-----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, TKv8cpWZiym6QpwVmqSAw75OCmwBioZ5+glEQl+X9wtwIOxEDo7x/xc1R/iQrXW2 7wPL5JA9GBo93uCwihW/9w== 0000074925-10-000002.txt : 20100513 0000074925-10-000002.hdr.sgml : 20100513 20100513130149 ACCESSION NUMBER: 0000074925-10-000002 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20091231 FILED AS OF DATE: 20100513 DATE AS OF CHANGE: 20100513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ORIGINAL SIXTEEN TO ONE MINE INC /CA/ CENTRAL INDEX KEY: 0000074925 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 940735390 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10156 FILM NUMBER: 10827452 BUSINESS ADDRESS: STREET 1: P O BOX 1621 CITY: ALLEGHENY STATE: CA ZIP: 95910 BUSINESS PHONE: 9162873223 MAIL ADDRESS: STREET 1: PO BOX 1621 STREET 2: PO BOX 1621 CITY: ALLEGHANY STATE: CA ZIP: 95910 10-K 1 tenkzeronine.txt 2009 10-K 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 (no fee required) For the fiscal year ended December 31, 2009 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 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 December 31, 2009, 13,373,505 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 1,111,628 troy ounces of gold have been retrieved since the mine commenced operation in 1896. It is a traditional hard rock underground mine where employees 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. 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, employees are primarily searching 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 fifteen 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. Also the same physics principles that are used in governmental programs for Directed Energy Weapons may stimulate research and development. 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 major construction projects to significantly increase production of gold. Sinking a new shaft in the center of the property is one project. The company has plans to raise working capital for this 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. Future development and testing of advanced metal detection will likely increase the production of gold. 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. In 1994, following a long-standing practice of acquiring inactive productive mines, the Company purchased the Brown Bear mine in Trinity County, located outside Lewiston, California. The property, 540 timbered and patented acres and twenty-two unpatented claims, has yielded 500,000 troy ounces of gold. The mine is underground, yet no excavation exists below the tunnel entrance (adit level). During the 1980's the property was extensively core drilled by Santa Fe Mineral. These results indicate that within the Brown Bear mine attractive exploration opportunities exist. (See subsequent events) 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 particular seasonality exists for the marketing of gold (other than the Company's gold jewelry sales for which some modest bias toward the fourth quarter is recorded). Business is not seasonal except for the generally modest effect of winter storms on the ability of a 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. In December of 2007, management elected to discontinue its exploration program at the Sixteen to One Mine in favor of focusing its attention on surface and underground repairs and maintenance. The work is ongoing. The Company's executive office is located at 527 Miners Street, Alleghany, California 95910. It maintains a website: www.origsix.com. Risk Factors (a) Price of Gold The price of gold has increased significantly from the low of $254 in 1999. Any significant drop in the price of gold may have an adverse effect on the results of the Company's operations unless the Company is able to offset such a price drop by increasing production or jewelry sales. (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 arises. 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 believes that substantial additional virgin veins exists in the Sixteen to One mine, the Company has no ability to measure using the mathematical tools generally recognized in the mining industry; however, the company can prove that approximately eighty percent (80%) 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 due to the existence of an unpaid bill. 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. 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, 2009, was $414,331, 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. The difference in the recorded value and the actual cash value is a significant increase in determining asset value but cannot be included on the balance sheet due to accounting rules. 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. 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. The Company has acquired additional mining properties for $470,017. No depletion has been applied to those properties. The Alleghany properties consist of 26 patented claims (470 acres) and 160 acres of mineral rights on patented claims. In 1994, the Company purchased the Brown Bear Mine in the French Gulch Mining District, consisting of 34 patented claims (540 acres) 22 unpatented claims (440 acres). The following table sets forth further information with respect to the Company's mining claims. ALLEGHANY DISTRICT: 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 FRENCH GULCH DISTRICT: PATENTED MINING CLAIMS OWNED 100% BY THE COMPANY NAME OF CLAIM NAME OF CLAIM Dreadnaught Quartz Lode Coon Dog Quartz Lode North Fork Quartz Lode Madison Quartz Lode North Fork No. 2 Quartz Mine Martin Quartz Lode Gem Quartz Lode Brown Bear Ext. Qtz. Lode Slide Quartz Lode Red Diamond Quartz Lode Abernathy Quartz Lode New World Quartz Lode North Pole Quartz Lode Cube Quartz Lode White Bear Quartz Lode Highland Mary Quartz Lode Comet Quartz Lode Dead Horse Quartz Lode Monte Cristo Gold Lode Belmont Quartz Lode Rising Sun Quartz Lode Capital Gold Quartz Lode Enterprise Gold Quartz Lode New World Quartz Lode Last Chance Gold Lode Black Bear Gold Lode Barted Gold Quartz Mine Queen Gold Quartz Gold Brown Bear Gold Quartz Mine Shoofly Gold Mining Claim Watt Quartz Lode Melton Quartz Lode Deadwood Placer Mining Lode Sebastian Placer Quartz Lode ITEM 3: LEGAL PROCEEDINGS In July the Company and its president were served a complaint for damages in Superior Court of the State of California, County of Sierra by the California Regional Water Quality Control Board, Central Valley Region. Both defendants filed an answer on August 20, 2009 denying that the state is entitled to any damages. The case number is: No. 7019. Discovery is in process. (See subsequent events.) ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable 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 2000 through 2009 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 ------ ----- ------ ----- ------ ----- ------ ----- 2009 $ .60 $ .45 $ * $ * $ .40 $ .40 $ ..45 $ .60 2008 .89 .75 .89 .75 * $ * * * 2007 1.00 .80 .95 .90 .90 .85 .88 .88 2006 1.00 375 1.00 .75 1.00 1.00 1.00 .95 2005 .65 .60 .75 .50 .60 .60 1.00 .40 2004 .83 .62 .75 .72 1.00 .60 .75 .42 2003 .90 .85 .83 .38 .70 .50 .60 .60 2002 .86 .22 .86 .60 .32 .20 .55 .20 2001 .234 .167 .400 .250 .300 .267 .400 .150 2000 .333 .187 .354 .210 .397 .210 .333 .127 * No trades took place on our website in these quarters. Note: The Company offered a 3 for 1 stock split in 2001. Accordingly, share and per share data has been restated for all periods presented to give effect to the split. ITEM 6: 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 believes that the assets of the Company are understated. Gold Inventory is recorded at spot price despite proven additional value for specimen and gem- stone material which is substantially greater than spot price. On hand jewelry is recorded at labor plus gold cost. No value is recorded on the balance sheet for timber. The company owns 1,000 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 on the property. No value is recorded on the balance sheet for goodwill. Fixed assets are recorded at historic cost less depreciation. Balance Sheet Balance Sheet Comparisons (a) Comparisons of 2009 with 2008. Assets: For the one-year period ended December 31, 2009: Gold Inventory decreased by $217,521 (34%) as a long-time creditor of the Company exchanged his debt for gold. The Company has an option to buy back the material at a small premium before October 1, 2010. Additionally if the creditor sells the gold within the time limit the Company will receive any profit made. Mineral property decreased by $143,263 (20%) due to the removal of the unpatented mining claims from the Company's balance sheet. The mining claims are still available to the Company for mining. Liabilites: For the one-year period ended December 31, 2009: Accounts payable & accrued expenses increased by $163,737 (33%) due primarily to increases in accrued wages and interest expense. Notes due to related parties reflects an increase of only $20,828 (3%) but it should be noted that the dispersal of this debt changed significantly over the course of the year. The advance on the sale of the Brown Bear Mine ($400,000) is included in the year-end balance. This was offset by the sale of inventory to a related party lender in the amount of $248,891 as well as the transfer of accrued wages from this account to the accounts payable and accrued expenses category above. Notes payable due within one year decreased by $341,300 (85%) as an advance on the sale of the Brown Bear Mine was used to pay down the note from Gold Country Lenders, which was secured by the Company's Alleghany properties. Statement of Operations (b) Comparison of 2009 with 2008 Income: For the one-year period ended December 31, 2009 compared to the one-year period Ended December 31, 2008 revenue increased by $92,583 (87%). This was due primarily to a large sale of inventory in the third quarter of 2009 to a related-party lender. The company has an option to buy back the material. (See balance sheet notes above for more information.) Expenses: For the one-year period ended December 31, 2009 compared to the one-year period Ended December 31, 2008 operating expenses decreased by $112,897 (29%) this was mainly due to a decrease in legal expenses of $84,231. For the one-year period ended December 31, 2009 the company showed a loss of $215,873 compared to a loss of $368,330 for the same period in 2008. The 41% difference can be attributed to higher income and lower expenses in 2009. The basic and diluted loss per share is .01 per share in 2009 compared to a basic and diluted loss per share of .02 in 2008. (c) Comparison of 2008 with 2007 Revenue: For the twelve-month period ended December 31, 2008 revenues decreased by $547,788 (84%) compared to the same period in 2007 due to the mine being on a maintenance only schedule and the resulting absence of gold production in 2008. Expenses: Salaries and wages increased by $16,399 (22%) as accrued wages to office staff previously booked to contract labor were booked to this account in 2008. Contract labor decreased by $487,948 (95%) for the year ended December 31, 2008 compared to 2007 due to a skeleton crew conducting maintenance only in 2008. Utilities decreased by $26,904 (39%) due to less activity in 2008 compared to 2007. Supplies decreased by $24,137 (52%) due to less activity in 2008 compared to 2007. Small equipment and repairs decreased by $20,121 (78%) due to the mine being on Maintenance-only status in 2008. Drayage decreased by $7,848 (25%) due to the mine being on maintenance-only Status in 2008. Legal and accounting increased by $76,801 (652%) due to a judgment rendered against the company in January 2008 in the amount of $88,376. Compliance/Safety decreased by $2,664 (55%) due to the mine being on maintenance-only status in 2008. Overall operating expenses decreased by $496,161 (56%) in 2008 compared to 2007. Loss from operations in 2008 of $278,724 was $51,627 (22%) more than the loss of $227,097 in 2007 due to a lack of gold production. The net loss after taxes in 2008 was $368,330 compared to a loss of $290,959 in 2007. The increased loss was due primarily to a lack of gold production in 2008. The basic and diluted loss per share is .02 per share in both 2008 and 2007. ITEM 7: SUBSEQUENT EVENTS The Brown Bear Mine was listed with Coldwell Banker at Trinity Alps Realty on May 27, 2009. Escrow opened with a related party on November 17, 2009 with a sale price of $580,000. Escrow closed in January 2010. The company has a three-year option to buy back the property. On January 6, 2010, the California Department of Conservation, formally the Division of Mines and Geology filed a complaint for statutory reporting and mining fees and penalties alleging failures by the Company. Various Public Resources Code Sections were cited substantially related to surface mining. On March 24, 2010, the Company filed verified answers denying any wrongdoing. Discovery is ongoing. ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The unaudited financial statements of the Company are attached at the end of this document. PART III ITEM 9: 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, 2010. 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 67 President & Director 1983 1977 Scott K. Robertson 53 Treasurer & Director 1999 1999 Hugh Daniel O'Neill 68 Director N/A 2002 Rae Bell Arbogast 44 Secretary 2002 N/A 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. Scott K. Robertson- Treasurer ~ Director Scott has been active in the Company as an outside accountant since 1984 and a director since 1999. In 1991, Scott co-founded the CPA business and development firm Robertson, Woodford & Summers, LLP located in Grass Valley, California. Currently he is CEO of Emerald Cove Marina, a full service marina at Bullard's Bar Reservoir and President of the Nevada County Broadcaster's Inc. a local radio station group. Scott also serves on the board of a high tech company and a local toy company. His community service includes past president of Rotary Club of Grass Valley, Nevada County Economic Council, Nevada County Business Association and Big Brothers Big Sisters. Scott is a graduate of University of Santa Barbara in Business in 1981 receiving his CPA certificate in 1986. Scott resides in Nevada City, California with his wife of over 30 years Debra, a graduate of University of Santa Barbara. They have three sons, Trevor, Keith and Dan. Hugh Daniel O'Neill III ~ Director 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. Rae Bell Arbogast ~ Secretary Rae Bell was born in Southern California and moved to the Alleghany area with her family in 1975. They lived near the Ruby Mine where they relied on skis and a snowmobile for transportation in the winter. Her father worked as a miner at the Ruby and Carson mines. Rae Bell has been involved with the Sixteen to One Mine since 1996. Currently she provides bookkeeping & secretarial services to a few clients in addition to Original Sixteen to One Mine, Inc. She serves as a Director of the Alleghany Water District and has held various board positions with the Fire Department since 1996. She has served as a volunteer Emergency Medical Technician with the Fire Dept. since 1997. She is a part-time student at Sierra College majoring in business/accounting. ITEM 10: EXECUTIVE COMPENSATION Remuneration of Directors and Executive Officers Total compensation for each Director, excluding the President, consists of $750 per meeting attended and an annual $2,000 retainer effective January 1, 1994, and remains unchanged. The Company has not paid or distributed and does not pay or distribute cash or non-cash compensation to officers, directors or employees under any retirement or pension plans, and has no intent to do so in the future. In April 1996, the Board of Directors adopted, subject to shareholders approval the Company's Stock Incentive Plan for employees and directors. Shareholders approved the plan on June 22, 1996. Management Remuneration for the Period Ended December 31, 2009 Name/ Principal Annual Position Year Salary Bonus Compensation Securities - --------- ------ ------ ----- ------------ ---------- Michael Miller/ 2009 $ 60,000 0 0 0 President & CEO 2008 $ 60,000 0 0 0 2007 $ 60,000 0 0 0 The following table summarizes incentive options granted to the president: Issued Sept.24, 1999 450,000 shares $ .23 per share On December 1, 2008 Michael Miller exercised his option dated Sept. 24, 1999. Note: No options were granted in recent years. These options vest ratably over a five-year period beginning one year from the date of grant and expire after ten. Non-qualified Stock Options granted to board members are summarized in the following table: SHARES EXERCISE PRICE FULLY VESTED ------ -------------- ------------ Issued June 30, 2001 45,000 $ .3400 June 30, 2005 Issued June 30, 2000 45,000 $ .3125 June 30, 2004 These options vest ratably over a four-year period beginning one-year from the date of grant and expire ten years after the date of grant. ITEM 11: 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 M. Blair Hull 1,962,822 14.6% Hull Trading Co. 401 So. LaSalle, Ste. 505 Chicago, IL 60605 Common Kathy N. Hull 1,490,250 11% 11 Sierra Ave. Piedmont, CA 94611 Common Michael M. Miller 1,308,597 9.7% Officer and Director P.O. Box 941 Alleghany, CA 95910 Common Charles I. Brown Family Partnership LTD 844,168 6.3% P.O. Box 1835 Edwards, CO 81632 Common Scott K. Robertson 167,820 1.2% Officer and Director 12391 Deer Park Drive Nevada City, CA 95945 Common Hugh Daniel O'Neill 26,227 .1% Director 227 Prospect St. Nevada City, CA 95959 Common Rae Bell Arbogast 13,158 .09% Secretary P.O. Box 919 Alleghany, CA 95910 Common All Officers & Directors 1,515,802 11% (as a group) ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS See notes to financial statements. PART IV ITEM 13: 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, 2009 and December 31, 2008, the results of operations and cash flows for the twelve-month periods ended December 30, 2009, 2008 and 2007. The unaudited financial statements have been prepared in accordance with Generally Accepted Accounting Principles. 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. 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 May 13, 2010 Balance Sheet December 31, 2009 & December 31, 2008 ASSETS 2009 2008 Current Assets Cash $ 7,321 $ - Accounts receivable 3,711 3,266 Inventory 414,331 631,852 Other current assets - - ------- ------- Total current assets 425,363 635,118 ------- ------- Mining Property Real estate and property rights net of depletion of $524,145 230,401 218,287 Mineral property 345,330 500,707 ------- ------- Total Mining Property (see Note 2) 575,731 718,994 ------- ------- Fixed Assets at Cost Equipment 925,243 925,243 Buildings 209,487 209,487 Vehicles 255,128 255,128 --------- --------- Total fixed assets at cost 1,389,858 1,389,858 --------- --------- Less accumulated depreciation (1,303,866) (1,284,275) ----------- ----------- Net fixed assets 85,992 105,583 ----------- ----------- Other Assets Bonds and misc. deposits 5,460 5,460 --------- ------- Total Assets $1,092,546 $1,465,155 ========== ========== Balance Sheet Continued LIABILITIES & STOCKHOLDERS' EQUITY 2009 2008 Current Liabilities Accounts payable & accrued expenses $ 648,434 484,697 Due to related party (see Note 3) 647,555 626,727 Notes payable due within one year (see Note 6) 58,700 400,000 -------- ------- Total Current Liabilities 1,354,689 1,511,424 -------- ------- Long Term Liabilities Notes payable due after one year (see Note 6) 97,236 97,236 -------- ------- Total Liabilities 1,459,695 1,608,660 -------- ------- Stockholders' Equity Capital stock, par value $.03: 30,000,000 shares authorized: 13,373,505 shares issued and outstanding as of December 31, 2009 and as of December 31, 2008 439,876 439,876 Additional paid-in capital 2,005,282 2,005,282 (Accumulated deficit) Retained earnings (2,804,537) (2,588,663) ------------ ----------- Total Stockholders' Equity (359,379) (143,505) ------------ ----------- Total Liabilities and Stockholders' Equity $1,092,546 $1,465,155 ============ ============ Original Sixteen to One Mine, Inc. Statement of Operations 2009 2008 2007 Revenues: Gold & jewelry sales 198,431 105,848 653,636 ------ ------- ------- Total Revenues 198,431 105,848 653,636 Operating expenses: Salaries and wages 68,543 90,613 74,214 Contract Labor 44,946 28,213 516,161 Telephone & utilities 43,285 42,672 69,576 Taxes - property & payroll 24,345 38,213 39,693 Insurance 761 1,418 2,032 Supplies 14,565 21,490 45,627 Small equipment & repairs 11,118 5,725 25,846 Drayage 15,313 22,711 30,559 Corporate expense 12,441 12,795 14,113 Legal and accounting 4,341 88,572 11,771 Compliance & Safety 1,316 2,149 4,813 Depreciation & amortization 19,591 19,608 20,813 Other expenses 11,110 10,393 25,515 ------- ------ ------ Total operating expenses 271,675 384,572 880,733 Profit (Loss) from operations (73,244) (278,724) (227,097) Other Income & (Expense): Interest Expense (98,206) (107,655) (106,207) Other expense (144,277) (1,171) (6,050) Other income 100,654 20,020 49,195 --------- -------- --------- Total other (expense) income (141,829) (88,806) (63,062) Profit (Loss) before taxes (215,073) (367,530) (290,159) Income tax expense (800) (800) (800) Net (loss) income $ (215,873) $ (368,330) $ (290,959) ========= ========== ========= Basic and diluted gain (loss) per share $ (.01) $ ( .03) $ (.02) Shares used in the calculation of net (loss) income per share 13,373,505 13,373,505 12,890,204 ======== ========= ======== Original Sixteen to One Mine, Inc. Statement of Cash Flow For the Years Ended December 31, 2009, 2008, 2007 Cash Flows From Operating Activities: 2009 2008 2007 Net profit (loss) $ (215,874) $ (368,330) $ (290,959) Operating activities: Depreciation and amortization 19,591 19,608 20,813 Gain on Sale of Asset - - (39,930) Decrease(Increase) in accounts receivable (445) (132) (3,134) Decrease(Increase) in inventory 217,521 82,268 34,889 Decrease (Increase) in other current assets - 625 478 (Decrease) Increase in accounts payable accrued expenses and short term notes (156,735) 94,372 260,382 -------- ------- --------- Net cash (used) provided by operating activities (135,942) (171,589) (17,461) Cash Flows From Investing Activities: (Purchase) of Real Estate 143,263 - - (Purchase) sale of fixed assets - - 39,930 Other assets Bonds Misc. deposits - 10,725 - --------- -------- -------- Net cash (used) provided by investing activities 143,263 10,725 39,930 Cash Flows From Financing Activities Increase (decrease) notes payable - 38,758 (23,049) Proceeds from sale of common stock - 14,499 - Paid in Capital from Shareholders - 106,965 - -------- -------- -------- Net cash provided (used) by financing activities - 160,222 (23,049) (Decrease)increase in cash 7,321 (642) (580) Cash, beginning of period - 642 1,222 ------ ------- -------- Cash, end of period $ 7,321 $ 0 $ 642 ======== ======= ======== 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 on maintenance status. 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 they are mined, gold specimens are recorded in inventory and revenue is recognized using quoted market prices for gold. For income tax purposes revenues are not recognized until the gold is sold. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. 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 Brown Bear Mine which was purchased in 1994 for $300,000 and the Plumbago Mine which was exchanged for 50,000 shares of restricted stock in 1999. The overall property decrease of $143,263 represents the write-down of the company's unpatented mining claims, including approximately $87,000 in legal costs associated with defending the mining claims that were capitalized in 1994. Escrow opened on the sale of the Brown Bear Mine in 2009 but did not close until 2010. 3. NOTES PAYABLE RELATED PARTIES Notes payable related parties at December 31, 2009 was $647,555 consisting of $222,555 in loans from Michael Miller secured by real-estate (see related party transactions)interest is charged on this loan on a reimbursement basis based on the interest charged on Michael Miller's personal line of credit at Citizen's bank. $400,000 of the balance is an advance payment on the Brown Bear Mine (see related party transactions) and $25,000 from a shareholder secured by gold belonging to Michael Miller. 4. RELATED PARTY TRANSACTIONS For several years Orocal Manufacturing had a Note Receivable from Original Sixteen to One Mine,Inc. that had accumulated to $249,891. In August of 2009 Orocal opted to convert the note to gold and a sale was made from Original Sixteen to One Mine Inc. to Orocal at $1,000 per ounce to cancel out the note. Orocal has granted the Company an option to buy back the material at spot price plus 10% for one year and at spot price plus 20% for the subsequent year. If the gold price falls below $1,000 per ounce, $1,000 per ounce is to be used to calculate the buy back prices. If Orocal sells any of the pieces within the two-year period the Company will get any amount over the established buy back price. The Brown Bear Mine was listed with Coldwell Banker at Trinity Alps Realty on May 27, 2009. A related party purchased the Brown Bear Mine and offered the Company a three-year buy-back option. Escrow opened on November 17, 2009 with a sale price of $580,000. Escrow closed in January 2010. Gold Country Lenders started foreclosure proceedings on the Company's Alleghany properties on May 29, 2009 for the $400,000 note they've held since 2001. The note was issued as a one-year note and was extended annually for the next seven years. A related party paid down the note to Gold Country Lenders and substituted into its position. 5. ACCOUNTS PAYABLE & ACCRUED EXPENSES Accounts payable and accrued expenses was $648,434 at December 31, 2009. This balance includes $325,695 in accrued wages owed to Michael Miller, $12,000 in accrued wages owed to an employee and $20,000 owed to independent contractors and secured with gold. 6. NOTES PAYABLE Notes payable due within one year of $58,700 is the balance remaining on the books for the $400,000 one-year note with that was secured by the Company's Alleghany property. Notes payable due after one year of $97,236 is the balance remaining on the mortgage for the Gold Crown Mine. The Company is behind on its payments and interest has not been accrued on this note. 7. STOCK Capital authorized: 30,000,000 non-assessable shares of common stock, par value $.03. Issued and outstanding: 13,373,505 shares of common stock. At December 31, 2009, 2,771,299 shares were 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. -----END PRIVACY-ENHANCED MESSAGE-----