc. Condensed Balance Sheet Continued LIABILITIES & STOCKHOLDERS' EQUITY June 30, 2018 & December 31, 2017 Current Liabilities Accounts payable & accrued expenses $1,235,526 1,197,026 Due to related party 213,243 200,882 Notes payable Short-term 538,558 537,276 -------- ------- Total Current Liabilities 1,987,327 1,935,184 -------- ------- Long Term Liabilities Notes payable due after one year 118,186 127,743 -------- ------- Total Liabilities 2,105,513 2,062,927 -------- ------- Stockholders' Equity Capital stock, par value $.03: 30,000,000 shares authorized: 14,338,855 issued and outstanding as of March 31,2017 and as of December 31, 2016 468,836 468,836 Additional paid-in capital 2,222,892 2,222,892 (Accumulated deficit) Retained earnings (3,773,249) (3,626,842) ------------ ----------- Total Stockholders' Equity (1,081,521) (935,114) ------------ ----------- Total Liabilities and Stockholders' Equity $1,023,992 $1,127,813 ============ ============ See Accompanying Notes Original Sixteen to One Mine, Inc. Statement of Operations and Retained Earnings Three Months Ending June. 30, Six Months Ending June. 30, 2018 2017 2018 2017 ------ ------ ------ ----- Revenues: Gold & Jewelry Sales 12,809 156,999 90,097 101,171 Other Revenue 24,000 24,000 48,000 48,000 --------- --------- -------- -------- Total revenues $ 36,809 $ 180,999 $ 138,097 $ 149,171 --------- --------- -------- -------- Operating expenses: Salaries and wages 15,000 15,000 30,000 30,000 Contract Labor 62,512 72,962 130,177 141,930 Utilities 22,900 25,217 41,193 41,938 Taxes - property & payroll 4,512 4,028 9,025 8,084 Supplies 6,741 10,862 11,719 20,110 Insurance 616 1,091 2,518 2,127 Small equipment & repairs 622 3,052 4,642 21,466 Drayage 9,104 5,116 10,764 7,325 Corporate expenses 4,815 7,341 7,174 9,181 Legal and Compliance 1,248 1,404 1,882 7,322 Mine Maintenance 3,118 23,335 7,504 42,702 Depreciation & amortization 6,343 5,542 12,686 11,084 Other expenses 1,183 1,928 2,072 2,821 ---------- ---------- ------- ------- Total operating expenses 138,714 176,878 271,356 346,090 ---------- ---------- -------- -------- Profit (Loss) from operations (101,905) 4,121 (133,259) (196,919) Other Income: 1,099 1,642 1,970 3,229 Other Expense: 7,084 7,133 13,517 13,330 -------- --------- --------- --------- Total Other income(expense) (5,985) (5,491) (11,547) (10,101) -------- ---------- ------- -------- Profit (Loss) before taxes (107,890) (1,370) (144,806) (207,020) -------- ---------- --------- --------- Income tax benefit (expense) (1,600) (800) (1,600) (800) -------- ---------- --------- -------- Net profit (loss) $ (109,490) $ (2,170) $ (146,406) $ (207,820) ============ =========== ========== ========== Basic and diluted (loss) earnings per share $ (.008) $ (.0002) $ (.01) $ (.015) ============ ============ ========= ========= 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 Six Months Ended June 30, 2017 and June 30, 2018 Six Months Ended June 30, 2018 2017 -------------- ------------ Net profit (loss) $ (146,406) $ (207,820) Cash Flows From Operating Activities: Depreciation and amortization 12,686 11,084 (Increase)Decrease in accounts receivable (4,158) 36,142 Decrease(Increase) in inventory 96,496 194,680 (Increase)Decrease in other current assets - - (Decrease) increase in accounts payable and accrued expenses 38,499 (7,255) (Decrease) increase in related party loans 12,360 12,925 (Decrease) increase in short term notes 1,282 1,281 ------------ ---------- Net cash (used) provided by operating activities 10,759 41,037 ------------ ---------- 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) Proceeds from sale of common stock - - Additional paid-in capital - - ----------- ----------- Net cash provided (used) by financing activities (9,557) (8,607) ------------ ------------ (Decrease) increase in cash 1,202 32,430 Cash, beginning of period 6,986 6,956 ------------ ---------- Cash, end of period $ 8,188 $ 39,386 ============ ============ Supplemental schedule of other cash flows: Cash paid during the period for: Interest expense $ 13,091 $ 13,091 ============ =========== Income taxes $ 800 $ 800 ============ =========== See Accompanying Notes 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, 2018 and December 31, 2017, the results of operations and cash flows for the three-month and six- month periods ended June 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 this 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 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. BALANCE SHEET COMPARISONS Assets: For the six-month period from December 31, 2017 to June 30, 2018 current assets decreased by $91,135 (12%) primarily due to the decrease in inventory as gold was sold to cover operating expenses. Other than depreciation expense, fixed assets remained the same. Liabilities: Liabilities did not change significantly. STATEMENT OF OPERATIONS Revenues for the three-month and six-month periods ended June 30, 2018 were $144,190 (80%) and $11,074 (7%)lower respectively than the same periods in 2017 primarily due to lower gold sales in the second quarter of 2018. Operating expenses for both the three-month and six-month periods ended June 30,2018 decreased overall by 22% compared to the same period in 2017 due to less activity in 2018. For the three-month period ended June 30, 2018 the company showed a loss of $109,490 compared to a loss of $2,170 for the same period in 2017. The 5,000% difference is due less gold revenue in 2018. For the six-month period ended June 30,2018 the company showed a loss of $146,406 compared to a loss of $207,820 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 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 8 citations under Section 104(a) were issued. Five of them were issued as S&S.No citations under 104(b) Orders, 104 (d) S&S Citations Section 110 (b)(2) Violations or Section 107 (a) Orders were issued. All of these citations have been 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, 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, 2018