SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(x)ANNAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 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.)
incorporation 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 if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act. Yes [] No [x]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the act. Yes [] No [x]
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 preceding 12 months (or for such shorter period that the
registrant was required to file such reports, and (2) has been subject to
such filing requirements for the past 90 days. Yes [] No [x]
Indicate by check mark whether the registrant has submitted electronically on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes[] No[x]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in defintive proxy or
information statements incorporated by reference in Part III of this Form 10-K.
Yes[x] No[]
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 [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
rule 12b-d of the act). Yes [] No[x]
As of December 31, 2016, 14,338,855 shares of Common Stock, par value $.03 per
share, were issued and outstanding.
PART I
GENERAL NOTE
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).
ITEM 1: BUSINESS
Description of Business
Original Sixteen to One Mine, Inc. (the Company) was incorporated in 1911 in
California. It mines gold on properties it owns in fee simple or on which it
has claims in the Alleghany Mining District, about 65 miles northeast of the
intersection of I-80 and California State Route 49.
The primary operation is the Sixteen to One mine from which more than 1,113,165
troy ounces of gold have been retrieved since the mine commenced operation in
1896. It is a traditional hard rock underground mine where miners create
horizontal levels at various elevations and raise into favorable areas. The
geology of the mineral deposit is well documented. Gold is not distributed
evenly within the quartz veins; however, concentrations of gold deposits are
found scattered within these quartz veins. Because the gold appears
intermittently, the Company has never declared reserves according to
contemporary industry standards. Most mining is exploration.
Operations are characterized by significant amounts of preparation, tunneling,
underground property maintenance and upgrading, all of which are necessary to
permit access to and extraction of gold. The Company from time to time focuses
substantially all of its resources on infrastructure development and
maintenance, and during these periods, little gold is mined. At other times,
miners are primarily exploring for gold. Accordingly, business is subjected
to two very different cycles, one dependent on whether the Company is directing
its resources towards infrastructure or underground development and the other
as a function of gold production. The operation resembles the classical "boom
or bust" cycles regardless of outside influences.
Metal detection technology enables exploration to detect gold from zero to 48
inches from quartz faces in the wall rock. (The size of the concentration is a
factor). The Company works with others interested in developing new
technologies for deeper penetration. These arrangements allow the Company to
benefit from research activities without incurring the full costs associated
with research and development.
Advancement in metal detection technology has steadily progressed over the past
twenty years. Greater sensitivity in metal detection has historically
increased gold production throughout the mine. Since the Company lacks the
funds to carry forth scientific research, it is impossible to predict when a
new device will be developed; however, the hardware used in advanced gold
detection has continued to improve. In September 2012, the company completed
negotiating a service agreement with a technology start-up company based in
Silicon Valley, California. It is a developer of deep sensing technology and
believes it can develop and demonstrate its ability to detect the presence of
gold at a range beyond ten feet through solid quartz. To-date it has failed to
deliver on its representations to the Company.
For accounting purposes gold revenues are accrued when the metal has been
recovered. For tax purposes revenues are not recognized until the gold is
sold. Rare highgrade gold and quartz is sold at a premium to museums,
collectors and jewelry manufacturers. This market has become a significant
financial factor since its beginning in 1993. Demand for the Sixteen to One
gold quartz gemstone is currently greater than the amount mined.
The Company lacks sufficient funds to implement long-term construction projects
to increase mining efficiency. Sinking a new shaft in the center of the
property is one project. Other mining related projects are: joining a public
stock exchange, building and testing a gold detector specifically designed for
the Sixteen to One vein and dewatering the levels that were left to flood.
Supplies and equipment used for underground exploration are commonly available.
Labor requirements are available. The Company believes that within the Sixteen
to One mine substantial exploration opportunities exist.
No particular seasonality exists for the marketing of gold. Business is not
seasonal except for the adverse effect of winter storms on the ability of the
crew to access the mine. Management believes it is in substantial compliance
with all applicable federal, state and local laws and regulations relating to
the environment. The Company does not presently anticipate any material
capital expenditures for environmental control facilities, either for the
remainder of its current fiscal year or for the succeeding fiscal year.
The Company's executive office is located at 527 Miners Street, Alleghany,
California 95910. It maintains a website: origsix.com.
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. Ore exceeds the bullion price due
to its value in the jewelry and specimen markets which are not significantly
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 recommended in using the doctrines of reserves as an economic
tool for valuing the Sixteen to One mine. 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 system has 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
compliance with this SEC regulation for companies listed on an exchange.
Mining is generally subjected to regulation by state and federal authorities.
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 unlawful demands from the Central Valley Regional Water
Quality Control Board 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.
(d) Liquidity
Gold inventory at December 31, 2016, was $1,010,213 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. 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 maintains no program to support or
promote its stock and is unlikely to conduct a program until a public
marketplace is secured.
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 unpredictable.
ITEM 2: PROPERTIES
Properties
The Sixteen to One Mine was incorporated into Original Sixteen to One Mine,
Inc. in 1911. Properties acquired prior to 1925 are carried on the Company's
books at their original purchase price and are fully amortized through
depletion.
In 1999, the Company acquired the Plumbago mine in the Alleghany Mining
District, which is located approximately two miles southeast of the Sixteen to
One mine. The property includes a twenty-acre patented claim, mineral rights to
eight patented claims and sixteen unpatented claims. The property has a
history of rich gold production. The Company will pursue the potential within
this property when funding becomes available for exploration and development.
On June 22, 2005, the Company acquired the mineral rights to fourteen claims,
the patent rights to one claim and the mill of the Gold Crown mine, adjacent to
the Sixteen to One Mine. The Board of Directors decided that it is a long-term
investment and important to the long-term welfare of the Company.
No depletion has been applied to the Gold Crown or Plumbago properties.
The Alleghany properties consist of 26 patented claims (470 acres), 160 acres
of mineral rights on patented claims and approximately 320 acres of unpatented
claims. The following table sets forth further information with respect to the
Company's mining claims.
PATENTED MINING CLAIMS OWNED 100% BY THE COMPANY
NAME OF CLAIM NAME OF CLAIM
Belmont Rainbow Fraction
Number Three Twenty-One
Eclipse Quartz Eclipse Extension
Tightner Extension Contract
Alene Valentine
Red Star Bartlett
Farnham Gold Quartz Mine Belmont #2
Contract Extension Hanley Quartz Mine
Noble Sixteen to One
Groves Gold Quartz Mine Denver
Happy Jack Extension Ophir
Rainbow Extension Happy Jack
Marion Lode Sphoon
MINERAL RIGHTS - PATENTED CLAIMS
NAME OF CLAIM NAME OF CLAIM
Standard Lode Standard Lode Extension
Gold Beater Lode Clute Lode
Hope Extension Lode Crafts Lode
Plumbago Mine Mill Site Enterprise Quartz
UNPATENTED CLAIMS
NAME OF CLAIM NAME OF CLAIM
Alice Alice Annex
General Sherman N. Ext. Jumbo
No Better No Better Ext.
Right Place Wonder #1
Wonder #2 Wonder Goldmines MS
Tightner #2 Lode Tightner #3 Lode
Tightner #4 Lode Tightner #5 Lode
Tightner #6 Lode Alene Ext. Quartz
Bartlett Ext. Quartz Illocano Quartz
East Bartlett Lode Bal Quartz
ITEM 3: 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.
This case is in regards to citations issued to the Plumbago Mine which was a
non-producing mine at the time the citations were issued and currently not in
operation.
Original Sixteen to One Mine, Inc. 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. The case is scheduled to be heard in the spring
of 2017. A request by the Federal Mine Safety and Health Administration to
dismiss the case was denied.
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. The Company entered over eighty pages of testimony
supporting its 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 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. The behavior of federal employees 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. The Company prays for relief and support from
the Judicial Branch.
ITEM 4 MINE SAFETY DISCLOSURES
For the twelve month period ended December 31, 2016, a total of 35 citations
with a total assessed value of $5,364 were issued to the mine operator. Nine
of the 33 citations have appeals pending, 2 have been contested and the
remainder are either closed or settled. The Company is not aware of any pending
legal action.
During the same 12 month period there were five citations issued under Section
104(a) (S&S) and these were all challenged. Two citations were issued under
104(b) Orders.
An appeal to a judges' decision has been filed in the 9th circuit court of
appeals. No: 16-72349 recorded on 7/12/16 (see LEGAL PROCEEDINGS above)
Safety is a core value. We strive for superior performance and have reached
superior performance the past ten years of operations and beyond. We follow
federal and state regulations of MSHA and CAL/OSHA, two agencies formed to
assist all miners and operators. For the past three years employees' hours
were 22,429. There were zero fatal incidences or injuries during this period.
A zero record is well below the incident rates in the National Average, which
is calculated by mine type and classification.
A review of the Mine Profile Report of Sixteen to One Mine (0401299) by MSHA
agency, for the Five Year Violation History reveals a disturbing situation
within the federal MSHA agency. In 2015 and 2016 nine serious & substantial
citations were issued while in 2013, 2014, and 2017, there were none. It was
not the miners' operations that caused these allegations. It was the fact that
the MSHA inspectors lacked underground mining experience and therefore were
ignorant about judging what they were seeing. The Company vigorously has
contested the problem and anticipates improvements.
Original Sixteen to One Mine Inc. is not alone in experiencing overreaching
regulatory issues with its operations. The Newmont SEC Disclosure, Item 4.,
Mine Safety Disclosure states:
"The operation of our U.S. based mines is subject to regulation by the Federal
Mine Safety and Health Administration (MSHA) under the Federal Mine Safety Act
of 1977 (the Mine Act). MSHA inspects our mines on a regular basis and issues
citations and orders when it believes a violation has occured under the Mine
Act. Following passage of the Mine Improvement and New Emergency Response Act
of 2006, MSHA significantly increased the numbers of citations and orders
charged against mining operations. The dollar penalties assessed for citations
issued has also increased in recent years.
Newmont is required to report certain mine safety violations or other
regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street
Reform and Consumer Protection Act and item 104 of Regulation S-K."
Original Sixteen to One Mine, Inc. is not required to present the above
information; however it is vital and important for all Americans to gain
knowledge about the issues facing the necessary mineral extraction industries.
PART II
ITEM 5: MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
Market Information
Currently there is no public marketplace for the Company's common stock. Data
from 2015 through 2016 is based upon activity on the X-Mart posted on the
Company's web-site.
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
High Low High Low High Low High Low
------ ----- ------ ----- ------ ----- ------ -----
2016 $ * $ * $ * $ * $ * $ * $ .52 $ .52
2015 * * .44 .44 .56 .56 * *
2014 * * .46 .54 * * .42 .42
2013 .89 .89 .86 .65 * * * *
2012 .49 .49 .49 .49 * * * *
2011 * * .55 .55 * * * *
2010 * * .89 .45 * * .55 .50
2009 .60 .45 * * .40 .40 .45 .60
2008 .89 .75 .89 .75 * * * *
2007 1.00 .80 .95 .90 .90 .85 .88 .88
* No trades took place on the Company website in these quarters.
ITEM 6: SELECTED FINANCIAL DATA
Year 2016 2015 2014 2013 2012
---- ---- ---- ---- ----
Sales 1,452,169 1,037,972 230,899 300,923 292,963
Income(loss) 610,160 76,443 (495,063) (227,097) (48,638)
Income(loss)
per share .04 .01 (.04) (.02) (.004)
Total Assets 1,537,443 1,757,262 752,221 742,034 651,242
Total Debt 2,042,593 3,060,443 2,131,844 1,626,594 1,308,705
SH Equity (505,150) (1,303,181) (1,379,623) (884,560) (657,463)
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
Balance Sheet
Original Sixteen to One Mine, Inc. is a distinct company in that it is the
only operating company of its kind remaining in the United States. Management
knows that the assets of the Company are understated due to the age of
acquisition. Exploration and development expenses are not capitalized. The
Company celebrated its 100 year anniversary on Oct. 9, 2011. It is the oldest
gold mining corporation in the United States. 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. 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.
(A) Comparisons of 2016 with 2015.
Balance Sheet Comparisons
Assets:
For the one-year period ended December 31, 2016, compared to the one-year
period ended December 31, 2015, cash decreased by $533,706 (99%) primarily
due the use of cash to pay down the Company's debt in 2016.
For the one-year period ended December 31, 2016, compared to the one-year
period ended December 31, 2015 Accounts Receivable increased by $33,892 (47%)
due to increased sales on account in Dec. 2016 compared to 2015.
For the one-year period ended December 31, 2016, compared to the one-year
period ended December 31, 2015 inventory increased by $286,163 (40%) due to
gold production in 2016.
Liabilities:
For the one-year period ended December 31, 2016, compared to the one-year period
ended December 31, 2015 notes payable related parties decreased by $549,116
(76%) due to loan payments made to a shareholder as well as a conversion of
debt to stock for Michael Miller and directors. (See note 4 at the
end of these financial statements)
For the one-year period ended December 31, 2016, compared to the one-year period
ended December 31, 2015 short-term notes decreased by $495,339 (48%) due to the
payment of a loan.
Statement of Operations
Income:
For the one-year period ended December 31, 2016 compared to the one-year period
ended December 31, 2015,revenue increased by $414,197 (40%) primarily due to
gold production in 2016.
Operating Expenses:
For the one-year period ended December 31,2016, compared to the one-year period
ended December 31,2015, operating expenses decreased overall by $105,938 (12%).
Most categories increased due to increased activity, but this was offset by a
decrease in Mine Maintenance and Compliance of $177,101 (74%) in 2016 compared
to 2015.
Other Income and Expense:
For the one-year period ended December 31, 2016, compared to the one-year period
ended December 31, 2015 other expenses and income did not change significantly.
For the one-year period ended December 31,2016, compared to the one-year period
ended December 31, 2015, interest expense decreased by $20,560 (34%) due to the
pay-down of loans in 2016.
The company showed a profit of $610,160 in 2016 compared to a profit of $76,443
in 2015. The $533,717 (691%) difference was due to increased production in 2016.
The basic and diluted gain per share was .04 in 2016 compared to .006 in 2015.
The number of shares used for the 2016 calculation was 14,338,855 and for 2015
the number of shares outsanding was 13,399,505.
(B) Comparison of 2015 with 2014
Balance Sheet Comparisons
Assets:
For the one-year period ended December 31, 2015, compared to the one-year
period ended December 31, 2014, cash increased by $540,662 due to the receipt of
a loan from a shareholder secured by gold at the end of the year.
For the one-year period ended December 31, 2015, compared to the one-year
period ended December 31, 2014 inventory increased by $476,981 (193%) due to
gold production in 2015.
Liabilities:
For the one-year period ended December 31, 2015, compared to the one-year period
ended December 31, 2014 accounts payable and accrued expenses increased by
$202,580 (21%) primarily due to a legal settlement with the Regional Water
Quality Control Board for $237,083 filed on Feb. 11, 2015 combined with accrued
interest on two accounts.
For the one-year period ended December 31, 2015, compared to the one-year period
ended December 31, 2014 notes payable related parties increased by $553,160
(323%) due to a loan from a shareholder as well as additional loans from
Michael Miller.
Statement of Operations
Income:
For the one-year period ended December 31, 2015 compared to the one-year period
ended December 31, 2014, Gold and Jewelry revenue increased by $866,248
(1,144%) primarily due to gold production in 2015. Other revenue increased by
$59,175 (38%) due to payments from a technology company for reimbursed
expenses.
Operating Expenses:
For the one-year period ended December 31,2015, compared to the one-year period
ended December 31,2014, operating expenses increased overall by $170,751 (23%).
This was primarily due to a legal settlement with the Regional Water Quality
Control Board for $237,083 filed on Feb. 11, 2015.
Other Income and Expense:
For the one-year period ended December 31, 2015, compared to the one-year period
ended December 31, 2014 other expenses increased by $31,070 (99%) due to
increased interest expense in 2015.
For the one-year period ended December 31,2015, compared to the one-year period
ended December 31, 2014, interest expense increased by $30,555 (102%) due to
increased borrowing in 2015.
The company showed a profit of $76,443 in 2015 compared to a loss of $495,063 in
2014. The $571,506 (115%) difference was due to increased production in 2015.
The basic and diluted gain per share was .006 in 2015 compared to a loss of.037
in 2014. The number of shares used in both calculations was 13,399,505.
ITEM 7A 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 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The unaudited financial statements of the Company are attached at the end of
this document.
ITEM 9: 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 III
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
Officers and Directors
The following table sets forth the Officers and Directors of the Company. The
directors listed below will serve until the next annual shareholders meeting to
be held on June 18, 2016. All of the officers of the Company serve at the
pleasure of the Board of Directors.
Name Age Position Officer Since Director Since
Michael M. Miller 74 President
& Director 1983 1977
Hugh Daniel O'Neill 74 Secretary
& Director 2016 2002
Robert Beso 65 Treasurer
& Director 2016 2016
Michael M. Miller-Director, President and CEO
As President and Chief Executive Officer, Mr. Miller is responsible for the
day-to-day operations of the Company. In 1975, Mr. Miller became the sole
proprietor of Morning Glory Gold Mines. Prior to that, he was self-employed in
Santa Barbara County, California from 1965 to 1974. Mr. Miller served
as a trustee and President of the Sierra County Board of Education (1979 to
1983 trustee) (President in 1983). In 1991 he was appointed a member of the
Sierra County Planning Commission (Chairman in 1992, 1993, 1999 and 2000) until
2001. Mr. Miller is licensed as a California Class A general engineering
contractor. He is a member of the American Institute of Mining Engineers.
In 1965, Mr. Miller received a B.A. from the University of California at Santa
Barbara in combined Social Sciences-Economics. He was born in Sacramento,
California.
Hugh Daniel O'Neill III ~ Director, Secretary
Mr. O'Neill was born April 21, 1942 at a naval base in Virginia. He was raised
in seventeen states over a fourteen-year period, settling in Nevada City,
California. He attended the University of San Francisco, where he created Odd
Bodkins in 1961. The San Francisco Chronicle syndicated Odd Bodkins in 1963
making Mr. O'Neill the youngest cartoonist ever hired by a national syndicate.
It was published in 350 newspapers. At its peak readership was 50 million
daily. Dan is an historian, an accomplished journalist and a former War
Correspondent.
Robert Beso ~ Director, Treasurer
Robert John Besso was born in Sacramento. Just out of high school, he drew
draft # 32 but joined the US Army 101st Airborne Division where he was assigned
to tanks. Once in Vietnam he was promoted to Sargent at age 19 and took POINT
for nine months. In 1971 he was decorated with two bronze stars (combat
infantry badges): oak leaf cluster and V for valor. He earned Soldier of the
Month and was the personal body guard for Officer Coast. He declined the
offer to continue his military career at West Point and almost died from
malaria. He returned to California attending American River College and El
Camino College.
Robert decided to cut hair which he has done for thirty-eight years. He has
continued to serve our country with 25 years working with Alcoholics Anonymous,
Jail and Prison inmates, Boys Ranch and Teen Substance addiction groups. He
has and continues to take "point" to protect the things that he values. "Like
farmers and ranchers, the miners have value. The Sixteen to One is a reality
and will work to reduce the ignorance about mining."
Management Remuneration for the Period Ended December 31, 2016
Name/
Principal Annual
Position Year Salary Bonus Compensation Securities
--------- ------ ------ ----- ------------ ----------
Michael Miller/ 2016 $ 60,000 0 0 0
President & CEO 2015 $ 60,000 0 0 0
2014 $ 60,000 0 0 0
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners and Management
Title of Name and Address Amount and Nature Percent
Class of Beneficial Owner of Beneficial Owner of Class
------- ------------------- ------------------- --------
Common Michael M. Miller 2,123,597 15%
Officer and Director
P.O. Box 941
Alleghany, CA 95910
Common M. Blair Hull 1,962,822 14%
Hull Trading Co.
401 So. LaSalle, Ste. 505
Chicago, IL 60605
Common Kathy N. Hull 1,490,250 10%
11 Sierra Ave.
Piedmont, CA 94611
Common Charles I. Brown
Family Partnership LTD 833,668 6%
P.O. Box 1835
Edwards, CO 81632
Common Hugh Daniel O'Neill 143,077 1%
Director - Secretary
227 Prospect St.
Nevada City, CA 95959
Common Robert Beso 7,500 .1%
Director - Treasurer
PO Box 909
Alleghany, CA 95910
Common All Officers & Directors 6,560,914 46%
(as a group)
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See notes to financial statements.
PART IV
ITEM 15: UNAUDITED FINANCIAL STATEMENTS
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 December 31, 2016 and December 31, 2015, the
results of operations and cash flows for the twelve-month periods ended
December 30, 2014, 2015 and 2016. The unaudited financial statements have been
prepared in accordance with Generally Accepted Accounting Principles.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Annual Report to
be signed on its behalf by the undersigned, thereunto duly authorized.
ORIGINAL SIXTEEN TO ONE MINE, INC.
Registrant
By: /s/Michael M. Miller
Michael M. Miller
President and Director
Date March 27, 2017
Original Sixteen to One Mine, Inc.
Condensed Balance Sheet
December 31, 2016 & December 31, 2015
ASSETS
2016 2015
Current Assets
Cash $ 6,956 $ 540,662
Accounts receivable 105,417 71,525
Inventory 1,010,213 724,050
Other current assets - -
------- -------
Total current assets 1,122,586 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 (see Note 2) 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 (1,151,296) (1,129,128)
----------- -----------
Net fixed assets 115,020 137,188
----------- -----------
Other Assets
Bonds and misc. deposits 21,460 5,460
--------- -------
Total Assets $ 1,537,443 $1,757,262
========== ==========
Original sixteen to One Mine, Inc.
Condensed Balance Sheet Continued
LIABILITIES & STOCKHOLDERS' EQUITY
2016 2015
Current Liabilities
Accounts payable & accrued expenses (see Note 3)$ 1,187,920 1,146,492
Due to related party (see Note 4) 175,533 724,649
Notes payable Short-term (see Note 6) 534,691 1,030,030
-------- -------
Total Current Liabilities 1,898,144 2,901,171
-------- -------
Long Term Liabilities
Notes payable due after one year (see Note 7) 144,449 159,272
-------- -------
Total Liabilities 2,042,593 3,060,443
---------- ---------
Stockholders' Equity
Capital stock, par value $.03:
30,000,000 shares authorized: 14,338,855
issued and outstanding as of Dec. 31,2016
and 13,399,505 issued and outstanding
as of December 31, 2015 (see Note 8) 468,836 440,656
Additional paid-in capital 2,222,892 2,063,202
(Accumulated deficit)
Retained earnings (3,196,878) (3,807,039)
------------ -----------
Total Stockholders' Equity (505,150) (1,303,181)
------------ -----------
Total Liabilities and Stockholders' Equity $1,537,443 $1,757,262
============ ============
Original Sixteen to One Mine, Inc.
Statement of Operations
2016 2015 2014
Revenues:
Gold & jewelry sales 1,356,169 941,972 75,724
Other Income 96,000 96,000 155,175
------ ------- -------
Total Revenues 1,452,169 1,037,972 230,899
Operating expenses:
Salaries and wages 60,000 60,000 60,434
Contract Labor 358,749 274,333 272,198
Utilities 78,594 59,836 55,106
Taxes - property & payroll 19,122 19,123 22,645
Insurance 4,795 14,562 7,632
Supplies 59,370 57,714 90,487
Small equipment & repairs 33,445 8,855 17,249
Drayage 13,753 17,685 25,903
Corporate expense 14,790 10,897 9,897
Legal and accounting 63,233 240,334 7,691
Mine Maintenance & compliance 66,323 104,898 125,644
Depreciation & amortization 22,166 33,148 11,955
Other expenses 10,856 9,749 33,542
------- ------ ------
Total operating expenses 805,196 911,134 740,383
Profit (Loss) from operations 646,973 126,838 (509,484)
Other Income & (Expense):
Other Income 4,550 12,968 46,714
Interest Expense (39,894) (60,454) (29,899)
Other expense (669) (2,109) (1,594)
--------- -------- ---------
Total Other Income (Expense) (36,013) (49,595) 15,221
Profit (Loss) before taxes 610,960 77,243 (494,263)
Income tax expense (800) (800) (800)
Net (loss) income $ 610,160 $ 76,443 $ (495,063)
========== ========== =========
Basic and diluted gain (loss) per share $ .04 $ .01 $ (.04)
Shares used in the calculation of net
(loss) income per share 14,338,855 13,399,505 13,399,505
======== ========= ========
Original Sixteen to One Mine, Inc.
Statement of Cash Flow
For the Years Ended December 31, 2016 2015 2014
Cash Flows From Operating Activities:
Net profit (loss) $ 610,160 $ 76,443 $(495,063)
Operating activities:
Depreciation and amortization 22,166 33,148 11,955
Decrease(Increase) in accounts receivable (33,892) 679 (67,289)
Decrease(Increase) in inventory (286,163) (476,981) 53,650
(Decrease) Increase in accounts payable
accrued expenses 41,431 202,578 178,572
(Decrease) Increase in related party loans (549,116) 553,160 (58,169)
(Decrease) Increase in short-term notes (495,339) 186,936 343,094
-------- ------- ---------
Net cash (used) provided by operating activities (690,753) 575,963 (33,250)
Cash Flows From Investing Activities:
Sale (Purchase) of Real Estate - -
sale (Purchase) of fixed assets - (21,225) (52,982)
Decrease (Increase) Bonds Misc. deposits (16,000) - -
--------- -------- --------
Net cash (used) provided by investing activities (16,000) (21,225) (52,982)
Cash Flows From Financing Activities
Increase (Decrease) notes payable (14,823) (14,076) 41,753
Proceeds from sale of common stock 28,180 - -
Paid in Capital from Shareholders 159,690 - -
-------- -------- --------
Net cash provided (used) by financing activities 173,047 (14,076) 41,753
(Decrease)increase in cash (533,706) 540,662 (44,479)
Cash, beginning of period 540,662 - 44,479
------ ------- --------
Cash, end of period $ 6,956 $ 540,662 $ -
======== ========= ========
NOTES TO THE FINANCIAL STATEMENTS
1. 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 a gold mine in
Alleghany, California; currently in exploration mode. 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).
Inventory: Inventory consists of gold bullion, specimens and jewelry. Gold
bullion and specimens are quoted at the market price for gold bullion. (PM
London Fix on the last day of the quarter.) The quarterly valuation adjustment
to inventory is recorded as an expense when the value decreases and as revenue
when the value increases and is combined with Gold Sales Revenue on the
Condensed Income Statement. This serves the dual purpose of fairly presenting
the value of the gold inventory on the balance sheet and adjusts Cost of Goods
Sold to reflect the actual spot gold price. 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. Specimens are 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 currently 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 it is mined, gold is 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.
2. PROPERTY
The company's original property is carried at the 1924 value of $628,662
and has been fully amortized through depletion charges of $524,145. Other
properties included in the "real estate and property rights" category are
a lot purchased in 1984 for $1,000, Surface rights purchased at the townsite
auction in 1996 for $76,574 and $48,310 for the Sphoon Mine which is patented
property included with the purchase of the Gold Crown Mine in 2005. The
category "mineral property" includes the Plumbago Mine which was exchanged for
50,000 shares of restricted stock in 1999.
3. ACCOUNTS PAYABLE & ACCRUED EXPENSES
Accounts payable and accrued expenses was $1,187,920 at December 31, 2016. This
balance includes $717,976 in accrued wages owed to Michael Miller. Mr. Miller's
salary has been accrued (not paid) for over ten years and is secured with real
estate.
4. NOTES PAYABLE RELATED PARTIES
Notes payable related parties at December 31, 2016 of $175,533 is a loan from a
shareholder secured by gold.
5. RELATED PARTY TRANSACTIONS
Debt owed to the company's directors in the amount of $187,870 was converted to
stock at .20 per share on December 31, 2016. Of this amount $163,000 was owed
to Michael Miller. Also, see Notes 3 & 4 above.
6. NOTES PAYABLE SHORT-Term
Note payable short-term of $534,691 at December 31, 2016 consists of a
$500,000 interest-free line of credit as well as accrued interest on a
previous loan. There is no specific due date on these loans which are
convertable to stock at $1.00 per share.
7. NOTES PAYABLE
Notes payable due after one-year totaling $144,449 consists of the balance
remaining on the mortgage for the Gold Crown Mine of $97,236 as well as $15,434
remaining on a loan to purchase a piece of equipment in 2013 and $31,779
secured in 2014 for the purchase of a vehicle.
8. STOCK
Capital authorized: 30,000,000 non-assessable shares of common stock,
par value $.03. Issued and outstanding: 14,338,855 shares of common stock.
With approx. 3 Million of the total restricted. Restricted common stock cannot
be sold within two years of the issuance date. After the required holding
period, the shareholder can take steps to remove the indicated restriction.
