ItemItem 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 FinancialAccounting 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 FinancialAccounting 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 CFO,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, 2018.2020. 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, 2018.2020. 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 chief financial officerPrincipal 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.
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, 2018,2020, 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, 2018.2020.
PART III
Item 10Directors, Executive Officers, Promoters and Control Persons, Compliance withSection 16(a) of the Exchange Act
Identification of directors and executive officers at December 31, 2018,2020, is as follows:
Name | Age | Affiliation | Expiration of Term |
John C. Gustavsen | 72 | Interim CEO | Annual meeting |
| | | |
JohnRussell C. Lawrence | 8052 | Chairman,Interim President & Director | Annual meeting |
John C. Gustavsen | 70 | First Vice-President | |
Alicia Hill | 38 | Secretary, Controller, | Annual meeting |
Russell C. Lawrence | 50 | Second Vice-President,Director
| Annual meeting |
Matthew Keane | 63 | Third Vice-President | Annual meeting |
Daniel L. Parks | 70 | Chief Financial Officer | Annual meeting |
Alicia Hill | 37 | Secretary, Controller, and Treasurer | Annual meeting |
Gary D. Babbitt | 73 | Director | resigned 1stQtr of 2019
|
Whitney Ferer | 60 | Director | resigned 1stQtr of 2019
|
Hart W. Baitis | 6970 | Director | Annual meeting |
Jeffrey Wright | 49 | | |
Dr. Blaise Aguirre | 55 | Director | Annual meeting |
Craig Thomas | 44 | | |
Joseph Bardswich | 73 | Director | Annual meeting |
Business Experience of Directors and Executive Officers
John C. Lawrence. Mr. Lawrence has been the president and a director since our inception in 1969. Mr. Lawrence was the president and a director of AGAU Mines, Inc., our corporate predecessor. He is a member of the Society of Mining Engineers and a recipient of the Uuno Sahinen Silver Medallion Award presented by Butte Tech, University of Montana. He has a vast background in mining, milling, smelting, chemical processing and oil and gas.
Gary D. Babbitt. Mr. Babbitt has experience in the mining industry with approximately 30 years dealing with joint ventures, purchases, royalty leases and contracts. He has a working knowledge of Spanish and has negotiated supply and mining agreements in Mexico. Mr. Babbitt has a B.A. from the Albertson College of Idaho, and earned his J.D. from the University of Chicago. Mr. Babbitt resigned as director during the first quarter of 2019.
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.
Whitney Ferer. Dr. Blaise AguirreMr. Ferer was nominated to the board of USAC in February 2012. He worked for 34 years for Aaron Ferer & Sons Co. headquartered in Omaha, Nebraska, where he was the Vice President of Operations and Senior Trader, as well Vice Chairman of. Blaise Aguirre, MD joined the Board of AF&S Co.. He has been involved in the patentingDirectors of various processes for the breakdown of plastics and metal recovery, and was Vice President of the Lead & Zinc Division of AF&S. In addition, Mr. Ferer has been active in the trading of all metals, and facilitated the opening of eight offices in the Far East and China for AF&S. Mr. Ferer has recently opened his own company W.H. Ferer Co., LLC. He is one of the largest traders of antimony metal and oxides in the United States and, additionally, he handles approximately 20-30 elementsAntimony Corp. on August 14, 2019, to replace a Director that retired for medical reasons. He received his Medical Doctor’s degree in various forms and grades. Mr. Ferer resigned as director during the first quarter of 2019.
Jeffrey D. Wright. Mr. Wright graduated from North Carolina University in 1991, and1989 from the University of Southern California, Marshallthe Witwatersrand, Johannesburg, South Africa, and performed his residency at Boston University School of Business (MBA) in 2004. Mr. Wright was a naval officerMedicine from 1991 through 1996, serving aboard the aircraft carrier USS Carl Vinson and the destroyer USS John Young. After duty in the military, Mr. Wright held successively more responsible positions in the securities and finance industry. From 2011 through 2013 he was the managing director metals and mining research for Global Hunter Securities,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 the same position for H.C. Wainwright for 2013 through 2015.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.
Craig W. Thomas. Mr. Thomas is a professional investor with fifteen years of investing experience. He is currently the co-founder of Shareholder Advocates for Value Enhancement and the managing member of various investment partnerships. Mr. Thomas is currently a director of Full House Resorts, Inc. Mr. Thomas earned a B.A. from Stanford University and an M.B.A. from the Graduate School of Business at Stanford University.
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.
Daniel L. Parks.Lloyd Joseph Bardswich Mr. Parks graduated from the University of IdahoBardswich has extensive experience in 1974 withmining, mining engineering, management, drilling, metallurgy and plant design. He is a B.S. in Accounting, and was licensedregistered professional mining engineer, can served as a certified public accountant in 1976. HeQP (qualified person) regarding reporting to NI43-101 standards and has worked as an auditor for Coopers & Lybrand for three years, as controller for a lumber manufacturing company for one year,Shift Boss, Mine Safety Engineer, Mine Foreman, Mine Manager, and owned his own accounting practice for thirty years. Mr. Parks was extensively involved in auditing and financial statement preparation during this time.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.
Matt Keane. Mr. Keane graduated from Mankato State University in 1978 with degrees in geography and environmental studies. Mr. Keane was owner of a construction business and a retail building supply business before becoming the director of sales for United States Antimony Corporation in 2000. Mr. Keane has developed the Company’s growing zeolite sales through Bear River Zeolite and the increase in the Company’s share of the domestic market for antimony products.
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 20182020 calendar year. Each incumbent director attended all of the meetings held during the 20182020 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 consistsconsisted of fourtwo members at December 31, 2018, Gary Babbitt (Chairman), Whitney Ferer,2020, Jeffrey Wright, and Craig Thomas. Gary Babbitt and Whitney Ferer resigned as of March 18, 2019.Hart Baitis. None of the Audit Committee members are involved in our day-to-day financial management. Jeffrey Wright andwas considered a financial expert. Jeffrey Wright resigned from the board effective January 1, 2021. Craig Thomas are considered financial experts.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, 2018:2020:
Directors Compensation
Name and Principal Position | Fees Earned or paid in Cash | | Total Fees, Awards, and Other Compensation |
John C. Lawrence, Chairman | $25,000 | $25,000 |
Gary D. Babbitt, Director | $18,000 | $25,000 | $43,000 |
Russell Lawrence, Director | $25,000 | $25,000 |
| $25,000 | $25,000 |
| $25,000 | $25,000 |
Jeffrey Wright, Director | | $25,000 | $25,000 |
Craig Thomas, Director | | $25,000 | $25,000 |
Totals | $18,000 | $175,000 | $193,000 |
| | | |
| | | |
Name and Principal | | | |
Position | | | |
Russell Lawrence, | - | $20,000 | $20,000 |
| | |
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 Mr. Babbitt, Mr. Ferer, and Mr. Russell Lawrence did not file timely Forms 3, 4 or Form 5 reports during 20182019 and 2017.2018.
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.
ItemItem 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, 20182020 and 2017.2019.
Name and Principal Position | Year | Salary | Bonus | Stock Awards (2) | Total |
John C.Russell Lawrence,
Interim President and Chief Executive Officer
| 20182020
20172019
| $141,000110,000 $141,000110,000 | N/A | $25,00020,000 $25,000 | $166,000130,000 $166,000135,000 |
John C. Gustaven, Executive Vice
PresidentInterim CEO
| 20182020
20172019
| $100,000$100,000
$100,000 | N/A | | $100,000
$100,000
|
Russell Lawrence, Vice
President for Latin
America
| 2018
2017
| $110,000
$110,000
| N/A | $25,000100,000 $25,000 | $135,000
$135,000100,000
|
(2)
These figures represent the fair value, as of the date of issuance, the annual director's fees for John C. Lawrence and Russell Lawrence payable in shares of USAC's common stock.
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.
Two executive officers, the President/CEO and the Vice-President for the Latin American operations, receiveThe Interim President receives restricted stock awards for their services as Board members.
The following table sets forth information concerning the outstanding equity awards at December 31, 2018, held by our principal executive officer. There were not any other outstanding equity awards or plan based awards to officers or directors as of December 31, 2018.2020. 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.
| | | Outstanding Equity Awards | | |
| | | | | |
| | | | | |
| | | Equity Incentive Plan Awards: | | |
| | | | |
| Number of Securities Underlying | | | |
Name | | | | |
| | | | | |
John C. Lawrence | 250,000 | 0 | 0 | $0.25 | None
|
(Chairman of the Board of Directors and Chief Executive Officer) | - | - | - | - | - |
ItemItem 12 Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information regarding beneficial ownership of our common stock as of April 1, 2019,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 all Voting Stock | | Name and Address of Beneficial Owner (1) | Amount and Nature of Beneficial Ownership | | Percent of all Voting Stock |
Common Stock | Reed Family Limited Partnership 328 Adams Street Milton, MA 02186 | 4,018,335 | 5.89% | 5.80% | |
Common Stock | The Dugan Family c/o A.W.Dugan 1415 Louisana Street, Suite 3100 Houston, TX 77002 | 6,362,927(3) | 9.33% | 9.19% | |
Series B Preferred | Excel Mineral Company P.O. Box 3800 Santa Barbara, CA 93130 | 750,000 | 100.00% | N/A | | Excel Mineral Company P.O. Box 3800 Santa Barbara, CA 93130 | 750,000 | 100% | N/A |
Series C Preferred | Richard A. Woods 59 PennCircle West Penn Plaza Apts. Pittsburgh, PA 15206 | 48,305(4) | 27.10% | * | | 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) | 18.10% | * | | 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 floor Philadelphia, PA 19107 | 32,203(4) | 18.10% | * | | 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(4) | 100.00% | * | | All Series C Preferred Shareholders as a Group | 177,904 | 100% | * |
Common Stock | John C. Lawrence
| 4,498,181(2)
| 62.07%
| 6.52%
| |
| Russell Lawrence | 353,179 | 4.92% | * | |
| Hart Baitis | 339,254 | 4.72% | * | |
| Garry Babbitt | 377,060 | 5.25% | * | |
| Whitney Ferer | 268,074 | 3.75% | * | | | |
| Jeffrey Wright | 235,804 | 3.30% | * | | John C. Lawrence | 4,496,350 | 82.5% | 4.2% |
| Mathew Keane | 10,300 | 0.14% | * | | Russell Lawrence | 495,897 | 9.1% | * |
| Daniel Parks | 464,500 | 6.45% | * | | Hart Baitis | 441,978 | 8.1% | * |
| Craig Thomas | 555,367 | 9.40% | * | | Blaise Aquirre | 17,688 | 0.3% | * |
Common Stock | All Directors and Executive Officers as a Group | 7,052,719 | 100.00% | 10.45% | | All Directors and Executive Officers as a Group | 5,451,913 | 100% | |
Series D Preferred | John C. Lawrence | 1,590,672(4) | 90.80%
| 2.33%
| |
| Leo Jackson | 102,000 | 5.80% | * | | | |
| Garry Babbitt | 58,333 | 3.40% | * | | John C. Lawrence | 1,590,672 | 90.8% | 1.5% |
Series D Preferred | All Series D Preferred Shareholders as a Group | 1,751,005(4) | 100.00% | 2.52% | | 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 Directors and Executive Officers as a Group All preferred Shareholders that are officers or directors | | 78.38 %
| 9.16 %
| | All Preferred Shareholders that are officers or directors | 1,751,005 | 24.3% | 1.7% |
|
| 7,052,719 | 21.62% | 2.52% | | | |
Common and Preferred Voting Stock | Common and Preferred Voting Stock | 8,803,724 | 100.00% | 12.86% | | | 7,202,918 | 100.0% | 6.8% |
(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 April 1, 2019, 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 68,427,171 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 April 1, 2019. Total voting stock of 70,356,080 shares is a total of all the common stock issued, and all of the Series C and Series D Preferred Stock outstanding at April 1, 2019.
(2)
Includes 4,031,107 shares of common stock and 250,000 stock purchase warrants. Excludes 183,324 shares owned by the estate of Mr. Lawrence's sister, as to which Mr. Lawrence disclaims beneficial ownership.
(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. |
(3)
Includes shares owned by the estate of Al W. Dugan and shares owned by companies owned and controlled by the estate of Al W. Dugan. Excludes 183,333 shares owned by Lydia Dugan as to which the estate of Mr. Dugan disclaims beneficial ownership.
(4)
The outstanding Series C and Series D preferred shares carry voting rights equal to the same number of shares of common stock.
(5)
The outstanding Series B preferred shares carry voting rights only if the Company is in default in the payment of declared dividends. The Board of Directors has not declared any dividends as due and payable for the Series B preferred stock.
(2) | The outstanding Series C and Series D preferred shares carry voting rights equal to the same number of shares of common stock. |
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, 2018,2020, the Company awarded, but did not issue, common stock with a value of $175,000$110,000 to its Board of Directors as compensation for their services as directors. In connection with the issuances, the Company recorded $175,000$110,000 in director compensation expense and accrued common stock payable.
In May 2018,June 2020, the Company issued the Board members 739,018295,463 shares of the Company’s common stock for services provided during 20172019 which was accrued at December 31, 2017,2019, with a value of $175,000.$130,483.
During 2017,the years ended December 31, 2019, the Company awarded but did not issue, common stock with a value at December 31, 2017, of $175,000$134,375 to its Board of Directors as compensation for their services as directors. In connection with the issuances, the Company recorded $175,000$134,375 in director compensation expense. On May 3, 2018, the shares were issued to the directors.
During 2016, the Company awarded, but did not issue,expense and accrued common stock with a value at December 31, 2016, of $168,750 to its Board of Directors as compensation for their services as directors. In connection with the issuances, the Company recorded $168,750 in director compensation expense. In March of 2017, at a price of $0.40 per share, the directors were issued 421,875 shares for 2016.payable.
The Company’s previous President and Chairman, John Lawrence, rentsrented equipment and an aircraft to the Company and chargescharged 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, 20182020 and 20172019 was $93,567$171,017 and $22,668,$156,974, respectively. Expenses paid to Mr. Lawrence for the years ended December 31, 20182020 and 20172019 were $9,634$1,533 and $13,603, respectively.$9,799, respectively
ItemDuring 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 DeCoria, Maichel & Teague P.S.Assure CPA for such services. In its review of non-audit service fees and its appointment of DeCoria, Maichel & Teague P.S.Assure CPA as the Company's independent accountants, the Board of Directors considered whether the provision of such services is compatible with maintaining DeCoria, Maichel & Teague P.S.Assure CPA independence. All of the services provided and fees charged by DeCoria, Maichel & Teague P.S.Assure CPA in 20182020 were pre-approved by the Board of Directors and its audit committee.
Audit Fees
The aggregate fees billed by DeCoria, Maichel & Teague P.S.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 20182020 and 20172019 were $116,716$122,500 and $119,985,$118,998, respectively, net of expenses.
Audit-Related Fees
There were no other fees billed by DeCoria, Maichel & Teague P.S.Assure CPA during the last threetwo 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 DeCoria, Maichel & Teague P.S.Assure CPA during the last two fiscal years for professional services rendered by DeCoria, Maichel & Teague P.S.Assure CPA for tax compliance for 20182020 and 20172019 were $12,465$12,100 and $8,985,$11,833, respectively.
All Other Fees
There were no$1,123 in other fees billed by DeCoria, Maichel & Teague P.S.Assure CPA during 2017. During 2018, we paid $5,998 for services related to the acquisition of Lanxess, LLC, provided by DeCoria, Maichel & Teague P.S.2020 and none during 2019.
ItemItem 15. Exhibits and Reports on Form 8-K
Exhibit Number | 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. | 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. |
| | |
3.04 | | 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. |
| | |
4.01 | | 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:
10.1 | 10.10 Yellow Jacket Venture Agreement | 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) |
| | |
10.18 | | Series B Stock Certificate to Excel-Mineral Company, Inc. |
| | |
10.19 | | Division Order and Purchase and Sale Agreement |
| | |
10.2 | | Inventory and Sales Agreement |
| | |
10.21 | | Processing Agreement |
| | |
10.22 | | Release and settlement agreement between Bobby C. Hamilton and United States Antimony Corporation |
10.11
Agreement Between Excel-Mineral USAC and Bobby C. Hamilton
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)
| 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 10.25 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 | |
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 |
| | |
10.3 | | 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:
10.3110.31 Warrant Issue-Al W. Dugan | | Warrant Issue-Al W. Dugan |
| | |
| | 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:
10.3310.33 Warrant Issue-John C. Lawrence 10.34 PVS Termination Agreement | | Warrant Issue-John C. Lawrence |
| | |
| | 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:
10.3510.35 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 | | Maguire Settlement Agreement |
| | |
| | Warrant Issue-Carlos Tejada |
| | |
| | Warrant Issue-Al W. Dugan |
| | |
| | Memorandum of Understanding with Geosearch Inc. |
| | |
| | Factoring Agreement-Systran Financial Services Company |
| | |
| | Mortgage to John C. Lawrence |
| | |
10.4110.40 Mortgage to John C. Lawrence | | 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 |
| | |
| | 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 |
| | |
| | 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. |
| | |
| | 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 |
10.41
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:
10.47Bear 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* 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 | | 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 |
| | |
10.51 | | Secured convertible note payable - Delaware Royalty Company dated December 22, 2003* |
| | |
10.52 | | Convertible note payable - John C. Lawrence dated December 22, 2003* |
| | |
10.53 | | Pledge, Assignment and Security Agreement dated December 22, 2003* |
| | |
10.54 | | Note Purchase Agreement dated December 22, 2003* |
| | |
14 | | Code of Ethics* |
| | |
| | Rule 13a-14(a)/15d-14(a) Certifications, Certification of John C. Lawrence* |
| | |
| | Rule 13a-14(a)/15d-14(a) Certifications, Certification of Daniel L. Parks*
|
| | |
| | Section 1350 Certifications, Certification of John C. Lawrence* |
| | |
| | Section 1350 Certifications, Certification of Daniel L. Parks*
|
| | |
4.1 | | 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.
Reports on Form 8-K
Item 5.Other5.
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
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
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:By /s/ John C.Russell Lawrence Date: Date: April 1, 2019March 31, 2021
John C. Russell Lawrence, Interim President, Director, and Principal Executive Officer
By:By /s/ Daniel L. Parks Date: April 1, 2019
Daniel L. Parks, Chief Financial Officer
By: /s/ Alicia Hill Date: Date: April 1, 2019March 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:By /s/ John C.Russell Lawrence Date: Date: April 1, 2019March 31, 2021
John C.Russell Lawrence, Interim Director and President
(Principal Executive)
By:By /s/Hart Baitis Date: Date: April 1, 2019March 31, 2021
Hart Baitis, Director
By:By /s/ Russell LawrenceBlaise Aguirre Date: Date: April 1, 2019March 31, 2021
Russell Lawrence,Blaise Aguirre, Director
By: /s/ Jeffrey Wright Date: April 1, 2019
Jeffrey Wright, Director
By: /s/ Craig Thomas Date: April 1, 2019
Craig Thomas, Director
By Report of Independent Registered Public Accounting Firm/s/ Joseph Bardswich Date: March 31, 2021
Joseph Bardswich, Director
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 and Subsidiaries (the "Company") as of December 31, 20182020 and 2017,2019, 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, 20182020 and 2017,2019, 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.
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 29, 201931, 2021
United States Antimony Corporation and Subsidiaries
Consolidated Balance Sheets
December 31, 2018 and 2017United States Antimony Corporation and Subsidiaries | | |
Consolidated Balance Sheets | | |
December 31, 2020 and 2019 | | |
ASSETS | | |
| | |
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 |
ASSETS | | |
| | |
Current assets: | | |
Cash and cash equivalents | $56,650 | $27,987 |
Certificates of deposit | 252,954 | 252,298 |
Accounts receivable | 438,391 | 362,579 |
Inventories | 755,261 | 914,709 |
Note receivable - sale of land | 400,000 | - |
Other current assets | - | 4,697 |
Total current assets | 1,903,256 | 1,562,270 |
| | |
Properties, plants and equipment, net | 15,227,172 | 15,132,897 |
Restricted cash for reclamation bonds | 57,247 | 63,345 |
IVA receivable and other assets | 369,448 | 372,742 |
Total assets | $17,557,123 | $17,131,254 |
| | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | |
Current liabilities: | | |
Checks issued and payable | $46,482 | $28,248 |
Accounts payable | 1,926,320 | 2,276,357 |
Due to factor | 16,524 | 10,880 |
Accrued payroll, taxes and interest | 159,037 | 185,283 |
Other accrued liabilities | 353,911 | 168,578 |
Payables to related party | 93,567 | 22,668 |
Deferred revenue | 32,400 | 60,049 |
Notes payable to bank | 183,917 | 192,565 |
Income taxes payable (Note 14) | - | 443,110 |
Long-term debt, current portion, net of discount | 705,460 | 546,988 |
Total current liabilities | 3,517,618 | 3,934,726 |
| | |
Long-term debt, net of discount and current portion | 1,027,730 | 1,239,126 |
Hillgrove advances payable (Note 10) | 1,134,221 | 1,134,221 |
Stock payable to directors for services | 175,000 | 175,000 |
Asset retirement obligations and accrued reclamation costs | 277,720 | 271,572 |
Total liabilities | 6,132,289 | 6,754,645 |
Commitments and contingencies (Note 4, 10 and 16) | | |
| | |
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 $930,000 and $922,500 | | |
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 $5,002,470 and $4,961,324 | | |
respectively) | 17,509 | 17,509 |
Common stock, $0.01 par value, 90,000,000 shares authorized; | | |
68,227,171 and 67,488,153 shares issued and outstanding, respectively | 682,271 | 674,881 |
Additional paid-in capital | 36,406,874 | 36,239,264 |
Accumulated deficit | (25,691,099) | (26,564,324) |
Total stockholders' equity | 11,424,834 | 10,376,609 |
Total liabilities and stockholders' equity | $17,557,123 | $17,131,254 |
| | |
The accompanying notes are an integral part of these consolidated financial statements.
United States Antimony Corporation and Subsidiaries
Consolidated Statements of Operations
For the years ended December 31, 2018 and 2017
| | |
REVENUES | $9,034,403 | 10,229,978 |
| | |
COST OF REVENUES | 9,032,860 | 9,954,518 |
| | |
GROSS PROFIT | 1,543 | 275,460 |
| | |
OPERATING EXPENSES (INCOME): | | |
General and administrative | 795,833 | 647,566 |
Salaries and benefits | 375,788 | 371,162 |
Gain on sale of land | (700,000) | - |
Gain on plant acquisition (Note 11) | (1,500,000) | - |
Other operating expenses | 119,076 | - |
Professional fees | 363,810 | 216,431 |
TOTAL OPERATING EXPENSES (INCOME) | (545,493) | 1,235,159 |
| | |
INCOME (LOSS) FROM OPERATIONS | 547,036 | (959,699) |
| | |
OTHER INCOME (EXPENSE): | | |
Interest income | 864 | 873 |
Gain on tax settlement | 110,778 | - |
Interest expense | (99,970) | (106,975) |
Factoring expense | (4,969) | (35,993) |
Foreign exchange loss | (12,846) | (32,600) |
TOTAL OTHER INCOME (EXPENSE) | (6,143) | (174,695) |
| | |
INCOME (LOSS) BEFORE INCOME TAXES | 540,893 | (1,134,394) |
| | |
INCOME TAX BENEFIT -CURRENT | 332,332 | - |
| | |
NET INCOME (LOSS) | 873,225 | (1,134,394) |
| | |
Preferred dividends | (48,649) | (48,649) |
Net income (loss) available to | | |
common stockholders | $824,576 | (1,183,043) |
| | |
Net income (loss) per share of | | |
common stock: | | |
Basic and diluted | $0.01 | $(0.02) |
| | |
Weighted average shares outstanding: | | |
Basic | 67,978,132 | 67,413,025 |
Diluted | 68,097,924 | 67,413,025 |
| | |
The accompanying notes are an integral part of these consolidated financial statements.
F-3
United States Antimony Corporation and Subsidiaries
Consolidated Statement of Changes in Stockholders' Equity
For the years ended December 31, 2018 and 2017United States Antimony Corporation and Subsidiaries |
Consolidated Statements of Operations | | |
For the years ended December 31, 2020 and 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 |
| | | | | | | |
| | | | | |
| | | | | | | |
| | | | | | | |
Balances, December 31, 2016 | 2,678,909 | $26,788 | 67,066,278 | $670,662 | $36,074,733 | $(25,429,930) | $11,342,253 |
| | | | | | | |
Issuance of common stock to directors for services | | | 421,875 | 4,219 | 164,531 | | 168,750 |
Net loss | | | | | | (1,134,394) | (1,134,394) |
Balances, December 31, 2017 | 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 for services | | | 739,018 | 7,390 | 167,610 | | 175,000 |
Net income | | | | | | 873,225 | 873,225 |
Balances, December 31, 2018 | 2,678,909 | $26,788 | 68,227,171 | $682,271 | $36,406,874 | $(25,691,099) | $11,424,834 |
| | | | | | | |
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 | | | | | |
| | | | | | | |
| | | | | |
| | | | | | | |
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 |
United States Antimony Corporation and Subsidiaries
Consolidated Statements of Cash Flows
For the years ended December 31, 2018 and 2017
Cash Flows From Operating Activities: | | |
Net income (loss) | $873,225 | $(1,134,394) |
Adjustments to reconcile net income (loss) to net cash | | |
provided by operating activities: | | |
Depreciation and amortization | 904,844 | 968,888 |
Amortization of debt discount | 83,991 | 93,450 |
Accretion of asset retirement obligation | 6,148 | 5,790 |
Common stock accrued for directors fees | 175,000 | 175,000 |
Foreign exchange loss | - | 32,600 |
Gain on sale of land | (700,000) | - |
Gain on plant acquisition | (1,500,000) | - |
Non-cash miscellaneous income | (656) | (657) |
Change in: | | |
Accounts receivable | (75,812) | 189,540 |
Inventories | 159,448 | (59,072) |
Other current assets | 4,697 | 18,404 |
IVA receivable and other assets | 3,294 | (58,539) |
Accounts payable | (350,037) | 479,106 |
Accrued payroll, taxes and interest | (26,246) | (28,412) |
Other accrued liabilities | 185,333 | 45,610 |
Deferred revenues | (27,649) | (18,681) |
Payables to related party | 70,899 | 8,143 |
Income taxes payable | (443,110) | - |
Net cash provided (used) by operating activities | (656,631) | 716,776 |
| | |
Cash Flows From Investing Activities: | | |
Proceeds from sale of land | 300,000 | - |
Proceeds from plant acquisition | 1,500,000 | - |
Purchase of properties, plants and equipment | (899,119) | (365,541) |
Net cash provided (used) by investing activities | 900,881 | (365,541) |
| | |
Cash Flows From Financing Activities: | | |
Net proceeds (to) from factor | 5,644 | (139,519) |
Proceeds from notes payable to bank, net of payments | (8,648) | 25,248 |
Principal payments of long-term debt | (236,915) | (211,529) |
Advances from related party | 135,000 | - |
Payments on advances from related party | (135,000) | - |
Change in checks issued and payable | 18,234 | (7,434) |
Net cash provided (used) by financing activities | (221,685) | (333,234) |
NET INCREASE (DECREASE) IN CASH | | |
AND CASH EQUIVALENTS AND RESTRICTED CASH | 22,565 | 18,001 |
Cash and cash equivalents and restricted cash at beginning of year | 91,332 | 73,331 |
Cash and cash equivalents and restricted cash at end of year | $113,897 | $91,332 |
| | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | | |
Interest paid in cash | $15,928 | $14,632 |
Noncash investing and financing activities: | | |
Properties, plants & equipment acquired with long-term debt | 100,000 | 40,278 |
Common stock payable issued to directors | 175,000 | 168,750 |
Note receivable-sale of land | 400,000 | - |
| | |
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 | | |
| | |
| | |
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.
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2018 and 2017
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 (“Lanxess Laurel”)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. See Note 11.
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 since August 31, 2018, Lanxess LaurelAntimony Mining and Lanxess Laurel Mexico.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.
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, 20182020 and 20172019 consists of cash held for reclamation performance bonds and is held in certificates of deposit with financial institutions.
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2018 and 2017
2. Summary of Significant Accounting Policies, continued:
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, 20182020 and 20172019 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, 2018,2020, the Company’s consolidated financial statements show negative working capital of approximately $1.6$2.7 million and an accumulated deficit of approximately $25.7$32.7 million. AlthoughWith the exception of 2018, the Company had net income for the current year, they havehas incurred losses for the prior threepast several years. The net income in 2018 was primarily due to non-recurring events which contributed approximately $2.5 million to net income. These factors indicate that there may be doubt regarding the ability to continue as a going concern for the next twelve months.
The continuing losses are principally a result of the Company’s antimony operations due to both depressed antimony prices and in particular the production costs incurred in Mexico. The other two operating divisions, precious metals and zeolite, had gross profits of $186,403 and $536,309 in 2018 and $310,373 and $408,403 in 2017, respectively. TheTo improve conditions, the Company is expecting an increaseplans to continue searching for areas to reduce these production costs. Management expects improvement in cash flow in 2021 from boththe sale of these divisions in 2019. The Company will get more precious metals extracted from their North American raw material as they have resumed normal shipments, and zeolite sales should continue to increase. The Company’s largest zeolite customer believesthe leach circuit that they will be doubling its orderscame on line in 2019, and the Company has built a warehouse to accommodate its needs.
Regarding the antimony division, in 2016 the Company endured some of the lowest prices for antimonyMexico in the past seven years, with an average sales pricesecond half of only $2.98 per pound of metal contained. Prices improved during 2017 with an average sale price of $4.01. Through 2018, the average sale price for antimony was approximately $4.11 per pound. However due to a temporary decrease in raw material from the Company’s North American supplier, overall antimony production decreased.2020.
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2018 and 2017
2.
Summary of Significant Accounting Policies, continued:
In 2017, the Company reduced costs for labor at the Mexico locations which has resulted in a lower overall production costs in Mexico which continued through 2018. In the fourth quarter 2017, the Company also adjusted operating approaches at Madero that will likely result in a decrease in operating costs for fuel, natural gas, electricity, and reagents. Although total production activity in Mexico decreased in 2018 and 2017 due to the lack of Hillgrove concentrates, the Company’s 2019 plan involves ramping up production at its own antimony properties in Mexico. The expected increase in production will result in a significant decrease in the per-unit cost of operations. The Company is presently making antimony metal in Mexico and shipping directly to customers. This will decrease production costs in Mexico and shipping costs for raw materials previously sent to Montana. The Company is already seeing approximately twice the production from the Wadley mine in 2019 than was experienced in 2018. In addition, a new leach circuit expected to come on line during 2019 in Mexico will result in more extraction of precious metals from the Los Juarez mine. The Company has approximately 30,000 tons of ore mined and broken awaiting transport to the Puerto Blanco plant.
In 2017 and 2018, management implemented wage and other cost reductions at the corporate level that will keep administrative costs stable in 2019. The Company expects to continue paying a low cost for propane in Montana, which in years past has been a major operating cost.
Over the past several years, the Company has been able to make required principal payments on its debt from cash generated from operations withoutoperations. The Company is confident it can make debt payments when due. In March 2020, the needCompany applied for additional borrowings or sellingand 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. The Company plansstock and warrants that will be used for general corporate purposes, working capital, and to continue keeping current on its debt payments in 2019 through cash flows from operations.
Managementfund a geochemical, geological and geophysical program at the Los Juarez property. With the funds raised, management believes that the current circumstances and cost reduction actions taken will enable the Company has sufficient funds to sustain its operations and meet its financial obligations forduring the next twelve months.
Mineral Rights
The costs to obtain12 months following the legal right to explore, extract and retain at least a portiondate of issuance 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. No impairment has been indicated for the years ended December 31, 2018 or 2017 as a result of this assessment. Mineral rights are subject to write down in the period the property is abandoned.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 of the Company periodically reviews and evaluates the net carrying value of all of its long-lived assets. These reviews considerassets for impairment upon the net realizable valueoccurrence of each assetevents or group to determine whether a permanent impairmentchanges in value has occurred andcircumstances that indicate that the needrelated carrying amounts may not be recoverable. A test for any asset write-down. An impairment lossrecoverability is recognized whenperformed based on the estimated undiscounted future cash flows (undiscountedthat will be generated from operations at each property and without interest) expectedthe estimated salvage value of asset. Although management has made what it believes to resultbe 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 useestimated remaining life of anthe 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 amountvalue of the asset. Measurement ofan asset, an impairment loss is based onrecognized for the estimateddifference between the carrying value and fair value of the asset if the asset is expected to be held and used.asset.
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2018 and 2017
2.
Summary of Significant Accounting Policies, continued:
Exploration and Development
The Company recognizesexpenses exploration costs as operating expensessuch in the period they occur, and capitalizesoccur. 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 on discrete mineralized bodies that have proven reserves in compliance with Securities and Exchange Commission Industry Guide 7, and are in developmentamortized over the estimated economic life of the mineral resource using the straight-line method, based upon estimated lives of the properties, or production.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.
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.
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2018 and 2017
2. Summary of Significant Accounting Policies, continued:
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 consideration received or the fair value of the common stock issued, whichever is more readily determinable.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. The calculation of diluted earnings per share for the year ended December 31, 2018 includes 250,000 warrants.
For the years ended December 31, 20182020 and 2017,2019, potentially dilutive common stock equivalents not included in the calculation of diluted earnings per share because they were anti-dilutive are as follows:
| | | | |
Warrants | - | 250,000 | 6,194,899 | 702,041 |
Convertible preferred stock | 1,751,005 | 1,751,005 |
Total possible dilution | 1,751,005 | 2,001,005 | 7,945,904 | 2,453,046 |
Fair Value of Financial Instruments
The Company’s financial instruments include cash and cash equivalents, certificates of deposits, note receivable for land, restricted cash, due to factor (included in accrued liabilities), notes payable to bank, and long-term debt.notes payable. The carrying value of these instruments approximates fair value based on their contractual terms.
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2018 and 2017
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.
Recent Accounting PronouncementsContingencies
In May 2014,determining accruals and disclosures with respect to loss contingencies, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09 Revenue Recognition, replacing guidance previously codified in Subtopic 605-10 Revenue Recognition-Overall. The new ASU establishesCompany evaluates such accruals and contingencies for each reporting period. Estimated losses from loss contingencies are accrued by a five step principles-based framework in an effortcharge to significantly enhance comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets. In August 2015, the FASB issued ASU No. 2015-14 Revenue from Contracts with Customers (Topic 606): Deferralincome when information available prior to issuance of the Effective Date. ASU No. 2015-14 deferredfinancial statements indicates that it is probable that a liability could be incurred and the effective date of ASU No. 2014-09 until annual and interim reporting periods beginning after December 15, 2017. The Company adopted ASU No. 2014-09 as of January 1, 2018 using the modified-retrospective transition approach.
The Company performed an assessmentamount of the impactloss 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 implementation of ASU No. 2014-09, and concludedthe loss contingency is made in the financial statements when it does not change the timing of revenue recognition or amounts of revenue recognized compared to how it recognized revenue under previous policies. Revenues contracts and customers do not involve multiple types of performance obligations and revenues are generally recognizedis at the time of shipment or receipt by the customer depending on shipping terms.
Adoption of ASU No. 2014-09 involves additional disclosures, where applicable, concerning (i) contracts with customers, (ii) significant judgments and changes in judgments in determining the timing of satisfaction of performance obligations and the transaction price, and (iii) assets recognized for costs to obtain or fulfill contracts. See Note 3 for information on sales of products.
In August 2016, the FASB issued ASU No. 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The update provides guidance on classification of cash receipts and payments related to eight specific issues. The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The Company adopted this update as of January 1, 2018, and there were no material impacts on the consolidated financial statements.
In November 2016, the FASB issued ASU No. 2016-18 Statement of Cash Flows (Topic 230): Restricted Cash. The update requiresleast reasonably possible that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The Company adopted this update as of January 1, 2018. Cash, cash equivalents, and restricted cash on the consolidated statement of cash flows includes restricted cash of $57,247 as of December 31, 2018, $63,345 as of December 31, 2017, and $63,274 as of December 31, 2016 as well as amounts previously reported for cash and cash equivalents.
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2018 and 2017
2. Summary of Significant Accounting Policies, continued:
In January 2017, the FASB issued ASU No. 2017-01 Business Combinations (Topic 805): Clarifying the Definition of a Business. The update clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions shouldmaterial loss could be accounted for as acquisitions (or disposals) of assets or businesses. The Company adopted this update as of January 1, 2018. The Company will apply the applicable provisions of the update to any future acquisitions.
In February 2016, the FASB issued ASU No. 2016-02 Leases (Topic 842). The update modifies the classification criteria and requires lessees to recognize the assets and liabilities on the balance sheet for most leases. The update is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. Upon implementation of the new guidance, the Company will be required to recognize a liability and right-of-use asset for all operating leases. The Company has elected the transition option to apply the new guidance at the effective date without adjusting comparative periods presented. The Company has no capital leases at December 31, 2018. The Company’s operating leases, which will be impacted upon adoption, are not significant and the Company does not anticipate a material impact upon adoption on January 1, 2019.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.2019-12Debt 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.
Sales of products for the years ended December 31, 2018,2020 and 2017,2019, were as follows:
| | |
| | |
| | | | |
Antimony | $6,113,014 | $7,588,470 | $2,942,628 | $5,450,649 |
Zeolite | 2,666,944 | 2,266,636 | 2,118,823 | 2,623,117 |
Precious metals | 254,445 | 374,872 | 174,079 | 194,239 |
| $9,034,403 | $10,229,978 | $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, 2018,2020, and 2017.2019.
| | |
| | |
| | | | |
United States | $8,242,141 | $9,510,211 | $4,662,841 | $7,454,163 |
Canada | 792,262 | 719,767 | 572,689 | 813,842 |
Mexico | | - |
| $9,034,403 | $10,229,978 | $5,235,530 | $8,268,005 |
Sales of products to significant customers were as follows for the years ended December 31, 2018,2020, and 2017:2019:
Sales to | |
Largest Customers | | |
Mexichem Specialty Compounds Inc. | $2,698,770 | $3,335,046 |
East Penn Manufacturing Inc | - | 512,621 |
Kohler Corporation | 1,441,197 | 1,928,692 |
Ampacet | 538,922 | - |
| $4,678,889 | $5,776,359 |
% of Total Revenues | 51.79% | 56.50% |
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2018 and 2017
3.
Revenue Recognition, continued:
| |
Sales to Three | | |
Largest Customers | | |
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, 2018,2020, and 2017:2019:
Largest | | |
Accounts Receivable | | |
Nutreco Canada Inc. | | $25,657 |
DanaMart | $143,890 | $- |
Teck American Inc | - | 241,267 |
Axens North America Inc. | 34,912 | - |
Earth Innovations Inc. | 35,967 | - |
Ralco Mix Products | - | 16,000 |
| $214,769 | $282,924 |
% of Total Receivables | 49.00% | 78.10% |
| | |
Largest Accounts Receivable | | |
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 $438,391$238,634 at December 31, 20182020 and $362,579$284,453 at December 31, 2017.2019.
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 iswas 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 presented as a secured financingincluded in current accrued liabilities.
Accounts Receivble | | |
Accounts receivable - non-factored | $421,867 | $351,699 |
Accounts receivable - factored with recourse | 16,524 | 10,880 |
Accounts receivable - net | $438,391 | $362,579 |
Factoring fees paid by the Company during the years ended December 31, 2018 and 2017, were $4,969 and $35,993, respectively. For the years ended December 31, 2018 and 2017, net accounts receivable of approximately $0.25 million and $1.70 million, respectively, were sold under the agreement.
Proceeds from the sales were used to fund inventory purchases and operating expenses.
Accounts Receivable | | |
Accounts receivable - non factored | $222,034 | $273,573 |
Accounts receivable - factored with recourse | 16,600 | 10,880 |
Accounts receivable - net | $238,634 | $284,453 |
United States Antimony Corporation and Subsidiaries5.
Notes to Consolidated Financial StatementsInventories
December 31, 2018 and 2017
5. Inventories
The major components of the Company's inventories at December 31, 20182020 and 20172019 were as follows:
| | | | |
Antimony Oxide | | $67,377 | $204,550 |
Antimony Metal | $8,127 | $- | 268,100 | 5,654 |
Antimony Oxide | 255,782 | 408,217 | |
Antimony Concentrates | 2,214 | 35,554 | |
Antimony Ore | 257,067 | 187,133 | 95,880 | 151,841 |
Total antimony | 523,190 | 630,904 | 431,357 | 362,045 |
Zeolite | 232,071 | 283,805 | 218,856 | 264,199 |
| $755,261 | $914,709 | $650,213 | $626,244 |
At December 31, 20182020 and 2017,2019, 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, 20182020 and 2017,2019, the antimony oxide and concentrates inventory in Mexico waswere valued at estimated net realizable value.value resulting in write-downs of $13,137 and $16,396, respectively. The Company's zeolite inventory consists of salable zeolite material held in a Canadian warehouse and at BRZ's Idaho mining and production facility, and is carried at cost.material.
6.
Properties, Plants and Equipment
The major components of the Company's properties, plants and equipment by segment at December 31, 20182020 and 20172019 are shown below:
| | | | |
2018 | | | | | |
Plant & Equipment | $743,767 | $8,466,461 | $3,690,249 | $792,628 | $13,693,105 |
Buildings | 247,210 | 900,992 | 391,305 | - | 1,539,507 |
Mineral Rights and Interests | - | 3,793,502 | 3,664 | - | 3,797,166 |
Land & Other | 3,274,572 | 2,529,294 | 15,310 | - | 5,819,176 |
| 4,265,549 | 15,690,249 | 4,100,528 | 792,628 | 24,848,954 |
Accumulated Depreciation | (2,630,234) | (4,029,480) | (2,785,159) | (176,909) | (9,621,782) |
| $1,635,315 | $11,660,769 | $1,315,369 | $615,719 | $15,227,172 |
| | | | | |
| | | Precious Metals | |
2020 | | | | | |
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 |
| | | | |
2017 | | | | | |
Plant & Equipment | $743,767 | $7,655,777 | $3,577,055 | $751,640 | $12,728,239 |
Buildings | 247,210 | 900,992 | 349,946 | - | 1,498,148 |
Mineral Rights and Interests | | 3,793,502 | 3,664 | - | 3,797,166 |
Land & Other | 3,274,572 | 2,529,294 | 15,310 | - | 5,819,176 |
| 4,265,549 | 14,879,565 | 3,945,975 | 751,640 | 23,842,729 |
Accumulated Depreciation | (2,577,552) | (3,427,058) | (2,596,356) | (108,866) | (8,709,832) |
| $1,687,997 | $11,452,507 | $1,349,619 | $642,774 | $15,132,897 |
| | | | |
2019 | | | | | |
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:
| | |
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, 20182020 and 2017,2019, the Company had $1,270,289$755,978 and $521,896,$1,306,579, respectively, of assets that were not yet placed in service and have not yet been depreciated.
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2018 and 2017
7.
Asset Retirement Obligation and Accrued Reclamation Costs
Changes to the asset retirement obligation balance during 20182020 and 20172019 are as follows:
Asset Retirement Obligation | |
Balance December 31, 2016 | |
Accretion during 2017 | 5,790
|
Balance December 31, 2017 | 164,072
|
Accretion during 2018 | 6,148
|
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 $277,720$291,719 and $271,572,$283,868, at December 31, 20182020 and 2017,2019, respectively, include reclamation obligations for the Idaho and Montana operations of $107,500.
Long-Term debt at December 31, 2018 and December 31, 2017, is as follows: | | |
| | |
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. | $100,000 | $- |
Note payable to First Security Bank, bearing interest at 6%; | | |
payable in monthly installments of $917; maturing | | |
September 2018; collateralized by equipment. | - | 8,054 |
Note payable to Cat Financial Services, bearing interest at 6%; | | |
payable in monthly installments of $1,300; maturing | | |
August 2019; collateralized by equipment. | 14,022 | 27,096 |
Note payable to Cat Financial Services, bearing interest at 6%; | | |
payable in monthly installments of $778; maturing | | |
December 2022; collateralized by equipment. | 34,390 | 40,278 |
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. | 5,851 | 13,344 |
Note payable to De Lage Landen Financial Services, | | |
bearing interest at 3.51%; payable in monthly installments of $655; | | |
maturing December 2019; collateralized by equipment. | 8,371 | 15,776 |
Note payable to Phyllis Rice, bearing interest | | |
at 1%; payable in monthly installments of $2,000; originally maturing | | |
March 2015; collateralized by equipment. | 12,146 | 14,146 |
Obligation payable for Soyatal Mine, non-interest bearing, | | |
annual payments of $100,000 or $200,000 through 2020, net of discount | | |
of $22,321 and $49,360, respectively | 639,747 | 715,709 |
Obligation payable for Guadalupe Mine, non-interest bearing, | | |
annual payments from $60,000 to $149,078 through 2026, net of discount | | |
of $252,444 and $309,397 respectively | 918,663 | 951,711 |
| 1,733,190 | 1,786,114 |
Less current portion | (705,460) | (546,988) |
Long-term portion | $1,027,730 | $1,239,126 |
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2018 and 2017
8.
Long-Term Debt, continued:
Long-Term debt at December 31, 2020 and 2019 is as follows: | |
| | |
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, 2018,2020, principal payments on debt are due as follows:
Year Ending December 31, | | | |
2019 | $776,205 | $(70,745) | $705,460 |
2020 | 289,930 | (54,044) | 235,886 |
2021 | 190,396 | (42,342) | 148,054 |
2022 | 191,292 | (35,938) | 155,354 |
2023 | 151,681 | (29,150) | 122,531 |
Thereafter | 408,451 | (42,546) | 365,905 |
| $2,007,955 | $(274,765) | $1,733,190 |
12 Months Ending December 31, | |
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.
At December 31, 2018 and 2017, the Company had the following notes payable to bank: | |
| | |
| | |
| | |
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 | $83,918 | $98,863 |
| | |
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 | 93,702 |
| | |
Total notes payable to the bank | $183,917 | $192,565 |
At December 31, 2020 and 2019, the Company had the following notes payable to bank: | | |
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 arewere personally guaranteed by John C. Lawrence, the Company’s Presidentprevious 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, require payment$378,074 of the advance upon Hillgrove’s issuance of a stop notice. Under terms of the agreement, if a stop order is issued after two years, the repayment obligation is 81.25% of the funds advanced at that point. As no stop notice was issued during the initial two year period ended November 7, 2016, the Company’s obligation to Hillgrove is 81.25% of total advanced funds. Through December 31, 2016, Hillgrove advanced the Company a total of $1,396,721, resulting in a net liability of $1,134,221 which is 81.25% of monies advanced. No funds were advanced in 2017 or 2018. Based on conversations with Hillgrove, management does not anticipate receiving a stop notice in 2019, thus the entire amountbalance is classified as long term.current as of December 31, 2020 and 2019.
11.
Plant Acquisition and Sale of LandStockholders' Equity
On August 31, 2018,In December 2020, 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 subsidiariesnumber of authorized shares of the sellers which include an antimony plant, equipment and land located in Reynosa, Mexico. In addition, the Company was paid $1,500,000 by the sellers which was recognized as operating income in the year ended December 31, 2018. The transaction was accounted for as an asset acquisition as there was no business associated with the acquired assets. The Company is disassembling, salvaging, and transporting the antimony plant and equipment for use in its existing operations in both Mexico and the United States. The project involves moving heavy equipment and has been completed as of March 31, 2019.
During November 2018, the Company sold the land acquired with the plant for $700,000, and the Company received $300,000 in 2018 and the remainder of the $700,000 in 2019. The Company recognized a gain on the sale of land during the year ended December 31, 2018.
United States Antimony Corporation and Subsidiaries
NotesCompany’s common stock increased from 90,000,000 to Consolidated Financial Statements
December 31, 2018 and 2017
Issuance of Common Stock for Cash
TheDuring 2020, the Company did not issue anysold 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 cash in 2018 or 2017.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 DirectorsOfficers and Consultants
Directors
During the year ended December 31, 2018,2020, the Company awarded, but did not issue, common stock with a value of $175,000$110,000 to its Board of Directors as compensation for their services as directors. In connection with the issuances, the Company recorded $175,000$110,000 in director compensation expense and accrued common stock payable.
In May 2018,June 2020, the Company issued the Board members 739,018295,463 shares of the Company’s common stock for services provided during 20172019 which was accrued at December 31, 2017,2019, with a value of $175,000.$130,483.
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, 2018 and 2017,2019, warrants for purchase of 250,000 shares of the Company’s common stock for $0.25 per share arewere outstanding and have no expiration date. These warrants arewere owned by the Company’s president.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:
| | |
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.
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, 20182020 and 20172019 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, 20182020 and 2017,2019, cumulative dividends in arrears on the outstanding Series B shares were $180,000$195,000 and $172,500,$187,500, respectively.
Series C
During 2000, the Board established a Series C preferred stock, consisting of 205,996 shares. In 2002, 28,092 shares were converted to common stock and cancelled, leaving 177,904 Series C preferred shares authorized and outstanding.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.
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2018 and 2017
12. Stockholders' Equity continued:
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, 20182020 and 2017,2019, the cumulative dividends in arrears on the 1,751,005 outstanding Series D shares were $624,960$707,258 and $583,812,$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, 20182020 and 2017,2019, the liquidation preference for Series D preferred stock was $5,002,470$5,084,770 and $4,961,324,$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, presidentthe previous President and Chairman of the Company.
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, 20182020 and 2017,2019, 300,000 shares of the Company's common stock had been previously issued under the Plan. There were no issuances under the Plan during 20182020 and 2017.2019.
14. 13.
Income and Other Taxes
During the year ended December 31, 20182020 and 2017,2019, the Company recognized anno income tax benefit (provision) of $332,332 and nil, respectively. The 2018 benefit which is a current foreign benefit, is a result of a positive outcome to an audit of USAMSA’s 2018 income tax return in Mexico..
Domestic and foreign components of income (loss)net loss from operations before income taxes for the years ended December 31, 2018,2020 and 2017,2019, are as follows:
| | |
Domestic | $3,675,095 | $(374,478) |
Foreign | (3,134,202) | (759,916) |
Total | $540,893 | $(1,134,394) |
| | |
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2018 and 2017
14. Income Taxes, continued: | | |
Domestic | $564,424 | $462,292 |
Foreign | (3,851,228) | (4,135,183) |
Total | $(3,286,804) | $(3,672,891) |
The income tax provision (benefit)benefit differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income (loss)pre-tax net loss for the years ended December 31, 20182020 and 2017,2019 due to the following:
| | | | |
Tax benefit at federal statutory rate | $113,588 | $(397,038) | $(690,229) | $(771,307) |
State income tax effect | 12,602 | (34,609) | (120,541) | (177,435) |
Foreign income tax effect | (102,078) | 37,996 | (279,111) | (147,166) |
Non-deductible items | 492 | 930 | 151 | 801 |
Percentage depletion | (47,341) | (58,056) | (27,667) | (52,416) |
Impact on change in federal tax rate | - | (6,660) | |
Change in prior year estimate | (95,687) | - | |
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 | (221,837) | 229,462 | (393,380) | 926,873 |
Change in valuation allowance - Foreign | 340,261 | 227,975 | 992,458 | (254,101) |
Gain on settlement of foreign tax assessment | (332,332) | - | |
Income tax provision (benefit) | $(332,332) | $- | |
| | |
Total | | $- |
At December 31, 20182020 and 2017,2019, the Company had net deferred tax assets as follows:
| | | | |
Deferred tax assets: | | |
Deferred tax asset: | | |
Domestic net operating loss carry forward | | $688,278 | $1,111,779 |
Foreign net operating loss carry forward | $1,877,681 | $1,537,420 | 2,616,038 | 1,623,580 |
Domestic net operating loss carry forward | 219,666 | 443,100 | |
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 | 1,006 | 16,827 | (2,180) | (1,658) |
Deferred tax assets | 2,098,353 | 1,997,347 | |
Total deferred tax liability | | (59,830) | (89,950) |
| | |
Valuation allowance (foreign) | (1,877,681) | (1,537,420) | |
Valuation allowance (domestic) | (94,956) | (316,793) | |
Total deferred tax assets | 125,716 | 143,134 | |
| | |
Deferred tax liabilities: | | |
Property, plant, and equipment | (125,716) | (143,134) | |
Net deferred tax assets | $- | |
Net deferred tax asset | | $- |
13.
Income and Other Taxes, continued:
At December 31, 2018, the Company has federal net operating loss (“NOL”) carry forwards of approximately $156,000 that expire at various dates between 20262020 and 2037. In addition, the Company has Montana state net operating loss carry forwards of approximately $2.2 million which expire between 2019, and 2026, and Idaho state net operating loss carry forwards of approximately $1.2 million, which expire between 2032 and 2038. The Company has approximately $5.5 million of Mexican net operating loss carry forwards which expire between 2023 and 2028.
At December 31, 2018 and 2017, 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, 20182020 and 2017.
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2018 and 2017
14. Income Taxes, continued:2019.
As disclosedAt 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 Note 11,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 new subsidiaries in 2018. Thetwo 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. Management is still determining the amount of the limitation, if any.
On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the "Act") resulting in significant modifications to existing law. The Company completed the accounting for the effects of the Act during the year ended December 31, 2017. The Company did not incur any income tax benefit or provision for the year ended December 31, 2017 as a result of the changes to tax laws and tax rates under the Act. The Company’s net deferred tax asset was reduced by approximately $7,000 during the year ended December 31, 2017, which consisted primarily of the re-measurement of federal deferred tax assets and liabilities from 35% to 21%.
During the years ended December 31, 20182020 and 2017,2019, 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 20152017 through 2017,2019, and 20142016 through 20172019 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. Approximately $285,000 USD of the total assessment was interest and penalties. SAT’s assessment was 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 appealThe assessment was filed.
At December 31, 2017, the Company had accrued a potential tax liability of $443,110 associated with this assessment. Insettled in 2018 SAT finalized its procedures with no assessment against the Company. The accrual of $443,110 was reversed and recognized as income tax benefit of $332,332 and a gain on tax settlement of $110,778 which represented previously accrued interest and penalties. The Company paid Mexican tax representatives $157,500 to negotiate this settlement that were recognized as professional fees expense during the year ended December 31, 2018.
TheIn early 2019, the Company has beenwas notified that SAT has re-opened its assessment of USAMSA’s 2013 income tax return and, in November 2019, SAT assessed the Company $16.3 million pesos, which could resultwas 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 separate assessment. Itguarantee of the amount in March 2020 as is too early inrequired 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 estimate any potential outcome. continue through 2021.
At December 31, 2018,2020, 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 does not believe it will be assessedsuccessful 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, taxes, interestwill not have a material adverse effect on the Company’s results of operations or penalties as a result of this assessment.financial position.
15. Related-Party TransactionsIf 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.
During the years ended December 31, 201813.
Income and 2017,Other Taxes, continued:
Other Taxes
In 2016, the Company, paid $9,634through 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 $13,603, respectivelywas granted a Maquiladora (IMMEX) which the Company believed provided an exemption from paying a 16% value-added tax (IVA) on imported goods to John Lawrence,Mexico that were ultimately exported in altered form. With this understanding, the Company’s President and Chief Executive Officer, as reimbursement for equipment usedCompany did not pay IVA on coal it imported to process the Australian concentrates. In 2020, the Company was informed by the Company.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 addition, Mr. Lawrence advancedlate 2020, the Company $135,000 for ongoing expenses duringfiled 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, 2018, which2020, 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 repaid asappointed to interim Chief Executive Officer. Russell Lawrence, son of December 31, 2018.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 payabledue to Mr. Lawrence as of December 31, 20182020 and 20172019 was $93,567$171,017 and $22,668, respectively, for expenses that$156,975, respectively. Expenses paid to Mr. Lawrence paid on behalffor 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 the year.2019, of which $10,000 had been repaid as of December 31, 2020, leaving a balance of $200.
15.
Commitments and Contingencies
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
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, 20182020 and 2017
16. Commitments and Contingencies
In June of 2013,2019, 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 mandatory termhad royalty expense of one year$224,875 and requires payments of $10,000 plus IVA tax of $1,600 per month. The lease is renewable each year with a 15 day notice to the lessor, and agreement of terms. The lease was renewed in June 2018.
From time to time, the Company is assessed fines and penalties by the Mine Safety and Health Administration (“MSHA”). Using appropriate regulatory channels, management may contest these proposed assessments.$266,388, respectively. At December 31, 20182020 and 2017,2019, the Company has no accruals relatinghad accrued royalties payable of $434,981 and $280,314, respectively. The Company is currently in negotiations with certain royalty holders to such assessments.modify the terms of the agreements.
17.
The Company is currently organized and managed by four segments, which represent the three operating units: United States antimony, operations, Mexican antimony, operations and United States zeolite, operations, and a separate segment for revenue received from the sale of precious metals recovered from the antimony process. The Company’s precious metals segment was added as a new reporting segment in 2016. The precious metals activity has been reclassified from the antimony segment for 2018 and 2017.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 consistsconsist primarily of interestnon-operating income and expense and factoringinterest 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 Zeolitezeolite near Preston, Idaho. Almost all of the sales of products from the United States antimony and Zeolitezeolite operations are to customers in the United States. Precious metal revenues arerecovered from salesthe 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.
| | |
| | |
Total Assets: | | | | |
Antimony | | |
United States | $2,199,694 | $2,510,323 | $2,798,283 | $2,166,041 |
Mexico | 12,824,291 | 12,073,219 | 7,953,190 | 9,193,521 |
Subtotal Antimony | 15,023,985 | 14,583,542 | |
Precious Metals | 615,719 | 642,774 | |
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 | 1,917,419 | 1,904,938 | 1,614,144 | 1,766,675 |
Total | $17,557,123 | $17,131,254 | $13,299,502 | $13,693,975 |
| | |
| | |
| | | |
Capital expenditures: | | | |
Antimony | | |
United States | $- | $32,961 | $32,448 | $8,429 |
Mexico | 803,579 | 87,396 | 38,456 | 705,123 |
Subtotal Antimony | 803,579 | 120,357 | |
Subtotal antimony | | 70,904 | 713,552 |
Precious metals | 40,988 | 185,668 | |
United States | | 10,219 | 21,086 |
Mexico | | 147,978 | - |
Subtotal precious metals | | 158,197 | 21,086 |
Zeolite | 154,552 | 99,794 | 13,990 | 58,287 |
Total | $999,119 | $405,819 | $243,091 | $792,925 |
United States Antimony Corporation and Subsidiaries16.
Notes to Consolidated Financial Statements
December 31, 2018 and 2017
17. Business Segments, continued:
Segment Operations for the | | | | | | |
Year ended December 31, 2018 | | | | | | |
| | | | | | |
Total revenues | $6,113,014 | $- | $6,113,014 | $254,445 | $2,666,944 | $9,034,403 |
| | | | | | |
Depreciation and amortization | 52,681 | 595,318 | 647,999 | 68,042 | 188,803 | 904,844 |
| | | | | | |
Income (loss) from operations | 3,046,782 | (3,148,092) | (101,310) | 186,403 | 461,943 | 547,036 |
| | | | | | |
Other income (expense) | (8,051) | 13,890 | 5,839 | - | (11,982) | (6,143) |
| | | | | | |
Income tax benefit | - | 332,332 | 332,332 | - | - | 332,332 |
| | | | | | |
NET INCOME (LOSS) | $3,038,731
| $(2,801,870)
| $236,861 | $186,403 | $449,961 | $873,225 |
Segment Operations for the | | | | | | |
Year ended December 31, 2017 | | | | | | | |
Segment Operations for the Year | | | | | |
Ended December 31, 2020 | | | | | | | |
| | |
Total revenues | $7,588,470 | $- | $7,588,470 | $374,872 | $2,266,636 | $10,229,978 | $2,942,628 | $- | $2,942,628 | $174,079 | $2,118,823 | $5,235,530 |
| | |
Depreciation and amortization | 57,761 | 623,899 | 681,660 | 64,499 | 222,729 | 968,888 | $25,809 | $590,579 | $616,388 | $86,835 | $182,620 | $885,843 |
| | |
Income (loss) from operations | 1,965,573 | (3,579,810) | (1,614,237) | 310,373 | 344,165 | (959,699) | $192,511 | $(3,851,228) | $(3,658,717) | $87,244 | $266,731 | $(3,304,742) |
| | |
Income tax expense | - | |
| | |
Other income (expense) | (35,853) | (126,149) | (162,002) | - | (12,693) | (174,695) | |
Other income (expense): | | 21,808 | - | 21,808 | - | (3,870) | 17,938 |
| | |
NET INCOME (LOSS) | $1,929,720 | $(3,705,959) | $(1,776,239) | $310,373 | $331,472 | $(1,134,394) | $214,319 | $(3,851,228) | $(3,636,909) | $87,244 | $262,861 | $(3,286,804) |
Segment Operations for the Year | | | | | | |
Ended December 31, 2019 | | | | | | |
| | | | | | |
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) |
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.
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.