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 September 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 [ ] N0 [X]
As of September 30, 2020, 14,390,631 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
September 30, 2020 & December 31, 2019
ASSETS
2020 2019
Current Assets
Cash $ 20,495 $ 4,433
Accounts receivable 55,775 56,525
Inventory (see Note 1) 307,920 305,691
Other current assets - -
------- -------
Total current assets 384,190 366,649
------- -------
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 (935,286) (927,961)
----------- -----------
Net fixed assets 40,728 48,053
----------- -----------
Other Assets
Bonds and misc. deposits 14,869 14,869
--------- -------
Total Assets $ 718,164 $ 707,948
========== ==========
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Original sixteen to One Mine, Inc.
Condensed Balance Sheet Continued
LIABILITIES & STOCKHOLDERS' EQUITY
2020 2019
Current Liabilities
Accounts payable & accrued expenses (see Note 3)$ 1,295,737 1,342,718
Due to related party (see Note 4) 259,880 247,911
Notes payable Short-term (see Note 6) 538,558 538,558
-------- -------
Total Current Liabilities 2,094,175 2,129,187
-------- -------
Long Term Liabilities
Notes payable due after one year (see Note 7) 97,236 101,092
-------- -------
Total Liabilities 2,191,411 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 (4,171,030) (4,218,512)
------------ -----------
Total Stockholders' Equity (1,473,247) (1,522,331)
------------ -----------
Total Liabilities and Stockholders' Equity $ 718,164 $ 707,948
============ ============
See Accompanying Notes
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Original Sixteen to One Mine, Inc.
Statement of Operations and Retained Earnings
Three Months Ending September 30, Nine Months Ending September 30
2020 2019 2020 2019
------ ------ ------ -----
Revenues:
Gold & Jewelry Sales 17,130 14,935 88,455 137,614
Other Revenue
--------- --------- -------- --------
Total revenues $ 17,130 $ 14,935 $ 88,455 $ 137,614
--------- --------- -------- --------
Operating expenses:
Salaries and wages 15,000 15,000 43,024 45,000
Contract Labor 5,715 41,323 46,237 153,247
Utilities 18,830 24,573 55,369 66,844
Taxes - property & payroll 4,294 8,786 13,948 17,657
Supplies 202 5,599 2,903 15,694
Insurance 600 1,592 2,860 4,531
Small equipment & repairs 1,662 1,468 5,283 7,943
Drayage 782 3,743 5,717 11,948
Corporate expenses 7,752 7,249 11,975 10,759
Legal and Compliance 25 914 12,104 7,670
Mine Maintenance 1,052 4,800 2,415 14,911
Depreciation & amortization 2,442 4,520 7,325 14,053
Other expenses 251 2,656 1,536 6,640
---------- ---------- ------- -------
Total operating expenses 58,607 122,223 210,696 376,897
---------- ---------- -------- --------
Profit (Loss) from operations (41,477) (107,288) (122,241) (239,283)
Other Income: 1,200 (16) 3,600 2,678
Other Expense: - 3,883 - 14,042
-------- --------- --------- ---------
Total Other income(expense) 1,200 (3,899) 3,600 (11,364)
-------- ---------- ------- --------
Profit (Loss) before taxes (40,277) (111,187) (118,641) (250,647)
-------- ---------- --------- ---------
Income tax benefit (expense) - - (800) (800)
-------- ---------- --------- --------
Net profit (loss) $ (40,277) $ (111,187) $ (119,441) $(251,447)
============ =========== ========== ==========
Basic and diluted (loss)
earnings per share $ (.003) $ (.008) $ (.008) $ (.02)
============ ============ ========= =========
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
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Original Sixteen to One Mine, Inc.
Statement of Cash Flows
Nine Months Ended September 30, 2020 and September 30, 2019
Nine Months Ended September 30,
2020 2019
-------------- ------------
Net profit (loss) $ (119,441) $ (251,447)
Cash Flows From Operating Activities:
Depreciation and amortization 7,325 14,053
(Increase)Decrease in
accounts receivable 750 10,650
Decrease(Increase) in inventory (2,229) 179,247
(Increase)Decrease in other
current assets - -
(Decrease) increase in accounts payable
and accrued expenses 6,282 40,681
(Decrease) increase in related party loans 11,969 15,004
(Decrease) increase in short term notes - -
------------ ----------
Net cash (used) provided by
operating activities (95,344) 8,188
------------ ----------
Cash Flows From Investing Activities:
Fixed Asset Purchases _ (3,450)
Proceed from sale real estate - -
Other assets bonds misc. deposits - 6,591
----------- - ----------
Net cash (used) provided by
investing activities - -
----------- -----------
Cash Flows From Financing Activities
Increase (decrease) notes payable (3,856) (6,905)
Proceeds from sale of common stock - -
Additional paid-in capital - -
----------- -----------
Net cash provided (used) by
financing activities 115,262 (6,905)
------------ ------------
(Decrease) increase in cash 16,062 4,424
Cash, beginning of period 4,433 3,296
------------ ----------
Cash, end of period $ 20,495 $ 7,720
============ ============
Supplemental schedule of other cash flows:
Cash paid during the period for:
Interest expense $ - $ 12,633
============ ===========
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 September 30, 2020 and December 31, 2019. The results of
operations and cash flows for the third quarter of 2020 and 2019 and
showing the nine month year-to-date ending September 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 nine-month period ended September 30,2020 there were no
significant changes to the balance sheet.
STATEMENT OF OPERATIONS
Revenues
Gold revenues for the nine-month period ending September 30, 2020,
decreased by $49,159 (36%) compared with the same period in 2019 due to
support COVID-19 California and federal restrictions.
Expenses
For the nine-month period ended September 30, 2020 compared to the same
period in 2019 total operating expenses decreased by $173,115 (45%) to
support COVID-19 California and federal restrictions to support COVID-19
California and federal restrictions.
For the nine-month period ended September 30, 2020 compared to the same
period in 2019 the company showed a loss of $119,441 compared to a loss
of $243,397. The $123,956 (51%) difference was due to support of 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 September 30, 2020, was $307,920 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 nine-month ended September 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 September 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: November 10, 2020
