FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 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
incorporation 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 March 31, 1997, 3,504,065 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
March 31, 1997 and December 31, 1996
ASSETS
March 31, 1997 December 31, 1996
-------------- -----------------
Current Assets:
Cash $ 19,016 $ 31,640
Accounts receivable 52,981 20,571
Inventory 941,209 1,138,041
Other current assets 26,221 25,056
------------ -----------
Total current assets 1,039,427 1,215,308
------------ -----------
Mining Property:
Real estate and property rights,
net of depletion of $524,145 182,091 182,091
Mineral property 415,263 415,263
Development costs 898,984 898,985
----------- -----------
1,496,338 1,496,339
----------- -----------
Fixed Assets at Cost:
Equipment 822,621 822,620
Building & Mill 144,717 144,462
Vehicles 147,099 176,086
----------- -----------
1,114,437 1,143,168
Less: Accumulated Depreciation (693,985) (665,583)
----------- -----------
Net Fixed Assets 420,452 477,585
----------- -----------
Other assets, net accumulation
$42,445 & $41,007 in 1997 &
1996, respectively 27,055 28,493
----------- -----------
TOTAL ASSETS $ 2,983,272 $ 3,217,725
=========== ===========
See Accompanying Notes
2
<PAGE>
PART I: FINANCIAL INFORMATION
Original Sixteen to One Mine, Inc.
Condensed Balance Sheet
LIABILITIES & STOCKHOLDERS' EQUITY
March 31, 1997 December 31, 1996
-------------- -----------------
Current Liabilities:
Accounts payable and
accrued compensation $ 135,911 $ 151,734
Related party advances 33,573 54,000
Notes payable due within
one year 267,826 267,793
Accrued expenses 14,021 -
Deferred income taxes 375,000 375,000
----------- ----------
Total Current
Liabilities 826,131 848,527
----------- ----------
Notes payable after one year 10,954 11,924
----------- ----------
Total Liabilities 837,085 860,451
Stockholders' Equity:
Capital Stock, par value $.10
10,000 shares authorized;
3,504,065 shares issued and
outstanding as of 03/31/97
and 12/31/96 350,407 350,407
Additional paid-in-capital 1,321,204 1,321,204
Notes receivable from employees (26,000) (26,000)
Retained earnings 500,576 711,663
------------ -----------
Total Stockholders' Equity 2,146,187 2,357,274
----------- -----------
Total Liabilities and
Stockholders' Equity $ 2,983,272 $ 3,217,725
=========== ===========
See Accompanying Notes
3
<PAGE>
PART I: FINANCIAL INFORMATION
Original Sixteen to One Mine, Inc.
Statement of Income and Retained Earnings
For the Three Months Ended March 31, 1997 and 1996
Three Months Ended March 31,
1997 1996
Revenues:
Gold & jewelry sales $ 445,230 $ 665,597
Operating expenses:
Salaries and wages 417,219 319,690
Depreciation & amortization 35,637 29,215
Contract labor 8,243 24,062
Telephone & utilities 29,015 31,367
Taxes - property & payroll 12,201 11,115
Insurance 12,866 17,922
Supplies 63,535 88,262
Drayage 17,429 14,822
Promotion 1,783 11,197
Office expenses 8,261 11,557
Legal and accounting 31,426 38,680
Other expenses 4,028 13,422
----------- -----------
Total operating expenses 641,663 611,311
----------- -----------
Income (loss)
from operations (196,433) 54,286
Other Income & (Expense):
Other Income 7,704 7,034
Other Expenses (21,385) (8,077)
----------- -----------
Total Other Income
(Expense) (13,654) (1,043)
----------- -----------
Income (loss) before taxes (210,087) 53,243
Provision for income taxes (1,000) (1,000)
----------- -----------
Net income (loss) (211,087) $ 52,243
===========
Retained earnings (12/31/96) 711,663
-----------
Retained earnings (03/31/97) $ 500,576
===========
Earnings (loss) per share
of common stock $ (0.06) $ (0.01)
----------- ------------
See Accompanying Notes
4
<PAGE>
PART I: FINANCIAL INFORMATION
Original Sixteen to One Mine, Inc.
Statement of Cash Flows
Three Months Ended March 31,
1997 1996
--------- ----------
Cash Flows From Operating
Activities:
Net Loss $ (211,087) $ 52,243
Adjustments to reconcile net
loss to net cash Provided by
operating activities:
Depreciation & amortization 29,840 29,215
(Increase) decrease in
accounts receivable (32,410) 2,144
Decrease in inventory 196,832 38,818
Increase in other current assets (1,165) (5,911)
Increase (decrease) in accounts
payable & accrued compensation (32,658) 80,485
Increase in accrued expenses 14,021 16,043
Decrease in corporate income
taxes payable - (83,000)
----------- -----------
Net cash provided (used) by
operating activities (36,627) 130,037
----------- -----------
Cash Flows From Inventing Activities:
Bond Deposit - (5,000)
Proceeds from sales of fixed assets 28,987 -
Purchase of fixed assets (255) (108,389)
Payments Made for Development - (86,533)
----------- -----------
Net cash provided (used) by
investing activities 28,732 (199,922)
----------- -----------
Cash Flows From Financing Activities:
Payments Made On Notes Payable - (850)
Principle payments on related
party advances (20,427) -
Proceeds from additional borrowings 15,698 -
Repurchase & Retirement of Common
Stock - (15,742)
----------- -----------
5
<PAGE>
PART I: FINANCIAL INFORMATION
Original Sixteen to One Mine, Inc.
Statement of Cash Flows
(continued)
Three Months Ended March 31,
1997 1996
--------- ----------
Net cash used by financing
activities (4,729) (16,592)
----------- -----------
Decrease in Cash (12,624) (86,477)
Cash, beginning of year 31,640 180,618
----------- -----------
Cash, end of period $ 19,016 $ 94,141
=========== ===========
Supplemental schedule of
other cash flows:
Cash paid during the period
for:
Interest expense $ 7,056 $ 7,187
============ ===========
Income taxes $ - $ 84,000
============ ===========
See Accompanying Notes
6
<PAGE>
PART I: FINANCIAL INFORMATION
Original Sixteen to One Mine, Inc.
Supplemental Schedule of Operations by Division
For the Three Months Ended March 31, 1997
Mine Gold Sales Combined
Division Division Divisions
-------- -------- ---------
Revenues:
Gold & Silver Production $ 310,618 $ -- $ 310,618
Finished jewelry sales -- 23,363 23,363
Fine gold specimen sales 34,628 34,628
Gold slab & cabochon sales -- 107,101 107,101
Less: Cost of sales -- (30,480) (30,480)
---------- ---------- ----------
310,618 134,612 445,230
Operating expenses:
Salaries & wages 391,227 25,992 417,219
Depreciation & amortization 35,637 -- 35,637
Contract labor 6,669 1,574 8,243
Telephone & utilities 28,050 965 29,015
Taxes: Property & payroll 12,200 -- 12,200
Insurance 12,866 -- 12,866
Supplies 60,901 2,620 63,521
Drayage 16,844 -- 16,844
Promotion 1,377 405 1,782
Office expenses 7,614 662 8,276
Legal & accounting 31,426 -- 31,426
Other expenses 4,048 586 4,634
Operations allocation (3,000) 3,000 --
---------- ---------- ----------
Total Operating Expenses 605,859 35,804 641,663
---------- ---------- ----------
Income (loss) from
operations (295,241) 98,808 (196,433)
Other Income & (Expense):
Other income 7,494 210 7,704
Other expenses (19,831) (1,527) (21,358)
---------- ---------- ----------
Total Other Income (Expense) (12,337) (1,317) (13,654)
---------- ---------- ----------
Net Income (Loss)
Before Taxes (307,578) 97,491 (210,087)
========== ========= ==========
See Accompanying Notes
7
<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 from the mining division 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 date of sale. Revenue does not include unprocessed high-
grade ore mined during the reporting period. Gold and silver
held in inventory is recorded at the spot price per ounce on the
balance sheet date.
Revenue from the gold sales division consists of wholesale and
retail sales of jewelry and unique high-grade gold and quartz
slab and specimens. It is recorded at the wholesale or retail
price on the date of sale. Jewelry held in inventory is recorded
at manufactured cost, and gold slab and specimens 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, except for jewelry, which is recorded at manufactured
cost.
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
are being capitalized.
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 ore revenues and accelerated depreciation and
depletion methods for income tax purposes. No provision for
income tax expense or deferred taxes has been made in the current
year because of the uncertainty of revenues for the remainder of
the year.
Net Income or Loss Per Share
Net income 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 fees.
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 $345,800
2007 27,200
--------
$373,000
========
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 $14,885,
bearing interest at 9.95% and secured by a Chevrolet Astro Van.
The note is payable in 60 monthly installments of $442, including
interest.
At March 31, 1997, the Company has revolving lines of credit.
The credit lines expire June 30, 1997. The borrowing under these
lines of credit at March 31, 1997, are $68,672 and $195,224.
<PAGE>
Original Sixteen to One Mine, Inc.
PART II: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
COMPARISON OF FIRST QUARTER 1997 WITH 1996
STATEMENT OF INCOME AND RETAINED EARNINGS
The Company's revenues decreased $220,367 (33%) the first quarter
of 1997 compared with the first quarter 1996. The primary reason
for the decline in revenue for 1997 was the reduction of gold
mined during the quarter. The spot price of gold also declined
from $395.55 on March 31, 1996 to $350.50 on March 31, 1997,
which decreased revenue values.
Gold production is measured in fine troy ounces. During the
first quarter of 1996, production from the mine totaled 1,413.70
troy ounces as follows:
January 849.33 ounces
February 483.37 ounces
March 81.00 ounces
In 1997, the Company identified new mine production into three
new categories: mine, mill and trommel. During the first quarter
of 1997, production from the mine totaled 878.75 troy ounces as
follows:
Mine Mill Trommel Total
January 46.44 93.12 0.00 139.56
February 40.41 205.73 149.13 395.27
March 161.39 133.93 48.60 343.92
The mill was inactive during the first quarter of 1996, so there
are no comparisons with 1997. The trommel (a perforated cylinder
used to screen ore) began operating in February, 1997, so there
are no comparisons with 1996.
The Company's compensation expenses in 1997 increased by $97,529
(31%) from the $319,690 incurred in 1996, primarily because the
Company's payroll expanded from 37 full time employees to 46 full
time employees through the course of the 1996 year.
Promotion expenses decreased $9,414 (84%) due to the need to
conserve working capital. Contract labor decreased particularly
within the gold sales division because jewelry was manufactured
in-house by employees. Other operating expenses increased or
decreased modestly and were not material.
BALANCE SHEET
Inventory decreased $196,832 (17%) from December 31, 1996 to
March 31, 1997. Gold specimens were crushed and sold as bullion.
The spot price of gold declined from $370 at the end of 1996 to
$350.50 on March 31, 1997, thereby decreasing the value of the
remaining inventory.
Total current liabilities decreased $23,366 (03%) since December
31, 1996, as accounts payable were reduced during the first
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 meet 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.
SIGNATURES
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: May 14, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1997
<CASH> 19,016
<SECURITIES> 0
<RECEIVABLES> 52,981
<ALLOWANCES> 0
<INVENTORY> 941,209
<CURRENT-ASSETS> 26,221
<PP&E> 2,610,775
<DEPRECIATION> 693,985
<TOTAL-ASSETS> 2,983,272
<CURRENT-LIABILITIES> 826,131
<BONDS> 10,954
0
0
<COMMON> 350,407
<OTHER-SE> 1,795,780
<TOTAL-LIABILITY-AND-EQUITY> 2,983,272
<SALES> 445,230
<TOTAL-REVENUES> 445,230
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 641,663
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,056
<INCOME-PRETAX> (210,087)
<INCOME-TAX> 1,000
<INCOME-CONTINUING> (211,087)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (211,087)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> 0
</TABLE>
