-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ox84MFS5IWTN3sikWR5lBxrMao/Z+Bqsdt/7GeVz6bS/L3XU1Nr7tiihnknCqvEo nh/cwOzLAAYSe+WYpm4pnA== 0000074925-05-000004.txt : 20051102 0000074925-05-000004.hdr.sgml : 20051102 20051102124452 ACCESSION NUMBER: 0000074925-05-000004 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20050930 FILED AS OF DATE: 20051102 DATE AS OF CHANGE: 20051102 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: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-10156 FILM NUMBER: 051172413 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 10QSB 1 tenqsept05.txt THIRD QUARTER FINANCIAL STATEMENTS SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended September 30, 2005 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. Yes: No: x As of September 30, 2005, 12,867,250 shares of Common Stock, par value $.03 per share, were issued and outstanding. PART I 1. FINANCIAL INFORMATION Original Sixteen to One Mine, Inc. Condensed Balance Sheet September 30, 2005 and December 31, 2004 September 30, 2005 December 31, 2004 ASSETS Current Assets Cash $ 1,544 $ 9,857 Accounts receivable 2,914 3,966 Inventory 614,320 927,812 Other current assets 1,968 1,161 ---------- ---------- Total current assets 620,746 942,796 ---------- ---------- Mining Property Real estate and property rights net of depletion of $524,145 235,841 181,091 Real estate and mineral property 543,403 473,403 ---------- ---------- 779,244 654,494 ---------- ---------- Fixed Assets at Cost Equipment 953,515 953,515 Buildings 178,237 159,487 Vehicles 253,128 253,128 ---------- ---------- 1,384,880 1,366,130 Less accumulated depreciation (1,264,916) (1,243,368) ---------- ---------- Net fixed assets 119,964 122,762 ---------- ---------- Other Assets Bonds and misc. deposits 16,185 16,185 ---------- ---------- Total Assets $1,536,139 $1,763,237 ========== ========== LIABILITIES & STOCKHOLDERS' EQUITY Current Liabilities Accounts payable & accrued expenses $ 249,504 256,621 Due to related party 206,599 156,291 Notes payable due within one year 436,352 421,421 ---------- ---------- Total Current Liabilities 892,455 834,333 ---------- ---------- Long Term Liabilities Notes payable due after one year 116,747 7,267 ---------- ---------- Total Liabilities 1,009,202 841,600 ---------- ---------- Stockholders' Equity Capital stock, par value $.03: 30,000,000 shares authorized: 12,867,250 shares issued and outstanding as of September 31, 2005 and December 31, 2004 428,869 428,869 Additional paid-in capital 1,875,888 1,875,888 (Accumulated deficit) retained earnings (1,777,820) (1,410,120) ---------- ---------- Total Stockholders' Equity 526,937 894,637 ---------- ---------- Total Liabilities and Stockholders' Equity $1,536,139 $1,736,237 ========== ========== See Accompanying Notes Original Sixteen to One Mine, Inc. Statement of Operations and Retained Earnings Three Months Ending Sept. 30, Nine Months Ending Sept. 30, 2005 2004 2005 2004 ------ ------ ------ ----- Revenues: Gold & jewelry sale s $ 110,426 $ 837,836 $ 387,910 $ 1,234,834 ----------- ----------- -------- -------- Total revenues 110,426 837,836 387,910 1,234,834 ----------- ----------- -------- -------- Operating expenses: Salaries and wages 52,885 35,890 144,415 103,640 Contract Labor 89,027 229,086 330,096 267,933 Telephone & utilities 25,357 21,222 70,854 78,846 Taxes - property & payroll 10,422 8,681 30,517 26,633 Insurance 905 1,925 1,949 5,775 Supplies 1,237 24,001 17,290 42,700 Small equipment & repairs 0 12,157 23,546 24,677 Drayage 5,306 7,750 20,289 17,184 Corporate expenses 1,154 2,235 8,417 8,200 Legal and accounting 5,809 4,502 12,122 9,421 Compliance/Safety 4,842 4,247 8,220 10,481 Depreciation & amortization 7,324 7,968 21,548 23,904 Other expenses 2,308 3,131 13,018 27,198 ---------- ---------- ------- ------- Total operating expenses 206,576 362,795 702,281 646,592 ---------- ---------- -------- -------- Profit (Loss) from operations (96,150) 475,041 (314,371) 588,242 Other Income & (Expense): Other income (expense) (25,631) (14,851) (52,529) (121,503) ---------- ----------- ------- -------- Profit (Loss) before taxes (121,781) 460,190 (366,900) 466,739 ---------- ----------- --------- ---------- Income tax benefit (expense) - (800) ---------- ----------- --------- ---------- Net profit (loss) $ (121,781) $ 460,190 $ (367,700) $ 466,739 ============ =========== ========== ========== Basic and diluted (loss) earning per share $ (.009) $ .04 $ (.03) $ .036 ============ ============ ========= ========= Shares used in the calculation of net (loss) income per share 12,867,250 12,867,250 12,867,250 12,867,250 ============ =========== ========== =========== See Accompanying Notes Original Sixteen to One Mine, Inc. Statement of Cash Flows Nine Months Ended Sept. 30, 2005 and Sept. 30, 2004 Nine Months Ended Sept. 30, 2005 2004 -------------- -------------- Cash Flows From Operating Activities: Net profit (loss Operating activities: ) $ (367,700) $ 466,739 Depreciation and amortization 21,548 23,904 (Increase)Decrease in accounts receivable 1,052 (186) Decrease(Increase) in inventory 313,492 (471,179) (Increase)Decrease in other current assets (807) 3,426 (Decrease) increase in accounts payable and accrued expenses (7,117) (25,903) (Decrease) increase in short term notes 65,239 60,216 ------------ ---------- Net cash (used) provided by operating activities 25,707 57,017 ------------ ----------- Cash Flows From Investing Activities: Purchase of mining property (124,750) - Purchase of fixed assets (18,750) (43,532) Other assets bonds misc. deposits - ----------- ----------- Net cash (used) provided by investing activities (143,500) (43,532) ----------- ----------- Cash Flows From Financing Activities Increase (decrease) notes payable 109,480 (9,746) Proceeds from sale of common stock - Additional paid-in capital ----------- ------------ Net cash provided (used) provided by financing activities 109,480 (9,746) ------------ ------------ (Decrease) increase in cash (8,313) 3,739 Cash, beginning of period 9,857 40 ------------ ---------- Cash, end of period $ 1,544 $ 3,779 ============ ============ Supplemental schedule of other cash flows: Cash paid during the period for: Interest expense $ 52,095 $ 45,002 ============ ============ Income taxes $ 800 $ - ============ ============ See Accompanying Notes NOTES TO THE FINANCIAL STATEMENTS I. 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 September 30, 2005 and December 31, 2004, the results of operations and cash flows for the three-month & nine-month periods ended Sept. 30, 2005 and 2004. 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-QSB and Item 310(b) of Regulation S-B. II. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION Predicting gold production at the operating Sixteen to One mine in Alleghany, California is not a worthwhile endeavor. Terms such as "proven", "probable", "inferred" or "measured" have no relevance in well established, traditional gold deposits like the Alleghany Mining District. The company is the oldest American gold mining corporation and continues to produce gold into the twenty first century from a mine with no reserves. Terms used in most mining analysis of future or potential gold mean nothing as to the future or potential of gold remaining in the Sixteen to One mine. The company mines what its deposits contain, high-grade gold veins within a well-defined vein of quartz. The company is the world's premier high-grade gold producer. It is not merely guess work that has allowed this to occur. Because the gold in quartz is in demand as a precious gemstone, the Company is not as sensitive to the fluctuations in the spot price for bullion; however, revenues in bullion sales have increased over the past six months due to the increases in the spot price. Currently, the demand for Sixteen to One gold exceeds the supply. The price received for quartz with gold varies based on the nature of the quartz and gold but is consistently three to four times the spot price. The Company also sells its own line of jewelry. The Company has a small crew and is only working the Sixteen to One Mine. It owns other past gold producers in the Alleghany Mining district as well as the Brown Bear mine in Trinity County, California. The Company has drafted plans for bringing each of its mines into production. The Company has announced its plans to construct a new shaft in the central area of its property. Construction is dependent on available capital for the expansion, estimated to be $3 million. The Directors have authorized its President to secure up to $3.5 million and use the Brown bear mine or the Company's gold collection to accomplish the funding. The Company was financially crippled by uncontrollable events over the past six years, resulting in a serious lack of both working capital and growth capital. These events included: over-aggressive State and Federal regulatory agencies, increased utility costs, increased workers compensation costs, a bear market for gold, which suppressed investors interest in a private placement of stock, and reckless accusations of criminal behavior by private attorneys associated with the tragic death of a miner. Currently, the atmosphere has greatly changed. The Company is actively seeking working capital to correct its financial shortcomings. The Company has followed a traditional pattern of growth and development since the mine was discovered in 1896. By acquiring mines within the region, Original Sixteen to One Mine, Inc. is the hub of the Alleghany Mining District and the most active high-grade area in California. On June 22, 2005, the Company announced the acquisition of 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. There are limited plans to investigate and evaluate the new acquisition. For the nine-month period ended Sept. 30, 2005 mine production was disappointing. Gold inventory at December 31, 2004 ($927,812) decreased $313,492 to $614,320 on Sept. 30, 2005. Demand for the Company's primary product, gold laced quartz, remains higher than available supply. While the daily price of gold bullion impacts revenue, gold laced quartz is sold for many times its crush or spot bullion price. BALANCE SHEET COMPARISONS During the nine-month period ended Sept. 30, 2005 Current Assets decreased by $322,050 (34%) primarily due the lack of gold production and subsequent necessity of selling existing gold inventory to cover operating expenses. Mining Property increased by $124,750 (19%) due to the acquisition of the Gold Crown Mine. Liabilities increased by $167,602 (20%) due to the note issued for the purchase of the Gold Crown Property and an increase in notes payable related parties. STATEMENT OF OPERATIONS Revenues for the three-month period ended Sept. 30, 2005 decreased by $727,410 (87%) compared to the same period in 2004 and decreased by $846,924 (68.5%) for the nine-month period ended Sept. 30, 2005 mainly due to the presence of gold production in the 2004 periods and the lack thereof in 2005. Changes in the Company's operating expenses are reflected as follows: 1. For the three and nine-month periods ended Sept. 30, 2005 wages & salaries increased by $16,995 (47%) and $40,775 (28%) respectively compared to the same periods in 2004 due the addition of one employee. 2. Contract labor decreased by $140,059 (61%) for the three-month period ended Sept. 30, 2005 compared the same period in 2004 due to the booking of the production percentage payment owed to the contract miners in 2004. For the nine-month periods the change is insignificant. 3. For the three and nine-month periods ended Sept. 30, 2005 supplies expense decreased by $22,764 (94%) and $25,410 (59.5%) respectively compared to the same periods in 2004 as the company began to downsize its operation due to the lack of gold production in 2005. 4. For the three-month period ended Sept. 30, 2005 small equipment and repairs expense decreased by $12,157 (100%) due to a bookkeeping error in the second quarter of 2005 in which an invoice was mistakenly booked to this account but the error was not caught until after the second quarter was closed. The credit was booked in the third quarter. For the nine-month periods the change was insignificant. 5. Corporate expenses decreased by $1,081 (48%)for the three months ended Sept. 30, 2005 due primarily to the lack of a formal board of directors meeting in the third quarter. 6. For the three-month period ended Sept. 30, 2005, the Company recorded a loss of $121,781 compared to a profit of $460,190 for same period in 2004 the $581,971 (126%)difference is due primarily to the gold hit in July of 2004 and the lack of a gold strike for the same period in 2005. The same is true of the nine-month period ended September 30, 2005 wherein the company recorded a loss of $367,700 compared to a profit of $466,739 for the same period in 2004 representing a $834,439 (178.7%) difference. SUBSEQUENT EVENTS None LIQUIDITY AND CAPITAL RESOURCES The Company's liquidity is substantially dependent upon the results of its operations. Because of the unpredictable nature of the gold mining business, the Company cannot provide any assurance with respect to long-term liquidity. In addition, if the Company's operation does not produce meaningful additions to inventory, the Company may determine it is necessary to satisfy its working capital needs by selling gold in bullion form. The Company is dependent on continued recovery of gold and sales of gold from inventory to meet its cash needs. Although the Company has historically located an annual average of $848,000 of gold over a five year period, there can be no assurance that the Company's efforts in any particular period will provide sufficient funding for the Company to continue operations. If the Company's cash resources are inadequate and its gold inventory is depleted, the Company may seek debt or equity financing on the most reasonable terms available. PART II LEGAL PROCEEDINGS 1. Petition in United States Court of appeals for the Ninth Circuit, filed March 23, 2004 contesting MSHA's interpretation of its standard. Docket Number 04-71301. 2. Plaintiff in Superior Court of the State of California, County of Sierra against private lawyers and their employer. Case filed February 13, 2004. Case No. 6293, Complaint for Damages (Malicious Prosecution, Intentional Infliction of Emotional Distress, Intentional Interference with Perspective Advantage) 3. On September 12, 2005, George Gilmour, Company attorney died in a single car accident near Alleghany. He will be greatly missed. 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-QSB. 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, 2005. CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 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. 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: November 2, 2005 -----END PRIVACY-ENHANCED MESSAGE-----