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, 2020 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, 2020, 14,342,097 shares of Common Stock, par
value $.033 per share, were issued and outstanding.
Item 1. PART I
Original Sixteen to One Mine, Inc.
Condensed Balance Sheet
June 30, 2020 & December 31, 2019
ASSETS
2020 2019
Current Assets
Cash $ 25,834 $ 4,433
Accounts receivable 56,775 56,525
Inventory (see Note 1) 291,030 305,691
Other current assets - -
------- -------
Total current assets 373,639 366,649
------- -------
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 597,602 597,602
Buildings 209,487 209,487
Vehicles 168,925 168,925
--------- ---------
Total fixed assets at cost 976,014 976,014
--------- ---------
Less accumulated depreciation (932,844) (927,961)
----------- -----------
Net fixed assets 43,170 48,053
----------- -----------
Other Assets
Bonds and misc. deposits 14,869 14,869
--------- -------
Total Assets $ 710,055 $ 707,948
========== ==========
Original sixteen to One Mine, Inc.
Condensed Balance Sheet Continued
LIABILITIES & STOCKHOLDERS' EQUITY
2020 2019
Current Liabilities
Accounts payable & accrued expenses (see Note 3)
$ 1,257,967 1,342,718
Due to related party (see Note 4) 249,264 247,911
Notes payable Short-term (see Note 6) 538,558 538,558
-------- -------
Total Current Liabilities 2,045,789 2,129,187
-------- -------
Long Term Liabilities
Notes payable due after one year(see Note 7)97,236 101,092
-------- -------
Total Liabilities 2,143,025 2,230,279
---------- ---------
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 June 30, 2019
(see Note 8) 474,891 474,891
Additional paid-in capital 2,222,892 2,221,290
(Accumulated deficit)
Retained earnings (4,130,753) (4,218,512)
------------ -----------
Total Stockholders' Equity (1,432,970) (1,522,331)
------------ -----------
Total Liabilities and Stockholders' Equity
$ 710,055 $ 707,948
============ ============
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,
2020 2019
2020 2019
------ ------ ----
-- -----
Revenues:
Gold & Jewelry Sales
21,196 6,227 71,325 122,678
Other Revenue
--------- --------- -------- --------
Total revenues
$ 21,196 $ 6,227 $ 71,325 $ 122,678
--------- --------- -------- --------
Operating expenses:
Salaries and wages
13,024 15,000 28,024 30,000
Contract Labor
6,004 56,637 40,522 111,924
Utilities
17,878 22,954 36,539 42,270
Taxes - property & payroll
4,892 4,492 9,654 8,871
Supplies
2,253 6,368 2,701 10,095
Insurance
1,133 1,064 2,260 2,939
Small equipment & repairs
1,021 3,964 3,621 6,475
Drayage
968 5,694 4,935 8,205
Corporate expenses
3,002 2,145 4,223 3,510
Legal and Compliance
7,878 5,879 12,079 6,756
Mine Maintenance
91 6,700 1,362 10,111
Depreciation & amortization
2,442 4,520 4,883 9,533
Other expenses
440 2,513 1,285 3,984
---------- ---------- ------- -------
Total operating expenses
61,026 137,930 152,088 254,673
---------- ---------- -------- --------
Profit (Loss) from operations
(39,830) (131,703) (80,763) (131,995)
Other Income:
1,200 1,174 2,400 2,694
Other Expense:
- 4,875 - 10,159
-------- --------- --------- ---------
Total Other income (expense)
1,200 (3,701) 2,400 (7,465)
-------- ---------- ------- --------
Profit (Loss) before taxes
(38,630) (135,404) (78,363) (139,460)
-------- ---------- -------
-- ---------
Income tax benefit (expense)
(800) (800) (800) (800)
-------- ---------- --------- --------
Net profit (loss)
$ (39,430) $ (136,204) $ (79,163) $ (140,260)
============ =========== ========== ==========
Basic and diluted (loss)
earnings per share
$ (.009) $ (.009) $ (.01) $ (.01)
============ ============ ========= =========
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, 2020 and June 30, 2019
Six Months Ended
June 30,
2020 2019
--------------
------------
Net profit (loss) $ (79,163) $ (140,260)
Cash Flows From Operating Activities:
Depreciation and amortization 4,883 9,533
(Increase)Decrease in
accounts receivable (250) (750)
Decrease(Increase) in inventory 14,661 122,396
(Increase)Decrease in other
current assets - -
(Decrease) increase in accounts payable
and accrued expenses (31,489) 6,686
(Decrease) increase in related party loans
1,353 9,413
(Decrease) increase in short term notes - -
------------ ----------
Net cash (used) provided by
operating activities (90,005) 7,018
------------ ----------
Cash Flows From Investing Activities:
Fixed Asset Purchases _ (3,450)
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 (3,856) (4,592)
Proceeds from sale of common stock - -
Additional paid-in capital - -
----------- -----------
Net cash provided (used) by
financing activities 115,262 (4,592)
------------ ------------
(Decrease) increase in cash 21,401 (1,024)
Cash, beginning of period 4,433 3,296
------------ ----------
Cash, end of period $ 25,834 $ 2,272
============ ============
Supplemental schedule of other cash flows:
Cash paid during the period for:
Interest expense $ - $ 8,973
============ ===========
Income taxes $ 800 $ 800
============ ===========
NOTES TO THE FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business: Original Sixteen to One Mine, Inc. (the
Company) incorporated in 1911, actively operates the Sixteen to
One mine in Alleghany, California.
Inventory: Inventory consists of gold bullion, specimens and
jewelry. Gold bullion is quoted at the market price. Jewelry
and specimens are 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 for
the period. The "exploration state" as defined in Guide
7(a)(4)(iii) may apply.
2. Financial statements contain adjustments (consisting only of
normal recurring accruals) necessary to present fairly the
Company's financial position at June 30, 2020 and December 31,
2019. The results of operations and cash flows for the second
quarter of 2020 and 2019 and showing the six month year-to-date
ending June 30, 2020 and 2019. 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 gold deposit and requires an unfamiliar operation, which
is recognized by its owners, its miners, geologists, engineers,
and some public agencies for 125 years. It is a rare California
high-grade, hard rock, underground gold mine. The Company
celebrated its 100th year anniversary on Oct. 9, 2011. It
became the oldest gold mining corporation in the United States.
Experts estimate that sixty percent of the gold deposit
remains. 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 as 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. A positive effect reduces 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 this high-grade gold mine cannot be
termed as "proven". At the Sixteen to One the search for gold
embraces: (1) historical maps; (2) geophysical prospecting; (3)
underground headings, drifts or tunnels. When operations detect
the presence of gold, the Company evaluates the environment and
changes from exploration to development to production rapidly.
The company hoards gold and sells it according to short-term
cash needs. These facts create headaches for the Company
managing cash flow between pockets.
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 which cloud the true value of Company assets.
BALANCE SHEET COMPARISONS
For the six-month period ended June 30,2020 there were no
significant changes to the balance sheet.
STATEMENT OF OPERATIONS
Revenues
Gold revenues for the six-month period ending June 30, 2020,
decreased by $239,416 (73%) compared with the same period in
2019 due to support COVID-19 California and federal
restrictions.
Expenses
For the six-month period ended June 30, 2020 compared to the
same period in 2019 total operating expenses decreased by
$110,769 (42%) to support COVID-19 California and federal
restrictions to support COVID-19 California and federal
restrictions.
For the six-month period ended June 30, 2020 compared to the
same period in 2019 the company showed a loss of $79,163
compared to a loss of $137,779. The $58,615 (43%) to support
COVID-19 California and federal restrictions that limited
mining.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
From time to time 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
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 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 exist
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, employee?s 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 reoccurring 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. CVRWCB staff accepted invitations to visit the
mine property. A definitive plan is under mutual development
to re-write the mine's discharge permit.
(d) Liquidity
Gold inventory at June 30, 2020, was $291,030 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.
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 six-month ended June 30, 2020, the Mine Safety and
Health Administration (MSHA) issued no citations or orders.
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 June 30, 2020.
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)
Michael M. Miller
President and Director
Dated: August 5, 2020
