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

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

 

For the quarterly period ended March 31, 2019

 

 

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 May 15, 2019, the registrant had outstanding 68,427,171 shares of par value $0.01 common stock.

 

 

UNITED STATES ANTIMONY CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR THE PERIOD

ENDED MARCH 31, 2019

(UNAUDITED)

 

TABLE OF CONTENTS

 

	Page
PART I – FINANCIAL INFORMATION
Item 1: Financial Statements (unaudited)	1-14
Item 2: Management’s Discussion and Analysis of Results of Operations and Financial Condition	15-18
Item 3: Quantitative and Qualitative Disclosure about Market Risk	19
Item 4: Controls and Procedures	19
PART II – OTHER INFORMATION
Item 1: Legal Proceedings	20
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3: Defaults upon Senior Securities	20
Item 4: Mine Safety Disclosures	20
Item 5: Other Information	20
Item 6: Exhibits and Reports on Form 8-K	20
SIGNATURE	21
CERTIFICATIONS

 

[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
	March 31,	December 31,
	2019	2018
Current assets:
Cash and cash equivalents	$43,504	$56,650
Certificates of deposit	253,552	252,954
Accounts receivable	335,186	438,391
Inventories	887,648	755,261
Note receivable - sale of land	-	400,000
Total current assets	1,519,890	1,903,256
Properties, plants and equipment, net	15,316,467	15,227,172
Restricted cash for reclamation bonds	57,247	57,247
IVA receivable and other assets	403,466	369,448
Total assets	$17,297,070	$17,557,123
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Checks issued and payable	$45,637	$46,482
Accounts payable	2,045,402	1,926,320
Due to factor	5,440	16,524
Accrued payroll, taxes and interest	262,463	159,037
Other accrued liabilities	378,010	353,911
Payables to related party	247,731	93,567
Deferred revenue	32,400	32,400
Notes payable to bank	113,125	183,917
Long-term debt, current portion, net of discount	725,317	705,460
Total current liabilities	3,855,525	3,517,618
Long-term debt, net of discount and current portion	968,443	1,027,730
Hillgrove advances payable	1,134,221	1,134,221
Stock payable to directors for services	206,250	175,000
Asset retirement obligations and accrued reclamation costs	279,257	277,720
Total liabilities	6,443,696	6,132,289
Commitments and contingencies (Note 4, and 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;
68,427,171 and 68,227,171 shares issued and outstanding, respectively	684,271	682,271
Additional paid-in capital	36,540,874	36,406,874
Accumulated deficit	(26,398,559)	(25,691,099)
Total stockholders' equity	10,853,374	11,424,834
Total liabilities and stockholders' equity	$17,297,070	$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
	March 31, 2019	March 31, 2018
REVENUES	$2,456,365	$2,432,929
COST OF REVENUES	2,525,418	2,488,017
GROSS PROFIT (LOSS)	(69,053)	(55,088)
OPERATING EXPENSES:
General and administrative	205,174	150,831
Salaries and benefits	232,668	91,446
Other operating expenses	76,130	-
Professional fees	100,742	102,404
TOTAL OPERATING EXPENSES	614,714	344,681
INCOME (LOSS) FROM OPERATIONS	(683,767)	(399,769)
OTHER INCOME (EXPENSE):
Interest income	741	562
Interest expense	(22,488)	(23,833)
Foreign exchange gain (loss)	-	(50,000)
Factoring expense	(1,946)	(1,400)
TOTAL OTHER INCOME (EXPENSE)	(23,693)	(74,671)
NET LOSS	(707,460)	(474,440)
Preferred dividends	(12,162)	(12,162)
Net loss available to common stockholders	$(719,622)	$(486,602)
Net income (loss) per share of
common stock:
Basic and diluted	$(0.01)	$(0.01)
Weighted average shares outstanding:
Basic	68,394,204	67,488,063
Diluted	68,394,204	67,488,063

 

 

United States Antimony Corporation and Subsidiaries

Consolidated Statement of Changes in Stockholders' Equity (Unaudited)

For the periods ended March 31, 2019 and and March 31, 2018

					Additional		Total
	Total Preferred Stock		Common Stock		Paid	Accumulated	Stockholders'
Quarter ended March 31, 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
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

					Additional		Total
	Total Preferred Stock		Common Stock		Paid	Accumulated	Stockholders'
Quarter ended March 31, 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
Net loss						(474,440)	(474,440)
Balances, March 31, 2018	2,678,909	$26,788	67,488,153	$674,881	$36,239,264	$(27,038,764)	$9,902,169

 

  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 three months ended
Cash Flows From Operating Activities:	March 31, 2019	March 31, 2018
Net income (loss)	$(707,460)	$(474,440)
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
Depreciation and amortization	223,273	277,562
Amortization of debt discount	18,037	21,120
Accretion of asset retirement obligation	1,537	1,537
Common stock issued for services	136,000	-
Common stock payable for directors fees	31,250	43,750
Foreign exchange loss	-	50,000
Other, net	(598)	(444)
Change in:
Accounts receivable	103,205	(49,967)
Inventories	(132,387)	273,615
Other current assets	-	4,697
IVA receivable and other assets	(34,018)	(45,609)
Accounts payable	119,082	16,202
Accrued payroll, taxes and interest	103,426	10,015
Other accrued liabilities	24,099	27,271
Deferred revenue	-	116
Payables to related party	28,964	8,236
Net cash provided (used) by operating activities	(85,590)	163,661
Cash Flows From Investing Activities:
Payment received on note receivable - sale of land	400,000	-
Purchase of properties, plants and equipment	(312,568)	(94,805)
Net cash provided (used) by investing activities	87,432	(94,805)
Cash Flows From Financing Activities:
Change in checks issued and payable	(845)	(17,203)
Net borrowing from factor	(11,084)	1,870
Advance from related party	125,200	75,000
Principal paid on notes payable to bank	(70,792)	(95,448)
Principal payments of net debt	(57,467)	(48,681)
Net cash provided (used) by financing activities	(14,988)	(84,462)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS AND RESTRICTED CASH	(13,146)	(15,606)
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	$100,751	$75,726

 

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 month period ended March 31, 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 March 31, 2019, the Company’s consolidated financial statements show negative working capital of approximately $2.3 million and accumulated deficit of approximately $26.4 million.  In addition, the Company has a net loss of $707,460 for the first quarter of 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 Company’s antimony operations and in particular the production costs incurred in Mexico.

 

Regarding the antimony division, prices were stable or decreased slightly during the first quarter of 2019 compared to the same quarter in the prior year, but orders have been strong. For the quarter ended March 31, 2019, the average sale price for antimony is approximately $3.85 per pound compared to a price of $4.04 per pound for the quarter ended March 31, 2018. In November 2017, the Company renegotiated its domestic sodium antimonite supply agreement with our North American supplier resulting in a lower cost per antimony per pound of approximately $0.44. During 2018, we endured supply interruptions from our North American supplier, but normal supply quantities have resumed since 2018. The new supply agreement with our North American supplier has helped us with cash flow from our antimony division in 2018 and into 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. The Company’s 2019 plan involves ramping up production at its antimony properties in Mexico. Our expectations are that in 2019 we can double the antimony output for 2018. We also are planning to produce and sell 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 in the second quarter of 2019. We expect to be receiving income from the production of precious metals some time during the third quarter of 2019. We believe that with the lower cost per pound due to increased production and the savings from shipping metal directly from 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.

 

 

United States Antimony Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

 

 

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. Management believes that the actions taken 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 months ended March 31, 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:

 

	March 31, 2019	March 31, 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 month periods ended March 31, 2019 and 2018, were as follows:

 

	Three Months Ended
	March 31,
	2019	2018
Antimony	$1,705,823	$1,681,812
Zeolite	726,015	690,707
Precious metals	24,527	60,410
	$2,456,365	$2,432,929

 

 

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 month periods ended March 31, 2019 and 2018:

 

	Three Months Ended
	March 31,
	2019	2018
United States	$2,108,569	$2,247,691
Canada	187,257	185,238
Mexico	160,539	-
	$2,456,365	$2,432,929

 

Sales of products to significant customers were as follows for the three month periods ended March 31, 2019 and 2018:

 

Sales to Three	For the Period Ended
Largest Customers	March 31, 2019	March 31, 2018
Kohler Corporation	$458,094	$316,772
Ampacet Corporation	-	184,142
East Penn Manufacturing	157,328	-
Mexichem Speciality Compounds	684,011	728,578
	$1,299,433	$1,229,492
% of Total Revenues	52.90%	50.50%

 

Accounts receivable from largest customers were as follows at March 31, 2019 and December 31, 2018:

 

Three Largest
Accounts Receivable	March 31, 2019	December 31, 2018
DanaMart	$-	$143,890
Axens North America Inc.	64,500	34,912
Earth Innovations Inc.	-	35,967
Commerce Industrial Chemical	36,652	-
Nutreco Canada Inc.	27,736	-
	$128,888	$214,769
% of Total Receivables	38.50%	49.00%

 

 

  

Our trade accounts receivable balance related to contracts with customers was $335,186 at March 31, 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.

 

Inventories at March 31, 2019 and December 31, 2018 consisted primarily of finished antimony products, antimony metal, antimony ore, and finished zeolite products that are stated at weighted average lower of 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 March 31, 2019 and December 31, 2018, is as follows:

 

	March 31,	December 31,
	2019	2018
Antimony Metal	$158,532	$8,127
Antimony Oxide	252,704	255,782
Antimony Concentrates	-	2,214
Antimony Ore	269,627	257,067
Total antimony	680,863	523,190
Zeolite	206,785	232,071
	$887,648	$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	March 31, 2019	December 31, 2018
Accounts receivable - non factored	$329,746	$421,867
Accounts receivable - factored with recourse	5,440	16,524
Accounts receivable - net	$335,186	$438,391

 

 

United States Antimony Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

 

 

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 March 31, 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 renewal is scheduled for renewal in June 2019.

 

 

At March 31, 2019 and December 31, 2018, the Company had the following notes payable to bank:

 

	March 31,	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	$13,126	$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	$113,125	$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 March 31, 2019 and December 31, 2018 is as follows:	March 31,	December 31,
	2019	2018
Note payable to Zeo Inc., non interest bearing, payable in 11 quarterly installments of $8,300 with a final payment of $8,700; maturing December 2022; uncollateralized.	$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.	9,088	14,022
Note payable to Cat Financial Services, bearing interest at 6%; payable in monthly installments of $778; maturing December 2022; collateralized by equipment.	31,940	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.	3,294	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.	5,844	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.	9,146	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. In addition, the Company is deliquent on payments of $392,069 related to this loan.	623,913	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. In addition, the Company is delinquent on payments of $32,539 related to this loan.	910,535	918,663
	1,693,760	1,733,190
Less current portion	(725,317)	(705,460)
Long-term portion	$968,443	$1,027,730

 

At March 31, 2019, principal payments on debt are due as follows:

 

3 Months Ending March 31,	Principal Payment	Discount	Net
2020	$791,908	$(66,591)	$725,317
2021	264,928	(51,140)	213,788
2022	190,396	(40,765)	149,631
2023	182,996	(34,266)	148,730
2024	149,078	(27,378)	121,700
Thereafter	371,181	(36,587)	334,594
	$1,950,487	$(256,727)	$1,693,760

 

 

 

United States Antimony Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited), Continued:

 

 

During the three months ended March 31, 2019 and 2018, the Chairman of the audit committee and compensation committee received $0 and $4,500, respectively, for services performed. See Note 11 for shares of common stock issued to directors.

 

During the three months ended March 31, 2019 and 2018, the Company paid $1,584 and $2,461, respectively, to John Lawrence, our President and Chief Executive Officer, as reimbursement for equipment used by the Company. Mr. Lawrence advanced the Company $125,200 for ongoing operating expenses during the quarter ended March 31, 2019.

 

 

Issuance of Common Stock for Payable to Board of Directors

 

During the quarters ended March 31, 2019 and March 31, 2018, the Company accrued $31,250 and $43,750, 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 have been reduced.

 

 

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 is disassembling, salvaging and transporting the antimony plant and equipment for use in its existing operations in both Mexico and the United States. The project involves moving heavy equipment and could take up to a year.  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. As of March 31, 2019, we have substantially completed the demolition and transportation of the salvaged equipment. 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 brings antimony up to an intermediate stage, which may be sold directly or shipped to the United States operation for finishing at the Thompson Falls, Montana plant. 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.

 

 

United States Antimony Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited), Continued:

 

 

Segment disclosure regarding sales to major customers is located in Note 4.

 

Properties, plants and equipment, net:	March 31, 2019	December 31, 2018
Antimony
United States	$1,625,783	$1,635,315
Mexico	11,786,592	11,660,769
Subtotal Antimony	13,412,375	13,296,084
Precious metals	605,462	615,719
Zeolite	1,298,630	1,315,369
Total	$15,316,467	$15,227,172

Total Assets:	March 31, 2019	December 31, 2018
Antimony
United States	$2,183,085	$2,199,694
Mexico	12,616,734	12,824,292
Subtotal Antimony	14,799,819	15,023,986
Precious metals	605,462	615,719
Zeolite	1,891,789	1,917,418
Total	$17,297,070	$17,557,123

 

	For the three months ended
Capital expenditures:	March 31, 2019	March 31, 2018
Antimony
United States	$1,345	$-
Mexico	274,906	40,085
Subtotal Antimony	276,251	40,085
Precious Metals	6,754	40,988
Zeolite	29,563	13,732
Total	$312,568	$94,805

 

 

United States Antimony Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited), Continued:

 

 

Segment Operations for the three	Antimony	Antimony	Total	Precious	Bear River
months ended March 31, 2019	USAC	Mexico	Antimony	Metals	Zeolite	Totals
Total revenues	$1,545,284	$160,539	$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)

Segment Operations for the three	Antimony	Antimony	Total	Precious	Bear River
months ended March 31, 2018	USAC	Mexico	Antimony	Metals	Zeolite	Totals
Total revenues	$1,681,812	$-	$1,681,812	$60,410	$690,707	$2,432,929
Depreciation and amortization	13,209	149,004	162,213	67,529	47,820	277,562
Income (loss) from operations	198,039	(742,781)	(544,742)	(7,119)	152,092	(399,769)
Other income (expense):	(778)	(71,120)	(71,898)	-	(2,773)	(74,671)
NET INCOME (LOSS)	$197,261	$(813,901)	$(616,640)	$(7,119)	$149,319	$(474,440)

 

 

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	1st Quarter	1st Quarter
and Mexico	2019	2018
Lbs of Antimony Metal USA	233,596	263,620
Lbs of Antimony Metal Mexico:	209,552	152,344
Total Lbs of Antimony Metal Sold	443,148	415,964
Average Sales Price/Lb Metal	$3.85	$4.04
Net loss/Lb Metal	$(1.97)	$(1.48)
Gross antimony revenue - net of discount	$1,705,823	$1,681,812
Cost of sales	(1,963,964)	(1,906,002)
Operating expenses	(596,631)	(320,552)
Non-operating expenses	(19,654)	(71,898)
	(2,580,249)	(2,298,452)
Net loss - antimony	(874,426)	(616,640)
Depreciation,& amortization	159,961	162,213
EBITDA - antimony	$(714,465)	$(454,427)
Precious Metals
Ounces sold
Gold	6	12
Silver	1,724	4,073
Gross precious metals revenue	$24,527	$60,410
Production costs, royalties, and shipping costs	(17,011)	(67,529)
Net income (loss) - precious metals	7,516	(7,119)
Depreciation	17,011	67,529
EBITDA - precious metals	$24,527	$60,410
Zeolite
Tons sold	3,841	3,753
Average Sales Price/Ton	$189.02	$184.04
Net income/Ton	$41.51	$39.79
Gross zeolite revenue	$726,015	$690,707
Cost of sales	(544,443)	(514,486)
Operating expenses	(18,083)	(24,129)
Non-operating expenses	(4,039)	(2,773)
Net income - zeolite	159,450	149,319
Depreciation	46,301	47,820
EBITDA - zeolite	$205,751	$197,139
Company-wide
Gross revenue	$2,456,365	$2,432,929
Production costs	(2,525,418)	(2,488,017)
Operating expenses	(614,714)	(344,681)
Non-operating expenses	(23,693)	(74,671)
Net income (loss)	(707,460)	(474,440)
Depreciation,& amortization	223,273	277,562
EBITDA	$(484,187)	$(196,878)

 

 

PART I - FINANCIAL INFORMATION, CONTINUED:

 

 

Company-Wide

 

For the first quarter of 2019, we recognized a net loss of $707,460, on sales of $2,456,365, compared to a net loss of $474,440 in the first quarter of 2018 on sales of $2,432,929. In addition to normal operating costs, the loss in the first quarter of 2019 was primarily due to the one time cost to demolish the Lanxess plant in Reynosa, Mexico ($76,130), an increase in administrative salaries paid by issuance of stock ($136,000), a reduction in precious metals revenue ($35,883), and the cost of the listing on the NYSE ($60,000). The loss in the first quarter of 2018 was primarily due to decrease in the raw materials received from our North American supplier. During 2018, we endured supply interruptions from our North American supplier, but we anticipate that near normal supply quantities will resume for the remainder of 2019.

 

For the first quarter of 2019, EBITDA was a negative $484,187 compared to a negative $196,878 for the same period of 2018.

 

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, $31,250 for director compensation, $136,000 for stock issued for employment, and $1,787 for other items.

 

Net non-cash expense items totaled $343,969 for the first quarter of 2018 and included $277,562 for depreciation and amortization, $21,120 for amortization of debt discount, $43,750 for director compensation and $1,537 for other items.

 

For the first quarter of 2019, general and administrative expenses were $205,174 compared to $150,831 for the same period of 2018.

 

Antimony

 

For the three months ended March 31, 2019, we sold 443,148 pounds of antimony compared to 415,964 pounds for the three months ended March 31, 2018. The raw material received from our North American supplier decreased by approximately 30,000 pounds for the three months ended March 31, 2019, compared to the same quarter for 2018. We had a increase in raw material of approximately 57,000 pounds from Mexico for the first quarter of 2019 compared to the same quarter for 2018.

 

The average sales price of antimony during the three months ended March 31, 2019 was $3.85 per pound compared to $4.04 during the same period in 2018.

 

The cyanide leach circuit at Puerto Blanco has been permitted, and construction of the leach circuit is underway and is nearly complete. The largest project was the construction of the tailings pond, and it is ready for a liner.

 

At the Wadley mine, production is being increased with more miners and load haul dump equipment. The use of pneumatic hammers is planned in lieu of explosives. We believe that we can double our production from this mine in 2019.

 

The Guadalupe mine has started production, and will be shipping direct shipping ore to our Madero smelter during 2019.

 

The Soyatal mine will be started once we receive an explosives permit.