UNITED STATES ANTIMONY CORP - Quarter Report: 2019 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

 

 

For the quarterly period ended June 30, 2019

 

 

 

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

  

	Page
PART I – FINANCIAL INFORMATION
Item 1: Financial Statements (unaudited)	1-15
Item 2: Management’s Discussion and Analysis of Results of Operations and Financial Condition	16-19
Item 3: Quantitative and Qualitative Disclosure about Market Risk	20
Item 4: Controls and Procedures	20
PART II – OTHER INFORMATION
Item 1: Legal Proceedings	21
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3: Defaults upon Senior Securities	21
Item 4: Mine Safety Disclosures	21
Item 5: Other Information	21
Item 6: Exhibits and Reports on Form 8-K	21
SIGNATURE	23
CERTIFICATIONS	24-29

 

[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.

 

 

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.

 

 

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.

 

 

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.

 

 

PART I - FINANCIAL INFORMATION, CONTINUED:

 

United States Antimony Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

 

 

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

 

 

United States Antimony Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

 

 

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.

 

 

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.

 

 

United States Antimony Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

 

 

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

 

 

Our products consist of the following:

 

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

 

 

United States Antimony Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

 

 

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.

 

 

United States Antimony Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

 

 

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

 

 

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

 

 

 

United States Antimony Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited), Continued:

 

 

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.

 

 

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.

 

 

United States Antimony Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited), Continued:

 

 

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

 

 

 

 

United States Antimony Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited), 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

 

 

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.

 

 

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.

 

 

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.

 

 

United States Antimony Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited), Continued:

 

 

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.

 

 

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