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 nineteen 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 and Security 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.
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 adverse 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, 2010, was $372,199, 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:
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 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.
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
ITEM 3:
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. Sierra County Superior Court Case No. 7019. Discovery is in process.
On January 6, 2010, the California Department of Conservation, formerly 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. Sierra County Superior Court Case No. 7097 Discovery is ongoing.
ITEM 4:
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
PART II
ITEM 5:
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 2010 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 ------ ----- ------ ----- ------ ----- ------ ----- 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 2006 1.00 .75 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
* 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:
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 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 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 2010 with 2009.
Assets: For the one-year period ended December 31, 2010:
Current assets decreased by $44,611 (10%) due primarily to a decrease in inventory which was sold to maintain operations.
Mining property decreased by $297,354 (52%) due to the sale of the Brown Bear Mine. (see note 4 at end of financial statements).
Vehicles decreased by $149,714 (58%) and equipment decreased by $114,839 (12%) due to the write-off of old vehicles and equipment no longer in use. These assets were fully depreciated. The write-off of these assets along with all accumulated depreciation, combined with new depreciation of $17,414, resulted in the net decrease of $16,044 in Fixed Assets.
Liabilites:
For the one-year period ended December 31, 2010:
Accounts payable & accrued expenses increased by $169,063 (26%) due primarily to increases in accounts payable and accrued wages.
Notes due to related parties reflects a decrease of $342,707 (53%) primarily due to an advance on the sale of the brown bear mine that was posted to this account in 2009 and applied to the sale of the asset in Jan. 2010 with the closing of escrow.
Notes payable due within one year decreased by $58,700 (100%) as the note to Gold Country Lenders was satisfied.
Statement of Operations
(b) Comparison of 2010 with 2009
Income: For the one-year period ended December 31, 2010 compared to the one-year period ended December 31, 2009 revenue decreased by $56,306 (28%) due to more sales in 2009 than 2010.
Operating Expenses: For the one-year period ended December 31,2010 compared to the one-year period ended December 31,2009 operating expenses increased by $325,047 (120%). A small crew was hired in 2010 to do rehab and maintenance work, the increased operating expenses related directly to the crew are: Salaries and Wages increased $132,811 (194%), taxes (includes payroll taxes) increased $16,413 (67%) and insurance increased $38,827 (5,102%) due to an exorbitant worker's, compensation insurance premium. The increased activity at the mine also resulted in an increase in utilities of $28,279 (65%), supplies increased $70,878 (487%), small equipment and repairs increased $6,112 (55%), drayage increased $12,866 (84%), compliance/safety increased $1,998 (152%), and other operating expensed increased by $19,286 (174%).
Other Expenses: Other expenses decreased by $205,983 (85%) primarily due to less interest expense in 2010 than 2009.
Other Income: Other income increased by $209,380 (208%) due primarily to the gain on the sale of the Brown Bear Mine.
For the one-year period ended December 31, 2010 the company showed a loss of $181,063 compared to a loss of $215,873 for the same period in 2009. The 16% difference can be attributed to the sale of the Brown Bear Mine.
The basic and diluted loss per share of .01 per share was about the same for both years. The number of shares used in the 2010 calculation was 13,399,505 and for the 2009 calculation 13,373,505 shares were used.
(c) 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.
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.
ITEM 7:
ITEM 7: SUBSEQUENT EVENTS
Regarding Superior Court of Sierra County Case # 7019 People ex rel. Regional Water Board vs. Original Sixteen to One Mine Inc. On March 18, 2011 the second, third and fourth causes of action were dismissed leaving only the first cause of action; also, Michael Miller was dismissed as a defendant in the case.
ITEM 8:
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:
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 25, 2011. 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 68 President & Director 1983 1977
Scott K. Robertson 54 Treasurer & Director 1999 1999
Hugh Daniel O'Neill 69 Director N/A 2002
Andrew Yeiser 85 Director N/A 2010
Rae Bell Arbogast 45 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.
Andrew Yeiser ~ Director
Andrew Yeiser has taken an active interest in Original Sixteen to One Mine for 19 years. In 1992, at Michael Miller's request, he took his ground penetrating radar (GPR) equipment in the mine to investigate the possibility of using GPR to locate gold deposits at distances greater than the range of metal detectors. The concept was proven by the detection of echoes from 600 feet away. "The mountain is transparent to radar!" was the surprised remark of Lamber Dalphin, Stanford Research Institute's GPR expert who assisted him. The proof of concept was successful, yet the equipment had been designed for surface use and was not suitable for use in a mine.
Mr. Yeiser holds a BA in Physics from MIT and a MA in Physics from UC Berkely. He is a professor Emeritus in Computer Engineering at UCLA and UCI and has taught classes around the world. His management experience includes: project manager of the Polaris Atomic Submarine satellite navigation computer, ANBRN-1, project manager of the first MILSPEC computer, ANUYK-1, Director of the California State Water Project (Feather River) Completion and Activation Phase contract at North American Rockwell, project Apollo Lunar Landing Program Information Systems Director at North American Aviation, and founder and Director of General systems Industries, Inc., a multidisciplinary company that included computer, civil and mechanical engineers and behavioral scientists. Presently Mr. Yeiser is beta testing a GPR system designed specifically for use in the Sixteen to One Mine and is assisting in mitigating 16 to 1 problems with the California State Water Quality Control Board.
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, Secretary/Treasurer Underground Gold Miners Museum and has held various board positions with the Fire District since 1996 (currently as Treasurer). 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:
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.
Management Remuneration for the Period Ended December 31, 2010
Name/ Principal Annual Position Year Salary Bonus Compensation Securities --------- ------ ------ ----- ------------ ----------
Michael Miller/ 2010 $ 60,000 0 0 0 President & CEO 2009 $ 60,000 0 0 0 2008 $ 60,000 0 0 0
ITEM 11:
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 9.8% Officer and Director P.O. Box 941 Alleghany, CA 95910
Common Charles I. Brown Family Partnership LTD 833,668 6% 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 .19% Director 227 Prospect St. Nevada City, CA 95959
Common Andrew Yeiser 18,450 .13% Director 302 Cleveland Dr. Huntington Beach, CA 92648
Common Rae Bell Arbogast 13,158 .01% Secretary P.O. Box 919 Alleghany, CA 95910
Common All Officers & Directors 1,534,252 11% (as a group)
ITEM 12:
ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See notes to financial statements.
PART IV
ITEM 13:
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, 2010 and December 31, 2009, the results of operations and cash flows for the twelve-month periods ended December 30, 2008, 2009 and 2010. 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 Date April 5, 2011
Condensed Balance Sheet
December 31, 2010 & December 31, 2009
ASSETS 2010 2009 Current Assets Cash $ 4,956 $ 7,321 Accounts receivable 3,597 3,711 Inventory 372,199 414,331 Other current assets - - ------- ------- Total current assets 380,752 425,363 ------- -------
Mining Property Real estate and property rights net of depletion of $524,145 230,401 230,401 Mineral property 47,976 345,330 ------- ------- Total Mining Property (see Note 2) 278,377 575,731 ------- -------
Fixed Assets at Cost Equipment 810,404 925,243 Buildings 209,487 209,487 Vehicles 105,414 255,128 --------- --------- Total fixed assets at cost 1,125,305 1,389,858 --------- --------- Less accumulated depreciation (1,055,357) (1,303,866) ----------- ----------- Net fixed assets 69,948 85,992 ----------- -----------
Other Assets Bonds and misc. deposits 7,962 5,460 --------- -------
Total Assets $ 737,039 $1,092,546 ========== ==========
Balance Sheet Continued
LIABILITIES & STOCKHOLDERS' EQUITY 2010 2009 Current Liabilities Accounts payable & accrued expenses (see Note 5) $ 817,497 648,434 Due to related party (see Note 3) 304,848 647,555 Notes payable due within one year - 58,700 -------- ------- Total Current Liabilities 1,122,345 1,354,689 -------- -------
Long Term Liabilities Notes payable due after one year (see Note 6) 97,236 97,236 -------- ------- Total Liabilities 1,219,581 1,451,925 -------- -------
Stockholders' Equity Capital stock, par value $.03: 30,000,000 shares authorized: 13,399,505 issued and outstanding as of December 31, 2010 13,373,505 shares and as of December 31, 2009 440,656 439,876 Additional paid-in capital 2,063,202 2,005,282 (Accumulated deficit) Retained earnings (2,986,400) (2,804,537) ------------ ----------- Total Stockholders' Equity (482,542) (359,379) ------------ -----------
Total Liabilities and Stockholders' Equity $ 737,039 $1,092,546 ============ ============
Original Sixteen to One Mine, Inc.
Statement of Operations
2010 2009 2008 Revenues: Gold & jewelry sales 142,125 198,431 105,848 ------ ------- ------- Total Revenues 142,125 198,431 105,848
Operating expenses: Salaries and wages 201,354 68,543 90,613 Contract Labor 42,622 44,946 28,213 Telephone & utilities 71,564 43,285 42,672 Taxes - property & payroll 40,758 24,345 38,213 Insurance 39,588 761 1,418 Supplies 85,443 14,565 21,490 Small equipment & repairs 17,230 11,118 5,725 Drayage 28,179 15,313 22,711 Corporate expense 10,543 12,441 12,795 Legal and accounting 8,317 4,341 88,572 Compliance & Safety 3,314 1,316 2,149 Depreciation & amortization 17,414 19,591 19,608 Other expenses 30,396 11,110 10,393 ------- ------ ------ Total operating expenses 596,722 271,675 384,572
Profit (Loss) from operations (454,597) (73,244) (278,724)
Other Income & (Expense): Interest Expense (35,626) (98,206) (107,655) Other expense (874) (144,277) (1,171) Other income 310,034 100,654 20,020 --------- -------- --------- Total other (expense) income 273,534 (141,829) (88,806)
Profit (Loss) before taxes (181,063) (215,073) (367,530)
Income tax expense (800) (800) (800)
Net (loss) income $ (181,863) $ (215,873) $ (368,330) ========= ========== =========
Basic and diluted gain (loss) per share $ (.01) $ (.01) $ (.03) Shares used in the calculation of net (loss) income per share 13,399,505 13,373,505 13,373,505 ======== ========= ========
Original Sixteen to One Mine, Inc.
Statement of Cash Flow For the Years Ended December 31, 2010, 2009, 2008
Cash Flows From Operating Activities: Net profit (loss) $ (181,863) $ (215,874) $ (368,330) Operating activities: Depreciation and amortization 17,414 19,591 19,608 Gain on retirement of Asset (1,370) - - Decrease(Increase) in accounts receivable 114 (445) (132) Decrease(Increase) in inventory 42,132 217,521 82,268 Decrease (Increase) in other current assets - - 625 (Decrease) Increase in accounts payable accrued expenses and short term notes (232,344) (156,735) 94,372 -------- ------- --------- Net cash (used) provided by operating activities 355,917) (135,942) (171,589)
Cash Flows From Investing Activities: Sale (Purchase) of Real Estate 297,354 143,263 - (Purchase) sale of fixed assets - - - Other assets Bonds Misc. deposits (2,502) - 10,725 --------- -------- -------- Net cash (used) provided by investing activities 294,852 143,263 10,725
Cash Flows From Financing Activities Increase (decrease) notes payable - - 38,758 Proceeds from sale of common stock 780 - 14,499 Paid in Capital from Shareholders 57,920 - 106,965 -------- -------- -------- Net cash provided (used) by financing activities 58,700 - 160,222
(Decrease)increase in cash (2,365) 7,321 (642) Cash, beginning of period 7,321 _ 642 ------ ------- -------- Cash, end of period $ 4,956 $ 7,321 $ 0 ======== ======= ========
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 Plumbago Mine which was exchanged for 50,000 shares of restricted stock in 1999 and ten unpatented mining claims.
3. NOTES PAYABLE RELATED PARTIES
Notes payable related parties at December 31, 2010 was $304,848 consisting of $259,848 in loans from Michael Miller secured by real-estate. 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. The remaining $45,000 in this account is owed to two shareholders.
4. RELATED PARTY TRANSACTIONS
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.
5. ACCOUNTS PAYABLE & ACCRUED EXPENSES
Accounts payable and accrued expenses was $817,497 at December 31, 2010. This balance includes $385,695 in accrued wages owed to Michael Miller, $12,000 in accrued wages owed to an employee and $29,000 owed to independent contractors and secured with gold.
6. NOTES PAYABLE
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: 13,399,505 shares of common stock. At December 31, 2010, 2,797,299 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.