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-Q
(Mark
One)
[X]
QUARTERLY REPORT
UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
quarterly period ended September 30, 2019
[
]
TRANSITION REPORT
UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition
period _______ to _______
Commission file
number 001-08675
UNITED
STATES ANTIMONY CORPORATION
(Exact name of
registrant as specified in its charter)
|
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
Indicate by check
mark whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12
months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
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 whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of “large accelerated filer,”
“accelerated filer”, “small reporting
company” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
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Large Accelerated
Filer ☐
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Accelerated Filer
☐
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Non-Accelerated
Filer ☐
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Smaller reporting
company ☒
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Emerging growth
company ☐
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If an emerging
growth company, indicate by check mark if the registrant has
elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check
mark whether the registrant is a shell company as defined by Rule
12b-2 of the Exchange Act. YES ☐
No
☒
At
November 14, 2019, the registrant had outstanding 69,661,436 shares
of par value $0.01 common stock.
UNITED STATES ANTIMONY CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD
ENDED SEPTEMBER 30, 2019
(UNAUDITED)
TABLE OF CONTENTS
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Page
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CERTIFICATIONS
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25-29
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[The
balance of this page has been intentionally left
blank.]
PART
I-FINANCIAL INFORMATION
Item 1. Financial Statements
United States Antimony Corporation a
n
d
Subsidiaries
Consolidated Balance Sheets (Unaudited)
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ASSETS
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September
30,
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December
31,
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2019
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2018
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Current
assets:
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Cash and cash
equivalents
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$
71,758
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$
56,650
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Certificates of
deposit
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253,552
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252,954
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Accounts
receivable
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322,940
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438,391
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Inventories
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708,074
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755,261
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Note receivable -
sale of land
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-
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400,000
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Total current
assets
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1,356,324
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1,903,256
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Properties, plants
and equipment, net
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15,229,807
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15,227,172
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Restricted cash for
reclamation bonds
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57,248
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57,247
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IVA receivable and
other assets
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329,947
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369,448
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Total
assets
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$
16,973,326
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$
17,557,123
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LIABILITIES
AND STOCKHOLDERS' EQUITY
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Current
liabilities:
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Checks
issued and payable
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$
31,705
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$
46,482
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Accounts
payable
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2,060,557
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1,926,320
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Due to
factor
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59,104
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16,524
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Accrued payroll,
taxes and interest
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200,362
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159,037
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Other accrued
liabilities
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401,376
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353,911
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Payables to related
parties
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343,263
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93,567
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Deferred
revenue
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32,400
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32,400
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Notes payable to
bank
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198,228
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183,917
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Long-term debt,
current portion, net of discount
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851,766
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705,460
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Total current
liabilities
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4,178,761
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3,517,618
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Long-term debt, net
of discount and current portion
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876,073
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1,027,730
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Hillgrove advances
payable
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1,134,221
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1,134,221
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Stock payable to
directors for services
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96,875
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175,000
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Asset retirement
obligations and accrued reclamation costs
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282,331
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277,720
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Total
liabilities
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6,568,261
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6,132,289
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Commitments and
contingencies (Note 7 an 11)
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Stockholders'
equity:
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Preferred stock
$0.01 par value, 10,000,000 shares authorized:
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Series A: -0-
shares issued and outstanding
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-
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-
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Series B: 750,000
shares issued and outstanding
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(liquidation
preference $930,000 and $922,500
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respectively)
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7,500
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7,500
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Series C: 177,904
shares issued and outstanding
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(liquidation
preference $97,847 both years)
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1,779
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1,779
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Series D: 1,751,005
shares issued and outstanding
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(liquidation
preference $5,002,470 and $4,961,324
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respectively)
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17,509
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17,509
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Common stock, $0.01
par value, 90,000,000 shares authorized;
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69,661,436 and
68,227,171 shares issued and outstanding, respectively
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696,614
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682,271
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Additional paid-in
capital
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37,134,853
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36,406,874
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Accumulated
deficit
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(27,453,190
)
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(25,691,099
)
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Total stockholders'
equity
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10,405,065
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11,424,834
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Total liabilities
and stockholders' equity
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$
16,973,326
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$
17,557,123
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The accompanying notes are an integral part of the consolidated
financial statements.
1
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For the three
months ended
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For the nine
months ended
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September 30,
2019
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September 30,
2018
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September 30,
2019
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September 30,
2018
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REVENUES
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$
1,787,934
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$
2,091,725
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$
6,516,582
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$
6,781,001
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COST
OF REVENUES
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2,058,751
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2,268,854
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7,029,647
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6,871,870
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GROSS
PROFIT (LOSS)
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(270,817
)
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(177,129
)
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(513,065
)
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(90,869
)
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OPERATING EXPENSES
(INCOME):
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General
and administrative
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139,456
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151,825
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498,539
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489,067
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Salaries
and benefits
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91,178
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93,723
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424,208
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281,596
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Professional
fees
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40,010
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211,583
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163,204
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332,550
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Other
operating expenses
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-
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-
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86,630
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-
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Gain on plant
acquisition (Note 13)
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-
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(1,500,000
)
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-
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(1,500,000
)
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TOTAL OPERATING
EXPENSES (INCOME)
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270,644
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(1,042,869
)
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1,172,581
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(396,787
)
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INCOME (LOSS) FROM
OPERATIONS
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(541,461
)
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865,740
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(1,685,646
)
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305,918
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OTHER INCOME
(EXPENSE):
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Interest
income
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19
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19
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791
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849
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Gain on tax
settlement (Note 11)
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-
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443,110
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-
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443,110
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Interest
expense
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(24,444
)
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(27,516
)
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(71,160
)
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(76,163
)
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Foreign exchange
loss
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-
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(12,752
)
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-
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-
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Factoring
expense
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(2,706
)
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(1,154
)
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(6,076
)
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(3,492
)
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TOTAL OTHER INCOME
(EXPENSE)
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(27,131
)
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401,707
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(76,445
)
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364,304
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NET INCOME (LOSS)
BEFORE INCOME TAXES
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(568,592
)
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1,267,447
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(1,762,091
)
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670,222
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Preferred
dividends
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(12,162
)
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(12,162
)
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(36,487
)
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(36,487
)
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|
Net
income (loss) available to common stockholders
|
$
(580,754
)
|
$
1,255,285
|
$
(1,798,578
)
|
$
633,735
|
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|
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Net income (loss)
per share of common stock:
|
|
|
|
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|
Basic
|
$
(0.02
)
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$
0.02
|
$
(0.01
)
|
$
0.01
|
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Diluted
|
$
(0.02
)
|
$
0.02
|
$
(0.01
)
|
$
0.01
|
|
|
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Weighted average
shares outstanding:
|
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|
|
|
Basic
|
69,224,297
|
68,227,171
|
68,818,050
|
67,894,207
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Diluted
|
69,224,297
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68,373,471
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68,818,050
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67,992,339
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The accompanying notes are an integral part of the consolidated
financial statements.
2
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United
States Antimony Corporation and Subsidiaries
|
||
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Consolidated
Statements of Cash Flows (Unaudited)
|
||
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For the nine
months ended
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|
|
September 30,
2019
|
September 30,
2018
|
|
Cash Flows From
Operating Activities:
|
|
|
|
Net income
(loss)
|
$
(1,762,091
)
|
$
670,222
|
|
Adjustments to
reconcile net income (loss) to net cash
|
|
|
|
provided (used) by
operating activities:
|
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|
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Depreciation and
amortization expense
|
732,702
|
678,010
|
|
Gain on tax
settlement
|
-
|
(443,110
)
|
|
Gain on plant
acquisition
|
-
|
(1,500,000
)
|
|
Amortization of
loan discount
|
54,110
|
63,360
|
|
Accretion of asset
retirement obligation
|
4,611
|
4,611
|
|
Common stock issued
for services
|
136,000
|
-
|
|
Common stock
payable for director fees
|
96,875
|
131,250
|
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Foreign exchange
(gain) loss
|
-
|
-
|
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Other non-cash
items
|
(598
)
|
(681
)
|
|
Change
in:
|
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Accounts
receivable, net
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115,451
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(211,637
)
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Inventories
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47,187
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197,813
|
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Other current
assets
|
-
|
4,697
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IVA receivable and
other assets
|
39,501
|
(91,592
)
|
|
Accounts
payable
|
134,237
|
28,619
|
|
Accrued payroll,
taxes and interest
|
41,325
|
(49,984
)
|
|
Deferred
revenues
|
-
|
(27,649
)
|
|
Other accrued
liabilities
|
47,465
|
161,486
|
|
Payables to related
parties
|
29,683
|
33,669
|
|
Net cash provided
(used) by operating activities
|
(283,542
)
|
(350,916
)
|
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|
|
Cash Flows From
Investing Activities:
|
|
|
|
Purchase of
properties, plants and equipment
|
(677,837
)
|
(411,571
)
|
|
Payment received on
note receivable for sale of land
|
400,000
|
-
|
|
Proceeds from plant
acquisition
|
-
|
1,500,000
|
|
Net cash provided
(used) by investing activities
|
(277,837
)
|
1,088,429
|
|
|
|
|
|
Cash Flows From
Financing Activities:
|
|
|
|
Net
proceeds from (payments to) factor
|
42,580
|
5,168
|
|
Checks
issued and payable
|
(14,777
)
|
13,572
|
|
Stock
issued for cash
|
431,322
|
-
|
|
Advances
from related parties
|
237,400
|
125,000
|
|
Payments
on advances from related party
|
(17,387
)
|
(125,000
)
|
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Advances from notes
payable to bank
|
14,311
|
(92,565
)
|
|
Principal payments
on long-term debt
|
(116,961
)
|
(178,504
)
|
|
Net cash provided
(used) by financing activities
|
576,488
|
(252,329
)
|
|
|
|
|
|
NET INCREASE IN
CASH AND CASH EQUIVALENTS
|
15,109
|
485,184
|
|
Cash and cash
equivalents and restricted cash at beginning of period
|
113,897
|
91,332
|
|
Cash and cash
equivalents and restricted cash at end of period
|
$
129,006
|
$
576,516
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
Noncash investing
and financing activities:
|
|
|
|
Common stock
payable issued to directors
|
$
175,000
|
$
175,000
|
The accompanying notes are an integral part of the consolidated
financial statements.
3
|
United
States Antimony Corporation and Subsidiaries
|
|||||||
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Consolidated
Statement of Changes in Stockholders' Equity (Unaudited)
|
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For
the three month periods ended September 30, 2019 and September 30,
2018
|
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|
|||||
|
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Additional
|
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Total
|
|
|
Total Preferred
Stock
|
Common
Stock
|
Paid
|
Accumulated
|
Stockholders'
|
||
|
Three
months ended September 30, 2019
|
Shares
|
Amount
|
Shares
|
Amount
|
In
Capital
|
Deficit
|
Equity
|
|
|
|
|
|
|
|
|
|
|
Balances, July 1,
2019
|
2,678,909
|
$
26,788
|
68,757,354
|
$
687,573
|
$
36,712,572
|
$
(26,884,598
)
|
$
10,542,335
|
|
|
|
|
|
|
|
|
|
|
Issuance of common
stock for cash
|
|
|
904,082
|
9,041
|
422,281
|
|
431,322
|
|
Net
loss
|
|
|
|
|
|
(568,592
)
|
(568,592
)
|
|
Balances, September
30, 2019
|
2,678,909
|
$
26,788
|
69,661,436
|
$
696,614
|
$
37,134,853
|
$
(27,453,190
)
|
$
10,405,065
|
|
|
|
|
|
|
Additional
|
|
Total
|
|
|
Total Preferred
Stock
|
Common
Stock
|
Paid
|
Accumulated
|
Stockholders'
|
||
|
Three
months ended September 30, 2018
|
Shares
|
Amount
|
Shares
|
Amount
|
In
Capital
|
Deficit
|
Equity
|
|
|
|
|
|
|
|
|
|
|
Balances, July 1,
2018
|
2,678,909
|
$
26,788
|
68,227,171
|
$
682,271
|
$
36,406,874
|
$
(27,161,549
)
|
$
9,954,384
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
|
|
|
1,267,447
|
1,267,447
|
|
Balances, September
30, 2018
|
2,678,909
|
$
26,788
|
68,227,171
|
$
682,271
|
$
36,406,874
|
$
(25,894,102
)
|
$
11,221,831
|
|
For
the nine month periods ended September 30, 2019 and September 30,
2018
|
|
|
|||||
|
|
|
|
|
|
Additional
|
|
Total
|
|
|
Total Preferred
Stock
|
Common
Stock
|
Paid
|
Accumulated
|
Stockholders'
|
||
|
Nine
months ended September 30, 2019
|
Shares
|
Amount
|
Shares
|
Amount
|
In
Capital
|
Deficit
|
Equity
|
|
|
|
|
|
|
|
|
|
|
Balances, January
1, 2019
|
2,678,909
|
$
26,788
|
68,227,171
|
$
682,271
|
$
36,406,874
|
$
(25,691,099
)
|
$
11,424,834
|
|
|
|
|
|
|
|
|
|
|
Issuance of common
stock to chief financial officer
|
|
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
|
422,281
|
|
431,322
|
|
Net
loss
|
|
|
|
|
|
(1,762,091
)
|
(1,762,091
)
|
|
Balances, September
30, 2019
|
2,678,909
|
$
26,788
|
69,661,436
|
$
696,614
|
$
37,134,853
|
$
(27,453,190
)
|
$
10,405,065
|
|
|
|
|
Additional
|
|
|
||
|
|
Total Preferred
Stock
|
Common
Stock
|
Paid
|
Accumulated
|
Stockholders'
|
||
|
Nine
months ended September 30, 2018
|
Shares
|
Amount
|
Shares
|
Amount
|
In
Capital
|
Deficit
|
Equity
|
|
|
|
|
|
|
|
|
|
|
Balances, January
1, 2018
|
2,678,909
|
$
26,788
|
67,488,153
|
$
674,881
|
$
36,239,264
|
$
(26,564,324
)
|
$
10,376,609
|
|
|
|
|
|
|
|
|
|
|
Issuance of common
stock to Directors
|
|
|
739,018
|
7,390
|
167,610
|
|
175,000
|
|
Net
income
|
|
|
|
|
|
670,222
|
670,222
|
|
Balances, September
30, 2018
|
2,678,909
|
$
26,788
|
68,227,171
|
$
682,271
|
$
36,406,874
|
$
(25,894,102
)
|
$
11,221,831
|
The accompanying notes are an integral part of the consolidated
financial statements.
4
PART I - FINANCIAL INFORMATION, CONTINUED:
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
1.
Basis
of Presentation
The
unaudited consolidated financial statements have been prepared by
the Company in accordance with accounting principles generally
accepted in the United States of America for interim financial
information, as well as the instructions to Form 10-Q. Accordingly,
they do not include all of the information and footnotes required
by accounting principles generally accepted in the United States of
America for complete financial statements. In the opinion of the
Company’s management, all adjustments (consisting of only
normal recurring accruals) considered necessary for a fair
presentation of the interim financial statements have been
included. Operating results for the three and nine month periods
ended September 30, 2019 are not necessarily indicative of the
results that may be expected for the full year ending December 31,
2019.
For
further information refer to the financial statements and footnotes
thereto in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2018.
Going Concern Consideration
At
September 30, 2019, the
Company’s consolidated
financial statements show negative working capital of approximately
$2.8 million and accumulated deficit of approximately $27.5
million. In addition, the Company has a net loss of
$1,762,091 and cash used in operations of $283,542 for the
nine-month period ended September 30, 2019. The Company has had
recurring operating losses for most of the prior periods.
These factors indicate that there is substantial doubt regarding
the ability to continue as a going concern for the next twelve
months.
The
continuing losses are principally a result of the falling prices of
antimony and production costs incurred in Mexico.
Antimony prices
decreased approximately 14% in the first nine months of 2019
compared to the same period in the prior year. For the nine
months ended September 30, 2019, the average sale price for
antimony was approximately $3.56 per pound compared to a price of
$4.14 per pound for the nine months ended September 30, 2018. In
addition, during 2019, we have endured supply interruptions from
our North American supplier and shipments have resumed although at
a lower level than years prior to 2018. A new supply agreement
negotiated with our North American supplier in 2017 helped us with
cash flow from our antimony division in 2018, but the continued
decrease in prices for antimony have caused us to negotiate a
better supply agreement in 2019 which will help us with our cash
flow situation. We negotiated a $73,469 decrease in our raw
material cost with the supplier for the third quarter.
Since
2017, we have continually reduced labor and other operating costs
at our Mexico locations which have resulted in a lower overall
production cost in Mexico. In June 2019, we reached agreement with
our miners in Mexico to further reduce labor costs. In 2019, we
completed installation of three of the large rotating furnaces
(LRFs) we obtained from the Lanxess transaction. The
Company’s 2019-2020 plan involves ramping up production at
our antimony properties in Mexico utilizing the additional LRFs
obtained from Lanxess. As a result, we expect to increase the
antimony output from our Mexican properties in 2020. In 2019, we
began selling antimony metal directly from Mexico to customers
which saves us approximately $0.38 per pound in processing costs
and freight.
On
September 16, 2019, we were awarded a grant for $510,528 to provide
the Defense Logistics Agency of the Department of Defense with six
samples of antimony tri-sulfide for testing to determine the
consistency for making primers for ordnance per military
specification MIL-A-159D. We will be paid $85,088 per sample over
the next twelve months.
5
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
1.
Basis
of Presentation, continued:
The
portion of the precious metals recovery system at the Madero
smelter is complete and the cyanide leach circuit being built at
the Puerto Blanco plant is complete except for the assaying and lab
equipment which will be tested in the fourth quarter of 2019. We
expect to be receiving income from the production of precious
metals some time during the first half of 2020.
Over
the past several years, the Company has made principal payments on
most of its debt from cash generated from operations without the
need for additional borrowings or selling shares of its common
stock. However, we are delinquent on some debt payments (see Note
9).
On
November 14, 2019, we completed a common stock private placement
for $431,322 to complete the precious metals circuit at our Puerto
Blanco milling facility and to make cost saving repairs at our
Montana smelter.
Management believes
that the actions taken to increase production from both antimony
and precious metals coupled with a reduction in production costs
will enable the Company to meet most of its obligations for the
next twelve months. However, due to the uncertainty of the price of
antimony and other operating factors, there is the likelihood that
some obligations will not be met.
2.
Developments
in Accounting Pronouncements
Accounting Standards Updates Adopted
In
February 2016, the Financial Accounting Standards Board
(“FASB”) issued Accounting Standards Update
(“ASU”) No. 2016-02 Leases (Topic 842). The
update modified the classification criteria and requires lessees to
recognize the assets and liabilities on the balance sheet for most
leases. The update was effective for fiscal years beginning
after December 15, 2018, with early adoption permitted.
Adoption of this update as of January 1, 2019 did not have a
material impact on the Company’s consolidated financial
statements.
In June
2018, the FASB issued ASU No. 2018-07 Compensation - Stock
Compensation (Topic 718): Improvements to Nonemployee
Share-Based Payment Accounting. The update involves
simplification of several aspects of accounting for nonemployee
share-based payment transactions by expanding the scope of Topic
718 to include nonemployee awards. The update was effective
for fiscal years beginning after December 15, 2018, and interim
periods within those fiscal years, with early adoption
permitted. Adoption of this update as of January 1, 2019 did
not have a material impact on the Company’s consolidated
financial statements.
Accounting Standards Updates to Become Effective in Future
Periods
In
August 2018, the FASB issued 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 is effective for fiscal years
beginning after December 15, 2019, with early adoption
permitted. Management is evaluating the impact of this update
on the Company’s fair value measurement
disclosures.
6
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
3.
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 warrants to purchase
the Company's common stock and convertible preferred
stock.
Included in the
calculation of diluted earnings per share for the three and
nine-month periods ended September 30, 2018 are 250,000 shares of
common stock warrants. For the three and nine months ended
September 30, 2019 and 2018, the potentially dilutive common stock
equivalents not included in the calculation of diluted earnings per
share as their effect would have been anti-dilutive are as
follows:
|
|
September 30,
2019
|
September 30,
2018
|
|
Warrants
|
702,041
|
-
|
|
Convertible
preferred stock
|
1,751,005
|
1,751,005
|
|
Total possible
dilution
|
2,453,046
|
1,751,005
|
4.
Revenue
Recognition
Our
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 our
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. We have
determined the performance obligation is met and title is
transferred either upon shipment from our 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) we have 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.
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.
Sales
of products for the three and nine month periods ended September
30, 2019 and 2018 were as follows:
|
|
Three Months Ended
|
NineMonths Ended
|
||
|
|
September 30,
|
September 30,
|
||
|
|
2019
|
2018
|
2019
|
2018
|
|
Antimony
|
$
1,080,871
|
$
1,366,540
|
$
4,294,281
|
$
4,540,873
|
|
Zeolite
|
651,563
|
653,365
|
2,081,751
|
2,026,605
|
|
Precious
metals
|
55,500
|
71,820
|
140,550
|
213,523
|
|
|
$
1,787,934
|
$
2,091,725
|
$
6,516,582
|
$
6,781,001
|
7
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
4.
Revenue
Recognition, continued:
The
following is sales information by geographic area based on the
location of customers for the three and nine-month periods ended
September 30, 2019 and 2018:
|
|
Three Months Ended
|
Nine Months Ended
|
||
|
|
September 30,
|
September 30,
|
||
|
|
2019
|
2018
|
2019
|
2018
|
|
United
States
|
$
1,570,364
|
$
1,876,218
|
$
5,498,640
|
$
6,151,068
|
|
Canada
|
217,570
|
215,507
|
544,350
|
629,933
|
|
Mexico
|
-
|
-
|
473,592
|
-
|
|
|
$
1,787,934
|
$
2,091,725
|
$
6,516,582
|
$
6,781,001
|
Sales
of products to significant customers were as follows for the three
and nine month periods ended September 30, 2019 and
2018:
|
|
For the
Three Months Ended
|
For the
Nine Months Ended
|
||
|
Sales
to Three
|
September
30,
|
September
30,
|
September
30,
|
September
30,
|
|
Largest
Customers
|
2019
|
2018
|
2019
|
2018
|
|
Axens North
America
|
$
128,805
|
$
-
|
$
-
|
$
-
|
|
Ampacet
Corporation
|
-
|
142,414
|
-
|
472,674
|
|
Mexichem Specialty
Compounds Inc.
|
314,008
|
587,568
|
1,373,533
|
1,985,249
|
|
Kohler
Corporation
|
-
|
471,358
|
1,028,624
|
1,122,908
|
|
Nyacol
Nanotechnologies
|
374,070
|
-
|
778,394
|
-
|
|
|
$
816,883
|
$
1,201,340
|
$
3,180,551
|
$
3,580,831
|
|
%
of Total Revenues
|
46
%
|
57
%
|
49
%
|
53
%
|
Accounts receivable
from largest customers were as follows for September 30, 2019 and
December 31, 2018:
|
Accounts
Receivable
|
September 30,
2019
|
December 31,
2018
|
|
DanaMart
|
$
-
|
$
143,890
|
|
Axens North America
Inc.
|
46,654
|
34,912
|
|
Earth Innovations
Inc.
|
35,584
|
35,967
|
|
Ralco Mix
Products
|
26,080
|
-
|
|
|
$
108,318
|
$
214,769
|
|
%
of Total Receivables
|
34
%
|
49
%
|
Our
trade accounts receivable balance related to contracts with
customers was $322,940 at September 30, 2019 and $438,391 at
December 31, 2018. Our products do not involve any warranty
agreements and product returns are not typical.
We have
determined our contracts do not include a significant financing
component. For antimony and zeolite sales contracts, we may factor
certain receivables and receive final payment within 30 days of the
performance obligation being met. For antimony and zeolite
receivables not factored, we typically receive 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.
8
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
5.
Inventories
Inventories at
September 30, 2019 and December 31, 2018 consisted primarily of
finished antimony products, antimony metal, antimony ore, and
finished zeolite products that are stated at the lower of first-in,
first-out 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. Inventory at September 30, 2019 and
December 31, 2018 is as follows:
|
|
September
30,
|
December
31,
|
|
|
2019
|
2018
|
|
Antimony
Metal
|
$
37,346
|
$
8,127
|
|
Sodium
Antimonate
|
28,568
|
-
|
|
Antimony
Oxide
|
147,304
|
255,782
|
|
Antimony
Concentrates
|
-
|
2,214
|
|
Antimony
Ore
|
198,492
|
257,067
|
|
Total
antimony
|
411,710
|
523,190
|
|
Zeolite
|
296,364
|
232,071
|
|
|
$
708,074
|
$
755,261
|
6.
Accounts
Receivable and Due to Factor
The
Company factors designated trade receivables pursuant to a
factoring agreement with LSQ Funding Group L.C., an unrelated
factor (the “Factor”). The agreement
specifies that eligible trade receivables are factored with
recourse. We submit selected trade receivables to the factor, and
receive 83% of the face value of the receivable by wire transfer.
The Factor withholds 15% as retainage, and 2% as a servicing fee.
Upon payment by the customer, we receive the remainder of the
amount due from the factor. The 2% servicing fee is recorded on the
consolidated statement of operations in the period of sale to the
factor. John Lawrence, CEO, is a personal guarantor of the
amount due to 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. The allowance for doubtful accounts (if any) is based
on management’s regular evaluation of individual
customer’s receivables and consideration of a
customer’s financial condition and credit
history. Trade receivables are written off when deemed
uncollectible. Recoveries of trade receivables
previously written off are recorded when
received. Interest is not charged on past due
accounts.
We
present the receivables, net of allowances, as current assets and
we present the amount potentially due to the Factor as a secured
financing in current liabilities.
|
Accounts
Receivble
|
September
30,
2019
|
December
31,
2018
|
|
Accounts receivable
- non factored
|
$
263,836
|
$
421,867
|
|
Accounts receivable
- factored with recourse
|
59,104
|
16,524
|
|
Accounts
receivable - net
|
$
322,940
|
$
438,391
|
9
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited),
Continued:
7.
Commitments
and Contingencies
In June
of 2013, the Company entered into a lease to mine antimony ore from
concessions located in the Wadley Mining district in Mexico. The
lease calls for a term of one year and, as of September 30, 2019,
requires payments of $10,000 plus a tax of $1,700, per month. The
lease is renewable each year with a 15 day notice to the lessor and
agreement of terms. The next lease is scheduled for renewal in June
2020.
8.
Notes
Payable to Bank
|
At September 30,
2019, and December 31, 2018, the Company had the following notes
payable to bank:
|
||
|
|
|
|
|
|
September
30,
|
December
31,
|
|
|
2019
|
2018
|
|
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
|
$
83,918
|
|
|
|
|
|
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
|
98,229
|
99,999
|
|
Total notes payable
to the bank
|
$
198,228
|
$
183,917
|
These
notes are personally guaranteed by John C. Lawrence the
Company’s Chief Executive Officer and Chairman of the Board
of Directors. The maximum amount available for borrowing under each
note is $99,999.
10
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited),
Continued:
9.
Debt
|
Long-Term debt at
September 30, 2019 and December 31, 2018 is as
follows:
|
September
30,
|
December
31,
|
|
|
2019
|
2018
|
|
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.(1)
|
$
100,000
|
$
100,000
|
|
Note payable to Cat
Financial Services, bearing interest at 6%;
|
|
|
|
payable in monthly
installments of $1,300; maturing
|
|
|
|
August 2019;
collateralized by equipment.
|
1,498
|
14,022
|
|
Note payable to Cat
Financial Services, bearing interest at 6%;
|
|
|
|
payable in monthly
installments of $778; maturing
|
|
|
|
December 2022;
collateralized by equipment.
|
28,175
|
34,390
|
|
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.
|
1,998
|
5,851
|
|
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.
|
-
|
8,371
|
|
Note payable to
Phyllis Rice, bearing interest
|
|
|
|
at 1%; payable in
monthly installments of $2,000; originally maturing
|
|
|
|
March 2015;
collateralized by equipment.
|
6,146
|
12,146
|
|
Obligation payable
for Soyatal Mine, non-interest bearing,
|
|
|
|
annual
payments of $100,000 or $200,000 through 2020, net of
discount
|
|
|
|
of $19,156
and $23,321, respectively. (2)
|
667,243
|
639,747
|
|
Obligation payable
for Guadalupe Mine, non-interest bearing,
|
|
|
|
annual
payments from $60,000 to $149,078 through 2026, net of
discount
|
|
|
|
of $201,527 and
$252,444, respectively. (3)
|
922,779
|
918,663
|
|
|
1,727,839
|
1,733,190
|
|
Less current
portion
|
(851,766
)
|
(705,460
)
|
|
Long-term
portion
|
$
876,073
|
$
1,027,730
|
(1)
Payments starting the fourth quarter of
2019.
2
)
At September 30,
2019, the Company has not made $465,021 of principal payments due
in previous periods on this note. At September
30, 2019, all but $23,585 of the balance is classified as a current
liability. The creditor has agreed to accept payments of $2,500 per
month through June 30, 2020, at which time the parties may agree to
an extension of that payment schedule, or modify the payment
schedule. The note holder accepted, and was paid, $40,000 during
the nine months ended September 30, 2019.
(3)
At September 30, 2019, the Company
is delinquent in $91,578 of principal payments on this
note. At September 30, 2019, the delinquent balance is
classified as a current liability. The Company is currently
working with the lenders to modify the payment terms to cure the
delinquent status. The Company has not received notice from
the lenders indicating default on the loan.
11
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited),
Continued:
9.
Debt,
continued:
At
September 30, 2019, principal payments on debt are due as
follows:
|
12 Months Ending
September 30,
|
Principal
Payment
|
Discount
|
Net
|
|
2020
|
$
910,048
|
$
(58,282
)
|
$
851,766
|
|
2021
|
223,957
|
(45,335
)
|
178,622
|
|
2022
|
191,052
|
(37,610
)
|
153,442
|
|
2023
|
177,716
|
(30,922
)
|
146,794
|
|
2024
|
149,077
|
(23,833
)
|
125,244
|
|
Thereafter
|
296,642
|
(24,671
)
|
271,971
|
|
|
$
1,948,492
|
$
(220,653
)
|
$
1,727,839
|
10.
Related
Party Transactions
During
the three and nine months ended September 30, 2018, the Chairman of
the audit committee and compensation committee received $4,500 for
services performed. No compensation was paid during the three and
nine month periods ended September 30, 2019. See Note 12 for shares
of common stock issued to directors.
For the
three and nine months ended September 30, 2019, the Company paid
$1,764 and $8,034, respectively, compared to $1,764, and $6,686 for
the three and nine months ended June 30, 2018, to John Lawrence,
our President and Chief Executive Officer, as reimbursement for
equipment used by the Company. Mr. Lawrence advanced the Company
$227,200 for ongoing operating expenses during the nine months
ended September 30, 2019, of which $17,387 has been repaid. In
addition to the loan that was owed to Mr. Lawrence at September 30,
2019, the Company also owed Mr. Lawrence for payroll and other
liabilities equal to $123,250 for a total owed to Mr. Lawrence at
September 30, 2019 of $333,063.
John
Gustaven, executive Vice President of the Company, advanced the
Company $10,200 during the quarter ended September 30, 2019, and is
included in payables to related parties at September 30,
2019.
11.
Income Taxes
During the three and nine months ended September
30, 2019, and the year ended December 31, 2018, the Company
determined that a valuation allowance equal to 100% of any deferred
tax asset was appropriate, as management of the Company cannot
determine that it is more likely than not the Company will realize
the benefit of its net deferred tax asset. The net effect is that
the deferred tax asset is fully reserved for at September 30, 2019
and December 31, 2018.
Management estimates the effective
tax rate at 0% for the current year.
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. Approximately $285,000
USD of the total assessment is interest and penalties. SAT’s
assessment is based on the disallowance of specific costs that the
Company deducted on the 2013 USAMSA income tax return. These
disallowed costs were incurred by the Company for USAMSA’s
business operations.
Management
reviewed the assessment notice from SAT and believed numerous
findings have no merit. The Company engaged accountants and tax
attorneys in Mexico to defend its position. An appeal was
filed.
12
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited),
Continued:
11.
Income Taxes, continued:
As
of December 31, 2017, the Company had accrued a potential tax
liability of $443,110 associated with this assessment. In the third
quarter of 2018, we settled a tax assessment from the Mexican
government completely in our favor. The accrual of $443,110
recorded as potential tax liability was reversed and recognized as
a gain during the quarter ended September 30, 2018. The Company
paid Mexican tax representatives $157,500 that were recognized as
professional fees expense, to negotiate this settlement during the
quarter ended September 30, 2018.
The
Company has been notified that SAT has re-opened its assessment of
USAMSA’s 2013 income tax return which could result in a
separate assessment. It is too early in the process to estimate any
potential outcome. At September 30, 2019, the Company does not
believe it will be assessed any taxes, interest or penalties as a
result of this assessment.
12.
Stockholder’s Equity
Issuance of Common Stock for Payable to Board of
Directors
During
the nine-month period ended September 30, 2019, the Board of
Directors was issued a total of 330,183 shares of common stock for
$175,000 in directors’ fees that were payable at December 31,
2018. In addition, during the three and nine months ended September
30, 2019, the Company accrued $34,375 and $96,875, respectively, in
directors’ fees payable that will be paid in common
stock.
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.
As part of the agreement, Mr. Parks’ hours worked and cash
compensation were reduced.
On May
3, 2018, the Board of Directors was issued a total of 739,018
shares of common stock for $175,000 in directors’ fees that
were payable at December 31, 2017. In addition, during the three
and nine months ended September 30, 2018, the Company accrued
$43,750 and $131,250, respectively, in directors’ fees
payable that will be paid in common stock.
Issuance of Common Stock for Cash
During
the nine-month period ended September 30, 2019, the Company sold
904,082 shares of its common stock for $0.48 per share for proceeds
of $431,322. Included with each share was a common stock warrant to
purchase ½ share (total of 452,041) of the Company’s
common stock exercisable at $0.65. The warrants expire in
2022.
13.
Plant
Acquisition
On
August 31, 2018, the Company closed a Member Interest and Capital
Share Agreement
(the
“Agreement”) with Great Lakes Chemical Corporation and
Lanxess Holding Company US Inc., as the sellers, and the Company as
the buyer. Under the Agreement, the Company acquired a subsidiary
of the sellers which includes an antimony plant, equipment and land
located in Reynosa, Mexico. The Company disassembled,
salvaged, and transported the antimony plant and equipment for use
in its existing operations in both Mexico and the United States.
The project involved moving heavy equipment and was completed in
the second quarter of 2019. In addition, the Company was paid
$1,500,000 by the sellers, which was recognized as operating income
in the quarter ended September 30, 2018, to assist in the salvage
and transport costs of the useable equipment. The transaction was
accounted for as an asset acquisition as there was no business
associated with the acquired assets. The real property acquired
with the plant was sold for $700,000 in November 2018, for which
the Company received $300,000 in 2018 and the remaining balance of
$400,000 in the three month period ended March 31,
2019.
13
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited),
Continued:
14.
Business
Segments
The
Company is currently organized and managed by four segments, which
represent our operating units: United States antimony operations,
Mexican antimony operations, precious metals recovery and United
States zeolite operations.
The
Madero smelter and Puerto Blanco mill at the Company’s Mexico
operation produces crude oxide and crude metal that is shipped to
Montana for finishing at the Thompson Falls, Montana, plant, or
finished antimony metal that is sold directly to customers in the
United States. The precious metals recovery plant is operated in
conjunction with the antimony processing plant at Thompson Falls,
Montana. 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.
Segment
disclosure regarding sales to major customers is located in Note
4.
|
Total
Assets:
|
September 30,
2019
|
December 31,
2018
|
|
Antimony
|
|
|
|
United
States
|
$
2,062,312
|
$
2,199,694
|
|
Mexico
|
12,412,737
|
12,824,292
|
|
Subtotal
Antimony
|
14,475,049
|
15,023,986
|
|
Precious
metals
|
581,314
|
615,719
|
|
Zeolite
|
1,916,963
|
1,917,418
|
|
Total
|
$
16,973,326
|
$
17,557,123
|
|
|
For the Three
Months Ended
|
For the Nine
Months Ended
|
||
|
|
September 30,
2019
|
September 30,
2018
|
September 30,
2019
|
September 30,
2018
|
|
Capital
expenditures:
|
|
|
|
|
|
Antimony
|
|
|
|
|
|
United
States
|
$
-
|
$
-
|
$
2,713
|
$
-
|
|
Mexico
|
190,861
|
223,390
|
607,564
|
334,367
|
|
Subtotal
Antimony
|
190,861
|
223,390
|
610,277
|
334,367
|
|
Precious
Metals
|
4,095
|
-
|
17,247
|
40,988
|
|
Zeolite
|
9,304
|
13,793
|
50,313
|
36,216
|
|
Total
|
$
204,260
|
$
237,183
|
$
677,837
|
$
411,571
|
14
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited),
Continued:
14.
Business
Segments, continued:
|
Segment
Operations for the three
|
Antimony
|
Antimony
|
Total
|
Precious
|
|
|
|
months
ended September 30, 2019
|
USA
|
Mexico
|
Antimony
|
Metals
|
Zeolite
|
Totals
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$
1,080,871
|
$
-
|
$
1,080,871
|
$
55,500
|
$
651,563
|
$
1,787,934
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
$
10,935
|
$
210,766
|
$
221,701
|
$
17,630
|
$
46,825
|
$
286,156
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
227,712
|
(921,965
)
|
(694,253
)
|
37,869
|
114,923
|
(541,461
)
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
(4,602
)
|
(18,037
)
|
(22,639
)
|
-
|
(4,492
)
|
(27,131
)
|
|
|
|
|
|
|
|
|
|
NET
INCOME (LOSS)
|
$
223,110
|
$
(940,002
)
|
$
(716,892
)
|
$
37,869
|
$
110,431
|
$
(568,592
)
|
|
Segment
Operations for the three
|
Antimony
|
Antimony
|
Total
|
Precious
|
|
|
|
months
ended September 30, 2018
|
USA
|
Mexico
|
Antimony
|
Metals
|
Zeolite
|
Totals
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$
1,366,540
|
$
-
|
$
1,366,540
|
$
71,820
|
$
653,365
|
$
2,091,725
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
$
13,170
|
$
148,363
|
$
161,533
|
$
17,011
|
$
46,807
|
$
225,351
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
1,259,735
|
(537,067
)
|
722,668
|
54,809
|
88,263
|
865,740
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
(3,715
)
|
409,238
|
405,523
|
-
|
(3,816
)
|
401,707
|
|
|
|
|
|
|
|
|
|
NET
INCOME (LOSS)
|
$
1,256,020
|
$
(127,829
)
|
$
1,128,191
|
$
54,809
|
$
84,447
|
$
1,267,447
|
15
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited),
Continued:
14.
Business
Segments, continued:
|
Segment
Operations for the nine
|
Antimony
|
Antimony
|
Total
|
Precious
|
|
|
|
months
ended September 30, 2019
|
USA
|
Mexico
|
Antimony
|
Metals
|
Zeolite
|
Totals
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$
3,820,689
|
$
473,592
|
$
4,294,281
|
$
140,550
|
$
2,081,751
|
$
6,516,582
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
$
32,690
|
$
508,934
|
$
541,624
|
$
51,652
|
$
139,426
|
$
732,702
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
1,083,360
|
(3,318,053
)
|
(2,234,693
)
|
88,898
|
460,149
|
(1,685,646
)
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
(10,388
)
|
(54,375
)
|
(64,763
)
|
-
|
(11,682
)
|
(76,445
)
|
|
|
|
|
|
|
|
|
|
NET
INCOME (LOSS)
|
$
1,072,972
|
$
(3,372,428
)
|
$
(2,299,456
)
|
$
88,898
|
$
448,467
|
$
(1,762,091
)
|
|
Segment
Operations for the nine
|
Antimony
|
Antimony
|
Total
|
Precious
|
|
|
|
months
ended September 30, 2018
|
USA
|
Mexico
|
Antimony
|
Metals
|
Zeolite
|
Totals
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$
4,540,873
|
$
-
|
$
4,540,873
|
$
213,523
|
$
2,026,605
|
$
6,781,001
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
$
39,550
|
$
445,729
|
$
485,279
|
$
51,032
|
$
141,699
|
$
678,010
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
1,849,669
|
(2,088,424
)
|
(238,755
)
|
162,491
|
382,182
|
305,918
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
(6,431
)
|
379,750
|
373,319
|
-
|
(9,015
)
|
364,304
|
|
|
|
|
|
|
|
|
|
NET
INCOME (LOSS)
|
$
1,843,238
|
$
(1,708,674
)
|
$
134,564
|
$
162,491
|
$
373,167
|
$
670,222
|
16
ITE
M
2.
Management’s
Discussion and Analysis of Results of Operations and
FinancialCondition
General
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.
|
Antimony -
Combined USA
|
Three Months
Ended
|
Three Months
Ended
|
Nine Months
Ended
|
Nine Months
Ended
|
|
and
Mexico
|
September 30,
2019
|
September 30,
2018
|
September 30,
2019
|
September 30,
2018
|
|
Lbs of Antimony Metal
USA
|
187,889
|
229,865
|
597,308
|
690,838
|
|
Lbs of Antimony Metal
Mexico
|
155,549
|
105,748
|
607,407
|
405,329
|
|
Total
Lbs of Antimony Metal Sold
|
343,438
|
335,613
|
1,204,715
|
1,096,167
|
|
Average Sales Price/Lb
Metal
|
$
3.15
|
$
4.07
|
$
3.56
|
$
4.14
|
|
Net income
(loss)/Lb Metal
|
$
(2.09
)
|
$
3.36
|
$
(1.91
)
|
$
0.12
|
|
|
|
|
|
|
|
Gross antimony
revenue
|
$
1,080,871
|
$
1,366,540
|
$
4,294,281
|
$
4,540,873
|
|
|
|
|
|
|
|
Cost of sales -
USA
|
(628,050
)
|
(735,284
)
|
(2,271,512
)
|
(2,759,947
)
|
|
Cost of sales -
Mexico
|
(892,714
)
|
(973,149
)
|
(3,138,309
)
|
(2,484,242
)
|
|
Operating income
(expenses)
|
(254,360
)
|
1,064,561
|
(1,119,153
)
|
464,561
|
|
Non-operating income
(expenses)
|
(22,639
)
|
405,523
|
(64,763
)
|
373,319
|
|
|
(1,797,763
)
|
(238,349
)
|
(6,593,737
)
|
(4,406,310
)
|
|
|
|
|
|
|
|
Net income
(loss) - antimony
|
(716,892
)
|
1,128,191
|
(2,299,456
)
|
134,564
|
|
Depreciation,&
amortization
|
221,701
|
161,533
|
541,624
|
485,279
|
|
EBITDA
- antimony
|
$
(495,191
)
|
$
1,289,724
|
$
(1,757,832
)
|
$
619,843
|
|
|
|
|
|
|
|
Precious
Metals
|
|
|
|
|
|
Ounces
sold
|
|
|
|
|
|
Gold
|
12
|
24
|
36
|
54
|
|
Silver
|
3,445
|
5,415
|
8,333
|
15,256
|
|
|
|
|
|
|
|
Gross precious metals
revenue
|
$
55,500
|
$
71,820
|
$
140,550
|
$
213,523
|
|
Cost of sales
|
(17,631
)
|
(17,011
)
|
(51,652
)
|
(51,032
)
|
|
Net income -
precious metals
|
37,869
|
54,809
|
88,898
|
162,491
|
|
Depreciation
|
17,630
|
17,011
|
51,652
|
51,032
|
|
EBITDA
- precious metals
|
$
55,499
|
$
71,820
|
$
140,550
|
$
213,523
|
|
|
|
|
|
|
|
Zeolite
|
|
|
|
|
|
Tons
sold
|
3,483
|
3,556
|
10,924
|
10,887
|
|
Average Sales
Price/Ton
|
$
187.07
|
$
183.74
|
$
190.57
|
$
186.15
|
|
Net income
(loss)/Ton
|
$
31.71
|
$
23.75
|
$
41.05
|
$
34.28
|
|
|
|
|
|
|
|
Gross zeolite
revenue
|
$
651,563
|
$
653,365
|
$
2,081,751
|
$
2,026,605
|
|
Cost of sales
|
(520,356
)
|
(543,410
)
|
(1,568,174
)
|
(1,576,649
)
|
|
Operating income
(expenses)
|
(16,284
)
|
(21,692
)
|
(53,428
)
|
(67,774
)
|
|
Non-operating income
(expenses)
|
(4,492
)
|
(3,816
)
|
(11,682
)
|
(9,015
)
|
|
Net income -
zeolite
|
110,431
|
84,447
|
448,467
|
373,167
|
|
Depreciation
|
46,825
|
46,807
|
139,426
|
141,699
|
|
EBITDA
- zeolite
|
$
157,256
|
$
131,254
|
$
587,893
|
$
514,866
|
|
|
|
|
|
|
|
Company-wide
|
|
|
|
|
|
Gross revenue
|
$
1,787,934
|
$
2,091,725
|
$
6,516,582
|
$
6,781,001
|
|
Cost of sales
|
(2,058,751
)
|
(2,268,854
)
|
(7,029,647
)
|
(6,871,870
)
|
|
Operating
expenses
|
(270,644
)
|
1,042,869
|
(1,172,581
)
|
396,787
|
|
Non-operating
expenses
|
(27,131
)
|
401,707
|
(76,445
)
|
364,304
|
|
Net income
(loss)
|
(568,592
)
|
1,267,447
|
(1,762,091
)
|
670,222
|
|
Depreciation,&
amortization
|
286,156
|
225,351
|
732,702
|
678,010
|
|
EBITDA
|
$
(282,436
)
|
$
1,492,798
|
$
(1,029,389
)
|
$
1,348,232
|
17
PART I - FINANCIAL INFORMATION, CONTINUED:
ITEM
2.
Management’s
Discussion and Analysis of Results of Operations and
FinancialCondition, continued:
Company-Wide
For the
third quarter of 2019, we recognized a net loss of $568,592 on
sales of $1,787,934, after depreciation and amortization of
$286,156. We reported a net income of $1,267,447 in the third
quarter of 2018 on sales of $2,091,725, after depreciation and
amortization of $225,351. In the third quarter of 2018, the profit
was due to a transaction where we acquired a company, Lanxess
Laurel, and were paid $1,500,000 to dismantle and dispose of the
acquired company’s assets.
For the
first nine months of 2019, we recognized a net loss of $1,762,091,
on sales of $6,516,582, after depreciation and amortization of
$732,702. For the first nine months of 2018, we reported a net
income of $670,222 on sales of $6,781,001, after depreciation and
amortization of $678,010. The profit for the nine months ending
September 30, 2018, was due to the Lanxess Laurel
transaction.
For the
three and nine months ended September 30, 2019, EBITDA was
($282,436) and ($1,029,389), compared to an EBITDA of $1,492,798
and $1,348,232 for the same periods of 2018. The positive EBITDA
for the three and nine months ending September 30, 2018, was due to
the Lanxess Laurel transaction.
Net non-cash
expense items totaled $347,943 for the three months ended September
30, 2019 and included $286,156 for depreciation and amortization,
$18,037 for amortization of debt discount, and $43,750 for director
compensation. Net non-cash expense items totaled $1,019,687 for the
nine months ended September 30, 2019 and included $732,702 for
depreciation and amortization, $54,110 of debt discount, $136,000
for common stock issued for services, and $96,875 for director
compensation.
Net
non-cash expense items totaled $302,973 for the three months ended
September 30, 2018 and included $225,351 for depreciation and
amortization, $21,120 for amortization of debt discount, $43,750
for director compensation and $12,752 for other items. Net non-cash
expense items totaled $872,620 for the nine months ended September
30, 2018 and included $678,010 for depreciation and amortization,
$63,360 of debt discount, $131,250 for director
compensation.
For the
three and nine months ended September 30, 2019, general and
administrative expenses were $139,456 and $498,539, respectively,
compared to $151,825 and $489,067 for the same periods in
2018.
The
falling price for antimony was the primary reason for the increases
in our year-over-year losses. Also, in the first half of 2019, we
were involved in dismantling furnaces and equipment at Reynosa,
Mexico, and moving it to our other operations in Mexico. We also
spent time and money preparing our Los Juarez precious metals
project for operation and installing furnaces at the Madero
smelter. These projects negatively affected our
profits.
Antimony
For the
three and nine months ended September 30, 2019, we sold 343,438 and
1,204,715 pounds of antimony compared to 335,613 and 1,096,167
pounds for the three and nine months ended September 30, 2018. The
increase in sales volume was 2.3% and 9.9% for the three and nine
months ending September 30, 2019, respectively. We had an increase
in raw material from Mexico of approximately 49,000 pounds for the
third quarter of 2019, and an increase of approximately 202,000
pounds for the nine months ended September 30, 2019, compared to
the same periods from a year ago.
18
The
average sales price of antimony during the three and nine months
ended September 30, 2019 was $3.15 and $3.56 per pound compared to
$4.07 and $4.14 during the same periods in 2018. This was a
decrease of 22.6% for the third quarter of 2019, and 14.0% for the
nine months ending September 30, 2019, compared to the same periods
from a year ago.
As of
September 30, 2019, we have installed three of the large rotating
furnaces (LRF) we acquired from the Lanxess Reynosa plant at our
Madero smelter. These furnaces are lined and are more efficient
than our old LRF, and they will increase our production and
efficiency, which will cut our production costs
substantially.
To
further cut costs, we are producing antimony metal in Mexico, and
we are renegotiating our raw material cost both in Mexico and from
our North American supplier.
Precious Metals
The
cyanide leach circuit at Puerto Blanco has been permitted, and
construction of the leach circuit is nearly complete, and we expect
to start pilot production during the fourth quarter of 2019. The
largest project was the construction of the tailings pond, and it
is ready for production to start. We need to complete the
installation of lab and assay equipment, calibrate the equipment,
and train employees in the use of the equipment.
For the
three and nine months ended September 30, 2019, EBITDA for precious
metals was $55,499 and $140,550, compared to $71,820 and $213,523
for the same periods of 2018.
We estimate the future recovery
of precious metals per metric ton, after the caustic leach and
cyanide leach circuits, is as follows:
|
Schedule of
recovery values
|
Metal
|
Assay
|
Recovery
|
Value
|
Value/Mt
|
|
|
Gold
|
0.035
opmt
|
90
%
|
$1500/oz
|
$47.25
|
|
|
Silver
|
3.27
opmt
|
85
%
|
$18.0/oz
|
$50.03
|
|
|
Antimony
|
0.652%
|
75
%
|
3.15/lb
|
$33.85
|
|
|
Total
|
|
|
|
$131.13
|
Current
and prior periods’ revenue from precious metals is as
follows:
|
Precious Metal
Sales Silver/Gold
|
For the three
months ended September 30,
|
For the nine
months ended September 30,
|
||
|
Montana
|
2019
|
2018
|
2019
|
2018
|
|
Ounces Gold Shipped
(Au)
|
12.53
|
24.26
|
27.67
|
53.69
|
|
Ounces Silver
Shipped (Ag)
|
3,444.68
|
5,415.00
|
7,604.84
|
15,256.00
|
|
Total
Revenues
|
$
55,500
|
$
71,820
|
$
117,979
|
$
213,523
|
|
|
|
|
|
|
|
Mexico
|
2019
|
2018
|
2019
|
2018
|
|
Ounces Gold Shipped
(Au)
|
-
|
-
|
8.21
|
-
|
|
Ounces Silver
Shipped (Ag)
|
-
|
-
|
727.88
|
-
|
|
Total
Revenues
|
-
|
-
|
$
22,571
|
-
|
19
Bear River Zeolite (BRZ)
For the
three and nine months ended September 30, 2019, BRZ sold 3,483 and
10,924 tons of zeolite compared to 3,556 and 10,887 tons in the
same periods of 2018, a decrease of 73 tons for the three months
and an increase of 37 tons for the nine months.
BRZ
realized net income of $110,431 in the third quarter of 2019,
compared to $84,447 in the third quarter of 2018. For the nine
months ended September 30, 2019, BRZ realized net income of
$448,467 compared to a net income of $373,167 for the same period a
year ago.
BRZ
realized an EBITDA for the three and nine months ended September
30, 2019 of $157,256 and $587,893, compared to $131,254 and
$514,866 for the same periods in 2018.
We are
anticipating continued growth in all areas of zeolite sales due to
new customers and increasing demand from existing customers as
customers realize that BRZ zeolite is one of the finest
clinotilolite zeolites in the world.
Financial Position
|
Financial
Condition and Liquidity
|
|
|
|
|
September 30,
2019
|
December 31,
2018
|
|
Current
assets
|
$
1,356,324
|
$
1,903,256
|
|
Current
liabilities
|
(4,178,761
)
|
(3,517,618
)
|
|
Net
Working Capital
|
$
(2,822,437
)
|
$
(1,614,362
)
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
|
September
30,
|
September
30,
|
|
|
2019
|
2018
|
|
Cash provided
(used) by operations
|
$
(283,542
)
|
$
(350,916
)
|
|
Cash used for
capital outlay
|
(677,837
)
|
(411,571
)
|
|
Proceeds from plant
acquisition
|
-
|
1,500,000
|
|
Payment received on
note receivable for sale of land
|
400,000
|
-
|
|
Cash provided
(used) by financing:
|
|
|
|
Net
proceeds (payments to) factor
|
42,580
|
5,168
|
|
Proceeds
from notes payable to bank
|
14,311
|
-
|
|
Change
in checks issued and payable
|
(14,777
)
|
13,572
|
|
Advances
from related party
|
237,400
|
125,000
|
|
Payment
on advances from related party
|
(17,387
)
|
(125,000
)
|
|
Payment
of notes payable to bank
|
-
|
(92,565
)
|
|
Stock
issued for cash
|
431,322
|
-
|
|
Principal
paid on long-term debt
|
(116,961
)
|
(178,504
)
|
|
Net
change in cash and cash equivalents
|
$
15,109
|
$
485,184
|
At
September 30, 2019, the
Company’s consolidated
financial statements show negative working capital of approximately
$2.8 million and accumulated deficit of approximately $27.5
million. In addition, the Company has a net loss of
$1,762,091 and cash used in operations of $283,542 for the
nine-month period ended September 30, 2019. The Company has had
recurring operating losses for most of the prior periods.
These factors indicate that there is substantial doubt regarding
the ability to continue as a going concern for the next twelve
months.
20
The
continuing losses are principally a result of the falling prices of
antimony and production costs incurred in Mexico.
Antimony prices
decreased approximately 14% in the first nine months of 2019
compared to the same period in the prior year. For the nine
months ended September 30, 2019, the average sale price for
antimony was approximately $3.56 per pound compared to a price of
$4.14 per pound for the nine months ended September 30, 2018. In
addition, during 2019, we have endured supply interruptions from
our North American supplier and shipments have resumed although at
a lower level than years prior to 2018. A new supply agreement
negotiated with our North American supplier in 2017 helped us with
cash flow from our antimony division in 2018, but the continued
decrease in prices for antimony have caused us to negotiate a
better supply agreement in 2019 which will help us with our cash
flow situation. We negotiated a $73,469 decrease in our raw
material cost with the supplier for the third quarter.
Since
2017, we have continually reduced labor and other operating costs
at our Mexico locations which have resulted in a lower overall
production cost in Mexico. In June 2019, we reached agreement with
our miners in Mexico to further reduce labor costs. In 2019, we
completed installation of three of the large rotating furnaces
(LRFs) we obtained from the Lanxess transaction. The
Company’s 2019-2020 plan involves ramping up production at
our antimony properties in Mexico utilizing the additional LRFs
obtained from Lanxess. As a result, we expect to increase the
antimony output from our Mexican properties in 2020. In 2019, we
began selling antimony metal directly from Mexico to customers
which saves us approximately $0.38 per pound in processing costs
and freight.
On
September 16, 2019, we were awarded a grant for $510,528 to provide
the Defense Logistics Agency of the Department of Defense with six
samples of antimony tri-sulfide for testing to determine the
consistency for making primers for ordnance per military
specification MIL-A-159D. We will be paid $85,088 per sample over
the next twelve months.
The
portion of the precious metals recovery system at the Madero
smelter is complete and the cyanide leach circuit being built at
the Puerto Blanco plant is complete except for the assaying and lab
equipment which will be tested in the fourth quarter of 2019. We
expect to be receiving income from the production of precious
metals some time during the first half of 2020.
Over
the past several years, the Company has made principal payments on
most of its debt from cash generated from operations without the
need for additional borrowings or selling shares of its common
stock. However, we are delinquent on some debt payments (see Note
9).
On
November 14, 2019, we completed a common stock private placement
for $431,322 to complete the precious metals circuit at our Puerto
Blanco milling facility and to make cost saving repairs at our
Montana smelter.
Management believes
that the actions taken to increase production from both antimony
and precious metals coupled with a reduction in production costs
will enable the Company to meet most of its obligations for the
next twelve months. However, due to the uncertainty of the price of
antimony and other operating factors, there is a likelihood that
some obligations will not be met.
21
IT
E
M
3.
None
ITEM
4. Con
t
rols and Procedures
EVALUATION OF
DISCLOSURE CONTROLS AND PROCEDURES
We
maintain disclosure controls and procedures that are designed to
ensure that information required to be disclosed in our reports
under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the
SEC's rules and forms, and that such information is accumulated and
communicated to management, as appropriate, to allow timely
decisions regarding required disclosure. Our chief financial
officer conducted an evaluation of the effectiveness of the
Company's disclosure controls and procedures (as defined in the
Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as
of September 30, 2019. It was determined that there were material
weaknesses affecting our disclosure controls and procedures and, as
a result of those weaknesses, our disclosure controls and
procedures were not effective as of September 30, 2019. These
material 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 chief financial officer will develop internal
control measures to mitigate the lack of 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.
We plan
to consult with independent experts when complex transactions are
entered into.
CHANGES
IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no significant changes made to
internal controls over financial reporting for the quarter ended
September 30, 2019
.
22
PART
II - OTH
E
R
INFORMATION
Item
1.
L
EGAL
PROCEEDINGS
None
Item
2. UN
R
EGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
Item
3. DE
F
AULTS UPON
SENIOR SECURITIES
The
registrant has no outstanding senior securities.
Item
4. MI
N
E 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.
Item
5. OTH
E
R
INFORMATION
None
Item
6. EXH
I
BITS AND
REPORTS ON FORM 8-K
Certifications
Certifications
Pursuant to the Sarbanes-Oxley Act
Reports
on Form 8-K None
23
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)
|
/s/ John C.
Lawrence
|
Date:
November 14,
2019
|
|
John C.
Lawrence
|
|
|
Director
and President (Principal Executive)
|
|
|
/s/ Daniel L.
Parks
|
Date:
November
14, 2019
|
|
Daniel
L. Parks
|
|
|
Chief
Financial Officer
|
|
24
TABLE OF CONTENTS
Part I - Financial Information, Continued:Item 2. Management S Discussion and Analysis Of Results Of Operations and Financialcondition, Continued:Item 4. Controls and ProceduresPart II - Other InformationItem 1. Legal ProceedingsItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Mine Safety DisclosuresItem 5. Other InformationItem 6. Exhibits and Reports on Form 8-k