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 Quarter Ended June 30, 1997 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
incorporated or organization) Identification No.)
Post Office Box 1621, Alleghany, CA 95910
(Address of principal executive offices)
(916) 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: X No:
As of June 30, 1997, 3,534,065 shares of Common Stock, par value $.10 per
share, were issued and outstanding.
<PAGE>
PART I: FINANCIAL INFORMATION
Original Sixteen to One Mine, Inc.
Condensed Balance Sheet
June 30, 1997 and December 31, 1996
ASSETS
June 30, 1997 December 31, 1996
Current Assets:
Cash $ 54,539 $ 31,640
Accounts Receivable 69,923 20,571
Inventory 1,041,532 1,138,041
Other Current Assets 22,587 25,056
----------- -----------
Total Current Assets 1,188,581 1,215,308
----------- -----------
Mining Property:
Real Estate & Property Rights
net of depletion of $524,145 182,091 182,091
Mineral Property 415,263 415,263
Development Costs
net of amortization of $35,800 863,184 898,985
---------- ----------
1,460,538 1,496,339
---------- ----------
Fixed Assets:
Equipment 842,620 822,620
Building & Mill 146,463 144,462
Vehicles 178,173 176,086
---------- ----------
1,167,256 1,143,168
Less: Accumulated Depreciation (716,305) (665,583)
---------- ----------
Net Fixed Assets 450,951 477,585
---------- ----------
Other Assets
net of amortization of
$42,445 and $41,007 in
1997 and 1996, respectively 25,617 28,493
---------- ----------
TOTAL ASSETS $ 3,125,687 $ 3,217,725
=========== ===========
See Accompanying Notes
2
<PAGE>
PART I: FINANCIAL INFORMATION
Original Sixteen to One Mine, Inc.
Condensed Balance Sheet
June 30, 1997 and December 31, 1996
LIABILITIES & STOCKHOLDERS' EQUITY
June 30, 1997 December 31, 1996
Current Liabilities:
Accounts payable and
accrued compensation $ 165,809 $ 151,734
Related party advances 20,973 54,000
Notes payable due within
one year 23,831 267,793
Accrued expenses 7,657 0
Deferred income taxes 375,000 375,000
---------- ----------
Total Current Liabilities 593,270 848,527
---------- ----------
Notes payable due after one year 9,629 11,924
---------- ----------
Total Liabilities 602,899 860,451
Stockholders' Equity:
Capital Stock, par value $.10
10,000 shares authorized;
3,534,065 and 3,504,065 shares
issued & outstanding as of
June 30, 1997 and December 31,
1996, respectively 353,406 350,407
Additional paid-in capital 1,357,203 1,321,204
Notes receivable from employees (26,000) (26,000)
Retained earnings 838,179 711,663
----------- -----------
Total Stockholders' Equity 2,522,788 2,357,274
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 3,125,687 $ 3,217,725
=========== ===========
See Accompanying Notes
3
<PAGE>
PART I: FINANCIAL INFORMATION
Original Sixteen to One Mine, Inc.
Statement of Income and Retained Earnings
Three Months End Six Months End
6/30/97 6/30/96 6/30/97 6/30/96
-------- -------- ------- -------
Revenue:
Gold & jewelry sales $1,015,187 $ 86,326 $1,460,417 $ 751,923
Expenses:
Salaries and wages 351,188 265,122 768,407 584,812
Depreciation & amortization
of fixed assets 23,758 29,215 59,395 58,430
Amortization of
development costs 35,800 0 35,800 0
Contract Labor 4,650 7,784 12,893 31,846
Telephone and utilities 29,882 29,441 58,897 60,808
Taxes-property and payroll 13,557 3,961 25,758 15,076
Insurance 11,401 15,094 24,267 33,016
Supplies 75,703 96,863 139,238 185,125
Drayage 13,785 15,076 31,214 29,898
Promotion 13,733 25,935 15,516 37,132
Office expenses 10,227 23,203 18,488 34,760
Legal and accounting 21,977 27,408 53,403 66,088
Other expenses 29,726 4,349 33,774 17,771
-------- ------- -------- --------
Total Expenses 635,387 543,451 1,277,050 1,154,762
-------- ------- --------- ---------
Income (Loss)
from Operations 379,800 (457,125) 183,367 (402,839)
Other Income & (Expense):
Other Income 5,925 8,326 13,629 15,360
Other Expenses (48,122) (888) (69,480) (8,965)
-------- ------- -------- --------
Total Other
Income (Expense) (42,197) 7,438 (55,851) 6,395
--------- ------- -------- --------
Income (Loss) Before Taxes 337,603 (449,687) 127,516 (396,444)
Provision for Income Tax 0 0 (1,000) (1,000)
-------- ------- ------- --------
Net Income (Loss) $ 337,603 $(449,687) $126,516 $(397,444)
========= ========= =========
Retained Earnings (12/31/96) 711,663
-------
Retained Earnings (6/30/97) $838,179
=======
Earnings (Loss) Per Share $0.10 ($0.13) $0.04 ($0.11)
----- ----- ----- -----
See Accompanying Notes
4
<PAGE>
PART I: FINANCIAL INFORMATION
Original Sixteen to One Mine, Inc.
Statement of Cash Flows
Six Months Ended June 30,
1997 1996
Cash Flows From Operating Activities:
Net income (loss) $ 126,516 $ (397,444)
Adjustments to reconcile new loss to
net cash provided by operating
activities:
Depreciation and amortization 89,398 58,430
Increase in accounts receivable (49,352) (5,526)
Decrease in inventory 96,509 593,286
(Increase) decrease in other
current assets 2,469 (8,608)
Increase (decrease) in accounts
payable & accrued compensation 14,075 (9,175)
Increase in accrued expenses 7,657 182
Decrease in corporate
income taxes payable 0 (83,000)
--------- ---------
Net cash provided by
operating activities 287,272 148,145
--------- ---------
Cash Flows From Investing Activities:
Bond deposit 0 (5,000)
Proceeds from sale of fixed assets 28,987 0
Purchase of fixed assets (53,075) (120,807)
Payments made for development 0 (135,369)
--------- ---------
Net cash provided used
by investing activities (24,088) (261,176)
--------- ---------
Cash Flows From Financing Activities:
Payments made on notes payable (261,956) (1,722)
Payments received on notes
receivable from employees 0 26,000
Payments made to employees for advance
made to the company (33,027) 0
Proceeds from additional borrowings 15,698 0
Proceeds from sales of common stock 39,000 0
Repurchase & retirement of common stock 0 (49,014)
--------- ---------
Net cash used by financing activities (240,285) (24,736)
--------- ---------
Net Increase (Decrease) in Cash 22,899 (137,767)
Cash, beginning of year 31,640 180,618
--------- ---------
Cash, end of period $ 54,539 $ 42,851
========== ==========
Supplemental Schedule of Other Cash Flows:
Cash paid during the period for:
Interest expense $ 15,424 $ 14,374
========== ==========
Income taxes $ 1,300 $ 84,000
========== ==========
See Accompanying Notes
5
<PAGE>
PART I: FINANCIAL INFORMATION
Original Sixteen to One Mine, Inc.
Supplemental Schedule of Operations by Divisions
For the Six Months Ended June 30, 1997
Mine Gold Sales Combined
---------- ---------- ----------
Revenues:
Gold & silver
production $1,265,177 $ 0 $1,265,177
Finished jewelry sales 0 53,197 53,197
Gold specimen sales 0 43,564 43,564
Gold slab & cabochan sales 0 161,087 161,087
Less: Cost of sales (62,608) (62,608)
---------- ---------- ----------
1,265,177 195,240 1,460,417
Operating expenses:
Salaries & wages 716,120 52,287 768,407
Depreciation &
amortization of
fixed assets 59,395 0 59,395
Amortization of
development costs 35,800 0 35,800
Contract labor 11,911 982 12,893
Telephone & utilities 57,477 1,420 58,897
Taxes-property & payroll 25,758 0 25,758
Insurance 24,267 0 24,267
Supplies 137,417 1,821 139,238
Drayage 31,214 0 31,214
Promotion 13,021 2,495 15,516
Office expense 16,864 1,624 18,488
Legal & accounting 53,403 0 53,403
Other expenses 32,350 1,424 33,774
Operations allocation (6,000) 6,000 0
---------- ---------- ----------
Total operating
expenses 1,208,997 68,053 1,277,050
---------- ---------- ----------
Income from operations 56,180 127,187 183,367
Other Income & (Expense):
Other Income 11,523 2,106 13,629
Other Expenses (36,830) (32,650) (69,480)
---------- --------- ----------
Total Other
Income (Expense) (25,307) (30,544) (55,851)
---------- --------- ---------
Income before taxes $ 30,873 $ 96,643 $ 127,516
========== ========= =========
See Accompanying Notes
6
<PAGE>
PART I: FINANCIAL INFORMATION
Original Sixteen to One Mine, Inc.
Notes to Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Original Sixteen to One Mine, Inc., was incorporated October 9, 1911, as a
California corporation. It owns and operates mining claims in both Sierra and
Trinity Counties located in Northern California.
REVENUE
Revenue consists of gold and silver mined during the reporting period, either
sold during the period or held in inventory. It is recorded at the spot price
per ounce on the statement date. Revenue does not include unprocessed high-
grade ore mined during the reporting period. Gold and silver held in inventory
are recorded at the spot price per ounce on the balance sheet date.
INVENTORY
Inventory consists of gold bullion, dore, specimens and jewelry. Inventory is
recorded at the spot price per ounce on the balance sheet date.
FIXED ASSETS
Fixed assets are stated at historical cost. Depreciation is being calculated
using straight-line and accelerated methods over the following estimated useful
lives:
Vehicles 3 to 5 years
Equipment 5 to 7 years
Buildings 18 to 31.5 years
DEPLETION POLICY
The Company has established a depletion policy for its mineral and mining
properties. Because of the geological formation in the Alleghany Mining
District, estimates of ore reserves cannot be calculated; therefore, a cost per
unit depletion factor cannot be determined. Management has determined that a
straight-line method of depletion over a 25 year period would most accurately
match the estimated production of the mining properties (see Note 2). If
estimates of ore reserves become available, the units of production method of
depletion will be used.
DEVELOPMENT
In February 1994, the Company began development of the 2483 winze into
unexplored ground. Costs associated with the development have been capitalized.
These costs are being amortized over the estimated production from the new
headings.
INCOME TAXES
Differences exist between the amount of income or loss reported for financial
statements and income tax reporting purposes. These differences are
attributable to the use of the cash basis reporting of more revenues and
accelerated depreciation and depletion methods for income tax purposes. No
provision for income taxes has been made in the current year because of the
uncertainty of revenues for the remainder of the year.
NET GAIN OR LOSS PER SHARE
Net gain or loss per share has been computed using the common shares outstanding
at end of reporting period. The Company's stock equivalents have been excluded
from the calculation of shares outstanding.
NOTE 2 - MINING PROPERTY
The original mining property is carried on the books at its March 1, 1913, value
of $379,000 as determined for depletion purposes in connection with Federal
income taxes. This value together with the cost of mining properties
acquired in 1920 and 1924 for the aggregated sum of $145,145 has been fully
amortized through depletion charges. During 1994, the Company purchased mining
properties at a cost of $300,000, and capitalized $86,633 in legal costs. These
legal costs were incurred in defense of certain mining claims which are
currently under appeal.
NOTE 3 - INCOME TAXES
For Federal income tax purposes, the Company has operating loss carryforwards
which may provide future tax benefits, expiring as follows:
Year of Expiration
2006 $345,753
2007 48,562
--------
$394,315
========
For California State income taxes, the Company has no operating loss
carryforwards.
NOTE 4 - NOTES PAYABLE
The Company has a note payable to the bank amounting to $13,560, bearing
interest at 9.95% and secured by a Chevrolet Astro Van. The note is payable in
60 monthly installmentS of $442.
At June 30, 1997, the Company has revolving lines of credit in the amount of
$275,000. These credit lines expire June 30, 1998, and carry no balance. A
separate line of credit at June 30, 1997, amounts to $19,900.
PART II: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATION
COMPARISON OF FIRST SIX MONTHS OF 1997 WITH 1996
STATEMENT OF INCOME AND RETAINED EARNINGS
The Company's revenues increased $708,494 (94%) the first six months of 1997
compared with the same period of 1996. Gold production has increased
significantly during the second quarter of 1997 (compared with all quarters
comprising this report); however, the spot price of gold has continued to
decline from $369.60 per troy ounce on December 31, 1996, to $334.10 on June 30,
1997. This has a direct impact on the volume of gold needed to maintain the
same inventory dollars.
Gold production is measured in fine troy ounces. During the first and second
quarter of 1996, production from the mine totaled 2,287.10 troy ounces as
follows:
January 849.33 April 0.00
February 483.37 May 227.69
March 81.00 June 645.71
------- -------
Quarter Total 1,413.70 Quarter Total 873.40
======== =======
The Company continues to identify mine production into three categories: Mine
Mill and Trommel. During the first six months of 1997, production totaled
3,749.79 troy ounces as follows:
MINE MILL TROMMEL TOTAL
------ ------ ------- -------
January 46.44 93.12 0.00 139.56
February 0.41 205.73 149.13 395.27
March 161.39 133.93 48.60 343.92
------- ------- ------- ------
Total:
First Quarter 248.24 432.78 197.73 878.75
======= ======= ======= =======
April 409.38 155.19 17.64 582.21
May 1,144.06 100.09 0.00 1,244.15
June 1,044.68 0.00 0.00 1,044.68
-------- -------- -------- --------
Total:
Second Qtr. 2,598.12 255.28 17.64 2,871.04
======== ======== ======== ========
As production from the mine increased in May 1997, the trommel operation was
discontinued.
During the second quarter of 1997, the bulk of production came from a recently
developed area known as the 2499-K. This remains an active working heading as
gold is visible in the quartz vein both above and below the excavation. This
area produced approximately 2,900 ounces of gold in both high grade and mill
ore.
The Company's compensation expenses in 1997 increased by $183,595 (31%) through
the first six months from the $584,812 incurred in 1996 during this same period
primarily because the Company's payroll expanded from 37 full time employees to
46 full time employees through the course of the 1996 and into the 1997 year.
Promotion expenses decreased $12,202 (47%) the second quarter due to the need to
conserve working capital. Contract labor and related material expenses directly
related to production of jewelry for the gold sales division has been
reclassified as a cost of goods sold as indicated on the Supplemental Schedule
of Operations by Division resulting in a significant decrease in contract labor
for six months end June 30, 1997, versus June 30, 1996. Office expenses
decreased $16,272 (53%) in the six month comparisons. To conserve working
capital supplies were kept at a minimum.
Amortization of development costs were incurred during the second quarter 1997
as costs associated with exploration and development are now being amortized
over the estimated production from the new headings. There are no comparisons
with 1996.
Other operating expenses increased or decreased modestly and were not material.
BALANCE SHEET
Inventory continues to show a decrease of $96,509 (08%) from December 31, 1996;
however, it has increased significantly from the decrease of 17% as shown at the
end of the first quarter 1997.
The increase in accounts receivable is temporary due to a large purchase of
quartz and gold slabs to an established customer at the end of June 1997.
Payment was received in early July.
Total current liabilities decreased $255,257 (30%) since December 31, 1996, as
accounts payable continued to be reduced and two lines of credit were paid in
full during the second quarter.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity (i.e., its ability to generate adequate amounts of cash
to meet its needs for cash) is substantially dependent upon the results of its
operations. While the Company does maintain a gold inventory which it can
liquidate from time to time to satisfy its working capital needs, there can be
no assurance that such inventory will be adequate to sustain operations if the
Company's gold mining activities are not successful. 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
mining 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 meets its cash needs. Although the Company has historically located
at least $1.2 million of gold in each of the last five years, there can be no
assurance that the Company's efforts in any particular period will provide
sufficient funding for the Company to continue operations. The Company has a
fully extended line of credit with a bank.
If the Company's cash resources are inadequate and its gold inventory is
depleted, the Company may seek debt of equity financing on the most reasonable
terms available.
SUBSEQUENT EVENT
During July 1997, a new underground location known as the 26105-K accounted for
approximately 1,000 ounces of high grade gold. It appears that miners worked
through the gold zone to recover the ounces. Noticeable gold remains both above
and below the excavation. Miners are preparing to extend the work in this newly
exposed productive area of the vein.
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)
By:/s/Michael M. Miller
Michael M. Miller
President and Director
Dated: August 11, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1997
<CASH> 54,539
<SECURITIES> 0
<RECEIVABLES> 69,923
<ALLOWANCES> 0
<INVENTORY> 1,041,532
<CURRENT-ASSETS> 22,587
<PP&E> 2,627,794
<DEPRECIATION> 716,305
<TOTAL-ASSETS> 3,125,687
<CURRENT-LIABILITIES> 593,270
<BONDS> 9,629
0
0
<COMMON> 353,406
<OTHER-SE> 2,169,382
<TOTAL-LIABILITY-AND-EQUITY> 3,125,687
<SALES> 1,015,187
<TOTAL-REVENUES> 1,015,187
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 635,387
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,368
<INCOME-PRETAX> 337,603
<INCOME-TAX> 0
<INCOME-CONTINUING> 337,603
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 337,603
<EPS-PRIMARY> 0.10
<EPS-DILUTED> 0
</TABLE>
