UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☑
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017
☐
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period _____ to _____
(Mark One) |
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the quarterly period ended March 31, 2020 |
| OR |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the transition period from to |
Commission file numberFile No. 001-08675
UNITED STATES ANTIMONY CORPORATION
(Exact name of registrantRegistrant as specified in its charter)charter)
Montana | | 81-0305822 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
P.O. Box 643, Thompson Falls, Montana | P.O. Box 643, Thompson Falls, Montana | 59873 |
(Address of principal executive offices) | | (Zip code) |
Registrant’s telephone number, including area code:number: (406) 827-3523(406 )827-3523
Indicate by check markSecurities registered pursuant to Section 12(g) of the Act:
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered |
Common Stock, $0.01 par value | UAMY | NYSE American |
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☑Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES ☑Yes ☒ No ☐
Indicate by check mark whether the registrant is a shell company as defined by Rule 12b-2 of the Exchange Act. YES ☐ No ☑
At November 14, 2017, the registrant had outstanding 67,488,153 shares of par value $0.01 common stock.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act.Act:
Large accelerated filer ☐
| | Accelerated filerFiler ☐ | | Non-accelerated filerAccelerated Filer ☐ | | Smaller reporting company ☑ |
Non-Accelerated Filer ☐ | Small Reporting Company ☒ | | | (Do not check if a smaller reporting company) | | Emerging Growth Company ☐ |
Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):
Yes ☐ No ☒
APPLICABLE ONLY TO CORPORATE ISSUERS:
At May 15, 2020, the registrant had outstanding 69,911,436 shares of par value $0.01 common stock.
UNITED STATES ANTIMONY CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD
ENDED SEPTEMBER 30, 2017
(UNAUDITED)MARCH 31, 2020
TABLE OF CONTENTS
| Page |
|
|
| |
| 1-121-14 |
| |
| 12-17 15-17
|
|
|
| 17 |
| |
| 17 |
| |
| |
| |
| |
| 18 |
| |
PART II – OTHER INFORMATION | |
| |
Item 1: Legal Proceedings | 19 |
| |
| 18 |
| |
| 18 |
| |
| 18 |
| |
| 18 |
| |
| 18 |
| |
| 19 |
| |
Item 3: Defaults upon Senior Securities | 19 |
| |
Item 4: Mine Safety Disclosures | 19 |
| |
Item 5: Other Information | 19 |
| |
Item 6: Exhibits and Reports on Form 8-K | 19 |
| |
SIGNATURE | 20 |
| |
CERTIFICATIONS | 20--23 |
[The balance of this page has been intentionally left blank.]
PART I-FINANCIAL INFORMATION
Item 1. Financial Statements
United States Antimony Corporation and Subsidiaries
Consolidated BalanceBalance Sheets (Unaudited)
| | |
| | | | |
ASSETS | | | |
Current assets: | | |
Cash and cash equivalents | $27,576 | $10,057 | $23,068 | $115,506 |
Certificates of deposit | 252,298 | 251,641 | 254,212 | 253,552 |
Accounts receivable, net | 496,397 | 552,119 | |
Accounts receivable | | 229,692 | 284,453 |
Inventories | 939,880 | 855,637 | 642,893 | 626,244 |
Other current assets | 23,890 | 23,101 | |
Total current assets | 1,740,041 | 1,692,555 | 1,149,865 | 1,279,755 |
| | |
Properties, plants and equipment, net | 15,338,206 | 15,695,966 | 12,056,838 | 12,186,848 |
Restricted cash for reclamation bonds | 63,275 | 63,274 | 57,261 |
Foreign value added tax refund receivable | 365,120 | 276,500 | |
Other assets | 32,520 | 37,703 | |
IVA receivable and other assets | | 168,028 | 170,111 |
Total assets | $17,539,162 | $17,765,998 | $13,431,992 | $13,693,975 |
| | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | LIABILITIES AND STOCKHOLDERS' EQUITY |
Current liabilities: | | |
Checks issued and payable | $48,408 | $35,682 | $73,735 | $17,633 |
Accounts payable | 2,199,458 | 1,797,251 | 2,304,449 | 2,328,977 |
Due to factor | 163,737 | 150,399 | 17,227 | 10,880 |
Accrued payroll, taxes and interest | 162,833 | 213,695 | 222,653 | 260,800 |
Other accrued liabilities | 153,273 | 122,968 | 357,982 | 334,208 |
Payables to related parties | 16,322 | 14,525 | |
Payables to related party | | 297,799 | 359,309 |
Deferred revenue | 78,730 | 32,400 |
Notes payable to bank | 103,026 | 167,317 | 199,554 | 197,066 |
Income taxes payable (Note 11) | 459,510 | 410,510 | |
Long-term debt, current portion, net of discount | 495,134 | 391,046 | |
Hillgrove advances payable (Note 10) | | 378,074 |
Long-term debt, current portion | | 55,802 | 56,334 |
Total current liabilities | 3,880,431 | 3,382,123 | 3,939,675 | 3,975,681 |
| | |
Long-term debt, net of discount and current portion | 1,282,981 | 1,472,869 | |
Hillgrove advances payable (Note 8) | 1,134,196 | 1,134,221 | |
Common stock payable to directors for services | 131,250 | 168,750 | |
Long-term debt, net of current portion | | 66,388 | 76,762 |
Hillgrove advances payable (Note 10) | | 756,147 |
Stock payable to directors for services | | 162,500 | 134,375 |
Asset retirement obligations and accrued reclamation costs | 270,124 | 265,782 | 286,522 | 283,868 |
Total liabilities | 6,698,982 | 6,423,745 | 5,211,232 | 5,226,833 |
Commitments and contingencies (Note 5 and 11) | | |
Commitments and contingencies (Note 4 and 10) | | |
| | |
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 $909,375 and $907,500 | | |
(liquidation preference $937,500 and $930,000 | | |
respectively) | 7,500 | 7,500 |
Series C: 177,904 shares issued and outstanding | | |
(liquidation preference $97,847) | 1,779 | |
(liquidation preference $97,847 both years) | | 1,779 |
Series D: 1,751,005 shares issued and outstanding | | |
(liquidation preference $5,014,692 and $4,920,178 | | |
(liquidation preference $5,043,622 and $5,002,473 | | |
respectively) | 17,509 | 17,509 |
Common stock, $0.01 par value, 90,000,000 shares authorized; | | |
67,488,153 and 67,066,278 shares issued and outstanding, respectively | 674,881 | 670,662 | |
69,911,436 and 69,661,436 shares issued and outstanding, respectively | | 699,114 | 696,614 |
Additional paid-in capital | 36,239,264 | 36,074,733 | 37,167,730 | 37,107,730 |
Accumulated deficit | (26,100,753) | (25,429,930) | (29,672,872) | (29,363,990) |
Total stockholders' equity | 10,840,180 | 11,342,253 | 8,220,760 | 8,467,142 |
Total liabilities and stockholders' equity | $17,539,162 | $17,765,998 | $13,431,992 | $13,693,975 |
The accompanying notes are an integral part of the consolidated financial statements.
United States Antimony Corporation and Subsidiaries | |
Consolidated Statements of Operations (Unaudited) | | |
| | |
| For the three months ended |
| | |
| | |
REVENUES | $1,742,991 | $2,456,365 |
| | |
COST OF REVENUES | 1,641,814 | 2,525,418 |
| | |
GROSS PROFIT (LOSS) | 101,177 | (69,053) |
| | |
OPERATING EXPENSES: | | |
General and administrative | 199,971 | 205,174 |
Salaries and benefits | 94,969 | 232,668 |
Other operating expenses | 24,225 | 76,130 |
Professional fees | 84,958 | 100,742 |
TOTAL OPERATING EXPENSES | 404,123 | 614,714 |
| | |
INCOME (LOSS) FROM OPERATIONS | (302,946) | (683,767) |
| | |
OTHER INCOME (EXPENSE): | | |
Interest income | 804 | 741 |
Interest expense | (4,748) | (22,488) |
Factoring expense | (1,992) | (1,946) |
TOTAL OTHER INCOME (EXPENSE) | (5,936) | (23,693) |
| | |
NET LOSS | (308,882) | (707,460) |
Preferred dividends | (12,162) | (12,162) |
| | |
Net loss available to common stockholders | $(321,044) | $(719,622) |
| | |
Net income (loss) per share of | | |
common stock: | | |
Basic and diluted | | $(0.01) |
| | |
Weighted average shares outstanding: | | |
Basic | 69,697,150 | 68,394,204 |
Diluted | 69,697,150 | 68,394,204 |
The accompanying notes are an integral part of the consolidated financial statements.
United States Antimony Corporation and Subsidiaries | | |
Consolidated Statement of Changes in Stockholders' Equity (Unaudited) | |
For the periods ended March 31, 2020 and and March 31, 2019 | | | | |
| | | | | | | |
| | | | | |
| | | | | |
| | | | | | | |
Quarter ended March 31, 2020 | | | | | | | |
| | | | | | | |
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 (Note 10) | | | 250,000 | 2,500 | 60,000 | | 62,500 |
| | | | | | | |
Net loss | | | | | | (308,882) | (308,882) |
Balances, March 31, 2020 | 2,678,909 | $26,788# | 69,911,436 | $699,114 | $37,167,730 | $(29,672,872) | $8,220,760 |
| | | | | | | |
| | | | | | | |
Quarter ended March 31, 2019 | | | | | | | |
| | | | | | | |
Balances, December 31, 2018 | 2,678,909 | $26,788 | 68,227,171 | $682,271 | $36,406,874 | $(25,691,099) | $11,424,834 |
| | | | | | | |
Issuance of common stock to chief financial officer | | | 200,000 | 2,000 | 134,000 | | 136,000 |
| | | | | | | |
Net loss | | | | | | (707,460) | (707,460) |
Balances, March 31, 2019 | 2,678,909 | $26,788# | 68,427,171 | $684,271 | $36,540,874 | $(26,398,559) | $10,853,374 |
The accompanying notes are an integral part of the consolidated financial statements.
3
United States Antimony Corporation and Subsidiaries
United States Antimony Corporation and Subsidiaries |
Consolidated Statements of Cash Flows (Unaudited) |
| For the three months ended |
Cash Flows From Operating Activities: | | |
Net income (loss) | $(308,882) | $(707,460) |
Adjustments to reconcile net income (loss) to net cash | | |
provided (used) by operating activities: | | |
Depreciation and amortization | 226,281 | 223,273 |
Amortization of debt discount | - | 18,037 |
Accretion of asset retirement obligation | 2,654 | 1,537 |
Common stock issued for services | - | 136,000 |
Common stock payable for directors fees | 28,125 | 31,250 |
Other, net | (660) | (598) |
Change in: | | |
Accounts receivable | 54,761 | 103,205 |
Inventories | (16,649) | (132,387) |
IVA receivable and other assets | 2,083 | (34,018) |
Accounts payable | (24,528) | 119,082 |
Accrued payroll, taxes and interest | (38,147) | 103,426 |
Other accrued liabilities | 23,774 | 24,099 |
Payables to related party | 14,923 | 28,964 |
Net cash provided (used) by operating activities | (36,265) | (85,590) |
| | |
Cash Flows From Investing Activities: | | |
Payment received on note receivable | - | 400,000 |
Purchase of properties, plants and equipment | (96,271) | (312,568) |
Net cash provided (used) by investing activities | (96,271) | 87,432 |
| | |
Cash Flows From Financing Activities: | | |
Change in checks issued and payable | 56,102 | (845) |
Net borrowing from factor | 6,347 | (11,084) |
Payments on advances from related party | (13,933) | - |
Advance from related party, net | - | 125,200 |
Borrowing on notes payable to bank, net | 2,488 | - |
Principal paid on notes payable to bank | - | (70,792) |
Principal payments of long-term debt | (10,906) | (57,467) |
Net cash provided (used) by financing activities | 40,098 | (14,988) |
NET INCREASE (DECREASE) IN CASH | | |
AND CASH EQUIVALENTS | (92,438) | (13,146) |
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 | $80,329 | $100,751 |
| | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | | |
Noncash investing and financing activities: | | |
Common stock issued for services | | $136,000 |
Payable to related party satisfied with exercise of stock purchase warrant (Note 10) | $62,500 | |
..
Consolidated Statements of Operations (Unaudited)
| For the three months ended | For the nine months ended |
| | | | |
| | | | |
REVENUES | $2,369,714 | $2,846,699 | $7,827,525 | $9,166,628 |
| | | | |
COST OF REVENUES | 2,315,646 | 2,888,660 | 7,381,020 | 8,811,663 |
| | | | |
GROSS PROFIT (LOSS) | 54,068 | (41,961) | 446,505 | 354,965 |
| | | | |
OPERATING EXPENSES: | | | | |
General and administrative | 228,185 | 309,832 | 762,745 | 850,255 |
Professional fees | 53,045 | 29,004 | 190,965 | 252,469 |
Hillgrove advance - earned credit (Note 8) | - | (32,813) | - | (109,392) |
TOTAL OPERATING EXPENSES | 281,230 | 306,023 | 953,710 | 993,332 |
| | | | |
INCOME (LOSS) FROM OPERATIONS | (227,162) | (347,984) | (507,205) | (638,367) |
| | | | |
OTHER INCOME (EXPENSE): | | | | |
Interest income | 19 | 19 | 857 | 1,421 |
Interest expense | (25,960) | (28,343) | (80,764) | (57,203) |
Foreign exchange gain (loss) | 2,642 | - | (49,000) | - |
Factoring expense | (12,104) | (9,259) | (34,711) | (24,694) |
TOTAL OTHER INCOME (EXPENSE) | (35,403) | (37,583) | (163,618) | (80,476) |
| | | | |
INCOME (LOSS) BEFORE INCOME TAXES | (262,565) | (385,567) | (670,823) | (718,843) |
| | | | |
Provision for income tax (Note 12) | - | (411,490) | - | (423,490) |
| | | | |
NET INCOME (LOSS) | (262,565) | (797,057) | (670,823) | (1,142,333) |
Preferred dividends | (12,162) | (12,162) | (36,487) | (36,487) |
| | | | |
Net income (loss) available to common stockholders | $(274,727) | $(809,219) | $(707,310) | $(1,178,820) |
| | | | |
Net income (loss) per share of common stock: | | | | |
Basic | | $(0.01) | $(0.01) | $(0.02) |
Diluted | | $(0.01) | $(0.01) | $(0.02) |
| | | | |
Weighted average shares outstanding: | | | | |
Basic | 67,488,153 | 66,866,278 | 67,387,337 | 66,687,981 |
Diluted | 67,488,153 | 66,866,278 | 67,387,337 | 66,687,981 |
The accompanying notes are an integral part of the consolidated financial statements.
United States Antimony Corporation and Subsidiaries4
Consolidated Statements of Cash Flows (Unaudited)
| For the nine months ended |
| | |
Cash Flows From Operating Activities: | | |
Net income (loss) | $(670,823) | $(1,142,333) |
Adjustments to reconcile net income (loss) to net cash | | |
provided (used) by operating activities: | | |
Depreciation and amortization expense | 637,225 | 652,375 |
Hillgrove deferred revenue | - | (109,392) |
Amortization of loan discount | 70,242 | 73,058 |
Accretion of asset retirement obligation | 4,342 | 4,091 |
Common stock payable for director fees | 131,250 | 112,500 |
Foreign exchange loss | 49,000 | - |
Other non-cash items | (682) | |
Change in: | | |
Accounts receivable, net | 55,722 | (97,444) |
Inventories | (84,243) | 356,120 |
Other current assets | (790) | 70,774 |
Other assets | (83,437) | (14,990) |
Accounts payable | 402,207 | 26,728 |
Accrued payroll, taxes and interest | (50,862) | 4,016 |
Other accrued liabilities | 30,305 | 42,889 |
Foreign income tax payable | - | 423,490 |
Payables to related parties | 1,797 | 10,280 |
Net cash provided by operating activities | 491,253 | 412,162 |
| | |
Cash Flows From Investing Activities: | | |
Purchase of properties, plants and equipment | (279,465) | (459,969) |
Net cash used by investing activities | (279,465) | (459,969) |
| | |
Cash Flows From Financing Activities: | | |
Net proceeds from (payments to) factor | 13,338 | 119,111 |
Checks issued and payable | 12,726 | - |
Principal payments on notes payable to bank (see Note 7) | (64,291) | (30,672) |
Principal payments on long-term debt | (156,042) | (130,857) |
Net cash provided (used) by financing activities | (194,269) | (42,418) |
| | |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 17,519 | (90,225) |
Cash and cash equivalents at beginning of period | 10,057 | 133,543 |
Cash and cash equivalents at end of period | $27,576 | $43,318 |
| | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | |
Noncash investing and financing activities: | | |
Properties, plants and equipment acquired with long-term debt | | $41,648 |
Common stock payable issued to directors | $168,750 | $137,500 |
The accompanying notes are an integral part of the consolidated financial statements.
PART I - FINANCIAL INFORMATION, CONTINUED:
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
1.
Basis of Presentation:Presentation
The unaudited consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America for interim financial information, as well as the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of the Company’s management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation of the interim financial statements have been included. Operating results for the three and nine month periodsperiod ended September 30, 2017March 31, 2020 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2017.2020.
For further information refer to the financial statements and footnotes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.
Certain consolidated financial statement amounts for the three and nine month periods ended September 30, 2016, have been reclassified to conform to the 2017 presentation. These reclassifications had no effect on the net income (loss) or cash flows or accumulated deficit as previously reported.2019.
Going Concern Consideration
At September 30, 2017, ourMarch 31, 2020, the Company’s consolidated financial statements show that we have a negative working capital of approximately $2.14$2.8 million and an accumulated deficit of approximately $26.1$29.7 million. In addition, we haveWith the exception of 2018, the Company has 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 beis substantial doubt regarding ourthe ability to continue as a going concern for the next twelve months.
DuringOver the past twelve months,several years, the priceCompany has been able to make required principal payments on its debt from cash generated from operations. The abandonment of the mineral properties in Mexico in November 2019 resulted in the removal of approximately $1,500,000 of debt and the related payments which were $86,000 in 2019 and $193,000 in 2018. The Company is confident it can make debt payments when due. During 2019, the Company was successful in raising $404,199 from sale of shares of its common stock to fund capital projects in Mexico.
The continuing losses are principally a result of the Company’s antimony has increased from a low of $3.07 per poundoperations due to both depressed antimony prices and production costs incurred in Mexico. To improve conditions, the Company plans to continue searching for the third quarter of 2016areas to an average price of $4.25 for the third quarter of 2017. We have gross profit and a positivereduce these production costs. Management expects improvement in cash flow in 2020 from our U.S. operations at this price. Our operationsthe sale of precious metals extracted from the leach circuit scheduled to come on line in Mexico are still in a transitional phase since the losssecond half of our raw material supply from Hillgrove of Australia. We are focusing our production at our Wadley mine to increase grade and output, and we have recently seen ore from there assaying 50% antimony. We are also trying new production techniques, and have found that we can process direct shipping ore successfully at our Madero smelter which will result in a reduction in our operating costs in Mexico going forward.2020.
We have reduced costs at our Mexico locations, most notablyThere can be no assurance that management plans will alleviate the doubt regarding the Company’s ability to continue as a reduced monthly lease payment of $11,600 for the Wadley mine from $23,200 for June 2016, and we have also reduced the cost for labor at the same mine. We have reduced administrative costs by approximately $81,000 from the prior year third quarter at the corporate level. Our capital outlay should be minimal in the near future; and we completed paying for the Los Juarez mining concessions in 2016 which were a major outlay in prior years.
Our zeolite operations continue to operate profitably and provide cash to our operations. We are aggressively seeking new markets for our zeolite products, and we now have an outside sales staff that is working to obtain new customers and have had some success.
We believe that the combination of the above will enable us to stay in operation and meet our financial obligations forgoing concern over the next twelve months, particularly during the current period of market instability related to the COVID-19 pandemic. If the going concern assumption were not appropriate for these financial statements, then adjustments would be necessary to the carrying values of the assets and further.liabilities, the reported revenues and expenses, and the balance sheet classifications used.
PART I - FINANCIAL INFORMATION, CONTINUED:
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited), Continued:
2.
Developments in Accounting Pronouncements
Accounting Standards Updates Adopted
In August 2018, the FASB issued ASU No. 2018-13 Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The update removes, modifies and makes additions to the disclosure requirements on fair value measurements. The update 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.
3.
Income (Loss) Per Common Share:Share
Basic earnings per share is calculated by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated based on the weighted average number of common shares outstanding during the period plus the effect of potentially dilutive common stock equivalents, including warrants to purchase the Company's common stock and convertible preferred stock. Management has determined that the calculation of diluted earnings per share for
For the three months ended March 31, 2020 and nine month periods ended September 30, 2017 and June 30, 2016, is not applicable since any additions to outstanding shares related to common stock equivalents would be anti-dilutive.
As of September 30, 2017 and 2016,2019, the potentially dilutive common stock equivalents not included in the calculation of diluted earnings per share as their effect would have been anti-dilutive are as follows:
| | | | |
Warrants | 250,000 | 452,041 | 250,000 |
Convertible preferred stock | 1,751,005 | 1,751,005 |
Total possible dilution | 2,001,005 | 2,203,046 | 2,001,005 |
3.4.
Inventories: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
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
4.
Revenue Recognition, Continued:
Sales of products for the three month periods ended March 31, 2020 and 2019, were as follows:
| |
| |
| | |
Antimony | $1,121,425 | $1,705,823 |
Zeolite | 559,360 | 726,015 |
| 62,206 | 24,527 |
| $1,742,991 | $2,456,365 |
The following is sales information by geographic area based on the location of customers for the three-month periods ended March 31, 2020 and 2019
| |
| |
| | |
United States | $1,566,237 | $2,244,400 |
Canada | 176,754 | 211,965 |
| $1,742,991 | $2,456,365 |
The following is sales information by geographic area based on the location of customers for the three month periods ended March 31, 2020 and 2019:
| |
| |
| | |
Antimony | $1,121,425 | $1,705,823 |
Zeolite | 559,360 | 726,015 |
| 62,206 | 24,527 |
| $1,742,991 | $2,456,365 |
The following is sales information by geographic area based on the location of customers for the three-month periods ended March 31, 2020 and 2019
| |
| |
| | |
United States | $1,566,237 | $2,244,400 |
Canada | 176,754 | 211,965 |
| $1,742,991 | $2,456,365 |
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
4.
Revenue Recognition, Continued:
Sales of products to significant customers were as follows for the three month periods ended March 31, 2020 and 2019:
Sales to Three | |
Largest Customers | | |
Kohler Corporation | $- | $458,094 |
GE Chaplin, Inc. | 114,291 | - |
Nyacol Technologies | 106,161 | - |
East Penn Manufacturing | - | 157,328 |
Mexichem Speciality Compounds | 413,993 | 684,011 |
| $634,445 | $1,299,433 |
% of Total Revenues | 36.40% | 52.90% |
Accounts receivable from largest customers were as follows at March 31, 2020 and December 31, 2019:
Largest | | |
Accounts Receivable | | |
Nutreco Canada Inc. | $20,452 | $21,219 |
Ralco Mix Products | 16,600 | - |
Lake Shore Gold | - | 27,854 |
Teck North America Inc. | 78,869 | - |
Commerce Industrial Chemical | - | 54,684 |
| $115,921 | $103,757 |
% of Total Receivables | 50.47% | 36.48% |
Our trade accounts receivable balance related to contracts with customers was $229,692 at March 31, 2020 and $284,453 at December 31, 2019. Our products do not involve any warranty agreements and product returns are not typical.
Inventories at September 30, 2017March 31, 2020 and December 31, 20162019 consisted primarily of finished antimony products, antimony metal, antimony ore, and finished zeolite products that are stated at the lower of first-in, first-out cost or estimated net realizable value. Finished antimony products, antimony metal and finished zeolite products costs include raw materials, direct labor and processing facility overhead costs and freight. Inventory at September 30, 2017March 31, 2020 and December 31, 2016,2019, is as follows:
| | |
Antimony Oxide | $200,780 | $204,550 |
Antimony Concentrates | - | 5,654 |
Antimony Ore | 151,841 | 151,841 |
Total antimony | 352,621 | 362,045 |
Zeolite | 290,272 | 264,199 |
| $642,893 | $626,244 |
| | |
| | |
Antimony Metal | $- | $112,300 |
Antimony Oxide | 452,871 | 326,126 |
Antimony Concentrates | 19,017 | 30,815 |
Antimony Ore | 151,841 | 181,815 |
Total antimony | 623,729 | 651,056 |
Zeolite | 316,151 | 204,581 |
| $939,880 | $855,637 |
Antimony oxide inventory consisted of finished product oxide held at the Company's plant in Montana. Antimony concentrates and ore were held primarily at sites in Mexico and are essentially raw material. The Company's zeolite inventory consists of salable zeolite material.
At March 31, 2020 and December 31, 2019, the antimony inventory in Mexico was valued at estimated net realizable value resulting in write-downs of $22,475 and $16,396, respectively.
PART I - FINANCIAL INFORMATION, CONTINUED:
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited), Continued:
4.6.
Accounts Receivable and Due to Factor:Factor
The | | |
Accounts receivable - non factored | $212,465 | $273,573 |
Accounts receivable - factored with recourse | 17,227 | 10,880 |
Accounts receivable - net | $229,692 | $284,453 |
Factoring fees paid by the Company factors designated trade receivables pursuant to a factoringfor the three months ended March 31, 2020 and 2019 were $1,992 and $1,946, respectively. For the three months ended March 31, 2020 and 2019, net accounts receivable of approximately $75,000 and $58,000, resepectively were sold under the agreement with LSQ Funding Group L.C., an unrelated factor (the “Factor”). The agreement specifies that eligible trade receivables are factored with recourse. We submit selected trade receivables to the factor, and receive 83% of the face value of the receivable by wire transfer. The Factor withholds 15% as retainage and 2% as a servicing fee. Upon payment by the customer, we receive the remainder of the amount due from the factor. The 2% servicing fee is recorded on the consolidated statement of operations in the period of sale to the factor. John Lawrence, CEO, is a personal guarantor of the amount due to Factor.
Trade receivables assigned to the Factor are carried at the original invoice amount less an estimate made for doubtful accounts. Under the terms of the recourse provision, the Company is required to reimburse the Factor, upon demand, for factored receivables that are not paid on time. Accordingly, these receivables are accounted for as a secured financing arrangement and not as a sale of financial assets. The allowance for doubtful accounts is based on management’s regular evaluation of individual customer’s receivables and consideration of a customer’s financial condition and credit history. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously written off are recorded when received. Interest is not charged on past due accounts.
We present the receivables, net of allowances, as current assets and we present the amount potentially due to the Factor as a secured financing in current liabilities.
Accounts Receivble | | |
Accounts receivable - non factored | $332,660 | $401,720 |
Accounts receivable - factored with recourse | 163,737 | 150,399 |
Accounts receivable - net | $496,397 | $552,119 |
5.7.
Commitments and Contingencies:Contingencies
In June of 2013, the Company entered into a lease to mine antimony ore from concessions located in the Wadley Mining district in Mexico. The lease calls for a mandatory term of one year, and as of September 30, 2017,March 31, 2020, requires payments of $10,000 plus a tax of $1,600$1,700, per month. The lease is renewable each year with a 15 day notice to the lessor, and agreement of terms. The next lease renewal is scheduled for renewal in June 2018.
PART I - FINANCIAL INFORMATION, CONTINUED:
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited), Continued:2020.
6.8.
Notes Payable to Bank:Bank
At September 30, 2017March 31, 2020 and December 31, 2016,2019, 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 | $3,027 | $76,350 | $99,923 | $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 | 99,999 | 90,967 | 99,631 | 99,999 |
| | |
Total notes payable to the bank | $103,026 | $167,317 | $199,554 | $197,066 |
| | |
These notes are personally guaranteed by John C. Lawrence the Company’s PresidentChief Executive Officer and Chairman of the Board of Directors. The maximum amount available for borrowing under each note is $99,999.
Long-Term debt at September 30, 2017 and December 31, 2016, is as follows: | | |
| | |
Note payable to First Security Bank, bearing interest at 6%; | | |
payable in monthly installments of $917; maturing | | |
September 2018; collateralized by equipment. | $10,660 | $18,246 |
Note payable to Cat Financial Services, bearing interest at 6%; | | |
payable in monthly installments of $1,300; maturing | | |
August 2019; collateralized by equipment. | 30,545 | 40,556 |
Note payable to Wells Fargo Bank, bearing interest at 4%; | | |
payable in monthly installments of $477; maturing | | |
December 2016; collateralized by equipment. | - | 473 |
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. | 14,567 | 20,581 |
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. | 16,985 | 22,944 |
Note payable to Phyllis Rice, bearing interest | | |
at 1%; payable in monthly installments of $2,000; maturing | | |
March 2015; collateralized by equipment. | 14,146 | 14,146 |
Obligation payable for Soyatal Mine, non-interest bearing, | | |
annual payments of $100,000 or $200,000 through 2019, net of discount. | 731,862 | 776,319 |
Obligation payable for Guadalupe Mine, non-interest bearing, | | |
annual payments from $60,000 to $149,078 through 2026, net of discount. | 959,350 | 970,651 |
| 1,778,115 | 1,863,916 |
Less current portion | (495,134) | (391,046) |
Long-term portion | $1,282,981 | $1,472,870 |
PART I - FINANCIAL INFORMATION, CONTINUED:
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited), Continued:
7.9.
Long – Term Debt Continued:
Year Ending September 30, | | |
2018 | 495,134 | |
2019 | 307,810 | |
2020 | 215,795 | |
2021 | 128,742 | |
2022 | 111,467 | |
Thereafter | 519,167 | |
| $1,778,115 | |
Long-Term debt at March 31, 2020 and December 31, 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. | $91,700 | $100,000 |
Note payable to Cat Financial Services, bearing interest at 6%; | | |
payable in monthly installments of $778; maturing | | |
December 2022; collateralized by equipment. | 24,294 | 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. | 50 | 700 |
Note payable to Phyllis Rice, bearing interest | | |
at 1%; payable in monthly installments of $2,000; originally maturing | | |
March 2015; collateralized by equipment. | 6,146 | 6,146 |
| 122,190 | 133,096 |
Less current portion | (55,802) | (56,334) |
Long-term portion | $66,388 | $76,762 |
At March 31, 2020, principal payments on debt are due as follows:
12 Months Ending March 31, | |
2021 | 55,802 |
2022 | 41,803 |
2023 | 24,585 |
| $122,190 |
8.10.
Hillgrove Advances PayableRelated Party Transactions
On November 7, 2014,The Company’s President and Chairman, John Lawrence, rents equipment to the Company entered into a loan and processing agreement with Hillgrove Mines Pty Ltd of Australia (Hillgrove) by which Hillgrove will advancecharges the Company fundsfor lodging and meals provided to be used to expand their smelter in Madero, Mexico,consultants, customers and in Thompson Falls, Montana, soother parties by an entity that they may process antimony and gold concentrates produced by Hillgrove’s mine in Australia.Mr. Lawrence owns. The agreement requires that the Company construct equipment so that it can process approximately 200 metric tons of concentrate initially shipped by Hillgrove, with a provision so that the Company may expand to process more than that. The parties agreed that the equipment will be owned by USAC and USAMSA. The final terms of when the repayment takes place have not yet been agreed on. The agreement called for the Company to sell the final product for Hillgrove, and Hillgrove to have approval rights of the customers for their products. The agreement allows the Company to recover its operating costs as approved by Hillgrove, and to charge a 7.5% processing fee and a 2.0% sales commission. The initial term of the agreement is five years; however, Hillgrove may suspend or terminate the agreement at its discretion. The Company may terminate the agreement and begin using the furnaces for their own production if Hillgrove fails to recommence shipments within 365 days of a suspension notice. At September 30, 2017, the net amount due to HillgroveMr. Lawrence as of March 31, 2020 and December 31, 2019 was $171,898 and $156,975, respectively. Expenses paid to Mr. Lawrence for advancesthe three month periods ended March 31, 2020 and 2019 were $1,712 and $1,584, respectively
During 2019, Mr. Lawrence, advanced funds to the Company that had a balance at December 31, 2019 of $192,134. During the three month period ended March 31, 2020, the Company paid Mr. Lawrence $74,443 on these advances. A portion of this amount was $1,134,196. Asin the form of September 30, 2107, repaymentthe 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. The balance of the advances due to Mr. Lawrence at March 31, 2020 is not expected to occur within$117,701.
John C. Gustaven, First Vice-President of the next twelve months soCompany, has an advance due from the balance is classified as a long term liability.Company of $8,200 and $10,200, respectively, at March 31, 2020 and December 31, 2019.
PART I - FINANCIAL INFORMATION, CONTINUED:
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited), Continued:
9. Concentrations of Risk:
| For the Three Months Ended | For the Nine Months Ended |
Sales to Three | | | | |
Largest Customers | | | | |
Ampacet Corporation | $150,234 | $- | $- | $- |
Mexichem Specialty Compounds Inc. | 909,965 | 414,157 | 2,466,388 | 1,524,253 |
Kohler Corporation | 512,451 | 362,770 | 1,458,949 | 972,083 |
East Penn Corporation | - | 245,514 | 512,641 | 965,564 |
| $1,572,650 | $1,022,441 | $4,437,978 | $3,461,900 |
% of Total Revenues | 66% | 36% | 57% | 38% |
| | | | |
During the quarters ended March 31, 2020 and March 31, 2019, the Company accrued $28,125 and $31,250, respectively, in directors’ fees payable that will be paid in common stock.
| | | | |
Three Largest Accounts Receivable | | | | |
Kohler Corporation | $169,991 | $133,705 | | |
Earth Innovations Inc. | 31,522 | 33,150 | | |
Axens North America, Inc. | 31,237 | - | | |
East Penn Corporation | - | 135,828 | | |
| $232,750 | $302,683 | | |
% of Total Receivables | 47.00% | 58.20% | | |
In January 2019, the Company issued Daniel Parks, the Company’s Chief Financial Officer, 200,000 shares of the Company’s common stock with a fair value of $136,000 to retain his services. As part of the agreement, Mr. Parks’ hours worked and financial compensation has been reduced.During the quarter ended March 31, 2020, the Company issued 250,000 shares of common stock to its president upon exercise of a warrant. See Note 10.
Warrants
At December 31, 2019, warrants for purchase of 250,000 shares of the Company’s common stock for $0.25 per share were outstanding and have no expiration date. These warrants were owned by the Company’s president. The warrants were exercised in the three month period ended March 31, 2020. See Note 10.
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. None have been exercised and all are outstanding at March 31, 2020 and December 31,2019.
10.12.
Related Party Transactions:Income Taxes
During the three and nine monthsmonth period ended September 30, 2017March 31, 2020 and 2016, the Chairman of the audit committee and compensation committee received $4,500 and $9,000, and $4,500 and $18,000, respectively, for services performed. See Note 12 for shares of common stock issued to directors.
During the three and nine months ended September 30, 2017 and 2016, the Company paid $2,715 and $8,989, and $2,480 and $11,310, respectively, to John Lawrence, President and Chief Executive Officer, as reimbursement for equipment used by the Company.
During the nine months ended September 30, 2017 and the year ended December 31, 2016,2019, the Company determined that a valuation allowance equal to 100% of any deferred tax asset was appropriate, as management of the Company cannot determine that it is more likely than not the Company will realize the benefit of aits net deferred tax asset. The net effect is that the deferred tax asset as of December 31, 2016, and any deferred tax assets that may have been incurred since then, areis fully reserved for at September 30, 2017.
March 31, 2020 and December 31, 2019. Management estimates the effective tax rate at 0% for the current year.
In 2015,early 2019, the Company was notified by the Mexican tax authority (“SAT”) initiated an auditbegan its re-assessment of the USAMSA’s 2013 income tax return. In October 2016, as a result of its audit,November 2019, SAT assessed the Company $13.8$16.3 million pesos, which was approximately $666,400 in U.S. Dollars (“USD”)$696,000 USD as of DecemberMarch 31, 2016. Approximately $285,000 USD of the total assessment is interest and penalties. SAT’s assessment is based on the disallowance of specific costs that the Company deducted on the 2013 USAMSA income tax return. These disallowed costs were incurred by the Company for USAMSA’s business operations. SAT claims that the costs were not deductible or were not supported by appropriate documentation. At September 30, 2017, the assessed amount is $746,000 in U.S dollars.
PART I - FINANCIAL INFORMATION, CONTINUED:
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited), Continued:
11.
Income Taxes, Continued:
2020.
Management has reviewed the 2019 assessment notice from SAT and believes numerousthe findings have no merit. The Company has engaged accountants anda tax attorneysattorney in Mexico to defend its position. An appeal has been filed.was filed by the Company in November 2019 suspending SAT from taking immediate action regarding the assessment. The Company posted a guarantee of the amount in March 2020 as is required under the appeal process. Management expects the appeal process to continue through 2020 and into 2021.
At DecemberMarch 31, 2016,2020, management estimatedassessed the possible outcomes for this assessmenttax audit and believes, it will ultimately pay an amount ranging from 30% of the total assessment to the total assessed amount. The Company’s agreementbased on its discussions with theits tax professionals isattorney in Mexico, that the professionalsmost likely outcome will receive 30% of the amount of tax relief they are able to achieve.
At December 31, 2016, the Company accrued a potential liability of $410,510 USD of which $285,048 was for unpaid income taxes, $75,510 was for interest expense, and $49,952 was for penalties. The amount accrued represents management’s best estimate of the amountbe that will ultimately be paid. The outcome could vary from this estimate. At September 30, 2017, the Company recognized a $49,000 increase due to the change in exchange rate. Fluctuation in exchange rates has an ongoing impact on the amount the Company will paybe successful in U.S. dollars.its appeal resulting in no tax due. Management determined that no amount should be accrued at March 31, 2020 relating to this potential tax liability. There can be no assurance that the Company’s ultimate liability, if any, will not have a material adverse effect on the Company’s results of operations or financial position.
If an issue addressed during the SAT audit is resolved in a manner inconsistent with management expectations, the Company will adjust its net operating loss carryforward, or accrue any additional penalties, interest, and tax associated with the audit. The Company’s tax professionals in Mexico have reviewedassessment.
United States Antimony Corporation and filed tax returns with the SAT forSubsidiaries
Notes to Consolidated Financial Statements (Unaudited), Continued:
13. Hillgrove Advances Payable
On November 7, 2014, 2015, and 2016, and have advised the Company that they doentered 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 expectprocessed Hillgrove concentrate for the past two years. The agreement requires the Company to havepay the advance balance after Hillgrove issues a taxstop 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 for those years relatingdue to similar issues.Hillgrove was $1,134,221 at both March 31, 2020 and December 31, 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 might be forthcoming in 2020. Based on management’s assessment of likelihood and the payment terms of the agreement, $378,074 of the balance is classified as current as of March 31, 2020 and December 31, 2019.
12.
Stockholder’s Equity:
Issuance of Common Stock for Payable to Board of Directors
During the nine months ended September 30, 2017, the Board of Directors was issued a total of 421,875 shares of common stock for $168,750 in directors’ fees that were payable at December 31, 2016. In addition, the Company accrued $131,250 in directors’ fees payable as of September 30, 2017, that will be paid in common stock.
During the nine months ended September 30, 2016, the Board of Directors was issued a total of 550,000 shares of common stock for $137,500 in directors’ fees that were payable at December 31, 2015. In addition, the Company accrued $112,500 in directors’ fees payable as of September 30, 2016, that will be paid in common stock.
13.14.
Business Segments:Segments
The Company is currently organized and managed by four segments, which represent our operating units: United States antimony operations, Mexican antimony operations, precious metals recovery and United States zeolite operations.
The Madero smelter and Puerto Blanco mill and the Madero smelter at the Company’s Mexico operation bringsbring antimony up to an intermediate or finished stage, which is typicallymay be sold directly or shipped to the United States operation for finishing and sales at the Thompson Falls, Montana plant. The Puerto Blanco mill is the site of our crushing and flotation plant, and a cyanide leach plant which will recover precious metals after the ore goes through the crushing and flotation cycles. A precious metals recovery plant is operated in conjunction with the antimony processing plant at Thompson Falls, Montana.Montana, where a 99% precious metals mix will be produced. The Zeolitezeolite 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.States, although the Company does have a sales operation in Canada.
Segment disclosure regarding sales to major customers is located in Note 4.
Properties, plants | | |
and equipment, net: | | |
Antimony | | |
United States | $1,646,827 | $1,631,100 |
Mexico | 8,386,700 | 8,800,820 |
Subtotal Antimony | 10,033,527 | 10,431,920 |
Precious metals | 877,446 | 567,738 |
Zeolite | 1,145,865 | 1,187,190 |
Total | $12,056,838 | $12,186,848 |
| For the three months ended |
Capital expenditures: | | |
Antimony | | |
United States | $23,121 | $1,345 |
Mexico | 26,765 | 274,906 |
Subtotal Antimony | 49,886 | 276,251 |
Precious Metals | 38,521 | 6,754 |
Zeolite | 7,864 | 29,563 |
Total | $96,271 | $312,568 |
PART I - FINANCIAL INFORMATION, CONTINUED:
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited), Continued:
13.14.
Business Segments, Continued:continued:
At March 31, 2020 and December 31, 2019, the Company had $841,503 and $1,306,579, respectively, of assets that were not yet placed in service and have not yet been depreciatied.
DisclosureSegment Operations for the three | | | | | | |
months ended March 31, 2020 | | | | | | |
| | | | | | |
Total revenues | $1,121,425 | $- | $1,121,425 | $62,206 | $559,360 | $1,742,991 |
| | | | | | |
Depreciation and amortization | 7,395 | 146,098 | 153,493 | 23,598 | 49,190 | 226,281 |
| | | | | | |
Income (loss) from operations | 239,352 | (719,066) | (479,714) | 38,608 | 138,160 | (302,946) |
| | | | | | |
Other income (expense): | (2,915) | - | (2,915) | - | (3,021) | (5,936) |
| | | | | | |
NET INCOME (LOSS) | $236,437 | $(719,066) | $(482,629) | $38,608 | $135,139 | $(308,882) |
Segment Operations for the three | | | | | | |
months ended March 31, 2019 | | | | | | |
| | | | | | |
Total revenues | $1,705,823 | $- | $1,705,823 | $24,527 | $726,015 | $2,456,365 |
| | | | | | |
Depreciation and amortization | 10,878 | 149,083 | 159,961 | 17,011 | 46,301 | 223,273 |
| | | | | | |
Income (loss) from operations | (52,096) | (802,676) | (854,772) | 7,516 | 163,489 | (683,767) |
| | | | | | |
Other income (expense): | (1,367) | (18,287) | (19,654) | - | (4,039) | (23,693) |
| | | | | | |
NET INCOME (LOSS) | $(53,463) | $(820,963) | $(874,426) | $7,516 | $159,450 | $(707,460) |
15. Subsequent Events
On April 22, 2020, the Company received a loan of $443,400 pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the activity relatingCARES Act, which was enacted March 27, 2020. The loan, which was in the form of a Note dated April 22, 2020 matures on April 22, 2022 and bears interest at a rate of 1% per annum, payable monthly commencing on November 22, 2020. The Note may be prepaid by the Company at any time prior to our precious metals recovery requires that itmaturity with no prepayment penalties. Under the terms of the PPP, certain amounts of the loan may be reportedforgiven if they are used for qualifying expenses as a separate business segment.described in the CARES Act. Qualifying expenses include payroll costs, costs used to continue group health care benefits, mortgage payments, rent, and utilities. The prior period comparative information has been reclassifiedCompany intends to reflect this change.
Segment disclosure regarding sales to major customers is located in Note 9.
| For the three months ended | For the nine months ended |
| | | | |
Capital expenditures: | | | | |
Antimony | | | | |
United States | $22,241 | $- | $22,241 | $1,040 |
Mexico | 45,326 | 26,130 | 121,042 | 201,882 |
Subtotal Antimony | 67,567 | 26,130 | 143,283 | 202,922 |
Precious Metals | 24,798 | 85,804 | 84,379 | 247,500 |
Zeolite | 35,856 | 61,284 | 51,803 | 123,075 |
Total | $128,221 | $173,218 | $279,465 | $573,497 |
Properties, plants and equipment, net: | | |
Antimony | | |
United States | $1,697,360 | $1,694,331 |
Mexico | 11,677,840 | 11,984,467 |
Subtotal Antimony | 13,375,200 | 13,678,798 |
Precious metals | 588,650 | 544,615 |
Zeolite | 1,374,356 | 1,472,553 |
Total | $15,338,206 | $15,695,966 |
| | |
Total Assets: | | |
Antimony | | |
United States | $2,543,350 | $2,495,842 |
Mexico | 12,338,179 | 12,681,109 |
Subtotal Antimony | 14,881,529 | 15,176,951 |
Precious metals | 588,650 | 544,615 |
Zeolite | 2,020,575 | 2,044,432 |
Total | $17,490,754 | $17,765,998 |
PART I - FINANCIAL INFORMATION, CONTINUED:
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited), Continued:use the entire loan amount for qualifying expenses.
13.
Business Segments, Continued:
Segment Operations for the three | | | | | |
months ended September 30, 2017 | | | | | |
| | | | | |
Total revenues | $1,796,775 | $- | $78,245 | $494,694 | $2,369,714 |
| | | | | |
Depreciation and amortization | 14,200 | 127,675 | 15,100 | 50,200 | 207,175 |
| | | | | |
Income (loss) from operations | 435,497 | (861,683) | 63,145 | 135,879 | (227,162) |
| | | | | |
Other income (expense): | (11,611) | (20,772) | - | (3,020) | (35,403) |
| | | | | |
NET INCOME (LOSS) | $423,886 | $(882,455) | $63,145 | $132,859 | $(262,565) |
Segment Operations for the three | | | | | |
months ended September 30, 2016 | | | | | |
| | | | | |
Total revenues | $2,025,755 | $3,557 | $240,238 | $577,149 | $2,846,699 |
| | | | | |
Depreciation and amortization | 20,000 | 136,875 | - | 53,400 | 210,275 |
| | | | | |
Income (loss) from operations | 723,628 | (1,421,013) | 240,238 | 109,163 | (347,984) |
| | | | | |
Income tax expense | - | (411,490) | - | - | (411,490) |
| | | | | |
Other income (expense): | (9,406) | (24,617) | - | (3,560) | (37,583) |
| | | | | |
NET INCOME (LOSS) | $714,222 | $(1,857,120) | $240,238 | $105,604 | $(797,057) |
| | | | | |
Segment Operations for the nine | | | | | |
months ended September 30, 2017 | | | | | |
| | | | | |
Total revenues | $5,842,801 | $17,782 | $243,822 | $1,723,120 | $7,827,525 |
| | | | | |
Depreciation and amortization | 42,900 | 397,325 | 47,000 | 150,000 | 637,225 |
| | | | | |
Income (loss) from operations | 1,618,156 | (2,680,293) | 196,821 | 358,110 | (507,206) |
| | | | | |
Other income (expense): | (34,654) | (119,341) | - | (9,622) | (163,617) |
| | | | | |
NET INCOME (LOSS) | $1,583,502 | $(2,799,634) | $196,821 | $348,488 | $(670,823) |
Segment Operations for the nine | | | | | |
months ended September 30, 2016 | | | | | |
| | | | | |
Total revenues | $6,621,732 | $3,557 | $564,581 | $1,976,758 | $9,166,628 |
| | | | | |
Depreciation and amortization | 60,400 | 431,975 | | 160,000 | 652,375 |
| | | | | |
Income (loss) from operations | 2,582,390 | (4,028,767) | 564,581 | 243,429 | (638,367) |
| | | | | |
Income tax expense | - | (423,490) | - | - | (423,490) |
| | | | | |
Other income (expense): | (23,837) | (49,122) | - | (7,517) | (80,476) |
| | | | | |
NET INCOME (LOSS) | $2,558,553 | $(4,501,379) | $564,581 | $235,912 | $(1,142,333) |
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited), Continued:
ITEMTEM 2.
Management’sManagement’s Discussion and Analysis of Results of Operations and Financial Condition
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. There is uncertainty related to the potential additional impacts COVID-19 could have on our operations and financial results for the year.
General
Certain matters discussed are forward-looking statements that involve risks and uncertainties, including the impact of antimony prices and production volatility, changing market conditions and the regulatory environment and other risks. Actual results may differ materially from those projected. These forward-looking statements represent our judgment as of the date of this filing. We disclaim, however, any intent or obligation to update these forward-looking statements.
Results of Operations by Division | | | | |
| | | | |
Antimony and Precious Metals | | | | |
Combined USA and Mexico | | | | |
Lbs of Antimony Metal USA | 298,472 | 247,505 | 1,102,290 | 1,027,501 |
Lbs of Antimony Metal Mexico | 123,919 | 411,410 | 372,307 | 1,277,058 |
Total Lbs of Antimony Metal Sold | 422,391 | 658,915 | 1,474,597 | 2,304,559 |
Sales Price/Lb Metal | $4.25 | $3.07 | $3.97 | $2.87 |
Net income (loss)/Lb Metal | $(0.94) | $(1.37) | $(0.69) | $(0.60) |
| | | | |
Gross antimony revenue - net of discount | $1,796,775 | $2,025,755 | $5,860,583 | $6,625,289 |
Precious metals revenue | 78,244 | 240,238 | 243,821 | 564,581 |
Production and shipping costs | (1,759,347) | (2,135,052) | (5,360,925) | (6,135,067) |
Mexico non-production costs | (51,310) | (156,489) | (215,762) | (514,400) |
General and administrative - non-production | (280,801) | (315,361) | (935,355) | (1,060,261) |
Other miscellaneous income(loss) | 2,642 | 32,813 | (49,000) | 109,392 |
Net interest and gain on sale of asset | (24,652) | (26,200) | (75,448) | (51,914) |
EBITDA | (238,449) | (334,296) | (532,086) | (462,380) |
Income tax expense | - | (411,490) | - | (423,490) |
Depreciation & amortization | (156,975) | (156,875) | (487,225) | (492,375) |
Net income (loss) - antimony and precious metals | $(395,424) | $(902,661) | $(1,019,311) | $(1,378,245) |
| | | | |
Zeolite | | | | |
Tons sold | 2,671 | 3,375 | 9,446 | 10,690 |
Sales Price/Ton | $185.21 | $171.01 | $182.42 | $184.92 |
Net income /Ton | $49.74 | $31.29 | $36.89 | $22.07 |
| | | | |
Gross zeolite revenue | $494,694 | $577,150 | $1,723,120 | $1,976,759 |
Production costs, royalties, and shipping costs | (297,815) | (386,844) | (1,167,108) | (1,509,822) |
General and administrative - non-production | (12,532) | (29,178) | (53,065) | (67,157) |
Net interest | (1,288) | (2,124) | (4,459) | (3,868) |
EBITDA | 183,059 | 159,004 | 498,488 | 395,912 |
Depreciation | (50,200) | (53,400) | (150,000) | (160,000) |
Net income - zeolite | $132,859 | $105,604 | $348,488 | $235,912 |
| | | | |
Company-wide | | | | |
Gross revenue | $2,369,713 | $2,846,699 | $7,827,524 | $9,166,628 |
Production costs, royalties, and shipping costs | (2,108,472) | (2,681,941) | (6,743,795) | (8,159,288) |
General, administrative, and other non-production costs | (293,333) | (344,539) | (988,420) | (1,127,418) |
Other miscellaneous income | 2,642 | 32,813 | (49,000) | 109,392 |
Net interest and gain on sale of asset | (25,940) | (28,324) | (79,907) | (55,782) |
EBITDA | (55,390) | (175,292) | (33,598) | (66,468) |
Income tax expense | - | (411,490) | - | (423,490) |
Depreciation & amortization | (207,175) | (210,275) | (637,225) | (652,375) |
Net income (loss) | $(262,565) | $(797,057) | $(670,823) | $(1,142,333) |
Antimony - Combined USA | | |
and Mexico | | |
Lbs of Antimony Metal USA | 166,908 | 233,596 |
Lbs of Antimony Metal Mexico: | 128,545 | 209,552 |
Total Lbs of Antimony Metal Sold | 295,453 | 443,148 |
Average Sales Price/Lb Metal | $3.06 | $3.85 |
Net loss/Lb Metal | $(1.63) | $(1.97) |
| | |
Gross antimony revenue - net of discount | $902,746 | $1,705,823 |
Tri-sulfide revenue | 218,679 | - |
Total revenue | $1,121,425 | $1,705,823 |
| | |
Cost of sales-domestic | (533,289) | (1,179,804) |
Cost of sales-Mexico | (684,061) | (784,160) |
Operating expenses | (383,789) | (596,631) |
Non-operating expenses | (2,915) | (19,654) |
| (1,604,054) | (2,580,249) |
| | |
Net loss - antimony | (482,629) | (874,426) |
Depreciation,& amortization | 153,493 | 159,961 |
EBITDA - antimony | $(329,136) | $(714,465) |
| | |
Precious Metals | | |
Ounces sold | | |
Gold | 15 | 6 |
Silver | 5,048 | 1,724 |
| | |
Gross precious metals revenue | $62,206 | $24,527 |
Production costs, royalties, and shipping costs | (23,598) | (17,011) |
Net income - precious metals | 38,608 | 7,516 |
Depreciation | 23,598 | 17,011 |
EBITDA - precious metals | $62,206 | $24,527 |
| | |
Zeolite | | |
Tons sold | 2,809 | 3,841 |
Average Sales Price/Ton | $199.13 | $189.02 |
Net income (Loss)/Ton | $48.11 | $41.51 |
| | |
Gross zeolite revenue | $559,360 | $726,015 |
Cost of sales | (400,866) | (544,443) |
Operating expenses | (20,334) | (18,083) |
Non-operating expenses | (3,021) | (4,039) |
Net income - zeolite | 135,139 | 159,450 |
Depreciation | 49,190 | 46,301 |
EBITDA - zeolite | $184,329 | $205,751 |
| | |
Company-wide | | |
Gross revenue | $1,742,991 | $2,456,365 |
Production costs | (1,641,814) | (2,525,418) |
Operating expenses | (404,123) | (614,714) |
Non-operating expenses | (5,936) | (23,693) |
Net income (loss) | (308,882) | (707,460) |
Depreciation,& amortization | 226,281 | 223,273 |
EBITDA | $(82,601) | $(484,187) |
PART I - FINANCIAL INFORMATION, CONTINUED:
ITEM 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition, continued:
The Mexico non-production costs for the three and nine months ending September 30, 2017, are primarily due to holding costs from inactivity at the Los Juarez, Guadalupe, and Soyatal mines and the Puerto Blanco mill. The loss of production at the Madero smelter from transitioning to Mexican raw material due to the closing of the Hillgrove mine in Australia and the subsequent loss of Hillgrove raw material contributed to non-production costs during the nine months ending September 30, 2017.
Company-Wide
For the thirdfirst quarter of 2017,2020, we recognized a net loss of $262,565$308,882 on sales of $2,369,713,$1,742,991, compared to a net loss of $797,057$707,460 in the third quarter of 2016 on sales of $2,846,699. This is a decrease in the loss for the period of 67%, and is significant progress in a corporate turnaround. For the nine month period ending September 30, 2017, we incurred a net loss of $670,823 on sales of $7,827,525, compared to a net loss of $1,142,333 for the same period in 2016, a decrease of 41%. The loss in the third quarter of 2017 and the nine months then ended was primarily due to the loss of raw material from Hillgrove Mines of Australia. We also recognized approximately $124,732 of settlement costs related to our precious metals production during the first quarter of 2017, and we incurred a foreign exchange2019, on sales of $2,456,365. In addition to normal operating costs, the loss of $49,000 through nine months related to our Mexican tax liability. Hillgrove has given us permission to usein the furnaces financed by them and that were dedicated to processing Hillgrove concentrates.
Depreciation and amortization for the quarter and nine months ending September 30, 2017, was $207,175 and $637,225, respectively.
The loss for the thirdfirst quarter of 2017 included $51,3102020 was significantly impacted by supply constrictions and the decrease in non-production costs in Mexico (holding coststhe market price for non-producing Mexican properties), compared to $156,489 for the same period in 2016.antimony.
For the thirdfirst quarter of 2017,2020, EBITDA was a negative $55,390,$82,601 compared to a negative EBITDA of $175,292$484,187 for the same period of 2016.2019.
Net non-cash expense items totaled $260,185 for the first quarter of 2020 and included $226,281 for depreciation and amortization, $31,250 for director compensation and $2,654 for other items.
Net non-cash expense items totaled $410,347 for 2019 and included $223,273 for depreciation and amortization, $18,037 for amortization of debt discount, $28,125 for director compensation, $136,000 for stock issued for employment, and $1,787 for other items.
For the thirdfirst quarter of 2017, the2020, general and administrative expenses were $228,185$199,971 compared to $309,832$205,174 for the same period of 2016.2019.
Antimony
We beganFor the mining and processing of ore from our own Mexican mines during Q1of 2017. Producing from our own Mexican mines will allow the Company to benefit from 100% of the price increases rather than a processing fee and a small percent of the price increases.
1.
The salethree months ended March 31, 2020, we sold 295,453 pounds of antimony during Q3 2017 was 422,391 pounds compared to 658,915 pounds during the same period in 2016.
2.
The sale of antimony during the first nine months of 2017 was 1,474,597 pounds compared to sales of 2,304,559443,148 pounds for the three months ended March 31, 2019. The raw material received from our North American supplier decreased by approximately 67,000 pounds for the three months ended March 31, 2020, compared to the same periodquarter for 2019. We had a decrease in raw material of 2016.
approximately 81,000 pounds from Mexico for the first quarter of 2020 compared to the same quarter for 2019. The decrease in Mexican raw material was primarily a result of utilizing available cash to finish the Puerto Blanco precious metals plant.3.
The average sales price of antimony during Q3 2017the three months ended March 31, 2020 was $4.25$3.06 per pound compared to $3.07$3.85 during the same period in 2016, an increase of 38%.
4.
The average sale price of antimony during the first nine months of 2017 was $3.97 compared to $2.87 for the same period of 2016, an increase of 38%.
5.
The decrease in production was offset by higher sales prices and better margins on production from our own mined ore.
PART I - FINANCIAL INFORMATION, CONTINUED:
ITEM 2. Management’s Discussion and Analysis of Results of Operations and Financial, continued:
The metallurgical problems with the Los Juarez ore have been solved, and we are processing the ore presently in inventory. As soon as we are permitted, we will complete construction of our leach circuit at the Puerto Blanco mill.
At the Wadley mine, production is being increased with more miners. The use of pneumatic hammers is planned in lieu of explosives. Wadley is our main producer of Mexican ore with some 90 men underground. The tonnage and grade is being increased, and some of the ore contains up to 50 percent antimony.
Powder magazines are being built at the Soyatal mine. We will use the Los Juarez explosives license to mine direct shipping ore for smelter feed at Madero.
The access road to Guadalupe is being repaired to re-start production.
A 400 ton mill test of Los Juarez ore has indicated the necessity of a cyanide leach circuit for the mill tailings. With the leach circuit, the estimated gross value of the ore will be approximately $125.00 at current precious metal prices.
Production changes at the Madero smelter have cut the costs and increased recovery.2019.
Precious Metals
The caustic leach of flotation concentrates from Los Juarez washas been successful, and 400 metric tons were runthe cyanide leach plant at Puerto Blanco is on schedule to start the pilot production of Los Juarez gold, silver, and antimony during the secondthird quarter of 2017 that indicate that a cyanide leach circuit is necessary2020.
For the three months ended March 31, 2020, income for precious metals from North American sources was $62,206, compared to increase$24,527 for the recoveriessame period of 2019.
The estimated recovery of precious metals from mill tailings.per metric ton, after the caustic leach and cyanide leach circuits, is as follows:
Precious Metals Sales | | | | |
Silver/Gold | | |
Montana | | | | |
Ounces Gold Shipped (Au) | 64.77 | 89.12 | 108.10 | 88.62 |
Ounces Silver Shipped (Ag) | 29,480.22 | 30,420.75 | 38,123.46 | 22,107.93 |
Revenues | $461,083 | $491,426 | $556,650 | $352,165 |
Mexico | | | | |
Ounces Gold Shipped (Au) | | | | |
Ounces Silver Shipped (Ag) | | | | |
Revenues | | | | |
Australian - Hillgrove | | | | |
Ounces Gold Shipped (Au) | | | 496.65 | 79.54 |
Revenues - Gross | | | $597,309 | $81,779 |
Revenues to Hillgrove | | | (481,088) | (190,122) |
Revenues to USAC | | | $116,221 | $(108,343) |
| | | | |
Total Revenues | $461,083 | $491,426 | $672,871 | $243,822 |
Schedule of Los Juarez recovery values | | | | |
| 0.035 opmt | 90% | $1700/oz | $54.00 |
| 3.27 opmt | 90% | $15.00/oz | $44.00 |
| 0.652% | 70% | 3.05/lb | $30.68 |
Total |
|
|
| $128.68 |
|
|
|
| |
PART I - FINANCIAL INFORMATION, CONTINUED:Current and prior years’ revenue from precious metals is as follows:
ITEM 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition, continued:Precious Metal Sales Silver/Gold | For the three months ended March 31, |
Montana | | |
Ounces Gold Shipped (Au) | 14.91 | 6.45 |
Ounces Silver Shipped (Ag) | 5,047.66 | 1,724.40 |
Total Revenues | $62,206 | $24,527 |
Bear River Zeolite (BRZ)
During Q3 2017,For the three months ended March 31, 2020, BRZ sold 2,6712,809 tons of zeolite compared to 3,3753,841 tons in the same period of 2016,2019, down 7041,032 tons (20%(27%). The decrease in tonnage was due to required maintenance.
WeBRZ realized net income of $135,139 after depreciation of $49,190 in the first quarter of 2020, compared to a net income of $132,859 from zeolite sales in Q3$159,450 after depreciation of 2017,$46,301 for the same quarter of 2019.
BRZ realized an EBITDA for the three months ended March 31, 2020 of $184,329, compared to $105,604 for$205,571for the same period in 2016. The increase in the profit from our zeolite operations was $27,255 (25%). The increase in profit was attributable to better plant efficiency. We realized net income of $348,488 from zeolite sales during the first nine months of 2017, compared to $235,912 for the same period in 2016. The increase in the profit from our zeolite operations was $112,576 (48%) and was attributable to better plant efficiency.2019.
We realized an EBITDA fromare anticipating continued growth in all areas of zeolite sales for Q3 2017 of $183,059, compared to $159,004 for the same period in 2016, an increase of $24,055 (15%). We realized an EBITDA from zeolite sales for the nine months ended September 30, 2017 of $498,488, compared to $395,912 for the same period in 2016, an increase of $102,576 (26%).
Our new sales program for zeolite products has two field representatives and a research person that prepares sales brochures and literature. At this time this effort is adding new customers. Increased production at our zeolite plant will enable us to provide timely product deliveries to our customers.sales.
Financial Position
Financial Condition and Liquidity | | | |
| | | |
Current Assets | $1,740,041 | $1,692,555 | |
Current assets | | $1,149,865 | $1,279,755 |
Current liabilities | ( 3,880,431) | ( 3,382,123) | (3,939,675) | (3,975,681) |
Net Working Capital | $(2,140,390) | $(1,689,568) | $(2,789,810) | $(2,695,926) |
| | |
| | For the Three Months Ended |
| | | | |
Cash provided (used) by operations | $491,253 | $412,162 | $(36,265) | $(85,590) |
Cash provided (used) by investing: | | |
Cash used for capital outlay | ( 279,465) | ( 459,969) | (96,271) | (312,568) |
Payment received on note receivable | | - | 400,000 |
Cash provided (used) by financing: | | |
Net proceeds from (payments) to factor | 13,338 | 119,111 | |
Payment of notes payable to bank | (64,291) | (30,672) | |
Net payments (to) from factor | | 6,347 | (11,084) |
Payments on notes payable to bank | | - | (70,792) |
Proceeds from notes payable to bank | | 2,488 | - |
Principal paid on long-term debt | | (10,906) | (57,467) |
Advances from related party | | - | 125,200 |
Payments on advances from related party | | (13,933) | - |
Checks issued and payable | 12,726 | | 56,102 | (845) |
Principal paid on long-term debt | ( 156,042) | ( 130,857) | |
Net change in cash | $17,519 | $(90,225) | |
Net change in cash and restricted cash | | $(92,438) | $(13,146) |
Our net working capital at September 30, 2017, has decreased by approximately $451,000$94,000 from December 31, 2016.2019. Our cash and cash equivalents decreased by approximately $92,000 during the same period. The decrease in our net working capital was primarilymostly due to an increasethe decrease in various categoriesthe price of liabilities, and expenditures ofantimony. We spent approximately $280,000$96,000 for capital outlay.items, and our long term debt decreased by approximately $11,000. We have estimated commitments of $50,000 for construction and improvements of less than $100,000 to finish building and installing the precious metals leach circuits. We believe that with our current cash balance, along with the future cash flow from operations and operating agreements, we have adequate liquid assets to meet these commitments and service our debt for the next twelve months. We have lines of credit of $202,000$199,998 which have been drawn down by $103,026$199,554 at September 30, 2017. We have a foreign value added tax refund receivable in Mexico of $365,120 at September 30, 2017. We believe that this refund will be adequate to offsetMarch 31, 2020.
At March 31, 2020, the amount ultimately paid on the Mexican tax assessment (see Note 11 of theCompany’s consolidated financial statements in Item 1).
PART I - FINANCIAL INFORMATION, CONTINUED:
ITEM 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition, continued:
Going Concern Consideration
At September 30, 2017, our financial statements show that we have a negative working capital of approximately $2.14$2.8 million and an accumulated deficit of approximately $26.1$29.7 million. In addition, we haveWith the exception of 2018, the Company has 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 beis substantial doubt regarding ourthe ability to continue as a going concern for the next twelve months.
DuringOver the past twelve months,several years, the priceCompany has been able to make required principal payments on its debt from cash generated from operations. The abandonment of the mineral properties in Mexico in November 2019 resulted in the removal of approximately $1,500,000 of debt and the related payments which were $86,000 in 2019 and $193,000 in 2018. The Company is confident it can make debt payments when due. During 2019, the Company was successful in raising $404,199 from sale of shares of its common stock to fund capital projects in Mexico.
The continuing losses are principally a result of the Company’s antimony has increased from a low of $3.07 per poundoperations due to both depressed antimony prices and production costs incurred in Mexico. To improve conditions, the Company plans to continue searching for the third quarter of 2016areas to an average price of $4.25 for the third quarter of 2017. We have gross profit and a positivereduce these production costs. Management expects improvement in cash flow in 2020 from our U.S. operations at this price. Our operationsthe sale of precious metals extracted from the leach circuit scheduled to come on line in Mexico are still in a transitional phase since the losssecond half of our raw material supply from Hillgrove of Australia. We are focusing our production at our Wadley mine to increase grade and output, and we have recently seen ore from there assaying 50% antimony. We are also trying new production techniques, and have found that we can process direct shipping ore successfully at our Madero smelter which will result in a reduction in our operating costs in Mexico going forward.2020.
We have reduced costs at our Mexico locations, most notablyThere can be no assurance that management plans will alleviate the doubt regarding the Company’s ability to continue as a reduced monthly lease payment of $11,600 for the Wadley mine from $23,200 for June 2016, and we have also reduced the cost for labor at the same mine. We have reduced administrative costs by approximately $81,000 from the prior year third quarter at the corporate level. Our capital outlay should be minimal in the near future; and we completed paying for the Los Juarez mining concessions in 2016 which were a major outlay in prior years.
Our zeolite operations continue to operate profitably and provide cash to our operations. We are aggressively seeking new markets for our zeolite products, and we now have an outside sales staff that is working to obtain new customers and have had some success.
We believe that the combination of the above will enable us to stay in operation and meet our financial obligations forgoing concern over the next twelve months, particularly during the current period of market instability related to the COVID-19 pandemic. If the going concern assumption were not appropriate for these financial statements, then adjustments would be necessary to the carrying values of the assets and further.liabilities, the reported revenues and expenses, and the balance sheet classifications used.
ITEMITEM 3.Quantitative and Qualitative Disclosure about Market Risk
None
ITEMITEM 4. ControlsControls and Procedures
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, as appropriate, to allow timely decisions regarding required disclosure. Our chief financial officer conducted an evaluation of the effectiveness of the Company's disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of September 30, 2017.March 31, 2020. It was determined that there were material weaknesses affecting our disclosure controls and procedures and, as a result of those weaknesses, our disclosure controls and procedures were not effective as of September 30, 2017.March 31, 2020. These material weaknesses are as follows:
●
Inadequate design of internal control over the preparation of the financial statements and financial reporting processes;
●
Inadequate monitoring of internal controls over significant accounts and processes including controls associated with domestic and Mexican subsidiary operations and the period-end financial reporting process; and
●
The absence of proper segregation of duties within significant processes and ineffective controls over management oversight, including antifraud programs and controls.
We are aware of these material weaknesses and will develop procedures to ensure that independent review of material transactions is performed. The chief financial officer will develop internal control measures to mitigate the lack of inadequate documentation of controls and the monitoring of internal controls over significant accounts and processes including controls associated with the period-ending reporting processes, and to mitigate the segregation of duties within significant accounts and processes and the absence of controls over management oversight, including antifraud programs and controls.
We plan to consult with independent experts when complex transactions are entered into.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no significant changes made to internal controls over financial reporting for the quarter ended September 30, 2017.March 31, 2020.
PARTPART II - OTHER INFORMATION
None
ItemUNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ItemDEFAULTS UPON SENIOR SECURITIES
The registrant has no outstanding senior securities.
The information concerning mine safety violations or other regulatory matters required by Section 1503 (a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Annual Report.
None
ItemEXHIBITS AND REPORTS ON FORM 8-K
Certifications
Certifications Pursuant to the Sarbanes-Oxley Act
Certifications Pursuant to the Sarbanes-Oxley Act | |
Reports on Form 8-K None | |
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)
| UNITED STATES ANTIMONY CORPORATION (Registrant) | |
| | | |
Date: May 15, 2020
| By: | /s/ John C. Lawrence | |
| | John C. Lawrence | |
| | Director and President (Principal Executive) | |
| |
| |
Date: May 15, 2020 | By: | /s/ John C. Lawrence Date: November 14, 2017 John C. Lawrence, Director and President
(Principal Executive)
By: /s/ Daniel L. Parks Date: November 14, 2017
Daniel L. Parks | |
| | Daniel L. Parks | |
| | Chief Financial Officer | |