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 5: 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 cost less depreciation.
Balance Sheet
Balance Sheet Comparisons
(a) Comparisons of 2006 with 2007.
Assets did not change significantly from December 31, 2006 to December 31,
2007.
Liabilities increased by $237,333 (19%) from December 31, 2006 to December 31,
2007 as the Company relied increasingly on creditors to finance the operation.
Statement of Operations
(b) Comparison of 2007 with 2006
For the twelve months ended December 31, 2007 revenues decreased by $14,450
(17.7%) compared to the same period in 2006 due to minimal gold production in
2007.
Expenses:
Contract labor increased by $71,650 (16%) for the year ended December 31, 2007
compared to 2006 due to a larger crew in 2007.
Utilities increased by $23,659 (51.5%) due to more pumping in 2007 than in 2006.
Taxes increased by $6,797 (20.7%) due to more property taxes and payroll
taxes in 2007 compared to 2006.
Insurance decreased by $606 (23%) due to the removal of vehicles from the
Company's policy in 2007.
Small equipment and repairs increased by $5,858 (29%) due to more equipment
repairs in 2007.
Drayage decreased by $26,196 (46%) as less hauling was done in 2007 than in
2006.
Legal and accounting increased by $3,455 (41.5%) due to a bill for legal
services.
Compliance/Safety decreased by $27,205 (84.9%) due to the purchase of safety
equipment in 2006 that does not need to be replaced for 10 years as well as
penalties booked in 2006.
Depreciation and amortization decreased by $8,073 (27.9%) due to the full
depreciation of aging equipment.
Overall operating expenses increased by $51,956 (6.2%) in 2007 compared to 2006.
Loss from operations in 2007 of $227,097 was $192,406 (554%) more than the loss
of $34,691 in 2006 due to a lack of gold production.
Interest expense increased by $24,867 (30%) due to increased dependence on
creditors in 2007.
Other income increased by $41,828 (567%) primarily due to the sale of a piece
of equipment in 2007.
The net loss after taxes in 2007 was $290,959 compared to a loss of $111,490 in
2006. The increased loss was due primarily to a lack of gold production in
2007.
The basic and diluted loss per share is .02 per share in 2007 compared to .001
per share in 2006.
(c) Comparison of 2006 with 2005
Balance Sheet Comparisons
Inventory increased by $122,360 (19%) due to an increase in the price of gold
during 2006.
Notes due to related parties increased by $254,279 as the Company relied on
loans from related parties to cover operating expenses in 2006.
Long term notes decreased by $26,425 (24%) as the Company made regular payments
on existing loans.
In order to round the par value down to three decimal places the common stock
account was decreased by $3,492 at December 31, 2006.
Statement of Operations
(d) Comparison of 2005 with 2006
Revenues increased by $279,982 (54%)as a result of a small pocket of gold that
was mined in October as well as an increase in the value of gold.
Salaries and wages decreased $98,249 (58%) due to transference of most of the
workforce to sub-contractor Morning Glory Gold Mine's payroll.
Telephone & utilities decreased by $36,791 (44%) as a result of decreased
pumping in 2006.
Supplies expense increased by $18,514 (83%) as a result of restocking.
Small equipment & repairs expense decreased by $4,157 (17%).
Drayage expense increased by $33,954 (148%) due to higher gas and diesel
prices.
Corporate expense increased by $4,011 (36%) due to a change in a bookkeeping
category from the previous year.
Legal and Accounting decreased by $5,368 (39%) due to minimal legal activity.
Compliance and safety increased by $9,389 (41%) mainly due to the cost of a
monthly contract with an outside Mine Rescue Team as the result of the
disbanding of the Lassen County Mine Rescue Team which previously provided
availability free of charge.
The company showed a net loss of $111,490 for the twelve-month period ended
December 31, 2006 compared to a loss of $407,764 for the same period ending
December 31, 2005. The loss decrease of $296,274 is due to increased revenue
as a result of increased production in 2006 compared to 2005.
The basic and diluted loss per share for 2006 totaled .001 compared with a
loss of .03 per share in 2005.
SUBSEQUENT EVENTS
On January 7, 2008 Superior Court visiting Judge R. Michael Smith issued an
order for plaintiff Original Sixteen to One Mine, Inc. to reimburse defendants
CDAA et all $88,376 for attorney's fees. See Item 3 "legal proceedings".