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, 2000 Commission File No. 001-10156
ORIGINAL SIXTEEN TO ONE MINE, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 94-0735390
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporated or organization
Post Office Box 909, Alleghany, CA 95910
(Address of principal executive offices)
(530) 287-3223
(Registrant's telephone number)
(including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the past 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirement for the past 90 days.
Yes: X No:
As of June 30, 2000, 4,154,340 shares of Common Stock, par value $.10 per
share, were issued and outstanding.
<PAGE>
PART I
Item 1. FINANCIAL INFORMATION
Original Sixteen to One Mine, Inc.
Balance Sheet
June 30, 2000 and December 31, 1999
June 30, 2000 December 31, 1999
------------- -----------------
ASSETS
Current Assets
Cash $ 34,726 $ 680
Accounts receivable 59,974 30,130
Inventory 424,016 308,420
Other current assets 8,441 11,181
---------- ----------
Total current assets 527,157 350,411
---------- ----------
Mining Property
Real estate and property rights
net of depletion of $524,145 182,091 182,091
Mineral property 472,403 473,323
Development costs, net of amortization
of $98,841 at June 30, 2000 and
December 31, 2000 799,144 799,144
---------- ----------
1,453,638 1,454,558
---------- ----------
Fixed Assets at Cost
Equipment 873,450 810,806
Buildings 170,721 170,721
Vehicles 184,805 184,805
---------- ----------
1,228,976 1,166,332
Less accumulated depreciation (1,010,816) (973,282)
---------- ----------
Net fixed assets 218,160 193,050
---------- ----------
Other Assets
net of amortization of $55,920
and $54,955 in 2000 and 1999,
respectively 14,900 15,865
---------- ----------
Total Assets $2,213,855 $2,013,884
========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable & accrued compensation $ 305,804 $ 184,060
Due to related party 133,260 54,458
Notes payable 205,804 176,801
---------- ----------
Total Current Liabilities 644,868 415,319
---------- ----------
Total Liabilities 644,868 415,319
---------- ----------
Stockholders' Equity
Capital stock, par value $.10 -
10,000,000 shares authorized:
4,154,340 shares issued and
outstanding as of June 30, 2000
and December 31, 1999, respectively 415,434 415,434
Additional paid-in capital 1,758,978 1,758,978
Retained earnings (605,425) (575,847)
---------- ----------
Total Stockholders' Equity 1,568,987 1,598,565
---------- ----------
Total Liabilities and
Stockholders' Equity $2,213,855 $2,013,884
========== ==========
See Accompanying Notes
<PAGE>
PART I: FINANCIAL INFORMATION
Original Sixteen to One Mine, Inc.
Statement of Operations
Three Months Ending Six Months Ending
6/30/00 6/30/99 6/30/00 6/30/99
-------- -------- ------- -------
Revenue:
Gold & jewelry sales $ 138,949 $ 107,701 $ 443,112 $ 527,910
Timber sales 67,569 0 75,706 0
---------- ---------- ---------- ----------
Total revenue $ 206,518 $ 107,701 $ 518,818 $ 527,910
---------- ---------- ---------- ----------
Expenses:
Salaries and wages 175,661 27,741 316,150 286,259
Depreciation & amortization 18,742 29,896 38,500 58,344
Contract labor - 55,215 - 90,547
Telephone and utilities 22,498 15,448 38,072 42,378
Property taxes & permit
fees 14,014 15,455 28,263 27,962
Insurance 7,394 11,034 18,285 21,933
Supplies 20,645 6,771 42,593 33,925
Drayage 12,515 5,353 17,518 11,705
Office expenses 11,462 10,896 18,960 18,504
Legal and accounting 4,318 24,670 31,438 38,319
Other expenses (24,366) 1,726 14,450 11,577
-------- ------- -------- --------
Total Expenses 262,883 204,205 564,229 641,453
-------- ------- -------- --------
Loss from Operations (56,365) (96,504) (45,411) (113,543)
Other Income & (Expense): 21,370 (23,633) 16,633 (38,354)
-------- -------- -------- --------
Loss Before Taxes (34,995) (120,137) (28,778) (151,897)
Provision for Income Tax 800 800 800 800
-------- ------- ------- --------
Net Loss $ (35,795) $(120,937) $ (29,578) $(152,697)
========== ========= ========= =========
Basic and diluted
loss per share $(0.01) $(0.03) $(0.01) $(0.04)
----- ----- ----- -----
June 30, 2000 June 30, 1999
------------- -------------
Weighted average
shares outstanding 4,154,340 3,572,765
See Accompanying Notes
<PAGE>
Original Sixteen To One Mine, Inc.
Statement of Cash Flows
Six Months Ended June 30, 2000 and June 30, 1999
Six Months Ended Six Months Ended
6/30/00 6/30/99
---------------- ----------------
Cash Flows From Operating Activities:
Net loss $ (29,578) $ (152,699)
Adjustments to reconcile net profit
(loss) to net cash provided by
operating activities:
Depreciation and amortization 38,500 58,343
(Increase)Decrease in
accounts receivable (29,845) 3,622
(Increase)Decrease in inventory (115,596) (8,452)
Decrease in other current assets 2,740 930
Increase in accounts payable
and accrued compensation 293,254 57,922
------------ ----------
Net cash provided (used) by
operating activities 159,475 (40,334)
------------ -----------
Cash Flows From Investing Activities:
Purchase of fixed assets (62,644) -
Proceeds from sale of land 920 -
------------- -----------
Net cash used in investing
activities (61,724) -
------------ -----------
Cash Flows From Financing Activities
Payments made on notes payable (70,997) (9,518)
Advances from related parties 7,292 -
Proceeds from additional borrowings - -
Proceeds from sale of common stock - 25,000
------------ ------------
Net cash (used) provided by
financing activities (63,705) 15,482
------------ ------------
Increase (Decrease) in Cash 34,046 (24,852)
Cash, beginning of year 680 25,338
------------ ------------
Cash, end of period $ 34,726 $ 486
============ ============
Supplemental schedule of other cash flows:
Cash paid during the period for:
Interest expense $ 13,287 $ 14,285
============ ============
Income taxes $ 800 $ -
============ ============
See Accompanying Notes
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS
1. 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 June 30, 2000 and December
31, 1999, the results of operations and cash flows for the six month periods
ended June 30, 2000 and 1999.
2. Certain information and footnote disclosures normally presented in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. These interim financial statements should be
read in conjunction with the financial statements and notes thereto included
in the Company's 1999 Form 10-KSB. The results of operations for the six
month period ended June 30, 2000 may not necessarily be indicative of the
operating results for the full year.
3. In preparing financial statements, management makes estimates and
assumptions that affect the reported amounts of assets and liabilities as of
the date of the balance sheet and revenues and expenses for the period.
Actual results could differ significantly from those estimates. Material
estimates that are particularly susceptible to significant changes in the near
term related to the ability of the Company to recover capitalized development
costs. In the event the capitalized 2283 winze area is abandoned, recovering
the capitalized development cost may not be possible.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
BALANCE SHEET COMPARISONS
The Company's increase in total assets of $200,011 or 9.9% was attributed
primarily to gold mined during the first quarter ending March 31, 2000 and
retained in inventory. Additionally, the increase of $62,644 in equipment
directly reflects the purchase of a compressor and related equipment.
Cash flow difficulties at the end of the period resulted in increased accounts
payable. The wage liability to the Company's president increase by
approximately $11,500 during the first six months of 2000. Additionally, a
shareholder made a short term advance and pre-purchased slab material to
facilitate cash flow. The Company's total liabilities increased $229,549
(55.3%) for the period.
Subsequent to June 30, 2000, the Company received payments from timber
harvesting. The Company used these funds to reduce accounts and notes payable
by approximately $173,000 at August 16, 2000.
STATEMENT OF OPERATIONS
It is difficult to evaluate line-by-line changes in the financial statements
due to the significant changes in operations during the comparative reporting
periods. On February 12, 1999, the Company significantly altered its mining
operation. Forty employees were terminated. Fourteen returned as independent
contractors. Compensation was based upon a percentage of the gold mined and
sold. Effective October 2, 1999, a crew of 13 was re-hired and on the
Company's payroll. Eighteen employees are on the Company's payroll at June
30, 2000.
The Company's net loss for the three and six month periods ended June 30, 2000
totaled $35,796 and $29,578, decrease in net loss of $85,141 and $123,119,
respectively, for the same period in 1999. The improved operating results are
primarily attributable to timber sales and the reduction of labor costs
(salaries, wages and contract labor).
Timber revenue for the three and six month periods ended June 30, 2000 totaled
$67,568 and $75,706, respectively. The Company uses timber revenues to
supplement mining revenues to sustain operations in periods of lower gold
production. The timber industry is highly regulated and restrictive; however,
the Company has an approved five year timber harvest plan with the State of
California Department of Forestry for both its Sierra and Trinity county
properties. The harvesting operation was not in place during the six month
period ended June 30, 1999.
Due to the significant changes in operations and reemployment of a mining
crew, salaries and wages combined with contract labor expense for the three-
month period ending June 30, 2000 increased $92,705 (111.8%) compared to the
same three-month period in 1999. For the six-month period ending June 30,
2000, salaries and wages combined with contract labor decreased $60,656
(16.1%). This decrease resulted from the use of an employed workforce in a
period of lower gold production compared to the use of contract labor in a
period of higher gold production.
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 mined 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 or
may terminate its operation.
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
- The failure of equipment of processes to operate in accordance
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.
PART II
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of the shareholders was held on June 17, 2000. The
following directors were re-elected:
Name Yes Votes No Votes Total Votes
Michael M. Miller 2,680,229 100 2,680,329
Charles I. Brown 2,680,229 100 2,680,329
Sandor Holly 2,680,229 100 2,680,329
Scott K. Robertson 2,678,729 1,600 2,680,329
Other matters to come before a vote are as follows:
Item 2 as stated on the Proxy: To approve the appointment of Perry-Smith LLP,
Certified Public Accountants, as independent auditor of the Corporation:
Yes Votes: 2,680,229 No Votes: 100 Total Votes: 2,680,329
Item 3 as stated on the Proxy: In his discretion, the proxy is authorized to
vote upon such other business as may properly come before the Meeting:
Yes Votes: 2,680,229 No Votes: 100 Total Votes: 2,680,329
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ORIGINAL SIXTEEN TO ONE MINE, INC.
(Registrant)
/s/Michael M. Miller
President and Director
Dated: August 21, 2000
