UNITED STATES ANTIMONY CORP
10-Ks and 10-Qs
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UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
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☑
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the fiscal year ended: December 31, 2020
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the
transition period from
to
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Commission
file number:
001-08675
UNITED STATES ANTIMONY CORPORATION
(Exact
name of registrant as specified in its charter)
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Montana
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81-0305822
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(State
or other jurisdiction of incorporation or
organization)
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(I.R.S.
Employer Identification No.)
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P.O. Box 643, Thompson Falls, Montana
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59873
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code:
(406) 827-3523
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Securities
registered under Section 12(b) of the Exchange Act:
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Title
of each class
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Trading
Symbol(s)
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Name of
each exchange on which registered
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None
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N/A
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N/A
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Securities
registered under Section 12(g) of the Exchange Act:
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Title
of each class
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Trading
Symbol(s)
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Name of
each exchange on which registered
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Common stock, $0.01 par value
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UAMY
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NYSE American
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Indicate
by checkmark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes ☐ No
☑
Indicate
by checkmark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No
☑
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 preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes ☑ No ☐
Indicate
by check mark whether the registrant has submitted electronically
and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). Yes ☑ No
☐
Indicate
by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ☐
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):
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Large
accelerated filer
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☐
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Accelerated
filer
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Non-accelerated
filer
Emerging
Growth Company
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☐
☐
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Smaller
reporting company
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☑
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Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Act). Yes ☐ No ☑
The
aggregate market value of the registrant’s common stock held
by non-affiliates was $31,287,606, based on the reported last sale
price of common stock on June 30, 2020, which was the last business
day of the registrant’s most recently completed second fiscal
quarter. For purposes of this computation, all executive officers
and directors were deemed affiliates.
The
number of shares outstanding of the registrant's common stock as of
March 26, 2021: 102,800,100 shares.
UNITED STATES ANTIMONY CORPORATION
2020 ANNUAL REPORT
TABLE OF CONTENTS
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PART I
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ITEM 1.
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DESCRIPTION OF BUSINESS
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1
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ITEM 1A.
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RISK FACTORS
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5
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS
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6
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ITEM 2.
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DESCRIPTION OF PROPERTIES
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6
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ITEM 3.
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LEGAL PROCEEDINGS
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12
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ITEM 4.
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MINE SAFETY DISCLOSURES
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12
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PART II
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ITEM 5.
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MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
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12
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ITEM 6.
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SELECTED FINANCIAL DATA
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13
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ITEM 7.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS
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13
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ITEM 7A.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
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20
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ITEM 7B.
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CRITICAL ACCOUNTING ESTIMATES
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20
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ITEM 8.
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FINANCIAL STATEMENTS
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20
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ITEM 9.
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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
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20
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ITEM 9A.
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CONTROLS AND PROCEDURES
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21
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ITEM 9B.
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OTHER INFORMATION
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PART III
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ITEM 10.
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DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS AND
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
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22
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ITEM 11.
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EXECUTIVE COMPENSATION
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34
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ITEM 12.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
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25
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ITEM 13.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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26
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ITEM 14.
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PRINCIPAL ACCOUNTANT FEES AND SERVICE
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26
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PART IV
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ITEM 15.
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EXHIBITS AND REPORTS ON FORM 8-K
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27
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SIGNATURES
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32
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CERTIFICATIONS
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FINANCIAL
STATEMENTS
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F-1-F-24
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i
PART I
General
Item 1. Description of Business
General
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Explanatory Note
: As used in this
report, the terms "we," "us" and "our" are used to refer to United
States Antimony Corporation and, as the context requires, its
management.
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Some of
the information in this Form 10-K contains forward-looking
statements that involve substantial risks and uncertainties. You
can identify these statements by forward-looking words as "may,"
"will," "expect," "anticipate," "believe," "estimate" and
"continue," or similar words. You should read statements that
contain these words carefully because they:
☐
discuss our future
expectations;
☐
contain projections
of our future results of operations or of our financial condition;
and
☐
state other
"forward-looking" information.
History
United
States Antimony Corporation, or USAC, was incorporated in Montana
in January 1970 to mine and produce antimony products. In December
1983, we suspended antimony mining operations but continued to
produce antimony products from domestic and foreign sources. In
April 1998, we formed United States Antimony SA de CV or USAMSA, to
mine and smelt antimony in Mexico. Bear River Zeolite Company, or
BRZ, was incorporated in 2000, and it is mining and producing
zeolite in southeastern Idaho. On August 19, 2005, USAC formed
Antimonio de Mexico, S. A. de C. V. to explore and develop antimony
and silver deposits in Mexico. Our principal business is the
production and sale of antimony, silver, gold, and zeolite
products. On May 16, 2012, we started trading on the NYSE MKT (now
NYSE AMERICAN) under the symbol UAMY.
Antimony Division
Our
antimony smelter and precious metals plant is located in the Burns
Mining District of Sanders County, Montana, approximately 15 miles
west of Thompson Falls, MT. We hold 2 patented mill sites where the
plant is located. We have no "proven reserves" or "probable
reserves" of antimony, as these terms are defined by the Securities
and Exchange Commission. Environmental restrictions preclude mining
at this site.
Mining
was suspended in December 1983, because antimony could be purchased
more economically from foreign sources.
For
2020, and since 1983, we relied on foreign sources for raw
materials, and there are risks of interruption in procurement from
these sources and/or volatile changes in world market prices for
these materials that are not controllable by us. We have sources of
antimony in Mexico but we are still depending on foreign companies
for raw material in the future. We expect to receive raw materials
from our owned and leased properties for 2021 and later years. We
continue working with suppliers in North America, Central America,
and South America.
We
currently own 100% of the common stock, equipment, and the leases
on real property of United States Antimony, Mexico S.A. de C.V. or
“USAMSA”, which was formed in April 1998. We currently
own 100% of the stock in Antimony de Mexico SA de CV (AM) which
owns the San Miguel concession of the Los Juarez property. USAMSA
has three divisions, (1) the Madero smelter in Coahuila, (2) the
Puerto Blanco flotation mill and oxide circuit in Guanajuato and
(3) the Los Juarez mineral deposit.
1
In our
existing operations in Montana, we produce antimony oxide, antimony
metal, and precious metals. Antimony oxide is a fine, white powder
that is used primarily in conjunction with a halogen to form a
synergistic flame retardant system for plastics, rubber,
fiberglass, textile goods, paints, coatings and paper. Antimony
oxide is also used as a color fastener in paint, as a catalyst for
production of polyester resins for fibers and film, as a catalyst
for production of polyethylene pthalate in plastic bottles, as a
phosphorescent agent in fluorescent light bulbs, and as an
opacifier for porcelains. We also sell antimony metal for use in
bearings, storage batteries and ordnance.
We
estimate (but have not independently confirmed) that our present
share of the domestic market and international market for antimony
oxide products is approximately 4% and less than 1%, respectively.
We are the only significant U.S. producer of antimony products,
while China supplies 92% of the world antimony demand. We believe
we are competitive both domestically and world-wide due to the
following:
●
We have a
reputation for quality products delivered on a timely
basis.
●
We have the only
two operating antimony smelters in North and Central
America.
●
We are the only
domestic producer of antimony products.
●
We can ship on
short notice to domestic customers.
●
We are vertically
integrated, with raw materials from our own mines, mills, and
smelter in Mexico, along with the raw materials from exclusive
supply agreements we have with numerous ore and raw material
suppliers.
●
As a vertically
integrated company, we will have more control over our raw material
costs.
Following
is a five year schedule of our antimony sales:
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Schedule of Antimony Sales
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Lbs Metal
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Average
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Year
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Contained
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$
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Price/Lb
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2020
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815,310
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$
2,942,628
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$
3.61
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2019
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1,566,585
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$
5,450,649
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$
3.48
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2018
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1,486,120
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$
6,113,014
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$
4.11
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2017
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1,891,439
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$
7,588,470
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$
4.01
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2016
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2,936,880
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$
8,744,170
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$
2.98
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Concentration of
Sales
:
During
the years ended December 31, 2020 and 2019, the following sales
were made to our three largest customers:
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For the Year Ended
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Sales to Three
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December 31,
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December 31,
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Largest Customers
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2020
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2019
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Mexichem
Specialty Compounds Inc.
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$
633,846
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$
1,823,194
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GE
Chaplin, Inc.
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589,384
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-
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Nyacol
Nanotechnologies
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417,501
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1,099,504
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Kohler
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345,899
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1,132,674
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$
1,986,630
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$
4,055,372
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% of Total Revenues
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38
%
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49
%
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In July
of 2020, following a major change in management, the Company
temporarily halted its sale of antimony to a few of its customers
in order to minimize its losses during a period for which the
antimony price was below production costs. The company in 2021 has
since resumed sale to most of these customers and is experiencing a
marked increase in the price of antimony.
Marketing:
We
employ full-time marketing personnel and have negotiated various
commission-based sales agreements with other chemical distribution
companies.
2
Antimony Price Fluctuations:
Our operating results have been,
and will continue to be, related to the market prices of antimony
metal, which have fluctuated widely in recent years. The volatility
of prices is illustrated by the following table, which sets forth
the average prices of antimony metal per pound, as reported by
sources deemed reliable by us.
A five
year range of prices for antimony oxide and antimony metal, per
pound, was as follows:
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USAC SALES
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Metal
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Contained
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Year
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Price
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2020
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$
3.61
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2019
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$
3.48
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2018
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$
4.11
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2017
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$
4.01
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2016
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$
2.98
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Antimony
metal prices are determined by a number of variables over which we
have no control. These include the availability and price of
imported metals, the quantity of new metal supply, and industrial
demand. If metal prices decline and remain depressed, our revenues
and profitability may be adversely affected.
We use
various antimony raw materials to produce our products. We
currently obtain antimony raw material from sources in Canada and
Mexico.
Zeolite Division
We own
100% of Bear River Zeolite Company, (BRZ, an Idaho corporation)
that was incorporated on June 1, 2000. BRZ has a lease with Webster
Farm, L.L.C. that entitles BRZ to surface mine and process zeolite
on property located near Preston, Idaho, in exchange for a royalty
payment. In 2010 the royalty was adjusted to $10 per ton sold. The
current minimum annual royalty is $60,000. In addition, BRZ has
more zeolite on U.S. Bureau of Land Management land. The Company
pays various royalties on the sale of zeolite products. William
Raymond and Nancy Couse are paid a royalty that varies from $1 to
$5 per ton. On a combined basis, royalties vary from 8%-13% of
sales. Shortly after inception BRZ constructed a processing plant
on the property which improved its productive capacity. We
constructed a new warehouse in 2018 to expedite our shipping and
packaging for customers.
We have
no "proven reserves" or "probable reserves" of zeolite, as these
terms are defined by the Securities and Exchange
Commission.
"Zeolite"
refers to a group of industrial minerals that consist of hydrated
aluminosilicates that hold cations such as calcium, sodium,
ammonium, various heavy metals, and potassium in their crystal
lattice. Water is loosely held in cavities in the lattice. BRZ
zeolite is regarded as one of the best zeolites in the world due to
its high CEC of approximately 180-220 meq/100 gr., its hardness and
high clinoptilolite content, its absence of clay minerals, and its
low sodium content. BRZ's zeolite deposits’ characteristics
which make the mineral useful for a variety of purposes
including:
☐
Soil Amendment and Fertilizer
.
Zeolite has been successfully used to fertilize golf courses,
sports fields, parks and common areas, and high value agricultural
crops
☐
Water Filtration
. Zeolite is
used for particulate, heavy metal and ammonium removal in swimming
pools, municipal water systems, fisheries, fish farms, and
aquariums.
☐
Sewage Treatment
. Zeolite is
used in sewage treatment plants to remove nitrogen and as a carrier
for microorganisms.
☐
Nuclear Waste and Other Environmental
Cleanup
. Zeolite has shown a strong ability to selectively
remove strontium, cesium, radium, uranium, and various other
radioactive isotopes from solution. Zeolite can also be used for
the cleanup of soluble metals such as mercury, chromium, copper,
lead, zinc, arsenic, molybdenum, nickel, cobalt, antimony, calcium,
silver and uranium.
3
☐
Odor Control
. A major cause of
odor around cattle, hog, and poultry feed lots is the generation of
the ammonium in urea and manure. The ability of zeolite to absorb
ammonium prevents the formation of ammonia gas, which disperses the
odor.
☐
Gas Separation
. Zeolite has
been used for some time to separate gases, to re-oxygenate
downstream water from sewage plants, smelters, pulp and paper
plants, and fish ponds and tanks, and to remove carbon dioxide,
sulfur dioxide and hydrogen sulfide from methane generators as
organic waste, sanitary landfills, municipal sewage systems, animal
waste treatment facilities, and is excellent in pressure swing
apparatuses.
☐
Animal Nutrition
. According to
other research, feeding up to 2% zeolite increases growth rates,
decreases conversion rates, and prevents scours. BRZ does not make
these claims.
☐
Miscellaneous Uses
. Other uses
include catalysts, petroleum refining, concrete, solar energy and
heat exchange, desiccants, pellet binding, horse and kitty litter,
floor cleaner and carriers for insecticides, pesticides and
herbicides.
Environmental Matters
Our
exploration, development and production programs conducted in the
United States are subject to local, state and federal regulations
regarding environmental protection. Some of our production and
mining activities are conducted on public lands. We believe that
our current discharge of waste materials from our processing
facilities is in material compliance with environmental regulations
and health and safety standards. The U.S. Forest Service
extensively regulates mining operations conducted in National
Forests. Department of Interior regulations cover mining operations
carried out on most other public lands. All operations by us
involving the exploration for or the production of minerals are
subject to existing laws and regulations relating to exploration
procedures, safety precautions, employee health and safety, air
quality standards, pollution of water sources, waste materials,
odor, noise, dust and other environmental protection requirements
adopted by federal, state and local governmental authorities. We
may be required to prepare and present data to these regulatory
authorities pertaining to the effect or impact that any proposed
exploration for, or production of, minerals may have upon the
environment. Any changes to our reclamation and remediation plans,
which may be required due to changes in state or federal
regulations, could have an adverse effect on our operations. The
range of reasonably possible loss in excess of the amounts accrued,
by site, cannot be reasonably estimated at this time.
We
accrue environmental liabilities when the occurrence of such
liabilities is probable and the costs are reasonably estimable. The
initial accruals for all our sites are based on comprehensive
remediation plans approved by the various regulatory agencies in
connection with permitting or bonding requirements. Our accruals
are further based on presently enacted regulatory requirements and
adjusted only when changes in requirements occur or when we revise
our estimate of costs to comply with existing requirements. As
remediation activity has physically commenced, we have been able to
refine and revise our estimates of costs required to fulfill future
environmental tasks based on contemporaneous cost information,
operating experience, and changes in regulatory requirements. In
instances where costs required to complete our remaining
environmental obligations are clearly determined to be in excess of
the existing accrual, we have adjusted the accrual accordingly.
When regulatory agencies require additional tasks to be performed
in connection with our environmental responsibilities, we evaluate
the costs required to perform those tasks and adjust our accrual
accordingly, as the information becomes available. In all cases,
however, our accrual at year-end is based on the best information
available at that time to develop estimates of environmental
liabilities.
Antimony Processing Site
We have
environmental remediation obligations at our antimony processing
site near Thompson Falls, Montana ("the Stibnite Hill Mine Site").
We are under the regulatory jurisdiction of the U.S. Forest Service
and subject to the operating permit requirements of the Montana
Department of Environmental Quality. At December 31, 2020 and 2019,
we have accrued $100,000 to fulfill our environmental
responsibilities.
BRZ
During
2001, we recorded a reclamation accrual for our BRZ subsidiary,
based on an analysis performed by us and reviewed and approved by
regulatory authorities for environmental bonding purposes. The
accrual of $7,500 represents our estimated costs of reclaiming, in
accordance with regulatory requirements, the acreage disturbed by
our zeolite operations, and remains unchanged at December 31,
2020.
4
General
Reclamation
activities at the Thompson Falls Antimony Plant have proceeded
under supervision of the U.S. Forest Service and Montana Department
of Environmental Quality. We have complied with regulators'
requirements and do not expect the imposition of substantial
additional requirements.
We have
posted cash performance bonds with a bank and the U.S. Forest
Service in connection with our reclamation activities.
We
believe we have accrued adequate reserves to fulfill our
environmental remediation responsibilities as of December 31, 2020.
We have made significant reclamation and remediation progress on
all our properties over thirty years and have complied with
regulatory requirements in our environmental remediation
efforts.
Employees
As of December 31, 2020, we employed 14 full-time employees in
Montana. In addition, we employed 15 people at our zeolite plant in
Idaho, and 27 employees at our mining, milling and smelting
operation in Mexico. We no longer employ any contract miners in
Mexico. The number of full-time employees may vary seasonally. None
of our employees are covered by any collective bargaining
agreement.
Other
We hold
no material patents, licenses, franchises or concessions. However,
we consider our antimony processing plants proprietary in
nature.
We are
subject to the requirements of the Federal Mining Safety and Health
Act of 1977, the Occupational Safety and Health Administration's
regulations, requirements of the state of Montana and the state of
Idaho, federal and state health and safety statutes and Sanders
County, Montana and Franklin County, Idaho health
ordinances.
Item 1A Risk Factors
There
may be events in the future that we are not able to accurately
predict or over which we have no control. The risk factors listed
below, as well as any cautionary language in this report, provide
examples of risks, uncertainties and events that may cause our
actual results to differ materially from the expectations we
describe in our forward-looking statements.
If we were liquidated, our common
stockholders could lose part, or all, of their
investment
.
In the
event of our dissolution, the proceeds, if any, realized from the
liquidation of our assets will be distributed to our stockholders
only after the satisfaction of the claims of our creditors and
preferred stockholders. The ability of a purchaser of shares to
recover all, or any portion, of the purchase price for the shares,
in that event, will depend on the amount of funds realized and the
claims to be satisfied by those funds.
We may have un-asserted liabilities for environmental
reclamation.
Our
research, development, manufacturing and production processes
involve the controlled use of hazardous materials, and we are
subject to various environmental and occupational safety laws and
regulations governing the use, manufacture, storage, handling, and
disposal of hazardous materials and some waste products. The risk
of accidental contamination or injury from hazardous materials
cannot be completely eliminated. In the event of an accident, we
could be held liable for any damages that result and any liability
could exceed our financial resources. We also have one ongoing
environmental reclamation and remediation project at our current
production facility in Montana. Adequate financial resources may
not be available to ultimately finish the reclamation activities if
changes in environmental laws and regulations occur, and these
changes could adversely affect our cash flow and profitability. We
do not have environmental liability insurance now, and we do not
expect to be able to obtain insurance at a reasonable cost. If we
incur liability for environmental damages while we are uninsured,
it could have a harmful effect on our financial condition and
results of operations. The range of reasonably possible losses from
our exposure to environmental liabilities in excess of amounts
accrued to date cannot be reasonably estimated at this
time.
5
We have accruals for asset retirement obligations and environmental
obligations.
We have
accruals totaling $291,719 on our balance sheet at December 31,
2020, for our environmental reclamation responsibilities and
estimated asset retirement obligations. If we are not able to
adequately perform these activities on a timely basis, we could be
subject to fines and penalties from regulatory
agencies.
Global health crises may adversely affect our planned
operations.
Our
business could be materially and adversely affected by the risks,
or the public perception of the risks, related to a pandemic or
other health crisis, such as the recent outbreak of novel
coronavirus (COVID-19). A significant outbreak of contagious
diseases in the human population could result in a widespread
health crisis that could adversely affect our planned operations.
Such events could result in the complete or partial closure of our
operations. In addition, it could impact economies and financial
markets, resulting in an economic downturn that could impact our
ability to raise capital.
Item 1B Unresolved Staff Comments
Not
Applicable
Item 2 Description of Properties
ANTIMONY DIVISION
Our
antimony smelter and precious metals plant is located in the Burns
Mining District, Sanders County, Montana, approximately 14 miles
west of Thompson Falls on Montana Highway 471. This highway is
asphalt, and the property is accessed by cars and trucks. The
property includes two five-acre patented mill sites that are owned
in fee-simple by us. The claims are U. S. Antimony Mill Site No. 1
(Mineral Survey 10953) and U. S. Antimony Mill Site No. 2 (Mineral
Survey 10953). We also own five acre Black Jack
millsite.
The U.
S. Antimony Mill Sites were used to run a flotation mill and
processing plant for antimony that we mined on adjacent claims that
have been sold. Presently, we run a smelter that includes furnaces
of a proprietary design to produce antimony metal, antimony oxide,
and various other products. We also run a precious metals plant.
The facility includes 6 buildings and our main office. There are no
plans to resume mining on the claims that have been sold or
abandoned, although the mineral rights have been retained on many
of the patented mining claims. The U. S. Forest Service and Montana
Department of Environmental Quality have told us that the
resumption of mining would require an Environmental Impact
Statement, massive cash bonding, and would be followed by years of
lawsuits. The mill site is serviced with three-phase electricity
from Northwest Power, and water is pumped from a well.
We
claim no reserves on any of these properties.
Antimony
mining and milling operations in the U.S. were curtailed during
1983 due to continued declines in the price of antimony. We are
currently purchasing foreign raw antimony materials and producing
our own raw materials from our properties in Mexico. We continue to
produce antimony metal, oxide, sodium antimonite, and precious
metals from our processing facility near Thompson Falls,
Montana.
ANTIMONY MINERAL PROPERTIES
Los Juarez Group
We hold
properties that are collectively called the “Los
Juarez” property, in Queretaro, as follows:
1.
The
mineral rights for the concessions San Miguel I and II were
purchased by a USAC subsidiary, Antimonio de Mexico, S. A. de C. V
(AM), for $1,480,500, which was paid in full as of December 31,
2018. As of December 31, 2020, we have paid for the property and
have incurred significant permitting costs. The property consists
of 40 hectares (100 acres)
2.
San Juan I and II
are concessions owned by AM and include 466 hectares (1,152
acres)
3.
San Juan III is
held by a lease agreement by AM in which we will pay a 10% royalty,
based on the net smelter returns from another USAC Mexican
subsidiary, named United States Antimony Mexico, S. A. de C. V. or
USAMSA. It consists of 214 hectares (529 acres).
6
The
concessions collectively constitute 720 hectares (1,780 acres). The
claims are accessed by roads that lead to highways.
Part of
the USAC Mexican property, including San Miguel I, II and part of
San Juan III, was originally drilled by the Penoles Company in
1970, when antimony metal prices were high. They did not proceed
with the property, due to the complex metallurgy of antimony.
Subsequently, the Mexican Government did additional work and
reported a deposit of mineralized material of 1,000,000 metric tons
(mt) grading 1.8% antimony and 8.1 ounces of silver per metric ton
(opmt) in Consejo de Recursos Minerales (Publicacion
M-4e). Such a report does not qualify as a comprehensive
evaluation, such as a final or bankable feasibility study that
concludes legal and technical viability, and economic feasibility.
The Securities and Exchange Commission does not recognize this
report, and we claim no reserves.
7
The
mineralized zone is a classic jasperoid-type deposit in the
Cretaceous El Doctor Limestone. The mineralization is confined to
silicified jasperoid pipes intruded upwards into limestone. The
zone strikes north 70 degrees west. The dimension of the deposit is
still conjectural. However, the strike length of the jasperoid is
more than 3,500 meters.
The
mineralization is typically very fine-grained stibnite with silver
and gold. It is primarily sulfide in nature due to its
encapsulation in silica. The mining for many years will be by open
pit methods. Eventually it will be by underground methods. At the
present time, mining has included hauling dump rock and rock from
mine faces.
8
USAMSA Puerto Blanco Flotation Mill, Guanajuato,
Mexico
The
flotation plant has a capacity of 100 metric tons per day. It
includes a 30” x 42” jaw crusher, a 4’x 8’
double-deck screen, a 36” cone crusher, an 8’x
36” Harding type ball mill, and eight No. 24 Denver sub A
type flotation machines, an 8’ disc filter, front end
loaders, tools and other equipment. The flotation circuit is used
for the processing of rock from Los Juarez and other properties. An
oxide circuit was added to the plant in 2013 and 2014 to mill oxide
ores from Los Juarez and other properties. It includes a vertical
shaft impactor, 3 ore bins, 8 conveyors, a 4’ x 6’ high
frequency screen, jig, 8 standard concentrating tables, 5 pumps,
sand screw and two buildings. The capacity of the oxide circuit is
50 tons per day. We have installed a cyanide leach circuit and
settling pond that will be used to recover precious metals from our
Los Juarez mine.
USAMSA Madero Smelter, Estacion Madero, Parras De La Fuente,
Coahuila, Mexico
USAC,
through its wholly owned subsidiary, USAMSA, owns and operates a
smelting facility at Estacion Madero, in the Municipio of Parras de
la Fuente, Coahuila, Mexico. The property includes 13.48 hectares
(30 acres). Seventeen small rotating furnaces (SRF’s) and
four large rotating furnaces (LRF) with an associated stack and
scrubbers. Other equipment includes cooling ducting, dust
collectors, scrubber, laboratory, warehouse, slag vault, stack, jaw
crusher, screen, hammer mill, and a 3.5’ x 8’ rod mill.
The plant has a feed capacity of twenty to thirty metric tons of
direct shipping ore or concentrates per day, depending on the
quality of the feedstock. If the feedstock is in the range of 45%
antimony, the smelter could produce as much as 10MM pounds of
contained antimony annually. Concentrates from our flotation plant,
and hand-sorted ore from Mexico sources and other areas, are being
processed. In 2019, we completed the installation of a leach
circuit to process concentrates from the Puerto Blanco cyanide
leach plant containing precious metals from our Los Juarez Mining
property. The Madero production is either sold as metal or finished
oxide directly to customers or shipped to our Montana plant to
produce finished Antimony products and precious metals. Access to
the plant is by road and railroad. Set forth below are location
maps:
9
ZEOLITE DIVISION
Location
This
property is located in the southeast corner of Idaho, approximately
seven miles east of Preston, Idaho, 34 miles north of Logan, Utah,
79 miles south of Pocatello, Idaho, and 100 miles north of
Salt Lake City, Utah.
The
mine is located in the N ½ of section 10 and the W ½ of
section 2, section 3, and the E ½ section 4, Township 15,
Range 40 East of the Boise Meridian, Franklin County, Idaho. The
plant and the initial pit are located on the Webster Farm, L.L.C.,
which is private land.
Transportation
The
property is accessed by seven miles of paved road and about l mile
of gravel road from Preston, Idaho. Preston is near the major
north-south Interstate Highway 15 to Salt Lake City or
Pocatello.
Several
Union Pacific rail sidings may be available to the mine. Bonida is
approximately 25 miles west of the mine and includes acreage out of
town where bulk rock could be stored, possibly in existing silos or
on the ground. Three-phase power is installed at this abandoned
site. Finished goods can also be shipped from the
Franklin County Grain Growers feed mill in the town of Preston on
the Union Pacific Railroad.
The
Burlington Northern Railroad can be accessed at Logan,
Utah.
Location
Map
Property and Ownership
BRZ
leases 320 acres from the Webster Farm, L.L.C. The term of the
lease is 15 years and it began on March 1, 2010. This includes the
mill site and zeolite in the area of the open pit. The property is
the NW ¼ and W ½ of the SW ¼ of section 3 and the N
½ of the W ¼ of section 10, Township 15 South, Range 40
East of the Boise Meridian, Franklin County, Idaho. The lease
requires a payment of $10.00 per ton plus an additional annual
payment of $10,000 on March 1st of each year. In addition, there
are two other royalty holders. Nick Raymond and the estate of
George Desborough each have a graduated royalty of $1.00 per ton to
$5.00 per ton, depending on the sale price.
The
balance of the property is on Bureau of Land Management property
and includes 480 acres held by 24, 20-acre Placer claims. Should we
drop our lease with Webster Farms LLC., we will retain these placer
claims.
10
Geology
The
deposit is a very thick, sedimentary deposit of zeolitized volcanic
ash of Tertiary age known as the Salt Lake Formation. The
sedimentary interval in which the clinoptilolite occurs is more
than 1000 feet thick in the area. Thick intervals of the zeolite
are separated by thin limestone and sandstone beds deposited in the
freshwater lake where the volcanic ash accumulated.
The
deposit includes an 800- foot mountain. Zeolite can be sampled over
a vertical extent of 800 feet on more than 700 acres. The current
pit covers more than 3 acres. Despite the
apparent size of the deposit, we claim no
reserves.
Exploration, Development, and Mining
Exploration
has been limited to the examination and sampling of surface
outcrops and mine faces.
Mining Methods
Depending
on the location, the zeolite is overlain by 1 to 12 feet of
zeolite-rich soil. On the ridges, the cover is very little, and in
the draws the soil is thicker. The overburden is stripped using a
tractor dozer, currently a Caterpillar D-8K. It is moved to the toe
of the pit, and will eventually be dozed back over the pit for
reclamation.
Although
near-surface rock is easily ripped, it is more economical to drill
and blast it. Breakage is generally good. Initial benches are 20
feet high, and each bench is accessed by a road.
Haulage
is over approximately 4,000 feet of road on an uphill grade of 2.5%
to the mill. On higher benches, the grade will eventually be
downhill. Caterpillar 769 B rock trucks are being used. They haul
18 to 20 tons per load, and the cycle time is about 30
minutes.
With
the trucks and the other existing equipment, the mine is capable of
producing 80 tons per hour.
MILLING
Primary Crusher
The
primary crushing circuit is a conventional closed circuit,
utilizing a Stephens-Adamson 42” x 12’ apron feeder,
Pioneer 30” x 42” jaw crusher, Nordberg standard
3’ cone crusher, a 5’ by 12’ double
deck Kohlberg screen, and has a self-cleaning dust collector. The
rock is crushed to minus 1 inch and the circuit has a rated
capacity of more than 50 tons per hour.
Dryer
There
are two dryer circuits, one for lines one and two, and one for the
Raymond mill. The dryer circuits include one 50 ton feed bin, and
each dryer has a conveyor bypass around each dryer, a bucket
elevator, and a dry rock bin. The dryers are 25 feet long, 5 feet
in diameter and are fired with propane burners rated at 750,000
BTUs. One self-cleaning bag house services both dryers. Depending
on the wetness of the feed rock, the capacity is in the range of 10
tons per hour per dryer. During most of the year, the dryers are
not run.
Coarse Products Circuit
There
are two lines to produce coarse products:
●
Line 1 is a
closed circuit with a 100 HP vertical shaft impactor and a 5 deck
Midwestern Multi Vibe high frequency screen.
●
Line 2 includes a
Jeffries 30” by 24” 60 HP hammer mill in a closed
circuit with two 5’ x 12’ triple deck Midwestern Multi
Vibe high frequency screens. The circuits also include bucket
elevators, (3) 125 ton capacity product silos, a 6 ton capacity
Crust Buster blender, augers, Sweco screens, and dust
collectors.
11
Fine Products Circuit
The
fine products circuit is in one building and it includes (2)
3.5’ x 10.5’ Derrick 2 deck high frequency (3450 RPM)
screens and various bucket elevators, augers, bins, and Sweco
screens for handling product. Depending on the screening sizes, the
plants can generate approximately 150 tons of granules and 125 tons
of fines per 24-hour day.
Raymond Mill Circuit
The
Raymond mill circuit includes a 6058 high-side Raymond mill with a
double whizzer, dust collector, two 100 ton product silos, feed
bin, conveyors, air slide, bucket elevators, and control booth. The
Raymond mill has a rated capacity of more than 10 tons per
hour.
Item 3 Legal Proceedings
No
director, officer or affiliate of USAC and no owner of record or
beneficial owner of more than 5.0% of our securities or any
associate of any such director, officer or security holder is a
party adverse to USAC or has a material interest adverse to USAC in
reference to pending litigation.
Item 4 Mine Safety Disclosures
The
information concerning mine safety violations or other regulatory
matters required by section 1503(a) of the Dodd-Frank Wall Street
Reform and Consumer Protection Act and Item 104 of Regulation S-K
is included in Exhibit 95 to this Annual Report.
PART II
Item 5 Market for Common Equity and Related Stockholder
Matters
Currently,
our common stock is traded on the NYSE-AMERICAN under the symbol
UAMY.
The
approximate number of holders of record of our common stock at
March 31, 2021, is 2,387.
We have
not declared or paid any dividends to our stockholders during the
last five years and do not anticipate paying dividends on our
common stock in the foreseeable future. Instead, we expect to
retain earnings for the operation and expansion of our
business.
During 2020, the Company sold
units consisting of 5,742,858 from sale of shares of its common
stock and 5,742,858 warrants to purchase shares of common stock for
total proceeds of $2,010,000. Offering costs associated with the
sale totaled $196,932.
During
2019, the Company sold units consisting of 904,082 shares of its
common stock and 452,041 warrants to purchase shares of common
stock for total proceeds of $433,960. Offering costs associated
with the sale totaled $29,761.
During
the year ended December 31, 2020, the Company awarded, but did not
issue, common stock with a value of $110,000 to its Board of
Directors as compensation for their services as directors. In
connection with the issuances, the Company recorded $110,000 in
director compensation expense and accrued common stock
payable.
In June
2020, the Company issued the Board members 295,463 shares of the
Company’s common stock for services provided during 2019
which was accrued at December 31, 2019, with a value of
$130,483.
During
the years ended December 31, 2019, the Company awarded but did not
issue, common stock with a value of $134,375 to its Board of
Directors as compensation for their services as directors. In
connection with the issuances, the Company recorded $134,375 in
director compensation expense and accrued common stock
payable.
12
In
January 2019, the Company issued Daniel Parks, the Company’s
prior Chief Financial Officer, 200,000 shares of the
Company’s common stock with a fair value of $136,000 to
retain his services.
Item
6
Selected Financial Data
Not
Applicable.
Item
7
Management's Discussion and Analysis or Plan of
Operations
Certain
matters discussed are forward-looking statements that involve risks
and uncertainties, including the impact of antimony prices and
production volatility, changing market conditions and the
regulatory environment and other risks. Actual results may differ
materially from those projected. These forward-looking statements
represent our judgment as of the date of this filing. We disclaim,
however, any intent or obligation to update these forward-looking
statements.
Overview
Company-wide
For the
year ended December 31, 2020, we reported net loss of $3,286,804
after depreciation and amortization of $885,843, compared to a net
loss of $3,672,891 for 2019 after depreciation and amortization of
$895,990. Our company-wide EBITDA was a negative $2,400,961 for
2020, compared to a negative EBITDA of $2,776,901 for
2019.
Net
non-cash expense items for 2020 totaled $1,317,644 and included
$318,502 for the loss on mineral properties, $885,843 for
depreciation and amortization, $106,108 for stock-based director
compensation, and $7,191 for other items.
Net
non-cash expense items for 2019 totaled $2,653,757 and included
$1,410,736 for the loss on abandonment of mineral properties,
$895,990 for depreciation and amortization, $54,112 for
amortization of debt discount, $134,375 for stock-based director
compensation, $136,000 for stock-based employee compensation,
$16,396 for the write-down of inventory, and $6,148 for other
items.
During
the year ending December 31, 2020, the following transactions had a
material impact on the Company’s net loss.
●
In July of 2020,
USAMSA elected to relinquish its lease agreement with the Wadley
mines. This decision, which resulted in a loss on mineral
properties of $318,502 in 2020, was made principally because the
exclusivity rights to purchase ore were not being honored. Antimony
purchases were suspended for a time following this event and have
been re-established in early 2021. Ore purchased from the Wadley
mines is now on a net smelter return basis.
●
The Company was notified of delinquent export tax
due associated with antimony production in Mexico prior to 2018. In
2020, the Company recognized an expense for the amount due of
approximately $1.2 million which was paid in February
2021.
During
the year ending December 31, 2019, the following transaction had a
material impact on the Company’s net loss.
●
During the fourth
quarter of 2019, it was decided to abandon two mining concessions
in Mexico, known as the Guadalupe mine and the Soyatal mine. This
decision was prompted by the low prices for antimony and the
expected cost to develop the properties. The effect of abandoning
the properties was a non-cash loss of $1,410,736 which was the
carrying value of the mineral properties less the balance of
related debt.
13
Antimony Sales
During
2020, we saw our average sale price increase by $0.13 per pound
from an average of $3.48 per pound for 2019 to an average of $3.61
per pound for 2020. Following the change in management in June and
the suppressed price of antimony, the Company temporarily suspended
sale of antimony oxide. This decision was made principally in order
to minimize the loss per pound in sales at a time for which our
production acquisition contracts were being renegotiated. As
consequence of these decisions, the Company is, as of the first
quarter of 2021, obtaining its raw materials from its Mexican
sources at a substantial savings as compared to the previous year.
These savings are due to the withdrawal of overhead from the staff
it had at the Wadley mine. Additionally, the Company is now
processing antimony products at its Madero facility at a
substantial savings compared with all previous years. These savings
were due to the renegotiating of its natural gas contract for the
Madero smelter.
During
2019, we saw our average sale price decrease by $0.63 per pound
from an average price of $4.11 per pound for 2018 to $3.48 per
pound for 2019. During 2019, our raw material from our North
American supplier increased by approximately 100,000 pounds and our
supply of raw material from our Mexican mines decreased by
approximately 20,000 pounds. Even though our sales volume
increased, our total sales of antimony decreased due to the
decrease in our sales price. This resulted in estimated decreased
sales of approximately $662,000. Normal shipments from our North
American supplier resumed in 2019 at a lower level than we
expected, and we do not expect an increase from this supplier in
the near future.
In the
third quarter of 2019, we renegotiated our sodium antimonite supply
agreement from our North American supplier to recognize that
antimony prices were in a world-wide slump, and that our general
and administrative costs were a larger percent of our revenues than
they were under the previous agreement. The new price agreement was
implemented in the third quarter of 2019, and resulted in lower
antimony production costs and an improved cash flow for 2019 and
better expectations for the North American operations going
forward. The Company is currently engaged in a renewal of the
contract with this supplier. The nature of the contract will likely
be altered in order to establish a better agreement for both
parties.
Zeolite Sales
Our
sales volume of zeolite in 2020 was 3,019 tons less than we sold in
2019, a decrease of 22%. Our average sales price increased by
approximately $6 per ton, from $192 per ton in 2019 to $199 per ton
in 2020 (3.6%). During 2020, total sales of zeolite decreased by
$504,294 from 2019. The zeolite division had an EBIDTA of $445,481
for 2020, compared to an EBITDA of $683,936 for 2019. Net income
decreased from $497,470 in 2019 to $262,861 in 2020
($234,609).
Our
sales volume of zeolite in 2019 was 641 tons less than we sold in
2018, a decrease of 4.5%. Our average sales price increased by
approximately $6 per ton, from $186 per ton in 2018 to $192 per ton
in 2019 (2.7%). During 2019, total sales of zeolite decreased by
$43,827 from 2018. The zeolite division had an EBIDTA of $683,936
for 2019, compared to an EBITDA of $638,764 for 2018. Net income
increased from $449,961 in 2018 to $497,470 in 2019, approximately
$47,000.
Precious Metals Sales
|
Precious Metal Sales
Silver/Gold
|
For the Year Ended December 31,
|
|
|
|
2020
|
2019
|
|
Ounces
Gold Shipped (Au)
|
30.79
|
48.13
|
|
Ounces
Silver Shipped (Ag)
|
11,434
|
11,714
|
|
Revenues
|
$
174,079
|
$
194,239
|
For the
years ended December 31, 2020 and 2019, the EBITDA for precious
metals was $174,079 and $194,239, respectively.
14
|
Results of Operations by Division
|
|
|
|
For the years ended December 31, 2020 and 2019
|
||
|
|
|
|
|
|
|
|
|
Antimony Division
|
2020
|
2019
|
|
|
|
|
|
Revenues
- Antimony (net of discount)
|
$
2,942,628
|
$
5,450,649
|
|
|
|
|
|
Domestic
cost of sales:
|
|
|
|
Production
costs
|
1,388,065
|
2,352,959
|
|
Depreciation
|
25,809
|
43,738
|
|
Freight
and delivery
|
169,662
|
243,341
|
|
Indirect
production costs
|
139,035
|
164,876
|
|
Direct
sales expense
|
-
|
65,652
|
|
Total
domestic antimony cost of sales
|
1,722,571
|
2,870,566
|
|
|
|
|
|
Mexico
cost of sales:
|
|
|
|
Production
costs
|
471,598
|
3,268,277
|
|
Depreciation
and amortization
|
590,579
|
596,719
|
|
Land
lease expense
|
-
|
166,800
|
|
Indirect
production costs
|
363,206
|
71,329
|
|
Total
Mexico antimony cost of sales
|
1,425,383
|
4,103,125
|
|
|
|
|
|
Total
revenues - antimony
|
2,942,628
|
5,450,649
|
|
Total
cost of sales - antimony
|
3,147,954
|
6,973,691
|
|
Total
gross profit (loss) - antimony
|
(205,326
)
|
(1,523,042
)
|
|
|
|
|
|
Precious Metals Division:
|
|
|
|
|
|
|
|
Revenues
|
174,079
|
194,239
|
|
Cost
of sales:
|
|
|
|
Depreciation
|
86,835
|
69,067
|
|
Total
cost of sales
|
86,835
|
69,067
|
|
Gross
profit - precious metals
|
87,244
|
125,172
|
|
|
|
|
|
Zeolite Division:
|
|
|
|
|
|
|
|
Revenues
|
2,118,823
|
2,623,117
|
|
Cost
of sales:
|
|
|
|
Production
costs
|
1,000,772
|
1,160,502
|
|
Depreciation
|
182,620
|
186,466
|
|
Freight
and delivery
|
223,545
|
269,251
|
|
Indirect
production costs
|
163,231
|
158,891
|
|
Royalties
|
224,875
|
266,388
|
|
Total
cost of sales
|
1,795,043
|
2,041,498
|
|
Gross
profit - zeolite
|
323,781
|
581,619
|
|
|
|
|
|
Company-wide
|
|
|
|
Total
revenues - combined
|
5,235,530
|
8,268,005
|
|
Total
cost of sales - combined
|
5,029,832
|
9,084,256
|
|
Total
gross profit (loss) combined
|
$
205,698
|
$
(816,251
)
|
15
|
Earnings before income taxes
|
|
|
|
depreciation and amortization
|
|
|
|
For the years ended December 31, 2020 and 2019
|
||
|
|
|
|
|
Antimony - Combined USA
|
|
|
|
and Mexico
|
2020
|
2019
|
|
Lbs
of Antimony Metal USA
|
514,837
|
794,770
|
|
Lbs
of Antimony Metal Mexico
|
300,473
|
771,815
|
|
Total Lbs of Antimony Metal Sold
|
815,310
|
1,566,585
|
|
Average
Sales Price/Lb Metal
|
$
3.61
|
$
3.48
|
|
Net loss/Lb Metal
|
$
(4.46
)
|
$
(2.74
)
|
|
|
|
|
|
Gross
antimony revenue
|
$
2,942,628
|
$
5,450,649
|
|
|
|
|
|
Cost
of sales - domestic
|
(1,722,571
)
|
(2,870,566
)
|
|
Cost
of sales - Mexico
|
(1,425,383
)
|
(4,103,125
)
|
|
Operating
expenses
|
(3,134,889
)
|
(1,451,267
)
|
|
Non-operating
expenses
|
21,808
|
87,798
|
|
Loss
on mineral properties
|
(318,502
)
|
(1,409,022
)
|
|
|
(6,579,537
)
|
(9,746,182
)
|
|
|
|
|
|
Net loss - antimony
|
(3,636,909
)
|
(4,295,533
)
|
|
Depreciation,&
amortization
|
616,388
|
640,457
|
|
EBITDA - antimony
|
$
(3,020,521
)
|
$
(3,655,076
)
|
|
|
|
|
|
Precious Metals
|
|
|
|
Ounces sold
|
|
|
|
Gold
|
31
|
48
|
|
Silver
|
11,434
|
11,714
|
|
|
|
|
|
Gross
precious metals revenue
|
$
174,079
|
$
194,239
|
|
Production
costs
|
(86,835
)
|
(69,067
)
|
|
Net income - precious metals
|
87,244
|
125,172
|
|
Depreciation
|
86,835
|
69,067
|
|
EBITDA - precious metals
|
$
174,079
|
$
194,239
|
|
|
|
|
|
Zeolite
|
|
|
|
Tons sold
|
10,661
|
13,680
|
|
Average
Sales Price/Ton
|
$
198.75
|
$
191.75
|
|
Net income (Loss)/Ton
|
$
24.66
|
$
36.36
|
|
|
|
|
|
Gross
zeolite revenue
|
$
2,118,823
|
$
2,623,117
|
|
Cost
of sales
|
(1,795,043
)
|
(2,041,498
)
|
|
Operating
expenses
|
(57,049
)
|
(68,567
)
|
|
Non-operating
expenses
|
(3,870
)
|
(15,582
)
|
|
Net income - zeolite
|
262,861
|
497,470
|
|
Depreciation
|
182,620
|
186,466
|
|
EBITDA - zeolite
|
$
445,481
|
$
683,936
|
|
|
|
|
|
Company-wide
|
|
|
|
Gross
revenue
|
$
5,235,530
|
$
8,268,005
|
|
Production
costs
|
(5,029,832
)
|
(9,084,256
)
|
|
Operating
expenses
|
(3,191,938
)
|
(1,519,834
)
|
|
Non-operating
expenses
|
17,938
|
72,216
|
|
Loss
on mineral properties
|
(318,502
)
|
(1,409,022
)
|
|
Net income (loss)
|
(3,286,804
)
|
(3,672,891
)
|
|
Depreciation,&
amortization
|
885,843
|
895,990
|
|
EBITDA
|
$
(2,400,961
)
|
$
(2,776,901
)
|
16
During
the period ending December 31, 2020, the most significant factors
affecting our financial performance were as follows:
●
The
death of John Lawrence, the Company’s previous President and
Chairman, which created the opportunity to renegotiate existing
supply and processing contracts,
●
The
continuing decline of antimony prices,
●
An
assessment against US Antimony from the Mexican tax authority (SAT)
in the amount of $1,120,730 regarding a lawsuit the Company had
been in involved in since 2016.
●
A
private placement of 5,742,858 shares of the Company’s common
stock sold in July of 2020.
●
A
50% decrease in Canadian supply of sodium antimonate.
●
The
consequences of the Covid-19 pandemic to antimony and zeolite sales
and corresponding increase costs of freight.
During the period ended December 31, 2019, the
most significant event affecting our financial performance was the
continued low price of antimony. This decrease in prices caused us
to re-evaluate our commitment to the two antimony mines we were
purchasing in Mexico. We made the decision that with the depressed
prices and the
cost of developing the mines, it was in our
best interest to abandon these properties and look at re-acquiring
them in the future if antimony prices improved. It was decided that
our resources should be directed to completing our precious metals
facility at Puerto Blanco and starting precious metals production
in 2021. In connection with the low antimony prices, we negotiated
a lower cost agreement with our North American supplier which will
help us with future cash flow.
Our
plan for the remainder of 2021 is to process
approximately:
●
1,300
tons of mined rock from the Los Juarez property. 2,000 tons have
already been moved to the Puerto Blanco facility. It is estimated
that we have 10,000 tons of mined rock at the Los Juarez
property.
●
At
least 720 tons of ore from the Wadley mines at the Madero Smelting
facility.
●
300
tons of milled tailings at the Puerto Blanco facility.
●
60
tons of stibnite ore at Puerto Blanco facility for the generation
of concentrates specifically for the production of antimony
trisulfide for the Defense Logistic Agency (DLA).
In
addition to the processing goals stated above, US Antimony intends
to continue to improve its production capacity and sales of zeolite
at its subsidiary Bear River Zeolite (BRZ). Funds obtained in early
2021 from two public placements of stock will assist greatly to
this goal as well as the improvement of the facilities in Madero,
Thompson Falls, Puerto Blanco, and Los Juarez.
In
2020, we only received 50% of our expected supply from North
American sources. We anticipated increasing the raw material from
Mexico and the resumption of normal shipments from our North
American supplier in 2019, but these plans did not materialize due
to low overall metal prices and the low antimony prices in
particular.
In both
2020 and 2019, the Puerto Blanco mill circuits were utilized less
than 2% of their capacity, but with the completion of the cyanide
leach circuit we expect it to be fully utilized processing precious
metals ore from the Los Juarez mine. Some antimony will be realized
as a by-product of processing the Los Juarez ore. In 2020, US
Antimony has been involved in renegotiating its supply contract
with its North American source, that will likely result in a mutual
improvement in the supply contract. Additionally, the price of
antimony in early 2021 is double what it was in 2019.
17
The
estimated recovery of precious metals per metric ton, after the
caustic leach and cyanide leach circuits, is as follows at Los
Juarez:
Schedule of Los Juarez
|
recovery
values
|
|
Metal
|
Assay
|
Recovery
|
Value
|
Value/Mt
|
|
|
|
Gold
|
0.035
opmt
|
87.40
%
|
$1,732/oz
|
$
52.98
|
|
|
|
Silver
|
3.27
opmt
|
64.30
%
|
$
25.90/oz
|
$
54.46
|
|
|
|
Antimony
|
0.652
%
|
41.80
%
|
$
5.23/lb
|
$
31.41
|
|
|
|
Total
|
|
|
|
$
138.85
|
The
following are highlights of the significant changes during
2020:
Antimony:
●
The sale of
antimony during 2020 was 815,310 pounds compared to 1,566,585
pounds in 2019, a decrease of 751,275 pounds (48%).
●
The average sales
price of antimony during 2020 was $3.61 per pound compared to $3.48
during 2019, an increase of $0.13 per pound (3.6%). During the
beginning of 2021, the Rotterdam price of antimony is approximately
$5.23 per pound.
●
The metallurgical
problem with the Los Juarez concentrates has been solved with the
cyanide and caustic leach plants, and initial production will
begin. This allowed the preliminary testing of the cyanide leach
circuit to occur in 2020. The Company plans to process both 1,300
tons of Los Juarez ore and 300 tons of milled tailings through this
cyanide leach circuit during 2021.
●
The net loss for
antimony sold was $4.46 per pound in 2020.
●
Our cost of goods
sold for antimony decreased from $6,973,691 in 2019 to $3,147,954
in 2020. This was primarily due to the decrease in antimony
production during 2020 in response to the lower price of antimony,
and halting production at the Wadley facility.
●
Our cost of
production for the years ended December 31, 2020 and 2019 included
metallurgical testing at Puerto Blanco and Madero, Mexico, and to a
lesser degree, our plant in Thompson Falls, Montana.
●
We are producing
and buying raw materials, which will allow us to ensure a steady
flow of products for sale. Our smelter at Madero, Mexico, was
producing primarily from ore from the Wadley mine in 2019.
Production from Madero during 2020 and 2019 was primarily from our
own Mexican properties, and although we only received 50% of
expected raw materials from our North American supplier, we
purchased a significant portion of the raw materials for our
smelter in Montana.
●
We produced ingots
of antimony metal to be shipped directly to customers from our
Madero smelter in 2020. We intend to increase this for 2021 and
beyond. This will significantly reduce our production and shipping
costs.
●
We are proceeding
with the processing of Los Juarez ore in the 100 ton per day mill
at Puerto Blanco. Due to the hardness of the jasperoid rock at Los
Juarez, it has been determined that the actual through-put is more
like 80 tons per day.
Zeolite:
During
2020, the Company sold 10,661 tons compared to 13,680 tons in 2019,
a decrease of 3,019 tons (22%). BRZ realized a net income of
$262,862 in 2020 after depreciation of $182,620 compared to a net
income of $497,470 in 2019 after depreciation of
$186,466.
General and Administrative:
General
and administrative costs, as reported in our statement of
operations, include fees paid to directors through stock-based
compensation, office expenses, and fees to the NYSE AMERICAN, and
other non-operating costs. The combined general and administrative
costs were 11.6%, and 8.2%, of sales for 2020 and 2019,
respectively.
18
Financial Condition and Liquidity
|
Financial Condition and Liquidity
|
2020
|
2019
|
|
|
|
|
|
Current
assets
|
$
1,808,161
|
$
1,279,755
|
|
Current
liabilities
|
(4,477,543
)
|
(3,975,681
)
|
|
Net
Working Capital
|
$
(2,669,382
)
|
$
(2,695,926
)
|
|
|
|
|
|
|
|
|
|
|
2020
|
2019
|
|
Cash
provided (used) by operations
|
$
(1,305,664
)
|
$
(11,355
)
|
|
Cash
provided (used) by investing:
|
|
|
|
Cash
used for capital outlay
|
(243,091
)
|
(792,925
)
|
|
Proceeds
from sale of land
|
-
|
400,000
|
|
Cash
provided (used) by financing:
|
|
|
|
Proceeds
from notes payable to bank, net of payments
|
(97,066
)
|
13,149
|
|
Principal
paid on long-term debt
|
(46,670
)
|
(127,683
)
|
|
Advances
from related party
|
-
|
237,400
|
|
Payments
on advances from related parties
|
(83,419
)
|
(35,066
)
|
|
Proceeds
from CARES Act note payable
|
443,400
|
|
|
Stock
issued for cash
|
1,813,068
|
404,199
|
|
Checks
issued and payable
|
69,052
|
(28,849
)
|
|
Net
change in cash and restricted cash
|
$
549,610
|
$
58,870
|
Our net
working capital increased for the year ended December 31, 2020 from
a negative amount of $2,695,926 at the beginning of the year to a
negative amount of $2,669,382 at the end of 2020. Current assets
increased due to an increase in cash and cash equivalents. Our
current liabilities increased by $501,862, which included a
decrease of approximately $584,000 in accounts payables and
payables to related parties, but an overall increase due to Mexican
export tax liability. Capital improvements were paid for with cash
and debt.
For the
year ending December 31, 2021, we are planning to use funds
acquired from the two stock offerings raised in Q1 2021 to make
significant improvements to our operations at Madero, Puerto
Blanco, Bear River Zeolite, and Thompson Falls facilities with the
goal of increasing production and decreasing costs.
Going Concern Consideration
At
December 31, 2020, the Company’s consolidated financial
statements show negative working capital of approximately $2.7
million and an accumulated deficit of approximately $32.7
million. With the exception of 2018, the Company has incurred
losses for the past several years. The net income in 2018 was
primarily due to non-recurring events which contributed
approximately $2.5 million to net income. The continuing losses are
principally a result of the Company’s antimony operations due
to both depressed antimony prices and production costs incurred in
Mexico. To improve conditions, the Company plans to continue
searching for areas to reduce these production costs.
Management expects improvement in cash flow in 2021 from the sale
of precious metals extracted from the leach circuit that came on
line in Mexico in the second half of 2020.
Over
the past several years, the Company has been able to make required
principal payments on its debt from cash generated from
operations. The Company is confident it can make debt
payments when due. In March 2020, the Company applied for and
received funds from a note payable under the CARES Act for
$443,400. In July 2020 the Company was successful in raising
$1,813,068 from the sale of shares of common stock and warrants to
fund capital projects in Mexico. In the first quarter of 2021, the
Company raised $23,497,180 (net of $1,499,820 in agent’s
fees) from sale of shares of its common stock and warrants that
will be used for general corporate purposes, working capital, and
to fund a geochemical, geological and geophysical program at the
Los Juarez property. With the funds raised, management believes the
Company has sufficient funds to sustain its operations and meet its
financial obligations during the 12 months following the date of
issuance of the consolidated financial statements.
19
Critical Accounting Estimates
We
have, besides our estimates of the amount of depreciation on our
assets, two critical accounting estimates. The percentage of
antimony contained in our unprocessed ore in inventory is based on
assays taken at the time the ore is delivered, and may vary when
the ore is processed. Also, the asset recovery obligation on our
balance sheet is based on an estimate of the future cost to recover
and remediate our properties as required by our permits upon
cessation of our operations, and may differ when we cease
operations.
●
The value of
unprocessed ore is based on assays taken at the time the ore is
delivered, and may vary when the ore is processed. We assay the ore
to estimate the amount of antimony contained per metric ton, and
then make a payment based on the Rotterdam price of antimony and
the % of antimony contained. Our payment scale incorporates a
penalty for ore with a low percentage of antimony. It is reasonably
likely that the initial assay will differ from the amount of metal
recovered from a given lot. If the initial assay of a lot of ore on
hand at the end of a reporting period were different, it would
cause a change in our reported inventory, but would not change our
accounts payable, reported cost of goods sold or net income
amounts. Our net income would not be affected. Direct shipping ore
(DSO) purchased at our Madero smelter is paid for at a fixed amount
at the time of delivery and assaying, and is not subject to
accounting estimates. The amount of the accounting estimate for
purchased ore at our Puerto Blanco mill is in a constant state of
change because the amount of purchased ore and the per cent of
metal contained are constantly changing. Due to the amount of ore
on hand at the end of a reporting period, as compared to the amount
of total assets, liabilities, equity, and the ore processed during
a reporting period, any change in the amount of estimated metal
contained would likely not result in a material change to our
financial condition.
●
The asset
retirement obligation and asset on our balance sheet is based on an
estimate of the future cost to recover and remediate our properties
as required by our permits upon cessation of our operations, and
may differ when we cease operations. At December 31, 2011, we made
an estimate that the cost of the machine and man hours probable to
be needed to put our properties in the condition required by our
permits once we cease operations would be $134,000. For purposes of
the estimate, we used a probable life of 20 years and costs that,
initially, are comparable to rates that we would incur at the
present. We are adding to (an accretion of 6%) the liability each
year, and amortizing the asset over 20 years ($6,700 annually),
which decreases our net income in total each year. We make periodic
reviews of the remaining life of the mine and other operations, and
the estimated remediation costs upon closure, and adjust our
account balances accordingly. At this time, we think that an
adjustment in our asset recovery obligation is not required, and an
adjustment in future periods would not have a material impact in
the year of adjustment, but would change the amount of the annual
accretion and amortization costs charged to our expenses by an
undetermined amount.
Item 7A Quantitative and Qualitative Disclosures about Market
Risk
Not
Applicable.
Item 8 Financial Statements
The
consolidated financial statements of the registrant are included
herein on pages F1-F24.
Item 9 Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None
20
Item 9A Controls and Procedures
Evaluation of disclosure controls and procedures
At the
end of the period covered by this Annual Report on Form 10-K, an
evaluation was carried out under the supervision of and with the
participation of our management, including the Principal Executive
Officer and the Principal Accounting Officer of the effectiveness
of the design and operations of our disclosure controls and
procedures (as defined in Rule 13a – 15(e) and Rule 15d
– 15(e) under the Exchange Act) as of the end of the period
covered by this report. Based on that evaluation, the Principal
Executive Officer and the Principal Accounting Officer have
concluded that our disclosure controls and procedures were not
effective in ensuring that: (i) information required to be
disclosed by the Company in reports that it files or submits to the
Securities and Exchange Commission under the Exchange Act is
recorded, processed, summarized, and reported within the time
periods specified in applicable rules and forms and (ii) material
information required to be disclosed in our reports filed under the
Exchange Act is accumulated and communicated to our management,
including our Interim CEO and Interim President, as appropriate, to
allow for accurate and timely decisions regarding required
disclosure.
Disclosure controls
and procedures were not effective due primarily to material
weaknesses in the Company’s internal control of financial
reporting as discussed below.
Internal control over financial reporting
Management's annual report on internal control over financial
reporting
The
management of USAC is responsible for establishing and maintaining
adequate internal control over financial reporting. This internal
control system has been designed to provide reasonable assurance to
our management and Board of Directors regarding the preparation and
fair presentation of our published financial
statements.
All
internal control systems, no matter how well designed, have
inherent limitations. Therefore, even those systems determined to
be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation.
The
management of USAC has assessed the effectiveness of our internal
control over financial reporting as of December 31, 2020. To make
this assessment, we used the criteria for effective internal
control over financial reporting described in Internal
Control-Integrated Framework (2013), issued by the Committee of
Sponsoring Organizations of the Treadway Commission
(COSO).
As a
result of our assessment, we concluded that we have material
weaknesses in our internal control over financial reporting as of
December 31, 2020. These weaknesses are as follows:
●
Inadequate
design of internal control over the preparation of the financial
statements and financial reporting processes;
●
Inadequate
monitoring of internal controls over significant accounts and
processes including controls associated with domestic and Mexican
subsidiary operations and the period-end financial reporting
process; and
●
The
absence of proper segregation of duties within significant
processes and ineffective controls over management oversight,
including antifraud programs and controls.
We are
aware of these material weaknesses and will develop procedures to
ensure that independent review of material transactions is
performed. The Principal Executive Officer will develop internal
control measures to mitigate the inadequate documentation of
controls and the monitoring of internal controls over significant
accounts and processes including controls associated with the
period-ending reporting processes, and to mitigate the segregation
of duties within significant accounts and processes and the absence
of controls over management oversight, including antifraud programs
and controls.
21
We plan
to consult with independent experts when complex transactions are
entered into.
Because
these material weaknesses exist, management has concluded that our
internal control over financial reporting as of December 31, 2020,
is ineffective.
Changes in internal control over financial reporting
There
were no changes in internal control over financial reporting for
the quarter ended December 31, 2020.
PART III
Item
10
Directors, Executive Officers, Promoters and Control Persons,
Compliance with
Section
16(a) of the Exchange Act
Identification of directors and executive officers at December 31,
2020, is as follows:
|
Name
|
Age
|
Affiliation
|
Expiration of Term
|
|
John C. Gustavsen
|
72
|
Interim CEO
|
Annual meeting
|
|
|
|
|
|
|
Russell C. Lawrence
|
52
|
Interim President & Director
|
Annual meeting
|
|
|
|
|
|
|
Alicia Hill
|
38
|
Secretary, Controller,
|
Annual meeting
|
|
|
|
and Treasurer
|
|
|
|
|
|
|
|
Hart W. Baitis
|
70
|
Director
|
Annual meeting
|
|
|
|
|
|
|
Dr. Blaise Aguirre
|
55
|
Director
|
Annual meeting
|
|
|
|
|
|
|
Joseph Bardswich
|
73
|
Director
|
Annual meeting
|
Business Experience of Directors and Executive
Officers
Russell C. Lawrence
. Mr. Lawrence has experience in applied
physics, mining, refining, excavation, electricity, electronics,
and building contracting. He graduated from the University of Idaho
in 1994 with a degree in physics, and worked for the Physics
Department at the University of Idaho for a period of 10 years. He
has also worked as a building contractor and for USAC at the
smelter and laboratory at Thompson Falls, for USAMSA in the
construction and operation of the USAMSA smelter in Mexico, and for
Antimonio de Mexico, S. A. de C. V. at the San Miguel Mine in
Mexico.
Hart W. Baitis.
Mr. Baitis graduated from the University of
Oregon in 1971 with a B.S. in Geology, and was awarded a Ph. D. in
Geology in 1976. He has 35 years of experience as an exploration
geologist in the United States, Canada, Central America, and
Mexico. Mr. Baitis is experienced in numerous geologic environments
and terrains, and has been involved in all phases of exploration,
ranging from field geologist, consultant, management, and
acquisition team director.
Dr. Blaise Aguirre
. Blaise Aguirre, MD joined the Board of
Directors of United States Antimony Corp. on August 14, 2019, to
replace a Director that retired for medical reasons. He received
his Medical Doctor’s degree in 1989 from the University of
the Witwatersrand, Johannesburg, South Africa, and performed his
residency at Boston University School of Medicine from 1991 to
1994. He is an Assistant Professor of Psychiatry at Harvard Medical
School and he is the founding Medical Director of 3East at McLean
Hospital. Dr. Aguirre is fluent in Spanish and lectures worldwide.
He was elected to the Board at Investors Capital Holdings, Ltd in
2011 and remained on the Board until it was sold to RCAP. He sits
on the boards of various privately held companies. He developed and
maintains enduring relationships with institutional money managers,
venture capitalists, Angel investors and developed an expertise as
a small cap stock analyst as a broker with series 7 and 63
securities licenses.
22
Alicia Hill.
Ms. Hill was hired by the Company in 2006 as an
accounting assistant, and was eventually promoted to chief
accountant responsible for the recording of transactions for three
companies. In 2011, she was appointed Company Controller,
Secretary, and Treasurer. Ms. Hill has guided the Company through
the listing on the NYSE-MKT, in the addition of a new division in
Mexico, and has been the liaison with the Company’s auditors
through a progressively complicated reporting process.
Lloyd Joseph Bardswich
Mr. Bardswich has extensive
experience in mining, mining engineering, management, drilling,
metallurgy and plant design. He is a registered professional mining
engineer, can served as a QP (qualified person) regarding reporting
to NI43-101 standards and has worked as a Shift Boss, Mine Safety
Engineer, Mine Foreman, Mine Manager, and Mining
Consultant.
John C. Gustaven.
Mr. Gustaven graduated from Rutgers
University in 1970 with a BS in chemistry and started work for
Harshaw Chemical (purchased by Amspec Chemical Corporation), a
major producer of antimony trioxide. Mr. Gustaven took engineering
courses from 1976 through 1980, and became president and treasurer
of the company in 1983. He was promoted CEO in 1990. Mr. Gustaven
designed a new type of production furnace for antimony trioxide
that eventually produced 20 million pounds of antimony trioxide per
year. Mr. Gustaven is conversant in Spanish, Chinese, and other
languages, and travelled to many countries as part of his duties as
president of Amspec Chemical Corporation. Mr. Gustaven came to work
at United States Antimony Corporation in November of
2011.
We are
not aware of any involvement by our directors or executive officers
during the past five years in legal proceedings that are material
to an evaluation of the ability or integrity of any director or
executive officer.
Board Meetings and Committees
Our Board of Directors held
four (4) regular meetings during the 2020 calendar year. Each
incumbent director attended all of the meetings held during the
2020 calendar year, in the aggregate, by the Board and each
committee of the Board of which he was a member.
Our
Board of Directors established an Audit Committee on December 10,
2011. It consisted of two members at December 31, 2020, Jeffrey
Wright, and Hart Baitis. None of the Audit Committee members are
involved in our day-to-day financial management. Jeffrey Wright was
considered a financial expert. Jeffrey Wright resigned from the
board effective January 1, 2021. Craig Thomas resigned from the
board on January 13, 2021.
During
2011, the Board also established a Compensation Committee and a
Nominating Committee.
Board Member Compensation
Following is a summary of fees,
cash payments, stock awards, and other reimbursements to Directors
during the year ended December 31, 2020:
23
Directors
Compensation
|
|
|
|
Total
Fees,
|
|
|
|
|
Awards,
and
|
|
Name and
Principal
|
Fees
Earned
|
Fees
Earned
|
Other
|
|
Position
|
paid in
Cash
|
paid in
Stock
|
Compensation
|
|
Russell
Lawrence,
|
-
|
$
20,000
|
$
20,000
|
|
Interim
President
|
|
|
|
|
Hartmut
Baitis,
|
-
|
$
20,000
|
$
20,000
|
|
Director
|
|
|
|
|
Dr. Blaise
Aquirre,
|
-
|
$
20,000
|
$
20,000
|
|
Director
|
|
|
|
|
Jeffrey
Wright,
|
-
|
$
20,000
|
$
20,000
|
|
Director
|
|
|
|
|
Craig
Thomas,
|
-
|
$
20,000
|
$
20,000
|
|
Director
|
|
|
|
|
John
Lawrence,
|
-
|
$
10,000
|
$
10,000
|
|
Previous
President
|
|
|
|
|
Totals
|
$
-
|
$
110,000
|
$
110,000
|
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of
the Securities Exchange Act of 1934 requires our directors and
executive officers and the holders of 10% or more of our common
stock to file reports of ownership and changes in ownership with
the Securities and Exchange Commission. Officers, directors and
stockholders holding more than 10% of our common stock are required
by the regulation to furnish us with copies of all Section 16(a)
forms they have filed. Based solely on our review of copies of
Forms 3, 4 and 5 furnished to us, Mr. Hart Baitis and Mr. Russell
Lawrence did not file timely Forms 3, 4 or Form 5 reports during
2019 and 2018.
Code of Ethics
The
Company has adopted a Code of Ethics that applies to the Company's
executive officers and its directors. The Company will provide,
without charge, a copy of the Code of Ethics on the written request
of any person addressed to the Company at: United States Antimony
Corporation, P.O. Box 643, Thompson Falls, MT 59873.
Item 11 Executive Compensation
Summary Compensation Table
The
Securities and Exchange Commission requires the following table
setting forth the compensation paid by USAC to its principal
executive officer for fiscal years ended December 31, 2020 and
2019.
|
Name and Principal Position
|
Year
|
Salary
|
Bonus
|
Stock Awards (2)
|
Total
|
|
Russell
Lawrence,
Interim
President
|
2020
2019
|
$110,000
$110,000
|
N/A
|
$20,000
$25,000
|
$130,000
$135,000
|
|
John C.
Gustaven,
Interim
CEO
|
2020
2019
|
$100,000
$100,000
|
|
N/A
|
$100,000
$100,000
|
Compensation for
all executive officers, except for the President/CEO position, is
recommended to the compensation committee of the Board of Directors
by the President/CEO. The compensation committee makes the
recommendation for the compensation of the President/CEO. The
compensation committee has identified a peer group of mining
companies to aid in reviewing the President’s compensation
recommendations for executives, and for reviewing the compensation
of the President/CEO. The full Board approves the compensation
amounts recommended by the compensation committee. Currently, the
executive managements’ compensation only includes base salary
and health insurance. The Company does not have annual performance
based salary increases, long term performance based cash
incentives, deferred compensation, retirement benefits, or
disability benefits.
24
The
Interim President receives restricted stock awards for their
services as Board members.
There
were not any outstanding equity awards or plan based awards to
officers or directors as of December 31, 2020. John Lawrence,
previous President and Chairman, exercised his warrants at a price
of $0.25 per share for 250,000 shares on March 20, 2020. The
receipt of $62,500 from the warrants was used to reduce advances
payable to Mr. Lawrence.
Item 12 Security Ownership of Certain Beneficial Owners and
Management
The
following table sets forth information regarding beneficial
ownership of our common stock as of March 26, 2021 by (i) each
person who is known by us to beneficially own more than 5% of our
Series B, C, and D preferred stock or common stock; (ii) each of
our executive officers and directors; and (iii) all of our
executive officers and directors as a group. Unless otherwise
stated, each person's address is c/o United States Antimony
Corporation, P.O. Box 643, 47 Cox Gulch, Thompson Falls, Montana
59873.
|
Title of Class
|
|
Name and Address of Beneficial Owner
(1)
|
Amount and Nature of Beneficial Ownership
|
Percent of Class
(1)
|
Percent of all Voting Stock
|
|
Series
B Preferred
|
|
Excel
Mineral Company P.O. Box 3800 Santa Barbara, CA 93130
|
750,000
|
100
%
|
N/A
|
|
Series
C Preferred
|
|
Richard
A. Woods 59 Penn Circle West Penn Plasa Apts. Pittsburgh, PA
15206
|
48,305
(4)
|
27.1
%
|
*
|
|
Series
C Preferred
|
|
Dr.
Warren A Evans 69 Ponfret Landing Road Brooklyn, CT
06234
|
32,203
(4)
|
18.1
%
|
*
|
|
Series
C Preferred
|
|
Edward
Robinson 1007 Spruce Street, 1st flor Philadelphia, PA
19107
|
32,203
(4)
|
18
%
|
*
|
|
Series
C Preferred
|
|
All
Series C Preferred Shareholders as a Group
|
177,904
|
100
%
|
*
|
|
|
|
|
|
|
|
|
|
|
John
C. Lawrence
|
4,496,350
|
82.5
%
|
4.2
%
|
|
|
|
Russell
Lawrence
|
495,897
|
9.1
%
|
*
|
|
|
|
Hart
Baitis
|
441,978
|
8.1
%
|
*
|
|
|
|
Blaise
Aquirre
|
17,688
|
0.3
%
|
*
|
|
Common
Stock
|
|
All
Directors and Executive Officers as a Group
|
5,451,913
|
100
%
|
|
|
|
|
|
|
|
|
|
|
|
John
C. Lawrence
|
1,590,672
|
90.8
%
|
1.5
%
|
|
Series
D Preferred
|
|
Leo
Jackson
|
102,000
|
5.8
%
|
*
|
|
|
|
Garry
Babbitt
|
58,333
|
3.3
%
|
*
|
|
Series
D Preferred
|
|
All
Series D Preferred Shareholders as a Group
|
1,751,005
|
100
%
|
1.7
%
|
|
|
|
|
|
|
|
|
Common
Stock and Preferred Stock w/voting rights
|
|
All
Directors and Executive Officers as a Group
|
5,451,913
|
75.7
%
|
5.1
%
|
|
Common
Stock and Preferred Stock w/voting rights
|
|
All
Preferred Shareholders that are officers or directors
|
1,751,005
|
24.3
%
|
1.7
%
|
|
|
|
|
|
|
|
|
Common
and Preferred Voting Stock
|
|
|
7,202,918
|
100.0
%
|
6.8
%
|
25
|
(1)
|
Beneficial
Ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of common stock
subject to options or warrants currently exercisable or
convertible, or exercisable or convertible within 60 days of March
26, 2021, are deemed outstanding for computing the percentage of
the person holding options or warrants but are not deemed
outstanding for computing the percentage of any other person.
Percentages are based on a total of 108
,994,999
shares of common stock,
750,000 shares of Series B Preferred Stock, 177,904 shares of
Series C Preferred Stock, and 1,751,005 shares of Series D
Preferred Stock outstanding on December 31, 2020. Total voting
stock of 77,878,666 shares is a total of all the common stock
issued, and all of the Series C and Series D Preferred Stock
outstanding at December 31, 2020.
|
|
(2)
|
The
outstanding Series C and Series D preferred shares carry voting
rights equal to the same number of shares of common
stock.
|
Item
13
Certain Relationships and Related Transactions
Described
below are transactions during the last two years to which we are a
party and in which any director, executive officer or beneficial
owner of five percent (5%) or more of any class of our voting
securities or relatives of our directors, executive officers or
five percent (5%) beneficial owners has a direct or indirect
material interest.
In
January 2019, the Company issued Daniel Parks, the Company’s
Prior Chief Financial Officer, 200,000 shares of the
Company’s common stock with a fair value of $136,000 to
retain his services.
During the year ended December 31, 2020, the Company awarded, but
did not issue, common stock with a value of $110,000 to its Board
of Directors as compensation for their services as
directors. In connection with the issuances, the Company
recorded $110,000 in director compensation expense and accrued
common stock payable.
In June 2020, the Company issued the Board members 295,463 shares
of the Company’s common stock for services provided during
2019 which was accrued at December 31, 2019, with a value
of $130,483.
During the years ended December 31, 2019, the Company awarded but
did not issue, common stock with a value of $134,375 to its Board
of Directors as compensation for their services as
directors. In connection with the issuances, the Company
recorded $134,375 in director compensation expense and accrued
common stock payable.
The
Company’s previous President and Chairman, John Lawrence,
rented equipment to the Company and charged the Company for lodging
and meals provided to consultants, customers and other parties by
an entity that Mr. Lawrence owns. The amount due to Mr. Lawrence as
of December 31, 2020 and 2019 was $171,017 and $156,974,
respectively. Expenses paid to Mr. Lawrence for the years ended
December 31, 2020 and 2019 were $1,533 and $9,799,
respectively
During
2019, John Lawrence made advances to the Company totaling $227,200,
of which $170,985 had been repaid as of December 31, 2020, leaving
an advance payable of $56,215. John C. Gustaven, Interim CEO,
advanced the Company $10,200 during 2019, of which $10,000 had been
repaid as of December 31, 2020, leaving a balance of
$200.
Item 14 Principal Accountant Fees and Services
The
Company's Board of Directors and audit committee reviews and
approves audit and permissible non-audit services performed by
Assure CPA (formerly DeCoria, Maichel & Teague P.S.), as well
as the fees charged by Assure CPA for such services. In its review
of non-audit service fees and its appointment of Assure CPA as the
Company's independent accountants, the Board of Directors
considered whether the provision of such services is compatible
with maintaining Assure CPA independence. All of the services
provided and fees charged by Assure CPA in 2020 were pre-approved
by the Board of Directors and its audit committee.
26
Audit Fees
The
aggregate fees billed by Assure CPA for professional services for
the audit of the annual financial statements of the Company and the
reviews of the financial statements included in the Company's
quarterly reports on Form 10-Q for 2020 and 2019 were $122,500 and
$118,998, respectively, net of expenses.
Audit-Related Fees
There
were no other fees billed by Assure CPA during the last two fiscal
years for assurance and related services that were reasonably
related to the performance of the audit or review of the Company's
financial statements and not reported under "Audit Fees"
above.
Tax Fees
The
aggregate fees billed by Assure CPA during the last two fiscal
years for professional services rendered by Assure CPA for tax
compliance for 2020 and 2019 were $12,100 and $11,833,
respectively.
All Other Fees
There
were $1,123 in other fees billed by Assure CPA during 2020 and none
during 2019.
Item 15. Exhibits and Reports on Form 8-K
Exhibit
Number
Description
3.01
Articles of
Incorporation of USAC, filed as an exhibit to USAC's Form 10-KSB
for the fiscal year ended December 31, 1995 (File
No.001-08675), are incorporated herein by this
reference.
3.02
Amended and
Restated Bylaws of USAC, filed as an exhibit to amendment No. 2 to
USAC's Form SB-2 Registration Statement (Reg. No. 333-45508) are
incorporated herein by this reference.
3.03
Articles of
Correction of Restated Articles of Incorporation of
USAC.
Articles of
Amendment to the Articles of Incorporation of United States
Antimony Corporation, filed as an exhibit to USAC's Form 10-QSB for
the quarter ended September 30, 2002 (File No. 001-08675), are
incorporated herein by this reference.
Key Employees 2000
Stock Plan, filed as an exhibit to USAC's Form S-8 Registration
Statement filed on March 10, 2000 (File No. 333-32216) is
incorporated herein by this reference.
Documents
filed with USAC's Annual Report on Form 10-KSB for the year ended
December 31, 1995 (File No. 001-08675), are incorporated herein by
this reference:
10.10
Yellow Jacket
Venture Agreement
10.11
Agreement Between
Excel-Mineral USAC and Bobby C. Hamilton
10.12
Letter
Agreement
10.13
Columbia-Continental
Lease Agreement Revision
10.14
Settlement
Agreement with Excel Mineral Company
10.15
Memorandum
Agreement
10.16
Termination
Agreement
10.17
Amendment to
Assignment of Lease (Geosearch)
27
10.18
Series
B Stock Certificate to Excel-Mineral Company, Inc.
10.19
Division Order and
Purchase and Sale Agreement
10.20
Inventory and Sales
Agreement
10.21
Processing
Agreement
10.22
Release and
settlement agreement between Bobby C. Hamilton and United States
Antimony Corporation
10.23
Columbia-Continental
Lease Agreement
10.24
Release of
Judgment
10.25
Covenant Not to
Execute
10.26
Warrant Agreements
filed as an exhibit to USAC's Annual Report on Form 10-KSB for the
year ended December 31, 1996 (File No. 001-08675), are incorporated
herein by this reference
10.27
Letter from EPA,
Region 10 filed as an exhibit to USAC's Quarterly Report on Form
10-QSB for the quarter ended September 30, 1997 (File No.
001-08675) is incorporated herein by this reference
10.28
Warrant Agreements
filed as an exhibit to USAC's Annual Report on Form 10-KSB for the
year ended December 31, 1997 (File No. 001-08675) are incorporated
herein by this reference
10.30
Answer,
Counterclaim and Third-Party Complaint filed as an exhibit to
USAC's Quarterly Report on Forms 10-QSB for the quarter ended
September 30, 1998 (File No. 001-08675) is incorporated herein by
this reference
Documents
filed with USAC's Annual Report on Form 10-KSB for the year ended
December 31, 1998 (File No. 001-08675), are incorporated herein by
this reference:
10.31
Warrant Issue-Al W.
Dugan
10.32
Amendment
Agreement
Documents
filed with USAC's Quarterly Report on Form 10-QSB for the quarter
ended March 31, 1999 (File No. 001-08675) is incorporated herein by
this reference:
10.33
Warrant Issue-John
C. Lawrence
10.34
PVS Termination
Agreement
Documents
filed as an exhibit to USAC's Form 10-KSB for the year ended
December 31, 1999 (File No. 001-08675) are incorporated herein by
this reference:
10.35
Maguire Settlement
Agreement
10.36
Warrant
Issue-Carlos Tejada
10.37
Warrant Issue-Al W.
Dugan
10.38
Memorandum of
Understanding with Geosearch Inc.
10.39
Factoring
Agreement-Systran Financial Services Company
28
10.40
Mortgage to John C.
Lawrence
10.41
Warrant Issue-Al W.
Dugan filed as an exhibit to USAC's Quarterly Report on Form 10-QSB
for the quarter ended March 31, 2000 (File No. 001-08675) is
incorporated herein by this reference
10.42
Agreement between
United States Antimony Corporation and Thomson Kernaghan & Co.,
Ltd. filed as an exhibit to USAC form 10-QSB for the quarter ended
June 30, 2000 (File No. 001-08675) are incorporated herein by this
reference
10.43
Settlement
agreement and release of all claims between the Estate of Bobby C.
Hamilton and United States Antimony Corporation filed as an exhibit
to USAC form 10-QSB for the quarter ended June 30, 2000 (File No.
001-08675) are incorporated herein by this reference.
10.44
Supply Contracts
with Fortune America Trading Ltd. filed as an exhibit to USAC form
10-QSB for the quarter ended June 30, 2000 (File No. 001-08675) are
incorporated herein by this reference
10.45
Amended and
Restated Agreements with Thomson Kernaghan & Co., Ltd, filed as
an exhibit to amendment No. 3 to USAC's Form SB-2 Registration
Statement (Reg. No. 333-45508), are incorporated herein by this
reference
10.46
Purchase Order from
Kohler Company, filed as an exhibit to amendment No. 4 to USAC's
Form SB-2 Registration Statement (Reg. No. 333-45508) are
incorporated herein by this reference
Documents
filed as an exhibit to USAC's Form 10-QSB for the quarter ended
June 30, 2002 (File No. 001-08675) are incorporated herein by this
reference:
Bear River Zeolite
Company Royalty Agreement, dated May 29, 2002
Grant of Production
Royalty, dated June 1, 2002
Assignment of
Common Stock of Bear River Zeolite Company, dated May 29,
2002
Agreement to Issue
Warrants of USA, dated May 29, 2002
Secured convertible
note payable - Delaware Royalty Company dated December 22,
2003*
Convertible note
payable - John C. Lawrence dated December 22, 2003*
Pledge, Assignment
and Security Agreement dated December 22, 2003*
Note Purchase
Agreement dated December 22, 2003*
Code of
Ethics*
Rule
13a-14(a)/15d-14(a) Certifications
- Certification of
John C. Lawrence*
Section 1350
Certifications
- Certification of
John C. Lawrence*
44.1
CERCLA Letter from
U.S. Forest Service filed as an exhibit to USAC form 10-QSB for the
quarter ended June 30, 2000 (File No. 001-08675) are incorporated
herein by this reference and filed as an exhibit to USAC's Form
10-KSB for the year ended December 31, 1995 (File No. 1-8675) is
incorporated herein by this reference
______________________
* Filed
herewith.
29
Reports
on Form 8-K
Item
5.
Other Events -
October 10, 2003.
Subsidiaries of Registrant, as of December 31, 2020
Bear
River Zeolite Company
C/o Box
643
Thompson
Falls, MT 59873
Antimonio
de Mexico, S.A. de C.V.
C/o Box
643
Thompson
Falls, MT 59873
United
States Antimony, Mexico, S.A. de C.V.
C/o Box
643
Thompson
Falls, MT 59873
Stibnite
Holding Company US Inc.
C/o Box
643
Thompson
Falls, MT 59873
Antimony
Mining and Milling US LLC
C/o Box
643
Thompson
Falls, MT 59873
AGUA
Mines, Inc
C/0 Box
643
Thompson
Falls, MT 59873
30
Pursuant
to Section 1503(a) of the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 (the “Dodd-Frank Act”),
issuers that are operators, or that have a subsidiary that is an
operator, of a coal or other mine in the United States are required
to disclose in their periodic reports filed with the SEC
information regarding specified health and safety violations,
orders and citations, related assessments and legal actions, and
mining-related fatalities. During the year ended December 31, 2020,
we had no material specified health and safety violations, orders
or citations, related assessments or legal actions, mining-related
fatalities, or similar events in relation to our United States
operations requiring disclosure pursuant to Section 1503(a) of the
Dodd-Frank Act, except as follows:
MSHA Actions for the year ended December 31, 2020
31
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(b) 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.
UNITED
STATES ANTIMONY CORPORATION
(Registrant)
By
/s/Russell
Lawrence
Date:
March 31,
2021
Russell Lawrence,
Interim President, Director, and Principal Executive
Officer
By
/s/Alicia Hill
Date:
March 31, 2021
Alicia
Hill, Controller
Pursuant
to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates
indicated.
By
/s/Russell Lawrence
Date:
March 31, 2021
Russell
Lawrence, Interim Director and President
(Principal
Executive)
By
/s/Hart Baitis
Date:
March 31, 2021
Hart
Baitis, Director
By
/s/Blaise Aguirre
Date:
March 31, 2021
Blaise
Aguirre, Director
By
/s/ Joseph
Bardswich
Date:
March 31,
2021
Joseph
Bardswich, Director
32
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the shareholders and the board of directors of United States
Antimony Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of
United States Antimony Corporation (the "Company") as of December
31, 2020 and 2019, the related consolidated statements of
operations, changes in
stockholders’ equity and cash flows for each of the years
then ended, and the related notes (collectively referred to as the
"financial statements"). In our opinion, the financial statements
present fairly, in all material respects, the financial position of
the Company
as of
December 31, 2020 and 2019, and the
results of its operations and its cash flows for each of the years
then ended, in conformity with
accounting principles
generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on the
Company's financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting
Oversight Board (United States) ("PCAOB") and are required to be
independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error
or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial
reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting but not
for the purpose of expressing an opinion on the effectiveness of
the Company's internal control over financial reporting.
Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis
for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising
from the current-period audit of the financial statements that was
communicated or required to be communicated to the audit committee
and that (1) relates to accounts or disclosures that are material
to the financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of
critical audit matters does not alter in any way our opinion on the
financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or
disclosures to which it relates.
F-1
Assessment of Properties, Plants and Equipment for
Impairment
As described in Note 2 to the consolidated financial statements,
management reviews and evaluates the net carrying value of
properties, plants and equipment for impairment upon the occurrence
of events or changes in circumstances that indicate that the
related carrying amounts may not be recoverable. If deemed
necessary based on this review and evaluation, management performs
a test for impairment. The determination of whether an impairment
has occurred is based on an estimate of undiscounted future net
cash flows attributable to the assets as compared to the carrying
value of the assets.
In its review and evaluation, management determined that the
carrying amount of properties, plants and equipment located in
Mexico (“Mexican PPE”), which has a carrying value of
$8,438,413 as of December 31, 2020, may not be recoverable and
prepared an undiscounted future net cash flows analysis to
determine recoverability. Based on its analysis, management
concluded that the undiscounted future net cash flow exceeded the
net carrying value of the Mexican PPE and an impairment was not
recognized.
The undiscounted future net cash flow analysis prepared by
management is sensitive to assumptions including quantities of
recoverable minerals, expected metal prices, production levels, and
estimated operating costs
of
production and capital.
We identified the impairment assessment of the Mexican PPE as a
critical audit matter due to the materiality of the Mexican PPE
balance, the high degree of auditor judgment and an increased level
of effort when performing audit procedures to evaluate the
reasonableness of management’s assumptions in determining the
undiscounted future net cash flows. The primary procedures we
performed to address this critical audit matter
included:
|
●
|
Evaluation of the Company’s identification of significant
events or changes in circumstances that have occurred indicating
the underlying Mexican PPE may not be recoverable by performing an
independent assessment.
|
|
●
|
Discussion with management of future business plans for the Mexican
PPE and assessment as to whether the undiscounted future net cash
flow analysis was consistent with the plans.
|
|
●
|
Comparison of key assumptions utilized in the current undiscounted
future net cash analysis to assumptions used in past analyses and
assessed whether the current analysis appropriately reflected the
impact of changes to the Company’s business plans and
operations, current metal prices, actual operating costs, and
industry-specific events.
|
|
●
|
In addition to ensuring key assumptions were consistent with
evidence obtained in other areas of the audit, evaluation of the
significant assumptions and judgements used in the Company’s
analysis including:
|
o
estimated metal
price through comparison to publicly available industry
information,
o
estimated future
operating and development costs through comparison to the
Company’s historical costs, and
o
estimated
quantities of recoverable minerals through comparison to historical
data and based on our knowledge and experience with the
Company.
/s/ Assure CPA, LLC
Assure CPA, LLC (formerly DeCoria, Maichel & Teague,
P.S.)
We have served as the Company's independent auditor since
1998.
Spokane, Washington
March
31, 2021
F-2
|
United States Antimony Corporation and Subsidiaries
|
|
|
|
Consolidated Balance Sheets
|
|
|
|
December 31, 2020 and 2019
|
|
|
|
ASSETS
|
|
|
|
|
2020
|
2019
|
|
Current
assets:
|
|
|
|
Cash
and cash equivalents
|
$
665,102
|
$
115,506
|
|
Certificates
of deposit
|
254,212
|
253,552
|
|
Accounts
receivable
|
238,634
|
284,453
|
|
Inventories
|
650,213
|
626,244
|
|
Total
current assets
|
1,808,161
|
1,279,755
|
|
|
|
|
|
Properties,
plants and equipment, net
|
11,225,594
|
12,186,848
|
|
Restricted
cash for reclamation bonds
|
57,275
|
57,261
|
|
IVA
receivable and other assets
|
208,472
|
170,111
|
|
Total
assets
|
$
13,299,502
|
$
13,693,975
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Checks
issued and payable
|
$
86,685
|
$
17,633
|
|
Accounts
payable
|
1,876,874
|
2,328,977
|
|
Payable
to related parties
|
227,432
|
359,309
|
|
Accrued
liabilities
|
635,626
|
638,288
|
|
Notes
payable to bank
|
100,000
|
197,066
|
|
Export
tax assessment payable (Note 13)
|
1,120,730
|
-
|
|
Hillgrove
advances payable (Note 10)
|
378,074
|
378,074
|
|
Long-term
debt, current portion
|
52,122
|
56,334
|
|
Total
current liabilities
|
4,477,543
|
3,975,681
|
|
|
|
|
|
Long-term
debt, net of current portion
|
34,304
|
76,762
|
|
Hillgrove
advances payable (Note 10)
|
756,147
|
756,147
|
|
CARES
Act note payable (Note 17)
|
443,400
|
-
|
|
Stock
payable to directors for services
|
110,000
|
134,375
|
|
Asset
retirement obligations and accrued reclamation costs
|
291,719
|
283,868
|
|
Total
liabilities
|
6,113,113
|
5,226,833
|
|
Commitments
and contingencies (Notes 13 and 15)
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
Preferred
stock $0.01 par value, 10,000,000 shares authorized:
|
|
|
|
Series
A: -0- shares issued and outstanding
|
-
|
-
|
|
Series
B: 750,000 shares issued and outstanding
|
|
|
|
(liquidation
preference $945,000 and $937,500
|
|
|
|
respectively)
|
7,500
|
7,500
|
|
Series
C: 177,904 shares issued and outstanding
|
|
|
|
(liquidation
preference $97,847 both years)
|
1,779
|
1,779
|
|
Series
D: 1,751,005 shares issued and outstanding
|
|
|
|
(liquidation
preference $5,084,770 and $5,043,622
|
|
|
|
respectively)
|
17,509
|
17,509
|
|
Common
stock, $0.01 par value, 150,000,000 shares authorized;
|
|
|
|
75,949,757
and 69,661,436 shares issued and outstanding,
respectively
|
759,496
|
696,614
|
|
Additional
paid-in capital
|
39,050,899
|
37,107,730
|
|
Accumulated
deficit
|
(32,650,794
)
|
(29,363,990
)
|
|
Total
stockholders' equity
|
7,186,389
|
8,467,142
|
|
Total
liabilities and stockholders' equity
|
$
13,299,502
|
$
13,693,975
|
The accompanying
notes are an integral part of these consolidated financial
statements.
F-3
|
United States Antimony Corporation and Subsidiaries
|
||
|
Consolidated Statements of Operations
|
|
|
|
For the years ended December 31, 2020 and 2019
|
||
|
|
|
|
|
|
2020
|
2019
|
|
|
|
|
|
REVENUES
|
$
5,235,530
|
$
8,268,005
|
|
|
|
|
|
COST OF REVENUES
|
5,029,832
|
9,084,256
|
|
|
|
|
|
GROSS PROFIT (LOSS)
|
205,698
|
(816,251
)
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
General
and administrative
|
607,365
|
674,494
|
|
Exploration
expense
|
165,183
|
-
|
|
Salaries
and benefits
|
367,491
|
518,758
|
|
Export
tax assessment
|
1,120,920
|
-
|
|
Other
operating expenses
|
684,361
|
88,347
|
|
Professional
fees
|
246,618
|
245,091
|
|
Loss
on mineral properties
|
318,502
|
1,410,736
|
|
TOTAL
OPERATING EXPENSES
|
3,510,440
|
2,937,426
|
|
|
|
|
|
INCOME
(LOSS) FROM OPERATIONS
|
(3,304,742
)
|
(3,753,677
)
|
|
|
|
|
|
OTHER
INCOME (EXPENSE):
|
|
|
|
Interest
expense
|
(17,991
)
|
(78,344
)
|
|
Other
income (expense)
|
35,929
|
159,130
|
|
TOTAL
OTHER INCOME (EXPENSE)
|
17,938
|
80,786
|
|
|
|
|
|
NET INCOME (LOSS)
|
(3,286,804
)
|
(3,672,891
)
|
|
Preferred
dividends
|
(48,649
)
|
(48,649
)
|
|
|
|
|
|
Net
income (loss) available to common stockholders
|
$
(3,335,453
)
|
$
(3,721,540
)
|
|
|
|
|
|
Net
income (loss) per share of common stock:
|
|
|
|
Basic
and diluted
|
$
(0.05
)
|
$
(0.05
)
|
|
|
|
|
|
Weighted
average shares outstanding:
|
|
|
|
Basic
and diluted
|
72,513,814
|
69,004,897
|
The
accompanying notes are an integral part of these consolidated
financial statements.
F-4
|
United States Antimony Corporation and
Subsidiaries
|
|
|
|
|
|
||
|
Consolidated Statements of Changes in Stockholders'
Equity
|
|
|
|
||||
|
For the years ended December 31, 2020 and 2019
|
|
|
|
|
|
||
|
|
|
|
|
|
Additional
|
|
Total
|
|
|
Total Preferred Stock
|
Common Stock
|
Paid
|
Accumulated
|
Stockholders'
|
||
|
|
Shares
|
Amount
|
Shares
|
Amount
|
In Capital
|
Deficit
|
Equity
|
|
Balances,
December 31, 2018
|
2,678,909
|
$
26,788
|
68,227,171
|
682,271
|
$
36,406,874
|
$
(25,691,099
)
|
$
11,424,834
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
2,000
|
134,000
|
|
136,000
|
|
|
Issuance of
common stock to Directors
|
|
|
330,183
|
3,302
|
171,698
|
|
175,000
|
|
Issuance of
common stock for cash
|
|
|
904,082
|
9,041
|
395,158
|
|
404,199
|
|
Net
loss
|
|
|
|
|
|
(3,672,891
)
|
(3,672,891
)
|
|
Balances,
December 31, 2019
|
2,678,909
|
26,788
|
69,661,436
|
696,614
|
37,107,730
|
(29,363,990
)
|
8,467,142
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock upon exercise of warrants
|
|
250,000
|
2,500
|
60,000
|
|
62,500
|
|
|
Issuance of
common stock to Directors
|
|
|
295,463
|
2,954
|
127,529
|
|
130,483
|
|
Issuance
of common stock and warrants for cash
|
|
5,742,858
|
57,428
|
1,952,572
|
|
2,010,000
|
|
|
Common stock
issuance costs
|
|
|
|
|
(196,932
)
|
|
(196,932
)
|
|
Net
loss
|
|
|
|
|
|
(3,286,804
)
|
(3,286,804
)
|
|
Balances,
December 31, 2020
|
2,678,909
|
$
26,788
|
75,949,757
|
759,496
|
$
39,050,899
|
$
(32,650,794
)
|
$
7,186,389
|
The accompanying notes are an integral part of these
consolidated financial statements.
F-5
|
United States Antimony Corporation and Subsidiaries
|
|
|
|
Consolidated Statements of Cash Flows
|
|
|
|
For the years ended December 31, 2020 and 2019
|
|
|
|
|
|
|
|
|
2020
|
2019
|
|
Cash
Flows From Operating Activities:
|
|
|
|
Net
income (loss)
|
$
(3,286,804
)
|
$
(3,672,891
)
|
|
Adjustments
to reconcile net income (loss) to net cash
|
|
|
|
provided
(used) by operating activities:
|
|
|
|
Depreciation
and amortization
|
885,843
|
895,990
|
|
Loss
on mineral properties
|
318,502
|
1,410,736
|
|
Write-down
of inventory to net realizable value
|
-
|
16,396
|
|
Amortization
of debt discount
|
-
|
54,112
|
|
Accretion
of asset retirement obligation
|
7,851
|
6,148
|
|
Common
stock issued for services
|
-
|
136,000
|
|
Common
stock payable for directors' fees
|
106,108
|
134,375
|
|
Other
non cash items
|
(660
)
|
(598
)
|
|
Change
in:
|
|
|
|
Accounts
receivable, net
|
45,819
|
153,938
|
|
Inventories
|
(23,969
)
|
112,621
|
|
IVA
receivable and other assets
|
(38,361
)
|
199,337
|
|
Accounts
payable
|
(452,103
)
|
402,657
|
|
Accrued
liabilities
|
(2,662
)
|
76,416
|
|
Export
tax assessment payable
|
1,120,730
|
-
|
|
Payables
to related parties
|
14,042
|
63,408
|
|
Net
cash provided (used) by operating activities
|
(1,305,664
)
|
(11,355
)
|
|
|
|
|
|
Cash
Flows From Investing Activities:
|
|
|
|
Payment
received on note receivable for sale of land
|
-
|
400,000
|
|
Purchases
of properties, plants and equipment
|
(243,091
)
|
(792,925
)
|
|
Net
cash used by investing activities
|
(243,091
)
|
(392,925
)
|
|
|
|
|
|
Cash
Flows From Financing Activities:
|
|
|
|
Change
in checks issued and payable
|
69,052
|
(28,849
)
|
|
Proceeds
from issuance of common stock and warrants, net of issuance
costs
|
1,813,068
|
404,199
|
|
Advances
from related party
|
-
|
237,400
|
|
Payments
on advances from related party
|
(83,419
)
|
(35,066
)
|
|
Proceeds
from CARES Act note payable
|
443,400
|
-
|
|
Proceeds
(payments) on notes payable to bank, net
|
(97,066
)
|
13,149
|
|
Principal
payments on long-term debt
|
(46,670
)
|
(127,683
)
|
|
Net
cash provided (used) by financing activities
|
2,098,365
|
463,150
|
|
|
|
|
|
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
549,610
|
58,870
|
|
Cash
and cash equivalents and restricted cash at beginning of
period
|
172,767
|
113,897
|
|
Cash
and cash equivalents and restricted cash at end of
period
|
$
722,377
|
$
172,767
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
|
Interest
paid in cash
|
$
17,991
|
$
24,233
|
|
Noncash
investing and financing activities:
|
|
|
|
Common
stock payable issued to directors
|
130,483
|
175,000
|
|
Payable
to related party satisfied with exercise of stock
|
|
|
|
purchase
warrant
|
62,500
|
-
|
The accompanying notes are an integral part of these consolidated
financial statements.
F-6
1.
Background
of Company and Basis of Presentation
AGAU
Mines, Inc., predecessor of United States Antimony Corporation
("USAC" or "the Company"), was incorporated in June 1968 as a
Delaware corporation to mine gold and silver. USAC was incorporated
in Montana in January 1970 to mine and produce antimony products.
In June 1973, AGAU Mines, Inc. was merged into USAC. In December
1983, the Company suspended its antimony mining operations when it
became possible to purchase antimony raw materials more
economically from foreign sources. The principal business of
the Company has been the production and sale of antimony
products.
During
2000, the Company formed a 75% owned subsidiary, Bear River Zeolite
Company ("BRZ"), to mine and market zeolite and zeolite products
from a mineral deposit in southeastern Idaho. In 2001, an
operating plant was constructed at the zeolite site and zeolite
production and sales commenced. During 2002, the Company
acquired the remaining 25% of BRZ and continued to produce and sell
zeolite products.
During
2005, the Company formed a 100% owned subsidiary, Antimonio de
Mexico S.A. de C.V. (“AM”), to explore and develop
potential antimony properties in Mexico.
During
2006, the Company acquired 100% ownership in United States
Antimony, Mexico S.A. de C.V. (“USAMSA”), which became
a wholly-owned subsidiary of the Company.
In 2018, the
Company acquired 100% ownership in Stibnite Holding Company US Inc.
(previously Lanxess Holding Company US Inc.), Antimony Mining and
Milling US LLC (previously Lanxess Laurel US LLC), a Delaware
limited liability company and Lanxess Laurel de Mexico, S.A. de C.V
(“Lanxess Laurel Mexico”), a Mexico corporation, both
of which became a wholly-owned subsidiary of the
Company.
COVID-19 Coronavirus Pandemic Response and Impact
Following the
outbreak of the COVID-19 coronavirus global pandemic ("COVID-19")
in early 2020, in March 2020 the U.S. Centers for Disease Control
issued guidelines to mitigate the spread and health consequences of
COVID-19. The Company implemented changes to its operations and
business practices to follow the guidelines and minimize physical
interaction, including using technology to allow employees to work
from home when possible and altering production procedures and
schedules, asset maintenance, and limiting discretionary spending.
As long as they are required, the operational practices implemented
could have an adverse impact on our operating results due to
deferred production and revenues or additional costs. The negative
impact of COVID-19 remains uncertain, including on overall business
and market conditions. The impact of these restrictions on our
business has been minimal. It is possible that future restrictions
could have an adverse impact on our operations or financial results
beyond 2020.
2.
Summary
of Significant Accounting Policies
Principles of Consolidation
The
Company's consolidated financial statements include the accounts of
its wholly-owned subsidiaries BRZ, USAMSA, AM, Stibnite Holding
Company US Inc., and Antimony Mining and Milling US LLC. All
intercompany balances and transactions are eliminated in
consolidation.
Use of Estimates
The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Significant and critical estimates include
property, plant and equipment depreciation and potential
impairment, metal content of mineral resources, accounts receivable
allowance for uncollectible accounts, net realizable value of
inventories, deferred income taxes, income taxes payable,
environmental remediation liabilities and asset retirement
obligations. Actual results could differ from those
estimates.
F-7
2.
Summary
of Significant Accounting Policies, continued:
Cash and Cash Equivalents
The
Company considers cash in banks and investments with original
maturities of three months or less when purchased to be cash
equivalents.
Restricted Cash
Restricted cash at
December 31, 2020 and 2019 consists of cash held for reclamation
performance bonds and is held in certificates of deposit with
financial institutions.
Accounts Receivable
Accounts receivable
are stated at the amount that management expects to collect from
outstanding balances. Management provides for probable
uncollectible amounts through an allowance for doubtful accounts.
Changes to the allowance for doubtful accounts are based on
management’s judgment, considering historical write-offs,
collections and current credit conditions. Balances which remain
outstanding after management has used reasonable collection efforts
are written off through a charge to the allowance for doubtful
accounts and a credit to the applicable accounts receivable.
Payments received on receivables subsequent to being written off
are considered a bad debt recovery.
Inventories
Inventories at
December 31, 2020 and 2019 consisted of finished antimony products,
antimony metal, antimony concentrates, antimony ore, and finished
zeolite products, and are stated at the lower of first-in,
first-out weighted average cost or estimated net realizable value.
Finished antimony products, antimony metal and finished zeolite
products costs include raw materials, direct labor and processing
facility overhead costs and freight allocated based on production
quantity. Stockpiled ore is carried at the lower of average cost or
net realizable value. Since the Company's antimony inventory is a
commodity with a sales value that is subject to world prices for
antimony that are beyond the Company's control, a significant
change in the world market price of antimony could have a
significant effect on the net realizable value of inventories. The
Company periodically reviews its inventories to identify excess and
obsolete inventories and to estimate reserves for obsolete
inventories as necessary to reflect inventories at net realizable
value.
Translations of Foreign Currencies
All
amounts in the financial statements are presented in U.S. dollars,
which is the functional currency for all of the Company’s
operations. Foreign translation gains and losses relating to
Mexican subsidiaries are recognized as foreign exchange gain or
loss in the consolidated statement of operations.
Going Concern Consideration
At
December 31, 2020, the Company’s consolidated financial
statements show negative working capital of approximately $2.7
million and an accumulated deficit of approximately $32.7
million. With the exception of 2018, the Company has incurred
losses for the past several years. The net income in 2018 was
primarily due to non-recurring events which contributed
approximately $2.5 million to net income. The continuing losses are
principally a result of the Company’s antimony operations due
to both depressed antimony prices and production costs incurred in
Mexico. To improve conditions, the Company plans to continue
searching for areas to reduce these production costs.
Management expects improvement in cash flow in 2021 from the sale
of precious metals extracted from the leach circuit that came on
line in Mexico in the second half of 2020.
F-8
2.
Summary
of Significant Accounting Policies, continued:
Over
the past several years, the Company has been able to make required
principal payments on its debt from cash generated from operations.
The Company is confident it can make debt payments when due. In
March 2020, the Company applied for and received funds from a note
payable under the CARES Act for $443,400. In July 2020 the Company
was successful in raising $1,813,068 from the sale of shares of
common stock and warrants to fund capital projects in Mexico. In
the first quarter of 2021, the Company raised $23,497,180 (net of
$1,499,820 in agent’s fees) from sale of shares of its common
stock and warrants that will be used for general corporate
purposes, working capital, and to fund a geochemical, geological
and geophysical program at the Los Juarez property. With the funds
raised, management believes the Company has sufficient funds to
sustain its operations and meet its financial obligations during
the 12 months following the date of issuance of the consolidated
financial statements.
Properties, Plants and Equipment
Properties, plants
and equipment are stated at historical cost and are depreciated
using the straight-line method over estimated useful lives of two
to thirty years. Vehicles and office equipment are stated at cost
and are depreciated using the straight-line method over estimated
useful lives of three to twelve years. Maintenance and repairs are
charged to operations as incurred. Betterments of a major nature
are capitalized. Expenditures for new property, plant, equipment,
and improvements that extend the useful life or functionality of
the asset are capitalized. When assets are retired or sold, the
costs and related accumulated depreciation are eliminated from the
accounts and any resulting gain or loss is reflected in
operations.
The
costs to obtain the legal right to explore, extract and retain at
least a portion of the benefits from mineral deposits are
capitalized as mineral rights in the year of acquisition. These
capitalized costs are amortized on the statement of operations
using the straight line method over the expected life of the
mineral deposit when placed into production. Mineral rights are
assessed for impairment when facts and circumstances indicate that
the potential for impairment exists. Mineral rights are subject to
write down in the period the property is abandoned. Mineral
properties are amortized over the estimated economic life of the
mineral resource using the straight-line method, based upon
estimated lives of the properties, or the units-of-production
method, based upon estimated units of mineral
resource.
Impairment of Long-lived Assets
Management reviews
and evaluates the net carrying value of its long-lived assets for
impairment upon the occurrence of events or changes in
circumstances that indicate that the related carrying
amounts may not be recoverable. A test for
recoverability is performed based on the estimated undiscounted
future cash flows that will be generated from operations at each
property and the estimated salvage value of asset. Although
management has made what it believes to be a reasonable estimate of
factors based on current conditions and information, assumptions
underlying future cash flows, which includes the estimated value of
assets, are subject to significant risks and uncertainties.
Estimates of undiscounted future cash flows are dependent upon,
among other factors, estimates of: (i) product and metals to be
recovered from identified mineralization and other resources (ii)
future production and capital costs, (iii) estimated
selling
prices (considering current, historical, and future prices) over
the estimated remaining life of the asset and (iv) market values of
property, if appropriate. It is possible that changes could occur
in the near term that could adversely affect the estimate of future
cash flows to be generated from operating properties. If estimated
undiscounted cash flows are less than the carrying value of an
asset, an impairment loss is recognized for the difference between
the carrying value and fair value of the asset.
F-9
2.
Summary
of Significant Accounting Policies, continued:
Exploration and Development
The
Company expenses exploration costs as such in the period they
occur. The mine development stage begins once the Company has
determined an ore body can be economically developed. Expenditures
incurred during the development stage are capitalized as deferred
development costs. Costs to improve, alter, or rehabilitate primary
development assets which appreciably extend the life, increase
capacity, or improve the efficiency or safety of such assets are
also capitalized. The development stage ends when the production
stage of reserves begins. Deferred development costs are amortized
over the estimated economic life of the mineral resource using the
straight-line method, based upon estimated lives of the properties,
or the units-of-production method, based upon estimated units of
mineral resource.
Asset Retirement Obligations and Reclamation Costs
All of
the Company's mining operations are subject to reclamation and
remediation requirements. Minimum standards for mine reclamation
have been established by various governmental agencies. Costs are
estimated based primarily upon environmental and regulatory
requirements and are accrued. The liability for reclamation is
classified as current or noncurrent based on the expected timing of
expenditures. Reclamation differs from an asset retirement
obligation in that no associated asset is recorded in the case of
reclamation liabilities.
It is
reasonably possible that because of uncertainties associated with
defining the nature and extent of environmental contamination,
application of laws and regulations by regulatory authorities, and
changes in remediation technology, the ultimate cost of remediation
and reclamation could change in the future. The Company continually
reviews its accrued liabilities for such remediation and
reclamation costs as evidence becomes available indicating that its
remediation and reclamation liability has changed.
The
Company records the fair value of an asset retirement obligation as
a liability in the period in which the Company incurs a legal
obligation for the retirement of long-lived assets if it is
probable that such costs will be incurred and they are reasonably
estimable. A corresponding asset is also recorded and depreciated
over the life of the assets on a straight line basis. After the
initial measurement of the asset retirement obligation, the
liability will be adjusted to reflect changes in the estimated
future cash flows underlying the obligation. Determination of any
amounts included in determination of fair value is based upon
numerous estimates and assumptions, including future retirement
costs, future inflation rates, and the Company’s
credit-adjusted risk-free interest rates.
Revenue Recognition
Products consist of
the following:
●
Antimony: includes
antimony oxide, sodium antimonate,
antimony trisulfide, and antimony metal
●
Zeolite:
includes coarse and fine zeolite crushed in various
sizes
●
Precious Metals: includes unrefined and
refined gold and silver
For
antimony and zeolite products, revenue is recognized upon the
completion of the performance obligation which is met when the
transaction price can be reasonably estimated and revenue is
recognized generally at the time when risk is transferred. The
Company has determined the performance obligation is met and title
is transferred either upon shipment from the Company’s
warehouse locations or upon receipt by the customer as specified in
individual sales orders. The performance obligation is met because
at that time, 1) legal title is transferred to the customer, 2) the
customer has accepted the product and obtained the ability to
realize all of the benefits from the product, 3) the customer has
the significant risks and rewards of ownership to it, 4) it is very
unlikely product will be rejected by the customer upon physical
receipt, and 5) the Company has the right to payment for the
product. Shipping costs related to the sales of antimony and
zeolite products are recorded to cost of sales as incurred. For
zeolite products, royalty expense due a third party by the Company
is also recorded to cost of sales upon sale in accordance with
terms of underlying royalty agreements.
F-10
2.
Summary
of Significant Accounting Policies, continued:
For
sales of precious metals, the performance obligation is met, the
transaction price is known, and revenue is recognized at the time
of transfer of control of the agreed-upon metal quantities to the
customer. Refining and shipping costs related to sales of precious
metals are recorded to cost of sales as incurred.
The
Company has determined that its contracts do not include a
significant financing component. Prepayments, which are not common,
received from customers prior to the time that products are
processed and shipped, are recorded as deferred revenue. For
antimony and zeolite sales contracts, the Company may factor
certain receivables and receive final payment within 30 days of the
performance obligation being met. For antimony and zeolite
receivables not factored, the Company typically receives payment
within 10 days. For precious metals sales,
a
provisional payment of 75% is typically received within 45 days of
the date the product is delivered to the customer. After an
exchange of assays, a final payment is normally received within 90
days of product delivery.
Common Stock Issued for Consideration Other than Cash
All
transactions in which goods or services are received for the
issuance of shares of the Company’s common stock are
accounted for based on the fair value of the common stock
issued.
Income Taxes
Income
taxes are accounted for under the liability method. Under this
method, deferred income tax liabilities or assets are determined at
the end of each period using the tax rate expected to be in effect
when the taxes are actually paid or recovered. A valuation
allowance is recognized on deferred tax assets when it is more
likely than not that some or all of these deferred tax assets will
not be realized.
The
Company applies generally accepted accounting principles for
recognition of uncertainty in income taxes and prescribing a
recognition threshold and measurement attribute for the recognition
and measurement of a tax position taken or expected to be taken in
a tax return.
Income (Loss) Per Common Share
Basic
earnings per share is calculated by dividing net income (loss)
available to common stockholders by the weighted average number of
common shares outstanding during the period. Diluted earnings per
share is calculated based on the weighted average number of common
shares outstanding during the period plus the effect of potentially
dilutive common stock equivalents, including stock options,
warrants to purchase the Company's common stock, and convertible
preferred stock. For the years ended December 31, 2020 and 2019,
potentially dilutive common stock equivalents not included in the
calculation of diluted earnings per share because they were
anti-dilutive are as follows:
|
|
December
31,
2020
|
December
31,
2019
|
|
Warrants
|
6,194,899
|
702,041
|
|
Convertible
preferred stock
|
1,751,005
|
1,751,005
|
|
Total possible
dilution
|
7,945,904
|
2,453,046
|
Fair Value of Financial Instruments
The
Company’s financial instruments include cash and cash
equivalents, certificates of deposits, restricted cash, due to
factor (included in accrued liabilities), notes payable to bank,
and notes payable. The carrying value of these instruments
approximates fair value based on their contractual
terms.
F-11
2.
Summary
of Significant Accounting Policies, continued:
Fair Value Measurements
When
required to measure assets or liabilities at fair value, the
Company uses a fair value hierarchy based on the level of
independent, objective evidence surrounding the inputs used. The
Company determines the level within the
fair
value hierarchy in which the fair value measurements in their
entirety fall. The categorization within the fair value hierarchy
is based upon the lowest level of input that is significant to the
fair value measurement. Level 1 uses quoted prices in active
markets for identical assets or liabilities, Level 2 uses
significant other observable inputs, and Level 3 uses significant
unobservable inputs. The amount of the total gains or losses for
the period are included in earnings that are attributable to
the change in unrealized gains or losses relating to those assets
and liabilities still held at the reporting date. The Company has
no financial assets or liabilities that are adjusted to fair value
on a recurring basis.
Contingencies
In
determining accruals and disclosures with respect to loss
contingencies, the Company evaluates such accruals and
contingencies for each reporting period. Estimated losses from loss
contingencies are accrued by a charge to income when information
available prior to issuance of the financial statements indicates
that it is probable that a liability could be incurred and the
amount of the loss can be reasonably estimated. Legal expenses
associated with the contingency are expensed as incurred. If a loss
contingency is not probable or reasonably estimable, disclosure of
the loss contingency is made in the financial statements when it is
at least reasonably possible that a material loss could be
incurred.
Reclassifications
Certain
reclassifications have been made to conform the prior year’s
data to the current year’s presentation. These
reclassifications have no effect on previously reported operations,
stockholders’ equity or cash flows.
Recent Accounting Pronouncements
Accounting Standards Updates Adopted
In August 2018, the Financial Accounting Standards
Board (“FASB”) issued Auditing Standards Update
(“ASU”) No. 2018-13 Fair Value Measurement (Topic 820):
Disclosure Framework-Changes to the Disclosure Requirements for
Fair Value Measurement. The update removes, modifies and makes
additions to the disclosure requirements on fair value
measurements.
The update was adopted as of January 1, 2020,
and its adoption did not have a material impact on the
Company’s consolidated financial statements.
Accounting Standards Updates to Become Effective in Future
Periods
In
December 2019, the FASB issued ASU No. 2019-12 Income Taxes (Topic
740): Simplifying the Accounting for Income Taxes. The update
contains a number of provisions intended to simplify the accounting
for income taxes. The update is effective for fiscal years
beginning after December 15, 2020, with early adoption permitted.
Management is evaluating the impact of
this update on the Company’s consolidated financial
statements.
In August 2020, the FASB issued ASU
No
.
2019
-
12
Debt with Conversion and Other Options (Subtopic
470
-
20) and Derivatives and Hedging—Contracts in
Entity’s Own Equity (Subtopic 815
-
40): Accounting for Convertible Instruments and
Contracts in an Entity’s Own Equity. The update is to address
issues identified as a result of the complexity associated with
applying generally accepted accounting principles for certain
financial instruments with characteristics of liabilities and
equity. The update is effective for fiscal years beginning after
December 15, 2021, including interim periods within those fiscal
years and with early adoption permitted. Management is evaluating
the impact of this update on the Company’s consolidated
financial statements.
F-12
3.
Revenue
Recognition
Sales
of products for the years ended December 31, 2020 and 2019, were as
follows:
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
|
2020
|
2019
|
|
Antimony
|
$
2,942,628
|
$
5,450,649
|
|
Zeolite
|
2,118,823
|
2,623,117
|
|
Precious
metals
|
174,079
|
194,239
|
|
|
$
5,235,530
|
$
8,268,005
|
The
following is sales information by geographic area based on the
location of customers for the years ended December 31, 2020, and
2019.
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
|
2020
|
2019
|
|
United
States
|
$
4,662,841
|
$
7,454,163
|
|
Canada
|
572,689
|
813,842
|
|
Mexico
|
-
|
-
|
|
|
$
5,235,530
|
$
8,268,005
|
Sales
of products to significant customers were as follows for the years
ended December 31, 2020, and 2019:
|
|
For the Year Ended
|
|
|
Sales to Three
|
December 31,
|
December 31,
|
|
Largest Customers
|
2020
|
2019
|
|
Mexichem
Specialty Compounds Inc.
|
$
633,846
|
$
1,823,194
|
|
GE
Chaplin, Inc.
|
589,384
|
-
|
|
Nyacol
Nanotechnologies
|
417,501
|
1,099,504
|
|
Kohler
|
345,899
|
1,132,674
|
|
|
$
1,986,630
|
$
4,055,372
|
|
% of Total Revenues
|
38
%
|
49
%
|
Accounts receivable
from the Company’s largest customers were as follows for
December 31, 2020, and 2019:
|
|
December 31,
|
December 31,
|
|
Largest Accounts Receivable
|
2020
|
2019
|
|
Nutreco
Canada Inc.
|
$
21,619
|
$
21,219
|
|
Earth
Innovations Inc.
|
68,055
|
15,184
|
|
Ralco
Mix
|
16,600
|
12,800
|
|
Premier
Tech
|
12,255
|
-
|
|
Lake
Shore
|
-
|
27,854
|
|
Total
|
$
118,529
|
$
77,057
|
|
% of Total Receivables
|
50
%
|
27
%
|
The
Company’s trade accounts receivable balance related to
contracts with customers was $238,634 at December 31, 2020 and
$284,453 at December 31, 2019.
F-13
4.
Accounts
Receivable and Due to Factor
The
Company factors designated trade receivables pursuant to a
factoring agreement with LSC Funding Group L.C., an unrelated
factor (the “Factor”). The agreement is for
a term of one year with automatic renewal for additional one-year
terms. The agreement specifies that eligible trade receivables are
factored with recourse. The performance of all obligations and
payments to the factoring company was personally guaranteed by John
C. Lawrence, the Company’s previous President and Chairman of
the Board of Directors. The existing agreement will be addressed in
2021 to account for Mr. Lawrence’s death and that impact on
the personal guarantee. Selected trade receivables are submitted to
the Factor, and the Company receives 85% of the face value of the
receivable by wire transfer. Upon payment by the customer, the
remainder of the amount due is received from the Factor, less a
one-time servicing fee of 2% for the receivables
factored. This servicing fee is recorded on the
consolidated statement of operations in the period of sale to the
Factor.
Trade
receivables assigned to the Factor are carried at the original
invoice amount less an estimate made for doubtful
accounts. Under the terms of the recourse provision, the
Company is required to reimburse the Factor, upon demand, for
factored receivables that are not paid on
time. Accordingly, these receivables are accounted for
as a secured financing arrangement and not as a sale of financial
assets.
Receivables, net of
allowances, are presented as current assets and the amount
potentially due to the Factor is included in current accrued
liabilities.
|
Accounts Receivable
|
December 31,
2020
|
December 31,
2019
|
|
Accounts
receivable - non factored
|
$
222,034
|
$
273,573
|
|
Accounts
receivable - factored with recourse
|
16,600
|
10,880
|
|
Accounts
receivable - net
|
$
238,634
|
$
284,453
|
5.
Inventories
The
major components of the Company's inventories at December 31, 2020
and 2019 were as follows:
|
|
2020
|
2019
|
|
Antimony
Oxide
|
$
67,377
|
$
204,550
|
|
Antimony
Metal
|
268,100
|
5,654
|
|
Antimony
Ore
|
95,880
|
151,841
|
|
Total
antimony
|
431,357
|
362,045
|
|
Zeolite
|
218,856
|
264,199
|
|
|
$
650,213
|
$
626,244
|
At
December 31, 2020 and 2019, antimony metal consisted principally of
recast metal from antimony-based compounds, and metal purchased
from foreign suppliers. Antimony oxide inventory consisted of
finished product oxide held at the Company's plant. Antimony
concentrates and ore were held primarily at sites in Mexico and are
essentially raw material. At December 31, 2020 and 2019, the
antimony oxide and concentrates inventory in Mexico were valued at
estimated net realizable value resulting in write-downs of $13,137
and $16,396, respectively. The Company's zeolite inventory consists
of salable zeolite material.
F-14
6.
Properties,
Plants and Equipment
The
major components of the Company's properties, plants and equipment
by segment at December 31, 2020 and 2019 are shown
below:
|
|
Antimony
Segment
|
Zeolite
Segment
|
Precious
Metals
|
|
|
|
2020
|
USAC
|
USAMSA
|
BRZ
|
Segment
|
TOTAL
|
|
Plant
and equipment
|
$
815,737
|
$
8,757,775
|
$
3,743,051
|
$
1,266,697
|
$
14,583,260
|
|
Buildings
|
247,210
|
613,449
|
410,780
|
-
|
1,271,439
|
|
Mineral
rights and interests
|
-
|
828,523
|
3,664
|
-
|
832,187
|
|
Land
and other
|
3,274,572
|
2,478,044
|
15,310
|
-
|
5,767,926
|
|
|
4,337,519
|
12,677,791
|
4,172,805
|
1,266,697
|
22,454,812
|
|
Accumulated
depreciation
|
(2,699,781
)
|
(5,042,381
)
|
(3,154,244
)
|
(332,812
)
|
(11,229,218
)
|
|
|
$
1,637,738
|
$
7,635,410
|
$
1,018,561
|
$
933,885
|
$
11,225,594
|
|
|
Antimony Segment
|
Zeolite Segment
|
Precious Metals
|
|
|
|
2019
|
USAC
|
USAMSA
|
BRZ
|
Segment
|
TOTAL
|
|
Plant
and equipment
|
$
783,290
|
$
9,164,600
|
$
3,729,061
|
$
813,714
|
$
14,490,665
|
|
Buildings
|
247,210
|
902,707
|
410,780
|
-
|
1,560,697
|
|
Mineral
rights and interests
|
-
|
816,786
|
3,664
|
-
|
820,450
|
|
Land
and other
|
3,274,572
|
2,529,294
|
15,310
|
-
|
5,819,176
|
|
|
4,305,072
|
13,413,387
|
4,158,815
|
813,714
|
22,690,988
|
|
Accumulated
depreciation
|
(2,673,972
)
|
(4,612,567
)
|
(2,971,625
)
|
(245,976
)
|
(10,504,140
)
|
|
|
$
1,631,100
|
$
8,800,820
|
$
1,187,190
|
$
567,738
|
$
12,186,848
|
United
States and Mexico components of properties, plants and
equipment:
|
|
2020
|
2019
|
|
United
States
|
$
2,787,181
|
$
2,961,895
|
|
Mexico
|
8,438,413
|
9,224,953
|
|
Total
|
$
11,225,594
|
$
12,186,848
|
The
Company’s precious metals segment includes properties, plants
and equipment in both the United States and Mexico. In the third
quarter of 2020, the Company decided not to renew the lease at the
Wadley Mining district in Mexico due to continuing low market price
for antimony and to reduce Mexican antimony production while
seeking other lower cost sources of antimony ore and concentrates.
The net carrying value of the mineral lease of $318,502 was
recognized as a loss on mineral properties during the year ended
December 31, 2020.
In the
fourth quarter of 2019, the Company abandoned the Soyatal and
Guadalupe mineral properties in Mexico. The net carrying value of
the mineral properties of $2,937,259 less the outstanding related
notes payable balances, resulted in a loss on mineral properties of
$1,410,736 which was recognized during the year ended December 31,
2019.
At
December 31, 2020 and 2019, the Company had $755,978 and
$1,306,579, respectively, of assets that were not yet placed in
service and have not yet been depreciated.
F-15
7.
Asset
Retirement Obligation and Accrued Reclamation Costs
Changes
to the asset retirement obligation balance during 2020 and 2019 are
as follows:
|
Asset Retirement Obligation
|
|
|
|
|
|
Balance
December 31, 2018
|
$
170,220
|
|
Accretion
during 2019
|
6,148
|
|
Balance
December 31, 2019
|
176,368
|
|
Accretion
during 2019
|
7,851
|
|
Balance
December 31, 2019
|
$
184,219
|
The
Company’s total asset retirement obligation and accrued
reclamation costs of $291,719 and $283,868, at December 31, 2020
and 2019, respectively, include reclamation obligations for the
Idaho and Montana operations of $107,500.
8.
Long-Term
Debt:
|
Long-Term
debt at December 31, 2020 and 2019 is as follows:
|
|
|
|
|
2020
|
2019
|
|
Note
payable to Zeo Inc., non interest bearing,
|
|
|
|
payable
in 11 quarterly installments of $8,300 with a final payment of
$8,700;
|
|
|
|
maturing
December 2022; uncollateralized.
|
$
66,800
|
$
100,000
|
|
Note
payable to Cat Financial Services, bearing interest at
6%;
|
|
|
|
payable
in monthly installments of $778; maturing
|
|
|
|
December
2022; collateralized by equipment.
|
17,480
|
26,250
|
|
Note
payable to De Lage Landen Financial Services,
|
|
|
|
bearing
interest at 3.51%; payable in monthly installments of
$655;
|
|
|
|
maturing
September 2019; collateralized by equipment.
|
|
700
|
|
Note
payable to Phyllis Rice, bearing interest
|
|
|
|
at
1%; payable in monthly installments of $2,000; originally
maturing
|
|
|
|
March
2015; collateralized by equipment.
|
2,146
|
6,146
|
|
|
86,426
|
133,096
|
|
Less
current portion
|
(52,122
)
|
(56,334
)
|
|
Long-term
portion
|
$
34,304
|
$
76,762
|
At
December 31, 2020, principal payments on debt are due as
follows:
|
12 Months Ending December 31,
|
Principal Payment
|
|
2021
|
52,122
|
|
2022
|
34,304
|
|
|
$
86,426
|
In the
fourth quarter 2019, the Company abandoned the Soyatal and
Guadalupe mineral properties in Mexico. The balances of the related
debt, net of discount, on the date of abandonment is $603,743 and
$922,780, respectively. The carrying value of the mineral
properties, less the outstanding related notes payable balances
resulted in a loss of $1,410,736 recognized on the abandonment of
mineral properties during the year ended December 31,
2019.
F-16
9.
Notes Payable to Bank
At
December 31, 2020 and 2019, the Company had the following notes
payable to bank:
|
|
2020
|
2019
|
|
Promissory note
payable to First Security Bank of Missoula,
|
|
|
|
bearing interest at
3.150%, payable on demand, collateralized
|
|
|
|
by a lien on
Certificate of Deposit
|
$
99,999
|
$
97,067
|
|
|
|
|
|
Promissory note
payable to First Security Bank of Missoula,
|
|
|
|
bearing interest at
3.150%, payable on demand, collateralized
|
|
|
|
by a lien on
Certificate of Deposit
|
1
|
99,999
|
|
|
|
|
|
Total notes payable
to the bank
|
$
100,000
|
$
197,066
|
These
notes were personally guaranteed by John C. Lawrence, the
Company’s previous Chief Executive Officer and Chairman of
the Board of Directors. The maximum amount available for borrowing
under each note is $99,999. As result of his death in June 2020,
the terms of the note, including the personal guarantee, will be
addressed in 2021.
10.
Hillgrove
Advances Payable
On
November 7, 2014, the Company entered into an advance and
concentrate processing agreement with Hillgrove Mines Pty Ltd of
Australia (Hillgrove) in which the Company was advanced funds from
Hillgrove to build facilities to process Hillgrove antimony
concentrate. The Company has not processed Hillgrove concentrate
for the past three years. The agreement requires the Company to pay
the advance balance after Hillgrove issues a stop notice. Payments
would begin 90 days after the stop notice issue date and be made in
six equal and quarterly installments. The balance of the advance
liability due to Hillgrove was $1,134,221 at both December 31, 2020
and 2019. Hillgrove was acquired by Red River Resources LTD
(“Red River”) during 2019. Although the Company has not
received a stop notice through the date these financial statements
were issued, management has determined that one is likely
forthcoming in 2021. Based on management’s assessment of
likelihood and the payment terms of the agreement, $378,074 of the
balance is classified as current as of December 31, 2020 and
2019.
11.
Stockholders'
Equity
In
December 2020, the number of authorized shares of the
Company’s common stock increased from 90,000,000 to
150,000,000.
Issuance of Common Stock for Cash
During
2020, the Company sold units consisting of 5,742,858 from sale of
shares of its common stock and 5,742,858 warrants to purchase
shares of common stock for total proceeds of $2,010,000. Offering
costs associated with the sale totaled $196,932.
During
2019, the Company sold units consisting of 904,082 shares of its
common stock and 452,041 warrants to purchase shares of common
stock for total proceeds of $433,960. Offering costs associated
with the sale totaled $29,761.
Issuance of Common Stock for Services to Officers and
Directors
During
the year ended December 31, 2020, the Company awarded, but did not
issue, common stock with a value of $110,000 to its Board of
Directors as compensation for their services as directors. In
connection with the issuances, the Company recorded $110,000 in
director compensation expense and accrued common stock
payable.
In June
2020, the Company issued the Board members 295,463 shares of the
Company’s common stock for services provided during 2019
which was accrued at December 31, 2019, with a value of
$130,483.
F-17
11.
Stockholders'
Equity, continued:
During
the years ended December 31, 2019, the Company awarded but did not
issue, common stock with a value of $134,375 to its Board of
Directors as compensation for their services as directors. In
connection with the issuances, the Company recorded $134,375 in
director compensation expense and accrued common stock
payable.
In
January 2019, the Company issued Daniel Parks, the Company’s
Chief Financial Officer, 200,000 shares of the Company’s
common stock with a fair value of $136,000 to retain his
services.
Common Stock Warrants
The
Company's Board of Directors has the authority to issue stock
warrants for the purchase of preferred or unregistered common stock
to directors and employees of the Company.
At
December 31, 2019, warrants for purchase of 250,000 shares of the
Company’s common stock for $0.25 per share were outstanding
and have no expiration date. These warrants were owned by the
Company’s previous President and Chairman, John Lawrence. The
warrants were exercised on March 18, 2020 in exchange for a
reduction of $62,500 in an amount payable to Mr.
Lawrence.
Warrants for
purchase of 452,041 shares of the Company’s common stock were
sold with shares of common stock in 2019. The
warrants have an exercise price of $0.65 per share and expire in
2022.
Warrants for
purchase of 5,742,858 shares of the Company’s common stock
were sold with shares of common stock in July
2020. The warrants have an exercise price of
$0.46 per share and expire in 2025. The warrants can be exercised
on a cashless basis. The warrants contain a repricing provision
whereby if the Company raises at least $6,000,000 in gross proceeds
from the sale of its common stock at an effective price per share
less than the warrants’ exercise price, the exercise price of
the warrants will be repriced to the lower price.
Transactions in
common stock purchase warrants for the years ended December 31,
2020 and 2019 are as follows:
|
|
Number of
Warrants
|
Exercise
Prices
|
|
Balance December
31, 2018
|
250,000
|
$
0.25
|
|
Issued
|
452,041
|
$
0.65
|
|
Balance December
31, 2019
|
702,041
|
$
0.25 - $0.65
|
|
Issued
|
5,742,858
|
$
0.46
|
|
Exercised
|
(250,000
)
|
$
0.25
|
|
Balance December
31, 2020
|
6,194,899
|
$
0.46 - $0.65
|
Preferred Stock
The
Company's Articles of Incorporation authorize 10,000,000 shares of
$0.01 par value preferred stock available for issuance with such
rights and preferences, including liquidation, dividend,
conversion, and voting rights, as the Board of Directors may
determine.
F-18
11.
Stockholders'
Equity, continued:
Series B
During
1993, the Board established a Series B preferred stock, consisting
of 750,000 shares. The Series B preferred stock has preference over
the Company's common stock and Series A preferred stock (none of
which are outstanding); has no voting rights (absent default in
payment of declared dividends); and is entitled to cumulative
dividends of $0.01 per share per year, payable if and when declared
by the Board of Directors. During each of the years ended December
31, 2020 and 2019 the Company recognized $7,500 in Series B
preferred stock dividend. In the event of dissolution or
liquidation of the Company, the preferential amount payable to
Series B preferred stockholders is $1.00 per share plus dividends
in arrears. No dividends have been declared or paid with respect to
the Series B preferred stock. The Series B Preferred stock is no
longer convertible to shares of the Company’s common stock.
At December 31, 2020 and 2019, cumulative dividends in arrears on
the outstanding Series B shares were $195,000 and $187,500,
respectively.
Series C
During
2000, the Board established a Series C preferred stock. The Series
C preferred stock has preference over the Company’s common
stock and has voting rights equal to that number of shares
outstanding, but no conversion or dividend rights. In the event of
dissolution or liquidation of the Company, the preferential amount
payable to Series C preferred stockholders is $0.55 per
share.
Series D
During
2002, the Board established a Series D preferred stock, authorizing
the issuance of up to 2,500,000 shares. The Series D preferred
stock has preference over the Company’s common stock but is
subordinate to the liquidation preferences of the holders of the
Company’s outstanding Series A, Series B and Series C
preferred stock. Series D preferred stock carries voting rights and
is entitled to annual dividends of $0.0235 per share. The dividends
are cumulative and payable after payment and satisfaction of the
Series A, B and C preferred stock dividends. No dividends have been
declared or paid with respect to the Series D preferred stock. At
December 31, 2020 and 2019, the cumulative dividends in arrears on
the 1,751,005 outstanding Series D shares were $707,258 and
$666,109, respectively, payable if and when declared by the Board
of Directors. In the event of dissolution or liquidation of the
Company, the preferential amount payable to Series D preferred
stockholders is $2.50 per share. At December 31, 2020 and 2019, the
liquidation preference for Series D preferred stock was $5,084,770
and $5,043,622, respectively. Holders of the Series D preferred
stock have the right, subject to the availability of authorized but
unissued common stock, to convert their shares into shares of the
Company's common stock on a one-to-one basis without payment of
additional consideration and are not redeemable unless by mutual
consent. The majority of Series D preferred shares are held by the
Estate of John Lawrence, the previous President and Chairman of the
Company.
12.
2000
Stock Plan
In
January 2000, the Company's Board of Directors resolved to create
the United States Antimony Corporation 2000 Stock Plan ("the
Plan"). The purpose of the Plan is to attract and retain the best
available personnel for positions of substantial responsibility and
to provide additional incentive to employees, directors and
consultants to promote the success of the Company's business. The
maximum number of shares of common stock or options to purchase
common stock that may be issued pursuant to the Plan is 500,000. At
December 31, 2020 and 2019, 300,000 shares of the Company's common
stock had been previously issued under the Plan. There were no
issuances under the Plan during 2020 and 2019.
F-19
13.
Income
and Other Taxes
During
the year ended December 31, 2020 and 2019, the Company recognized
no income tax benefit (provision).
Domestic and
foreign components of net loss from operations before income taxes
for the years ended December 31, 2020 and 2019, are as
follows:
|
|
2020
|
2019
|
|
Domestic
|
$
564,424
|
$
462,292
|
|
Foreign
|
(3,851,228
)
|
(4,135,183
)
|
|
Total
|
$
(3,286,804
)
|
$
(3,672,891
)
|
The
income tax benefit differs from the amount of income tax determined
by applying the U.S. federal income tax rate to pre-tax net loss
for the years ended December 31, 2020 and 2019 due to the
following:
|
|
2020
|
2019
|
|
Tax
benefit at federal statutory rate
|
$
(690,229
)
|
$
(771,307
)
|
|
State
income tax effect
|
(120,541
)
|
(177,435
)
|
|
Foreign
income tax effect
|
(279,111
)
|
(147,166
)
|
|
Non-deductible
items
|
151
|
801
|
|
Percentage
depletion
|
(27,667
)
|
(52,416
)
|
|
Adjustment
to prior year tax estimates - Domestic
|
580,408
|
(269,906
)
|
|
Adjustment
to prior year tax estimates - Foreign
|
(137,988
)
|
641,438
|
|
Impact
on change in foreign exchange rate
|
75,899
|
103,218
|
|
Change
in valuation allowance - Domestic
|
(393,380
)
|
926,873
|
|
Change
in valuation allowance - Foreign
|
992,458
|
(254,101
)
|
|
Total
|
$
-
|
$
-
|
At
December 31, 2020 and 2019, the Company had net deferred tax assets
as follows:
|
|
2020
|
2019
|
|
Deferred
tax asset:
|
|
|
|
Domestic
net operating loss carry forward
|
$
688,278
|
$
1,111,779
|
|
Foreign
net operating loss carry forward
|
2,616,038
|
1,623,580
|
|
Deferred
tax asset
|
3,304,316
|
2,735,359
|
|
|
|
|
|
Valuation
allowance (domestic)
|
(628,449
)
|
(1,021,829
)
|
|
Valuation
allowance (foreign)
|
(2,616,037
)
|
(1,623,580
)
|
|
Total
deferred tax asset
|
59,830
|
89,950
|
|
|
|
|
|
Deferred
tax liability:
|
|
|
|
Property,
plant, and equipment
|
(57,650
)
|
(88,292
)
|
|
Other
|
(2,180
)
|
(1,658
)
|
|
Total
deferred tax liability
|
(59,830
)
|
(89,950
)
|
|
|
|
|
|
Net
deferred tax asset
|
$
-
|
$
-
|
F-20
13.
Income
and Other Taxes, continued:
At
December 31, 2020 and 2019, the Company had deferred tax assets
arising principally from net operating loss carry forwards for
income tax purposes. As management cannot determine that it is more
likely than not the benefit of the net deferred tax asset will be
realized, a valuation allowance equal to 100% of the net deferred
tax asset has been recorded at December 31, 2020 and
2019.
At
December 31, 2020, the Company has federal net operating loss
(“NOL”) carry forwards of approximately $0.7 million
that expire at various dates between 2034 and 2037. In addition,
the Company has federal NOL carry forwards of $1.1 million that
will never expire but utilization of which is limited to 80% of
taxable income in any future year. The Company has Montana state
NOL carry forwards of approximately $3.4 million which expire
between 2021 and 2027, and Idaho state NOL carry forwards of
approximately $2.4 million, which expire between 2034 and 2039. The
Company has approximately $7.9 million of Mexican NOL carry
forwards which expire between 2024 and 2029.
In
2018, the Company acquired two subsidiaries have net operating loss
carryforwards in Mexico of approximately $800,000. Due to tax code
limitations, it is likely that a portion of this carryforward will
not be available to offset the Company’s future taxable
income in Mexico.
During
the years ended December 31, 2020 and 2019, there were no material
uncertain tax positions taken by the Company. The Company’s
United States income tax filings are subject to examination for the
years 2017 through 2019, and 2016 through 2019 in Mexico. The
Company charges penalties on assessments to general and
administrative expense and charges interest to interest
expense.
Mexican Tax Assessment
In
2015, the Mexican tax authority (“SAT”) initiated an
audit of the USAMSA’s 2013 income tax return. In October
2016, as a result of its audit, SAT assessed the Company $13.8
million pesos, which was approximately $666,400 in U.S. Dollars
(“USD”) as of December 31, 2016. SAT’s assessment
was based on the disallowance of specific costs that the Company
deducted on the 2013 USAMSA income tax return. The Company engaged
accountants and tax attorneys in Mexico to defend its position. The
assessment was settled in 2018 with no assessment against the
Company.
In
early 2019, the Company was notified that SAT re-opened its
assessment of USAMSA’s 2013 income tax return and, in
November 2019, SAT assessed the Company $16.3 million pesos, which
was approximately $821,000 USD as of December 31,
2020.
Management reviewed
the 2019 assessment notice from SAT and, similar to the earlier
assessment, believes the findings have no merit. The Company
engaged a tax attorney in Mexico to defend its position. An appeal
was filed by the Company in November 2019 suspending SAT from
taking immediate action regarding the assessment. The Company
posted a guarantee of the amount in March 2020 as is required under
the appeal process. In August 2020, the Company filed a lawsuit
against SAT for resolution of the process and, in December 2020,
filed closing arguments. Management expects the appeal process to
continue through 2021.
At
December 31, 2020, management assessed the possible outcomes for
this tax audit and believes, based on discussions with its tax
attorney in Mexico, that the most likely outcome will be that the
Company will be successful in its appeal resulting in no tax due.
Management determined that no amount should be accrued at December
31, 2020 relating to this potential tax liability. There can be no
assurance that the Company’s ultimate liability, if any, will
not have a material adverse effect on the Company’s results
of operations or financial position.
If an
issue addressed during the SAT audit is resolved in a manner
inconsistent with management expectations, the Company will adjust
its current net operating loss carryforward, or accrue penalties,
interest, and tax associated with the assessment.
F-21
13.
Income
and Other Taxes, continued:
Other Taxes
In 2016, the Company, through its wholly owned subsidiary USAMSA,
imported coal from the United States to its smelter in Mexico to
process Australian concentrates associated with the Hillgrove
agreement (Note 10). At that time, the Company applied for and was
granted a Maquiladora (IMMEX) which the Company believed provided
an exemption from paying a 16% value-added tax (IVA) on imported
goods to Mexico that were ultimately exported in altered form. With
this understanding, the Company did not pay IVA on coal it imported
to process the Australian concentrates. In 2020, the Company was
informed by the SAT that it owed the 16% IVA for the coal it had
imported from 2016 to 2018. The initial assessment from SAT
included penalties and fees. In late 2020, the Company filed a
motion before the Taxpayer's Defense Agency but the motion was
denied. To avoid incurring additional penalties, the Company
elected to pay the assessed amount in early 2021. For the year
ended December 31, 2020, the Company recognized an export tax
expense of $1,120,730 and accrued a liability for this assessment.
Upon payment in early 2021, the Company believes that this matter
is settled.
14.
Related-Party
Transactions
On June 16, 2020, John C. Lawrence, the
Company’s previous Chief Executive Officer and Chairman of
the Board of Directors, passed away. The Company’s Executive
Vice-President, John C. Gustaven, has been appointed to interim
Chief Executive Officer. Russell Lawrence, son of Mr. Lawrence, has
been appointed the Company’s
interim
President and is the executor of Mr.
Lawrence’s estate.
John
Lawrence rented equipment to the Company and charged the Company
for lodging and meals provided to consultants, customers and other
parties by an entity that Mr. Lawrence owned. The amount due to Mr.
Lawrence as of December 31, 2020 and 2019 was $171,017 and
$156,975, respectively. Expenses paid to Mr. Lawrence for the years
ended December 31, 2020 and 2019 were $1,533 and $9,799,
respectively
During
2019, John Lawrence made advances to the Company totaling $227,200,
of which $170,985 had been repaid as of December 31, 2020, leaving
a balance of $56,215. During 2020, a portion of this amount was in
the form of the exercise of a warrant held by Mr. Lawrence for
250,000 shares of common stock at an exercise price of $0.25 or
$62,500.
John C.
Gustaven advanced the Company $10,200 during 2019, of which $10,000
had been repaid as of December 31, 2020, leaving a balance of
$200.
15.
Commitments
and Contingencies
The
Company pays various royalties on the sale of zeolite products. On
a combined basis, royalties vary from 8%-13%. During the year ended
December 31, 2020 and 2019, the Company had royalty expense of
$224,875 and $266,388, respectively. At December 31, 2020 and 2019,
the Company had accrued royalties payable of $434,981 and $280,314,
respectively. The Company is currently in negotiations with certain
royalty holders to modify the terms of the agreements.
F-22
16.
Business
Segments
The
Company is currently organized and managed by four segments, which
represent the three operating units: United States antimony,
Mexican antimony, United States zeolite, and precious metals. The
Company’s other operating costs include general and
administrative expenses, freight and delivery, and other
non-production related costs. Other income and expense consist
primarily of non-operating income and interest
expense.
The
Madero smelter and Puerto Blanco mill at the Company’s Mexico
operation brings antimony up to a finished product or an
intermediate stage, which is then either shipped directly to
customers or to the United States operation for finishing and sales
at the Thompson Falls, Montana plant. The Zeolite operation
produces zeolite near Preston, Idaho. Almost all of the sales of
products from the United States antimony and zeolite operations are
to customers in the United States. Precious metal recovered from
the antimony process in the United States and Mexico is typically
sold to customers in the United States and Canada.
Segment
disclosures regarding sales to major customers and for property,
plant, and equipment are located in Notes 3 and 6,
respectively.
|
|
For the Years Ended
|
|
|
|
December 31,
|
December 31,
|
|
Total Assets:
|
2020
|
2019
|
|
Antimony
|
|
|
|
United
States
|
$
2,798,283
|
$
2,166,041
|
|
Mexico
|
7,953,190
|
9,193,521
|
|
Subtotal
antimony
|
10,751,473
|
11,359,562
|
|
Precious
metals
|
|
|
|
United
States
|
$
130,882
|
$
143,605
|
|
Mexico
|
803,003
|
424,133
|
|
Subtotal
precious metals
|
933,885
|
567,738
|
|
Zeolite
|
1,614,144
|
1,766,675
|
|
Total
|
$
13,299,502
|
$
13,693,975
|
|
|
For the Years Ended
|
|
|
|
December 31,
|
December 31,
|
|
|
2020
|
2019
|
|
Capital expenditures:
|
|
|
|
Antimony
|
|
|
|
United
States
|
$
32,448
|
$
8,429
|
|
Mexico
|
38,456
|
705,123
|
|
Subtotal
antimony
|
70,904
|
713,552
|
|
Precious
metals
|
|
|
|
United
States
|
10,219
|
21,086
|
|
Mexico
|
147,978
|
-
|
|
Subtotal
precious metals
|
158,197
|
21,086
|
|
Zeolite
|
13,990
|
58,287
|
|
Total
|
$
243,091
|
$
792,925
|
F-23
16.
Business
Segments, continued:
|
Segment Operations for the Year
|
Antimony
|
Antimony
|
Total
|
Precious
|
|
|
|
Ended December 31, 2020
|
USA
|
Mexico
|
Antimony
|
Metals
|
Zeolite
|
Totals
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$
2,942,628
|
$
-
|
$
2,942,628
|
$
174,079
|
$
2,118,823
|
$
5,235,530
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
$
25,809
|
$
590,579
|
$
616,388
|
$
86,835
|
$
182,620
|
$
885,843
|
|
|
|
|
|
|
|
|
|
Income
(loss) from operations
|
$
192,511
|
$
(3,851,228
)
|
$
(3,658,717
)
|
$
87,244
|
$
266,731
|
$
(3,304,742
)
|
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
21,808
|
-
|
21,808
|
-
|
(3,870
)
|
17,938
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
$
214,319
|
$
(3,851,228
)
|
$
(3,636,909
)
|
$
87,244
|
$
262,861
|
$
(3,286,804
)
|
|
Segment Operations for the Year
|
Antimony
|
Antimony
|
Total
|
Precious
|
|
|
|
Ended December 31, 2019
|
USA
|
Mexico
|
Antimony
|
Metals
|
Zeolite
|
Totals
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$
5,450,649
|
$
-
|
$
5,450,649
|
$
194,239
|
$
2,623,117
|
$
8,268,005
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
$
43,738
|
$
596,719
|
$
640,457
|
$
69,067
|
$
186,466
|
$
895,990
|
|
|
|
|
|
|
|
|
|
Income
(loss) from operations
|
$
(144,208
)
|
$
(4,239,123
)
|
$
(4,383,331
)
|
$
125,172
|
$
513,052
|
$
(3,745,107
)
|
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
(16,142
)
|
103,940
|
87,798
|
-
|
(15,582
)
|
72,216
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
$
(160,350
)
|
$
(4,135,183
)
|
$
(4,295,533
)
|
$
125,172
|
$
497,470
|
$
(3,672,891
)
|
17.
CARES
Act Loan
On
April 20, 2020, the Company received a loan of $443,400 pursuant to
the Paycheck Protection Program (the “PPP”) under
Division A, Title I of the CARES Act, which was enacted March 27,
2020. The loan, which was in the form of a Note dated April 20,
2020 had a maturity date on April 19, 2022 and an interest rate of
1% per annum. It is anticipated that the loan will be forgiven
under the provisions of the CARES Act because the Company used the
funds for qualifying expenses. Qualifying expenses included payroll
costs, costs used to continue group health care benefits, rent, and
utilities. The amount of the PPP loan will be recognized as gain on
forgiveness of the CARES Act loan in the period the Company
receives formal notification of forgiveness.
18.
Subsequent
Events
In the
first quarter of 2021, the Company raised $23,497,180 (net of
$1,499,820 in agent’s fees) in two separate transactions from
sale of shares of its common stock and warrants for general
corporate purposes, working capital, and to fund a geochemical,
geological and geophysical program at the Los Juarez
property.
F-24
TABLE OF CONTENTS
Part IItem 1. Description Of BusinessItem 1A Risk FactorsItem 1B Unresolved Staff CommentsItem 2 Description Of PropertiesItem 3 Legal ProceedingsItem 4 Mine Safety DisclosuresPart IIItem 5 Market For Common Equity and Related Stockholder MattersItem 6 Selected Financial DataItem 7 Management's Discussion and Analysis Or Plan Of OperationsItem 7A Quantitative and Qualitative Disclosures About Market RiskItem 8 Financial StatementsItem 9 Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A Controls and ProceduresPart IIIItem 10 Directors, Executive Officers, Promoters and Control Persons, Compliance with Section 16(a) Of The Exchange ActItem 11 Executive CompensationItem 12 Security Ownership Of Certain Beneficial Owners and ManagementItem 13 Certain Relationships and Related TransactionsItem 14 Principal Accountant Fees and ServicesItem 15. Exhibits and Reports on Form 8-kItem 5. Other Events - October 10, 2003