10-Q 1 uamy_10q.htm QUARTERLY REPORT Blueprint
 

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 June 30, 2019
 
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period _______ to _______
 
 
Commission file number 001-08675
 
UNITED STATES ANTIMONY CORPORATION
(Exact name of registrant as specified in its charter)
 
Montana
 
81-0305822
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
P.O. Box 643, Thompson Falls, Montana
 
59873
(Address of principal executive offices)
 
(Zip code)
 
Registrant’s telephone number, including area code: (406) 827-3523
 
Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES  No ☐
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES  No ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer”, “small reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large Accelerated Filer ☐
Accelerated Filer ☐
Non-Accelerated Filer ☐
Smaller reporting company ☒

Emerging growth company ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
 
Indicate by check mark whether the registrant is a shell company as defined by Rule 12b-2 of the Exchange Act.    YES ☐ No 
 
At August 14, 2019, the registrant had outstanding 68,757,354 shares of par value $0.01 common stock.
 

 
 
 
UNITED STATES ANTIMONY CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD
ENDED JUNE 30, 2019
(UNAUDITED)
 
TABLE OF CONTENTS
  
 
[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 Balance Sheets (Unaudited)
 
 
ASSETS
 
 
 
June 30,
 
 
December 31,
 
 
 
2019
 
 
2018
 
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 $45,762 
 $56,650 
Certificates of deposit
  253,552 
  252,954 
Accounts receivable
  417,005 
  438,391 
Inventories
  723,688 
  755,261 
Note receivable - sale of land
  - 
  400,000 
Total current assets
  1,440,007 
  1,903,256 
 
    
    
Properties, plants and equipment, net
  15,254,204 
  15,227,172 
Restricted cash for reclamation bonds
  57,247 
  57,247 
IVA receivable and other assets
  367,769 
  369,448 
Total assets
 $17,119,227 
 $17,557,123 
 
    
    
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
    
    
    Checks issued and payable
 $113,028 
 $46,482 
Accounts payable
  2,071,572 
  1,926,320 
Due to factor
  13,804 
  16,524 
Accrued payroll, taxes and interest
  241,882 
  159,037 
Other accrued liabilities
  389,693 
  353,911 
Payables to related party
  356,902 
  93,567 
Deferred revenue
  32,400 
  32,400 
Notes payable to bank
  199,998 
  183,917 
Long-term debt, current portion, net of discount
  761,663 
  705,460 
Total current liabilities
  4,180,942 
  3,517,618 
 
    
    
Long-term debt, net of discount and current portion
  918,435 
  1,027,730 
Hillgrove advances payable
  1,134,221 
  1,134,221 
Stock payable to directors for services
  62,500 
  175,000 
Asset retirement obligations and accrued reclamation costs
  280,794 
  277,720 
Total liabilities
  6,576,892 
  6,132,289 
Commitments and contingencies (Note 7)
    
    
 
    
    
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;
    
    
68,757,354 and 68,227,171 shares issued and outstanding, respectively
  687,573 
  682,271 
Additional paid-in capital
  36,712,572 
  36,406,874 
Accumulated deficit
  (26,884,598)
  (25,691,099)
Total stockholders' equity
  10,542,335 
  11,424,834 
Total liabilities and stockholders' equity
 $17,119,227 
 $17,557,123 
 
The accompanying notes are an integral part of the consolidated financial statements.
 
 
1
 
 
United States Antimony Corporation and Subsidiaries
Consolidated Statements of Operations (Unaudited)
 
 
 
For the three months ended
 
 
For the six months ended
 
 
 
June 30,
2019
 
 
June 30,
2018
 
 
June 30,
2019
 
 
June 30,
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
REVENUES
 $2,272,283 
 $2,256,347 
 $4,728,648 
 $4,689,276 
 
    
    
    
    
COST OF REVENUES
  2,445,478 
  2,114,999 
  4,970,896 
  4,603,016 
 
    
    
    
    
GROSS PROFIT (LOSS)
  (173,195)
  141,348 
  (242,248)
  86,260 
 
    
    
    
    
OPERATING EXPENSES:
    
    
    
    
     General and administrative
  153,909 
  186,411 
  359,083 
  337,242 
     Salaries and benefits
  100,362 
  96,427 
  333,030 
  187,873 
    Other operating expenses
  10,500 
  - 
  86,630 
  - 
     Professional fees
  22,452 
  18,563 
  123,194 
  120,967 
TOTAL OPERATING EXPENSES
  287,223 
  301,401 
  901,937 
  646,082 
 
    
    
    
    
INCOME (LOSS) FROM OPERATIONS
  (460,418)
  (160,053)
  (1,144,185)
  (559,822)
 
    
    
    
    
OTHER INCOME (EXPENSE):
    
    
    
    
Interest income
  31 
  268 
  772 
  830 
Interest expense
  (24,228)
  (24,814)
  (46,716)
  (48,647)
Foreign exchange gain (loss)
  - 
  62,752 
  - 
  12,752 
Factoring expense
  (1,424)
  (938)
  (3,370)
  (2,338)
TOTAL OTHER INCOME (EXPENSE)
  (25,621)
  37,268 
  (49,314)
  (37,403)
 
    
    
    
    
NET INCOME (LOSS)
  (486,039)
  (122,785)
  (1,193,499)
  (597,225)
     Preferred dividends
  (12,162)
  (12,162)
  (24,325)
  (24,325)
 
    
    
    
    
   Net income (loss) available to common stockholders
 $(498,201)
 $(134,947)
 $(1,217,824)
 $(621,550)
 
    
    
    
    
Net income (loss) per share of common stock:
    
    
    
    
Basic
 $(0.01)
 
 Nil
 
 $(0.02)
 $(0.01)
Diluted
 $(0.01)
 
 Nil
 
 $(0.02)
 $(0.01)
 
    
    
    
    
Weighted average shares outstanding:
    
    
    
    
Basic
  68,721,070 
  67,959,175 
  68,614,804 
  67,724,965 
Diluted
  68,721,070 
  67,959,175 
  68,613,804 
  67,724,965 
 
The accompanying notes are an integral part of the consolidated financial statements.
 
 
2
 
 
United States Antimony Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
 
 
 
For the six months ended
 
 
 
June 30,
2019
 
 
June 30,
2018
 
Cash Flows From Operating Activities:
 
 
 
 
 
 
Net income (loss)
 $(1,193,499)
 $(597,225)
Adjustments to reconcile net income (loss) to net cash
    
    
provided (used) by operating activities:
    
    
Depreciation and amortization
  446,546 
  452,659 
Amortization of debt discount
  36,338 
  42,240 
Accretion of asset retirement obligation
  3,074 
  3,074 
Common stock issued for services
  136,000 
  - 
Common stock payable for directors' fees
  62,500 
  87,500 
Foreign exchange loss (gain)
  - 
  (12,752)
Other non cash items
  (598)
  (656)
Change in:
    
    
Accounts receivable, net
  21,386 
  (98,712)
Inventories
  31,573 
  202,013 
Other current assets
  - 
  4,697 
Other assets
  1,679 
  (11,935)
Accounts payable
  145,252 
  91,299 
Accrued payroll, taxes and interest
  82,845 
  26,420 
Deferred revenues
  - 
  (27,649)
Other accrued liabilities
  35,782 
  36,834 
Payables to related parties
  36,135 
  10 
Net cash provided (used) by operating activities
  (154,987)
  197,817 
 
    
    
Cash Flows From Investing Activities:
    
    
Payment received on note receivable for sale of land
  400,000 
  - 
Purchases of properties, plants and equipment
  (473,578)
  (174,388)
Net cash used by investing activities
  (73,578)
  (174,388)
 
    
    
Cash Flows From Financing Activities:
    
    
Change in checks issued and payable
  66,546 
  82,330 
Net proceeds from (payments to) factor
  (2,720)
  (5,440)
Advances from related party
  227,200 
  75,000 
Payment on advances from related party
  - 
  (75,000)
Proceeds from notes payable to bank
  16,081 
  - 
Principal paid notes payable to bank, net
  - 
  (1,556)
Principal payments on long-term debt
  (89,430)
  (110,872)
Net cash provided (used) by financing activities
  217,677 
  (35,538)
 
    
    
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
  (10,888)
  (12,109)
Cash and cash equivalents and restricted cash at beginning of period
  113,897 
  91,332 
Cash and cash equivalents and restricted cash at end of period
 $103,009 
 $79,223 
 
    
    
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
    
    
Noncash investing and financing activities:
    
    
Common stock payable issued to directors
 $175,000 
 $175,000 
 
The accompanying notes are an integral part of the consolidated financial statements.
 
 
3
 
 
United States Antimony Corporation and Subsidiaries
Consolidated Statement of Changes in Stockholders' Equity (Unaudited)
 
For the three month periods ended June 30, 2019 and and June 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional
 
 
 
 
 
Total
 
 
 
Total Preferred Stock
 
 
Common Stock
 
 
Paid
 
 
Accumulated
 
 
Stockholders'
 
Three months ended June 30, 2019
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
In Capital
 
 
Deficit
 
 
Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances, April 1, 2019
  2,678,909 
 $26,788 
  68,427,171 
 $684,271 
 $36,540,874 
 $(26,398,559)
 $10,853,374 
 
    
    
    
    
    
    
    
Issuance of common stock to Directors
    
    
  330,183 
  3,302 
  171,698 
    
  175,000 
Net loss
    
    
    
    
    
  (486,039)
  (486,039)
Balances, June 30, 2019
  2,678,909 
 $26,788 
  68,757,354 
 $687,573 
 $36,712,572 
 $(26,884,598)
 $10,542,335 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional
 
 
 
 
 
Total
 
 
 
Total Preferred Stock
 
 
Common Stock
 
 
Paid
 
 
Accumulated
 
 
Stockholders'
 
Three months ended June 30, 2018
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
In Capital
 
 
Deficit
 
 
Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances, April 1, 2018
  2,678,909 
 $26,788 
  67,488,153 
 $674,881 
 $36,239,264 
 $(27,038,764)
 $9,902,169 
 
    
    
    
    
    
    
    
Issuance of common stock to Directors
    
    
  739,018 
  7,390 
  167,610 
    
  175,000 
Net loss
    
    
    
    
    
  (122,785)
  (122,785)
Balances, June 30, 2018
  2,678,909 
 $26,788 
  68,227,171 
 $682,271 
 $36,406,874 
 $(27,161,549)
 $9,954,384 
 
For the six month periods ended June 30, 2019 and and June 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional
 
 
 
 
 
Total
 
 
 
Total Preferred Stock
 
 
Common Stock
 
 
Paid
 
 
Accumulated
 
 
Stockholders'
 
Six months ended June 30, 2019
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
In Capital
 
 
Deficit
 
 
Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances, January 1, 2019
  2,678,909 
 $26,788 
  68,227,171 
 $682,271 
 $36,406,874 
 $(25,691,099)
 $11,424,834 
 
    
    
    
    
    
    
    
Issuance of common stock to chief financial officer
    
    
  200,000 
  2,000 
  134,000 
    
  136,000 
Issuance of common stock to Directors
    
    
  330,183 
  3,302 
  171,698 
    
  175,000 
Net loss
    
    
    
    
    
  (1,193,499)
  (1,193,499)
Balances, June 30, 2019
  2,678,909 
 $26,788 
  68,757,354 
 $687,573 
 $36,712,572 
 $(26,884,598)
 $10,542,335 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional
 
 
 
 
 
Total
 
 
 
Total Preferred Stock
 
 
Common Stock
 
 
Paid
 
 
Accumulated
 
 
Stockholders'
 
Six months ended June 30, 2018
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
In Capital
 
 
Deficit
 
 
Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances, January 1, 2018
  2,678,909 
 $26,788 
  67,488,153 
 $674,881 
 $36,239,264 
 $(26,564,324)
 $10,376,609 
 
    
    
    
    
    
    
    
Issuance of common stock to Directors
    
    
  739,018 
  7,390 
  167,610 
    
  175,000 
Net loss
    
    
    
    
    
  (597,225)
  (597,225)
Balances, June 30, 2018
  2,678,909 
 $26,788 
  68,227,171 
 $682,271 
 $36,406,874 
 $(27,161,549)
 $9,954,384 
 
The accompanying notes are an integral part of the consolidated financial statements.
 
 
4
 
 
PART I - FINANCIAL INFORMATION, CONTINUED:
 
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 
1.
Basis of Presentation
 
The unaudited consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America for interim financial information, as well as the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of the Company’s management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation of the interim financial statements have been included. Operating results for the three and six month periods ended June 30, 2019 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2019.
 
For further information refer to the financial statements and footnotes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.
 
Going Concern Consideration
 
At June 30, 2019, the Company’s consolidated financial statements show negative working capital of approximately $2.7 million and accumulated deficit of approximately $26.9 million.  In addition, the Company has a net loss of $1,193,499 for the six month period ended June 30, 2019, and the Company has had recurring operating losses for most of the prior periods.  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 falling prices of antimony and the Company’s antimony operations and production costs incurred in Mexico.
 
Regarding the antimony division, prices decreased approximately 13% in the first six months of 2019 compared to the same period in the prior year.  For the six months ended June 30, 2019, the average sale price for antimony was approximately $3.73 per pound compared to a price of $4.28 per pound for the six months ended June 30, 2018. During 2018, we endured supply interruptions from our North American supplier, but shipments have resumed, although at a lower level than years prior to 2018. A new supply agreement negotiated with our North American supplier in 2017 has helped us with cash flow from our antimony division in 2018, but falling prices for antimony have caused us to see a need for a better supply agreement in 2019.
 
In 2017, we reduced costs for labor at the Mexico locations which has resulted in a lower overall production costs in Mexico and we adjusted operating approaches at Madero that resulted in decreased operating costs for fuel, natural gas, electricity, and reagents for 2018 and 2019. In June of 2019, we again reached agreement with our miners in Mexico to reduce labor costs, and we completed installation of one of the large rotating furnaces (LRFs) we obtained from the Lanxess transaction, which has resulted in lower operating costs. The Company’s 2019 plan involves ramping up production at our antimony properties in Mexico, and installing additional LRFs obtained from Lanxess. Our expectations are that in the second half of 2019 we can substantially increase the antimony output from our Mexican properties from the 2018 production. We are producing and selling antimony metal directly from Mexico to customers which will save us approximately $0.38 per pound in processing costs and freight. In addition, a new leach circuit expected to come on line during 2019 in Mexico will result in more extraction of precious metals. The portion of the precious metals recovery system at the Madero smelter is complete and the cyanide leach circuit being built at the Puerto Blanco plant is expected to be completed and tested in the third quarter of 2019. We expect to be receiving income from the production of precious metals some time during the fourth quarter of 2019. We believe that with the lower cost per pound due to increased production and the savings from shipping metal directly from
 
 
5
 
 
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 
1.
Basis of Presentation, Continued:
 
Going Concern Consideration, continued
 
Mexico, we will have positive cash flow for Mexican antimony production by the end of the year and that we will be selling precious metals produced from Los Juarez before the end of 2019. Our orders for antimony were slow during the latter part of the second quarter of 2019, which we believe was caused by the uncertainties of trade with China.
 
Over the past several years, the Company has been able to make required principal payments on its debt from cash generated from operations without the need for additional borrowings or selling shares of its common stock. The Company plans to continue keeping current on its debt payments in 2019 through cash flows from operations while we continue with the expansion of our Mexican operation. As of August 14, 2019, we have received payment and are in the process of completing a common stock private placement for $444,160 to complete the precious metals circuit at our Puerto Blanco milling facility, and to make cost saving repairs at our Montana smelter. Management believes that the actions taken to increase our capital, and to increase production and revenue from both antimony and precious metals, along with a reduction in production costs, will enable the Company to meet its obligations for the next twelve months.
 
2. 
Developments in Accounting Pronouncements
 
Accounting Standards Updates Adopted
 
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02 Leases (Topic 842).  The update modified the classification criteria and requires lessees to recognize the assets and liabilities on the balance sheet for most leases.  The update was effective for fiscal years beginning after December 15, 2018, with early adoption permitted.  Adoption of this update as of January 1, 2019 did not have a material impact on the Company’s consolidated financial statements.
 
In June 2018, the FASB issued ASU No. 2018-07 Compensation - Stock Compensation (Topic 718):  Improvements to Nonemployee Share-Based Payment Accounting.  The update involves simplification of several aspects of accounting for nonemployee share-based payment transactions by expanding the scope of Topic 718 to include nonemployee awards.  The update was effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted.  Adoption of this update as of January 1, 2019 did not have a material impact on the Company’s consolidated financial statements.
 
Accounting Standards Updates to Become Effective in Future Periods
 
In August 2018, the FASB issued ASU No. 2018-13 Fair Value Measurement (Topic 820):  Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.  The update removes, modifies and makes additions to the disclosure requirements on fair value measurements.  The update is effective for fiscal years beginning after December 15, 2019, with early adoption permitted.  Management is evaluating the impact of this update on the Company’s fair value measurement disclosures.
 
 
6
 
 
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 
3. 
Income (Loss) Per Common Share
 
Basic earnings per share is calculated by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated based on the weighted average number of common shares outstanding during the period plus the effect of potentially dilutive common stock equivalents, including warrants to purchase the Company's common stock and convertible preferred stock.
 
For the three and six months ended June 30, 2019 and 2018, the potentially dilutive common stock equivalents not included in the calculation of diluted earnings per share as their effect would have been anti-dilutive are as follows:
 
 
 
June 30,
2019
 
 
June 30,
2018
 
Warrants
  250,000 
  250,000 
Convertible preferred stock
  1,751,005 
  1,751,005 
Total possible dilution
  2,001,005 
  2,001,005 
 
4. 
Revenue Recognition
 
Our products consist of the following:
Antimony: includes antimony oxide, sodium antimonate, antimony trisulfide, and antimony metal
Zeolite: includes coarse and fine zeolite crushed in various sizes
Precious Metals: includes unrefined and refined gold and silver
 
For our antimony and zeolite products, revenue is recognized upon the completion of the performance obligation which is met when the transaction price can be reasonably estimated and revenue is recognized generally at the time when risk is transferred. We have determined the performance obligation is met and title is transferred either upon shipment from our warehouse locations or upon receipt by the customer as specified in individual sales orders. The performance obligation is met because at that time, 1) legal title is transferred to the customer, 2) the customer has accepted the product and obtained the ability to realize all of the benefits from the product, 3) the customer has the significant risks and rewards of ownership to it, 4) it is very unlikely product will be rejected by the customer upon physical receipt, and 5) we have the right to payment for the product. Shipping costs related to the sales of antimony and zeolite products are recorded to cost of sales as incurred. For zeolite products, royalty expense due a third party by the Company is also recorded to cost of sales upon sale in accordance with terms of underlying royalty agreements.
 
For sales of precious metals, the performance obligation is met, the transaction price is known, and revenue is recognized at the time of transfer of control of the agreed-upon metal quantities to the customer. Refining and shipping costs related to sales of precious metals are recorded to cost of sales as incurred.
 
Sales of products for the three and six month periods ended June 30, 2019 and 2018 were as follows:
 
 
 
Three Months Ended
 
 
Six Months Ended
 
 
 
June 30,
 
 
June 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
Antimony
 $1,507,588 
 $1,492,520 
 $3,213,411 
 $3,174,333 
Zeolite
  704,172 
  682,534 
  1,430,187 
  1,373,240 
Precious metals
  60,523 
  81,293 
  85,050 
  141,703 
 
 $2,272,283 
 $2,256,347 
 $4,728,648 
 $4,689,276 
 
 
7
 
 
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 
4. 
Revenue Recognition, Continued:
 
The following is sales information by geographic area based on the location of customers for the three and six-month periods ended June 30, 2019 and 2018
 
 
 
Three Months Ended
 
 
Six Months Ended
 
 
 
June 30,
 
 
June 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
United States
 $1,819,707 
 $1,878,244 
 $3,928,276 
 $4,125,935 
Canada
  139,523 
  378,103 
  326,780 
  563,341 
Mexico
  313,053 
  - 
  473,592 
  - 
 
 $2,272,283 
 $2,256,347 
 $4,728,648 
 $4,689,276 
 
Sales of products to significant customers were as follows for the three and six month periods ended June 30, 2019 and 2018:
 
 
 
 For the Three Months Ended
 
 
 For the Six Months Ended
 
 
 
June 30,
2019
 
 
June 30,
2018
 
 
June 30,
2019
 
 
June 30,
2018
 
Mexichem Speciality Compounds
 $375,514 
 $669,103 
 $1,059,525 
 $1,397,681 
Nyacol Nanotechnologies
  267,638 
  - 
  404,324 
  - 
Kohler Corporation
  454,943 
  334,778 
  913,037 
  651,550 
Ampacet Corporation
  - 
  - 
  - 
  330,260 
ZEO, Inc.
  - 
  185,730 
  - 
  - 
 
 $1,098,095 
 $1,189,611 
 $2,376,886 
 $2,379,491 
% of Total Revenues
  48.33%
  52.70%
  50.27%
  50.70%
 
Accounts receivable from largest customers were as follows for June 30, 2019 and December 31, 2018:
 
Accounts Receivable
 
June 30,
2019
 
 
December 31,
2018
 
DanaMart
 $- 
 $143,890 
Axens North America Inc.
  25,121 
  34,912 
Earth Innovations Inc.
  - 
  35,967 
Kohler
  123,106 
  - 
Nutreco Canada Inc.
  27,963 
  - 
 
 $176,190 
 $214,769 
% of Total Receivables
  42.25%
  49.00%
 
Our trade accounts receivable balance related to contracts with customers was $417,005 at June 30, 2019 and $438,391 at December 31, 2018. Our products do not involve any warranty agreements and product returns are not typical.
 
We have determined our contracts do not include a significant financing component. For antimony and zeolite sales contracts, we may factor certain receivables and receive final payment within 30 days of the performance obligation being met. For antimony and zeolite receivables not factored, we typically receive payment within 10 days. For precious metals sales, a provisional payment of 75% is typically received within 45 days of the date the product is delivered to the customer. After an exchange of assays, a final payment is normally received within 90 days of product delivery.
 
 
8
 
 
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 
5.
Inventories
 
Inventories at June 30, 2019 and December 31, 2018 consisted primarily of finished antimony products, antimony metal, antimony ore, and finished zeolite products that are stated at the lower of first-in, first-out cost or estimated net realizable value. Finished antimony products, antimony metal and finished zeolite products costs include raw materials, direct labor and processing facility overhead costs and freight. Inventory at June 30, 2019 and December 31, 2018 is as follows:
 
 
 
June 30,
 
 
December 31,
 
 
 
2019
 
 
2018
 
Antimony Metal
 $- 
 $8,127 
Antimony Oxide
  252,128 
  255,782 
Antimony Concentrates
  - 
  2,214 
Antimony Ore
  201,543 
  257,067 
     Total antimony
  453,671 
  523,190 
Zeolite
  270,017 
  232,071 
 
 $723,688 
 $755,261 
 
6.
Accounts Receivable and Due to Factor
 
The Company factors designated trade receivables pursuant to a factoring agreement with LSQ Funding Group L.C., an unrelated factor (the “Factor”).  The agreement specifies that eligible trade receivables are factored with recourse. We submit selected trade receivables to the factor, and receive 83% of the face value of the receivable by wire transfer. The Factor withholds 15% as retainage, and 2% as a servicing fee. Upon payment by the customer, we receive the remainder of the amount due from the factor. The 2% servicing fee is recorded on the consolidated statement of operations in the period of sale to the factor. John Lawrence, CEO, is a personal guarantor of the amount due to Factor. 
 
Trade receivables assigned to the Factor are carried at the original invoice amount less an estimate made for doubtful accounts.  Under the terms of the recourse provision, the Company is required to reimburse the Factor, upon demand, for factored receivables that are not paid on time.  Accordingly, these receivables are accounted for as a secured financing arrangement and not as a sale of financial assets.  The allowance for doubtful accounts (if any) is based on management’s regular evaluation of individual customer’s receivables and consideration of a customer’s financial condition and credit history.  Trade receivables are written off when deemed uncollectible.  Recoveries of trade receivables previously written off are recorded when received.  Interest is not charged on past due accounts.
 
We present the receivables, net of allowances, as current assets and we present the amount potentially due to the Factor as a secured financing in current liabilities.
 
Accounts Receivble
 
June 30,
2019
 
 
December 31,
2018
 
Accounts receivable - non factored
 $403,201 
 $421,867 
Accounts receivable - factored with recourse
  13,804 
  16,524 
      Accounts receivable - net
 $417,005 
 $438,391 
 
 
 
9
 
 
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited), Continued:
 
7. 
Commitments and Contingencies
 
In June of 2013, the Company entered into a lease to mine antimony ore from concessions located in the Wadley Mining district in Mexico. The lease calls for a term of one year and, as of June 30, 2019, requires payments of $10,000 plus a tax of $1,700, per month. The lease is renewable each year with a 15 day notice to the lessor, and agreement of terms. The next lease is scheduled for renewal in June 2020.
 
8. 
Notes Payable to Bank
 
At June 30, 2019 and December 31, 2018, the Company had the following notes payable to bank:
 
 
 
June 30,
 
 
December 31,
 
 
 
2019
 
 
2018
 
Promissory note payable to First Security Bank of Missoula,
 
 
 
 
 
 
bearing interest at 3.150%, payable on demand, collateralized
 
 
 
 
 
 
by a lien on Certificate of Deposit
 $99,999 
 $83,918 
 
    
    
Promissory note payable to First Security Bank of Missoula,
    
    
bearing interest at 3.150%, payable on demand, collateralized
    
    
by a lien on Certificate of Deposit
  99,999 
  99,999 
Total notes payable to the bank
 $199,998 
 $183,917 
 
These notes are personally guaranteed by John C. Lawrence the Company’s Chief Executive Officer and Chairman of the Board of Directors. The maximum amount available for borrowing under each note is $99,999.
 
 
10
 
 
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited), Continued:
 
9. 
Debt
 
Long-Term debt at Jume 30, 2019 and December 31, 2018 is as follows:
 
June 30,
 
 
December 31,
 
 
 
2019
 
 
2018
 
Note payable to Zeo Inc., non interest bearing,
 
 
 
 
 
 
payable in 11 quarterly installments of $8,300 with a final payment of $8,700; (1)
 
 
 
 
 
 
maturing December 2022; uncollateralized.
 $100,000 
 $100,000 
Note payable to Cat Financial Services, bearing interest at 6%;
    
    
payable in monthly installments of $1,300; maturing
    
    
August 2019; collateralized by equipment.
  5,321 
  14,022 
Note payable to Cat Financial Services, bearing interest at 6%;
    
    
payable in monthly installments of $778; maturing
    
    
December 2022; collateralized by equipment.
  30,071 
  34,390 
Note payable to De Lage Landen Financial Services,
    
    
bearing interest at 3.51%; payable in monthly installments of $655;
    
    
maturing September 2019; collateralized by equipment.
  2,005 
  5,851 
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.
  4,569 
  8,371 
Note payable to Phyllis Rice, bearing interest
    
    
at 1%; payable in monthly installments of $2,000; originally maturing
    
    
March 2015; collateralized by equipment.
  6,146 
  12,146 
Obligation payable for Soyatal Mine, non-interest bearing,
    
    
 annual payments of $100,000 or $200,000 through 2020, net of discount
    
    
 of $19,156 and $23,321, respectively. (2)
  618,078 
  639,747 
Obligation payable for Guadalupe Mine, non-interest bearing,
    
    
 annual payments from $60,000 to $149,078 through 2026, net of discount
    
    
of $238,572 and $252,444, respectively. (3)
  913,908 
  918,663 
 
  1,680,098 
  1,733,190 
Less current portion
  (761,663)
  (705,460)
Long-term portion
 $918,435 
 $1,027,730 
 
(1)
Payments starting the fourth quarter of 2019.
 
(2)
At June 30, 2019, the Company has not made $432,069 of principal payments due in previous periods on this note.  At June 30, 2019, all but $47,619 of the balance is classified as a current liability.  The creditor has agreed to accept payments of $2,500 USD per month through June 30, 2020, at which time the parties may agree to an extension of that payment schedule, or modify the payment schedule.  The note holder accepted, and was paid, $7,500 USD as payment for the months of April, May, and June of 2019.
 
(3)
At June 30, 2019, the Company is delinquent in $59,308 of principal payments on this note. At June 30, 2019, the delinquent balance is classified as a current liability.  The Company is currently working with the lenders to modify the payment terms to cure the delinquent status. The Company has not received notice from the lenders indicating default on the loan.
 
 
11
 
 
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited), Continued:
 
9. 
Debt, Continued:
 
At June 30, 2019, principal payments on debt are due as follows:
 
12 Months Ending June 30,
 
Principal Payment
 
 
Discount
 
 
Net
 
2020
 $824,100 
 $(62,437)
 $761,663 
2021
  240,956 
  (48,238)
  192,718 
2022
  191,009 
  (39,188)
  151,821 
2023
  179,735 
  (32,594)
  147,141 
2024
  149,077 
  (25,605)
  123,472 
Thereafter
  333,912 
  (30,629)
  303,283 
 
 $1,918,789 
 $(238,691)
 $1,680,098 
 
10. 
Related Party Transactions
 
During the three and six months ended June 30, 2018, the Chairman of the audit committee and compensation committee received $4,500, and $9,000, respectively, for services performed. No compensation was received during the three and six month periods ended June 30, 2019. See Note 12 for shares of common stock issued to directors.
 
For the three and six months ended June 30, 2019, the Company paid $3,480 and $2,461, respectively, compared to $5,064, and $4,555 for the three and six months ended June 30, 2018, to John Lawrence, our President and Chief Executive Officer, as reimbursement for equipment used by the Company. Mr. Lawrence advanced the Company $227,200 for ongoing operating expenses during the six months ended June 30, 2019. In addition to the loan that was owed to Mr. Lawrence at June 30, 2019, the Company also owed Mr. Lawrence for payroll and other liabilities equal to $129,702 for a total owed to Mr. Lawrence at June 30, 2019 of $356,902.
 
11. 
Income Taxes
 
During the three and six months ended June 30, 2019, and the year ended December 31, 2018, the Company determined that a valuation allowance equal to 100% of any deferred tax asset was appropriate, as management of the Company cannot determine that it is more likely than not the Company will realize the benefit of its net deferred tax asset. The net effect is that the deferred tax asset is fully reserved for at June 30, 2019 and December 31, 2018. Management estimates the effective tax rate at 0% for the current year.
 
12. 
Stockholder’s Equity
 
Issuance of Common Stock for Payable to Board of Directors
 
During the six month period ended June 30, 2019, the Board of Directors was issued a total of 330,183 shares of common stock for $175,000 in directors’ fees that were payable at December 31, 2018. In addition, during the three and six months ended June 30, 2019, the Company accrued $31,250 and $62,500, respectively, in directors’ fees payable that will be paid in common stock.
 
In January 2019, the Company issued Daniel Parks, the Company’s Chief Financial Officer, 200,000 shares of the Company’s common stock with a fair value of $136,000 to retain his services. As part of the agreement, Mr. Parks’ hours worked and financial compensation were reduced.
 
On May 3, 2018, the Board of Directors was issued a total of 739,018 shares of common stock for $175,000 in directors’ fees that were payable at December 31, 2017. In addition during the quarter and six months ended June 30, 2018, the Company accrued $43,750 and $87,500, respectively, in directors’ fees payable that will be paid in common stock.
 
 
12
 
 
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited), Continued:
 
13. 
Plant Acquisition
 
On August 31, 2018, the Company closed a Member Interest and Capital Share Agreement (the “Agreement”) with Great Lakes Chemical Corporation and Lanxess Holding Company US Inc., as the sellers, and the Company as the buyer. Under the Agreement, the Company acquired a subsidiary of the sellers which includes an antimony plant, equipment and land located in Reynosa, Mexico.  The Company disassembed, salvaged and transported the antimony plant and equipment for use in its existing operations in both Mexico and the United States. The project involved moving heavy equipment and was completed in the second quarter of 2019.  In addition, the Company was paid $1,500,000 by the sellers, which was recognized as operating income in the quarter ended September 30, 2018, to assist in the salvage and transport costs of the useable equipment. The transaction was accounted for as an asset acquisition as there was no business associated with the acquired assets. The real property acquired with the plant was sold for $700,000 in November 2018, for which the Company received $300,000 in 2018 and the remaining balance of $400,000 in the three month period ended March 31, 2019.
 
14. 
Business Segments
 
The Company is currently organized and managed by four segments, which represent our operating units: United States antimony operations, Mexican antimony operations, precious metals recovery and United States zeolite operations.
 
The Madero smelter and Puerto Blanco mill at the Company’s Mexico operation produces crude oxide and crude metal that is shipped to Montana for finishing at the Thompson Falls, Montana, plant, or finished antimony metal that is sold directly to customers in the United States. The precious metals recovery plant is operated in conjunction with the antimony processing plant at Thompson Falls, Montana. The zeolite operation produces zeolite near Preston, Idaho. Almost all of the sales of products from the United States antimony and zeolite operations are to customers in the United States.
 
Segment disclosure regarding sales to major customers is located in Note 4.
 
Properties, plants
 
 
 
 
 
 
  and equipment, net:
 
June 30,
2019
 
 
December 31,
2018
 
Antimony
 
 
 
 
 
 
United States
 $1,616,273 
 $1,635,315 
Mexico
  11,779,305 
  11,660,769 
Subtotal Antimony
  13,395,577 
  13,296,084 
Precious metals
  594,850 
  615,719 
Zeolite
  1,263,777 
  1,315,369 
   Total
 $15,254,204 
 $15,227,172 
 
Total Assets:
 
March 31,
2019
 
 
December 31,
2018
 
Antimony
 
 
 
 
 
 
United States
 $2,171,811 
 $2,199,694 
Mexico
  12,453,537 
  12,824,292 
Subtotal Antimony
  14,625,348 
  15,023,986 
Precious metals
  594,850 
  615,719 
Zeolite
  1,899,029 
  1,917,418 
   Total
 $17,119,227 
 $17,557,123 
 
 
13
 
 
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited), Continued:
 
14. 
Business Segments, Continued:
 
 
 
For the Three Months Ended
 
 
For the Six Months Ended
 
 
 
June 30,
2019
 
 
June 30,
2018
 
 
June 30,
2019
 
 
June 30,
2018
 
Capital expenditures:
 
 
 
 
 
 
 
 
 
 
 
 
Antimony
 
 
 
 
 
 
 
 
 
 
 
 
United States
 $1,368 
 $- 
 $2,713 
 $- 
Mexico
  141,797 
  70,892 
  416,703 
  110,977 
Subtotal Antimony
  143,165 
  70,892 
  419,416 
  110,977 
Precious Metals
  6,398 
  - 
  13,152 
  40,988 
Zeolite
  11,447 
  8,691 
  41,010 
  22,423 
   Total
 $161,010 
 $79,583 
 $473,578 
 $174,388 
 
Segment Operations for the three
 
Antimony
 
 
Antimony
 
 
Total
 
 
Precious
 
 
 
 
 
 
 
months ended June 30, 2019
 
USA
 
 
Mexico
 
 
Antimony
 
 
Metals
 
 
Zeolite
 
 
Totals
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 $1,194,535 
 $313,053 
 $1,507,588 
 $60,523 
 $704,172 
 $2,272,283 
 
    
    
    
    
    
    
Depreciation and amortization
 $10,878 
 $149,083 
 $159,961 
 $17,011 
 $46,301 
 $223,273 
 
    
    
    
    
    
    
Income (loss) from operations
  (56,245)
  (629,422)
  (685,667)
  43,513 
  181,736 
  (460,418)
 
    
    
    
    
    
    
Other income (expense):
  (4,420)
  (18,051)
  (22,471)
  - 
  (3,150)
  (25,621)
 
    
    
    
    
    
    
NET INCOME (LOSS)
 $(60,665)
 $(647,473)
 $(708,138)
 $43,513 
 $178,586 
 $(486,039)
 
Segment Operations for the three
 
Antimony
 
 
Antimony
 
 
Total
 
 
Precious
 
 
 
 
 
 
 
months ended June 30, 2018
 
USA
 
 
Mexico
 
 
Antimony
 
 
Metals
 
 
Zeolite
 
 
Totals
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 $1,492,520 
 $- 
 $1,492,520 
 $81,293 
 $682,534 
 $2,256,347 
 
    
    
    
    
    
    
Depreciation and amortization
 $13,170 
 $97,844 
 $111,014 
 $17,011 
 $47,072 
 $175,097 
 
    
    
    
    
    
    
Income (loss) from operations
  391,895 
  (808,575)
  (416,680)
  114,801 
  141,826 
  (160,053)
 
    
    
    
    
    
    
Other income (expense):
  (1,938)
  41,630 
  39,692 
  - 
  (2,424)
  37,268 
 
    
    
    
    
    
    
NET INCOME (LOSS)
 $389,957 
 $(766,945)
 $(376,988)
 $114,801 
 $139,402 
 $(122,785)
 
 
14
 
 
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited), Continued:
 
14.            
Business Segments, Continued:
 
Segment Operations for the six
 
Antimony
 
 
Antimony
 
 
Total
 
 
Precious
 
 
 
 
 
 
 
months ended June 30, 2019
 
USA
 
 
Mexico
 
 
Antimony
 
 
Metals
 
 
Zeolite
 
 
Totals
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 $2,739,819 
 $473,592 
 $3,213,411 
 $85,050 
 $1,430,187 
 $4,728,648 
 
    
    
    
    
    
    
Depreciation and amortization
 $21,755 
 $298,168 
 $319,923 
 $34,021 
 $92,602 
 $446,546 
 
    
    
    
    
    
    
Income (loss) from operations
  (108,341)
  (1,432,098)
  (1,540,439)
  51,029 
  345,225 
  (1,144,185)
 
    
    
    
    
    
    
Other income (expense):
  (5,787)
  (36,338)
  (42,125)
  - 
  (7,189)
  (49,314)
 
    
    
    
    
    
    
NET INCOME (LOSS)
 $(114,128)
 $(1,468,436)
 $(1,582,564)
 $51,029 
 $338,036 
 $(1,193,499)
 
Segment Operations for the six
 
Antimony
 
 
Antimony
 
 
Total
 
 
Precious
 
 
 
 
 
 
 
months ended June 30, 2018
 
USA
 
 
Mexico
 
 
Antimony
 
 
Metals
 
 
Zeolite
 
 
Totals
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 $3,174,333 
 $- 
 $3,174,333 
 $141,703 
 $1,373,240 
 $4,689,276 
 
    
    
    
    
    
    
Depreciation and amortization
 $26,380 
 $297,366 
 $323,746 
 $34,021 
 $94,892 
 $452,659 
 
    
    
    
    
    
    
Income (loss) from operations
  589,934 
  (1,551,357)
  (961,423)
  107,682 
  293,919 
  (559,822)
 
    
    
    
    
    
    
Other income (expense):
  (2,716)
  (29,488)
  (32,204)
  - 
  (5,199)
  (37,403)
 
    
    
    
    
    
    
NET INCOME (LOSS)
 $587,218 
 $(1,580,845)
 $(993,627)
 $107,682 
 $288,720 
 $(597,225)
 
15. Subsequent Events
 
On August 14, 2019, we have received payment and are in the process of completing the issuance of approximately 925,333 shares of our common stock for $444,160. Each share includes one-half warrant to purchase one share of stock at $0.65 per share for three years from the date of issuance.
 
 
15
 
 
ITEM 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition
 
General
 
Certain matters discussed are forward-looking statements that involve risks and uncertainties, including the impact of antimony prices and production volatility, changing market conditions and the regulatory environment and other risks. Actual results may differ materially from those projected. These forward-looking statements represent our judgment as of the date of this filing. We disclaim, however, any intent or obligation to update these forward-looking statements.
 
Antimony - Combined USA
 
Three Months Ended
 
 
Three Months Ended
 
 
Six Months Ended
 
 
Six Months Ended
 
   and Mexico
 
June 30,
2019
 
 
June 30,
2018
 
 
June 30,
2019
 
 
June 30,
2018
 
Lbs of Antimony Metal USA
  175,823 
  161,044 
  409,419 
  424,664 
Lbs of Antimony Metal Mexico:
  242,306 
  165,214 
  451,858 
  317,558 
   Total Lbs of Antimony Metal Sold
  418,129 
  326,258 
  861,277 
  742,222 
Average Sales Price/Lb Metal
 $3.61 
 $4.57 
 $3.73 
 $4.28 
Net loss/Lb Metal
 $(1.69)
 $(1.16)
 $(1.84)
 $(1.34)
 
    
    
    
    
Gross antimony revenue
 $1,507,588 
 $1,492,520 
 $3,213,411 
 $3,174,333 
 
    
    
    
    
Cost of sales - domestic
  (859,301)
  (834,627)
  (1,643,463)
  (2,024,663)
Cost of sales - Mexico
  (1,065,791)
  (795,125)
  (2,245,594)
  (1,511,093)
Operating expenses
  (268,163)
  (279,448)
  (864,794)
  (600,000)
Non-operating expenses
  (22,471)
  39,692 
  (42,125)
  (32,204)
 
  (2,215,726)
  (1,869,508)
  (4,795,976)
  (4,167,960)
 
    
    
    
    
Net loss - antimony
  (708,138)
  (376,988)
  (1,582,565)
  (993,627)
Depreciation,& amortization
  159,961 
  111,014 
  319,923 
  323,746 
   EBITDA - antimony
 $(548,177)
 $(265,974)
 $(1,262,642)
 $(669,881)
 
    
    
    
    
Precious Metals
    
    
    
    
Ounces sold
    
    
    
    
  Gold
  18 
  15 
  24 
  29 
  Silver
  3,408 
  4,960 
  5,133 
  9,841 
 
    
    
    
    
Gross precious metals revenue
 $60,523 
 $81,293