Item 15. Exhibits and Reports on Form 8-K
Exhibit Number
Description
3.01
Articles of
Incorporation of USAC, filed as an exhibit to USAC's Form 10-KSB
for the fiscal year ended December 31, 1995 (File
No.001-08675), are incorporated herein by this
reference.
Amended and
Restated Bylaws of USAC, filed as an exhibit to amendment No. 2 to
USAC's Form SB-2 Registration Statement (Reg. No. 333-45508) are
incorporated herein by this reference.
3.03
Articles of
Correction of Restated Articles of Incorporation of
USAC.
Articles of
Amendment to the Articles of Incorporation of United States
Antimony Corporation, filed as an exhibit to USAC's Form 10-QSB for
the quarter ended September 30, 2002 (File No. 001-08675), are
incorporated herein by this reference.
Key Employees 2000
Stock Plan, filed as an exhibit to USAC's Form S-8 Registration
Statement filed on March 10, 2000 (File No. 333-32216) is
incorporated herein by this reference.
Documents
filed with USAC's Annual Report on Form 10-KSB for the year ended
December 31, 1995 (File No. 001-08675), are incorporated herein by
this reference:
10.10
Yellow Jacket
Venture Agreement
10.11
Agreement Between
Excel-Mineral USAC and Bobby C. Hamilton
10.13
Columbia-Continental
Lease Agreement Revision
10.14
Settlement
Agreement with Excel Mineral Company
10.15
Memorandum
Agreement
10.16
Termination
Agreement
10.17
Amendment to
Assignment of Lease (Geosearch)
10.18
Series
B Stock Certificate to Excel-Mineral Company, Inc.
10.19
Division Order and
Purchase and Sale Agreement
10.20
Inventory and Sales
Agreement
10.21
Processing
Agreement
10.22
Release and
settlement agreement between Bobby C. Hamilton and United States
Antimony Corporation
10.23
Columbia-Continental
Lease Agreement
10.24
Release of
Judgment
10.25
Covenant Not to
Execute
10.26
Warrant Agreements
filed as an exhibit to USAC's Annual Report on Form 10-KSB for the
year ended December 31, 1996 (File No. 001-08675), are incorporated
herein by this reference
Letter from EPA,
Region 10 filed as an exhibit to USAC's Quarterly Report on Form
10-QSB for the quarter ended September 30, 1997 (File No.
001-08675) is incorporated herein by this reference
Warrant Agreements
filed as an exhibit to USAC's Annual Report on Form 10-KSB for the
year ended December 31, 1997 (File No. 001-08675) are incorporated
herein by this reference
Answer,
Counterclaim and Third-Party Complaint filed as an exhibit to
USAC's Quarterly Report on Forms 10-QSB for the quarter ended
September 30, 1998 (File No. 001-08675) is incorporated herein by
this reference
Documents
filed with USAC's Annual Report on Form 10-KSB for the year ended
December 31, 1998 (File No. 001-08675), are incorporated herein by
this reference:
Warrant
Issue-Al W. Dugan
Documents
filed with USAC's Quarterly Report on Form 10-QSB for the quarter
ended March 31, 1999 (File No. 001-08675) is incorporated herein by
this reference:
10.33
Warrant
Issue-John C. Lawrence
10.34
PVS
Termination Agreement
Documents
filed as an exhibit to USAC's Form 10-KSB for the year ended
December 31, 1999 (File No. 001-08675) are incorporated herein by
this reference:
Maguire
Settlement Agreement
Warrant
Issue-Carlos Tejada
Warrant
Issue-Al W. Dugan
Memorandum of
Understanding with Geosearch Inc.
Factoring Agreement-Systran Financial Services Company
Mortgage to John C.
Lawrence
Warrant
Issue-Al W. Dugan filed as an exhibit to USAC's Quarterly Report on
Form 10-QSB for the quarter ended March 31, 2000 (File No.
001-08675) is incorporated herein by this reference
Agreement between
United States Antimony Corporation and Thomson Kernaghan & Co.,
Ltd. filed as an exhibit to USAC form 10-QSB for the quarter ended
June 30, 2000 (File No. 001-08675) are incorporated herein by this
reference
Settlement
agreement and release of all claims between the Estate of Bobby C.
Hamilton and United States Antimony Corporation filed as an exhibit
to USAC form 10-QSB for the quarter ended June 30, 2000 (File No.
001-08675) are incorporated herein by this reference.
Supply
Contracts with Fortune America Trading Ltd. filed as an exhibit to
USAC form 10-QSB for the quarter ended June 30, 2000 (File No.
001-08675) are incorporated herein by this reference
Amended
and Restated Agreements with Thomson Kernaghan & Co., Ltd,
filed as an exhibit to amendment No. 3 to USAC's Form SB-2
Registration Statement (Reg. No. 333-45508), are incorporated
herein by this reference
Purchase Order from
Kohler Company, filed as an exhibit to amendment No. 4 to USAC's
Form SB-2 Registration Statement (Reg. No. 333-45508) are
incorporated herein by this reference
Documents filed as
an exhibit to USAC's Form 10-QSB for the quarter ended June 30,
2002 (File No. 001-08675) are incorporated herein by this
reference:
Bear
River Zeolite Company Royalty Agreement, dated May 29,
2002
Grant
of Production Royalty, dated June 1, 2002
Assignment of
Common Stock of Bear River Zeolite Company, dated May 29,
2002
Agreement to Issue
Warrants of USA, dated May 29, 2002
Secured
convertible note payable - Delaware Royalty Company dated December
22, 2003*
Convertible note
payable - John C. Lawrence dated December 22, 2003*
Pledge,
Assignment and Security Agreement dated December 22,
2003*
Note
Purchase Agreement dated December 22, 2003*
Rule
13a-14(a)/15d-14(a) Certifications
Certification of
John C. Lawrence*
Section
1350 Certifications
Certification of
John C. Lawrence*
CERCLA
Letter from U.S. Forest Service filed as an exhibit to USAC form
10-QSB for the quarter ended June 30, 2000 (File No. 001-08675) are
incorporated herein by this reference and filed as an exhibit to
USAC's Form 10-KSB for the year ended December 31, 1995 (File No.
1-8675) is incorporated herein by this reference
______________________
* Filed
herewith.
Reports
on Form 8-K
Item
5. Other Events - October 10, 2003.
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(b) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly
authorized.
|
UNITED STATES
ANTIMONY CORPORATION
|
|
|
(Registrant)
|
|
|
|
|
|
Date:
April
2, 2018
|
By:
|
/s/
John C.
Lawrence
|
|
|
|
John C.
Lawrence
|
|
|
|
President,
Director,
and Principal
Executive Officer
|
|
|
|
|
|
|
By:
|
/s/
Daniel L.
Parks
|
|
|
|
Daniel L.
Parks
|
|
|
|
Chief Financial
Officer
|
|
|
|
|
|
|
By:
|
/s/
Alicia
Hill
|
|
|
|
Alicia
Hill
|
|
|
|
Controller
|
|
|
|
|
|
|
|
|
|
Pursuant to the
requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates
indicated.
Date:
April
2, 2018
|
By:
|
/s/
John C.
Lawrence
|
|
|
|
John C.
Lawrence
|
|
|
|
Director and
President
(Principal
Executive)
|
|
|
|
|
|
Date:
April
2, 2018
|
By:
|
/s/
Whitney
Ferer
|
|
|
|
Whitney
Ferer
|
|
|
|
Director
|
|
|
|
|
|
Date:
April
2, 2018
|
By:
|
/s/
Gary
Babbitt
|
|
|
|
Gary
Babbitt
|
|
|
|
Director
|
|
|
|
|
|
Date:
April
2, 2018
|
By:
|
/s/
Hart
Baitis
|
|
|
|
Hart
Baitis
|
|
|
|
Director
|
|
|
|
|
|
Date:
April
2, 2018
|
By:
|
/s/
Russell
Lawrence
|
|
|
|
Russell
Lawrence
|
|
|
|
Director
|
|
|
|
|
|
Date:
April
2, 2018
|
|
/s/
Jeffrey
Wright
|
|
|
|
Jeffrey
Wright
|
|
|
|
Director
|
|
|
|
|
|
Date:
April
2, 2018
|
|
/s/
Craig
Thomas
|
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|
|
Craig
Thomas
|
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|
|
Director
|
|
Report of Independent Registered Public Accounting
Firm
To the shareholders and the board of directors of United States
Antimony Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of
United States Antimony Corporation and Subsidiaries (the "Company")
as of December 31, 2017 and 2016, the related consolidated
statements of operations, changes in stockholders’
equity and cash flows for the years then ended, and the related
notes (collectively referred to as the "financial statements"). In
our opinion, the financial statements present fairly, in all
material respects, the financial position of the Company as
of December 31, 2017 and 2016, and the results of its
operations and its cash flows for the years then ended, in
conformity with
accounting principles generally
accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on the
Company's financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting
Oversight Board (United States) ("PCAOB") and are required to be
independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error
or fraud. The Company is not required to have, nor were we engaged
to perform, anaudit of its internal control over financial
reporting. As part of our audits we are required to obtain an
understanding of internal control over financial reporting but not
for the purpose of expressing an opinion on the effectiveness of
the Company's internal control over financial reporting.
Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis
for our opinion.
DeCoria, Maichel & Teague, P.S.
We have served as the Company's independent auditor since
1998.
Spokane, Washington
April 2, 2018
United States Antimony Corporation and Subsidiaries
|
|
|
Consolidated Balance Sheets
|
|
|
December 31, 2017 and 2016
|
|
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
Cash
and cash equivalents
|
$
27,987
|
$
10,057
|
Certificates
of deposit
|
252,298
|
251,641
|
Accounts
receivable, net of allowance
|
362,579
|
552,119
|
Inventories
|
914,709
|
855,637
|
Other
current assets
|
4,697
|
23,101
|
Total
current assets
|
1,562,270
|
1,692,555
|
|
|
|
Properties,
plants and equipment, net
|
15,132,897
|
15,695,966
|
Restricted
cash for reclamation bonds
|
63,345
|
63,274
|
IVA
receivable and other assets
|
372,742
|
314,203
|
Total
assets
|
$
17,131,254
|
$
17,765,998
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
Current
liabilities:
|
|
|
Checks
issued and payable
|
$
28,248
|
$
35,682
|
Accounts
payable
|
2,276,357
|
1,797,251
|
Due
to factor
|
10,880
|
150,399
|
Accrued
payroll, taxes and interest
|
185,283
|
213,695
|
Other
accrued liabilities
|
168,578
|
122,968
|
Payables
to related party
|
22,668
|
14,525
|
Deferred
revenue
|
60,049
|
78,730
|
Notes
payable to bank
|
192,565
|
167,317
|
Income
taxes payable (Note 13)
|
443,110
|
410,510
|
Long-term
debt, current portion, net of discount
|
546,988
|
391,046
|
Total
current liabilities
|
3,934,726
|
3,382,123
|
|
|
|
Long-term
debt, net of discount and current portion
|
1,239,126
|
1,472,869
|
Hillgrove
advances payable (Note 10)
|
1,134,221
|
1,134,221
|
Stock
payable to directors for services
|
175,000
|
168,750
|
Asset
retirement obligations and accrued reclamation costs
|
271,572
|
265,782
|
Total
liabilities
|
6,754,645
|
6,423,745
|
Commitments
and contingencies (Note 4, 10 and 15)
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
Preferred
stock $0.01 par value, 10,000,000 shares authorized:
|
|
|
Series
A: -0- shares issued and outstanding
|
-
|
-
|
Series
B: 750,000 shares issued and outstanding
|
|
|
(liquidation
preference $922,500 and $915,000
|
|
|
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 $4,961,324 and $4,920,178
|
|
|
respectively)
|
17,509
|
17,509
|
Common
stock, $0.01 par value, 90,000,000 shares authorized;
|
|
|
67,488,153
and 67,066,278 shares issued and outstanding,
respectively
|
674,881
|
670,662
|
Additional
paid-in capital
|
36,239,264
|
36,074,733
|
Accumulated
deficit
|
(26,564,324
)
|
(25,429,930
)
|
Total
stockholders' equity
|
10,376,609
|
11,342,253
|
Total
liabilities and stockholders' equity
|
$
17,131,254
|
$
17,765,998
|
The accompanying notes are an integral part of these consolidated
financial statements.
United States Antimony Corporation and Subsidiaries
|
|
Consolidated Statements of Operations
|
|
|
For the years ended December 31, 2017 and 2016
|
|
|
|
|
|
|
|
REVENUES
|
$
10,229,978
|
$
11,890,135
|
|
|
|
COST OF REVENUES
|
10,068,578
|
11,353,484
|
|
|
|
GROSS PROFIT
|
161,400
|
536,651
|
|
|
|
OPERATING
EXPENSES:
|
|
|
General
and administrative
|
533,506
|
681,487
|
Salaries
and benefits
|
371,162
|
483,937
|
Hillgrove
advance - earned credit (Note 10)
|
-
|
(120,329
)
|
Professional
fees
|
216,431
|
308,078
|
TOTAL
OPERATING EXPENSES
|
1,121,099
|
1,353,173
|
|
|
|
INCOME
(LOSS) FROM OPERATIONS
|
(959,699
)
|
(816,522
)
|
|
|
|
OTHER
INCOME (EXPENSE):
|
|
|
Interest
income
|
873
|
1,437
|
Interest
expense
|
(106,975
)
|
(160,795
)
|
Factoring
expense
|
(35,993
)
|
(35,182
)
|
Foreign
exchange loss
|
(32,600
)
|
-
|
TOTAL
OTHER INCOME (EXPENSE)
|
(174,695
)
|
(194,540
)
|
|
|
|
INCOME
(LOSS) BEFORE INCOME TAXES
|
(1,134,394
)
|
(1,011,062
)
|
|
|
|
INCOME
TAX PROVISION
|
-
|
(298,138
)
|
|
|
|
NET INCOME (LOSS)
|
(1,134,394
)
|
(1,309,200
)
|
|
|
|
Preferred
dividends
|
(48,649
)
|
(48,649
)
|
Net
income (loss) available to
|
|
|
common
stockholders
|
$
(1,183,043
)
|
$
(1,357,849
)
|
|
|
|
Net
income (loss) per share of
|
|
|
common
stock:
|
|
|
Basic
and diluted
|
$
(0.02
)
|
$
(0.02
)
|
|
|
|
Weighted
average shares outstanding:
|
|
|
Basic
and diluted
|
67,413,025
|
66,781,757
|
The accompanying notes are an integral part of these consolidated
financial statements.
United States Antimony Corporation and Subsidiaries
Consolidated Statement of Changes in Stockholders'
Equity
For the years ended December 31, 2017 and 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances,
December 31, 2015
|
2,678,909
|
$
26,788
|
66,316,278
|
$
663,162
|
$
35,890,733
|
$
(24,120,730
)
|
$
12,459,953
|
|
|
|
|
|
|
|
|
Issuance of common stock to directors for services
|
|
550,000
|
5,500
|
132,000
|
|
137,500
|
Issuance
of common stock to chief financial officer
|
|
|
200,000
|
2,000
|
52,000
|
|
54,000
|
Net
loss
|
|
|
|
|
|
(1,309,200
)
|
(1,309,200
)
|
Balances,
December 31, 2016
|
2,678,909
|
26,788
|
67,066,278
|
670,662
|
36,074,733
|
(25,429,930
)
|
11,342,253
|
|
|
|
|
|
|
|
|
Issuance of common stock to directors for services
|
|
421,875
|
4,219
|
164,531
|
|
168,750
|
Net
loss
|
|
|
|
|
|
(1,134,394
)
|
(1,134,394
)
|
Balances,
December 31, 2017
|
2,678,909
|
$
26,788
|
67,488,153
|
$
674,881
|
$
36,239,264
|
$
(26,564,324
)
|
$
10,376,609
|
The accompanying notes are an integral part of these consolidated
financial statements.
F-4
United States Antimony Corporation and Subsidiaries
|
|
|
Consolidated Statements of Cash Flows
|
|
|
For the years ended December 31, 2017 and 2016
|
|
|
|
|
|
Cash
Flows From Operating Activities:
|
|
|
Net
income (loss)
|
$
(1,134,394
)
|
$
(1,309,200
)
|
Adjustments
to reconcile net income (loss) to net cash
|
|
|
provided
by operating activities:
|
|
|
Depreciation
and amortization
|
968,888
|
999,737
|
Amortization
of debt discount
|
93,450
|
70,590
|
Hillgrove
advance earned credit
|
-
|
(120,329
)
|
Accretion
of asset retirement obligation
|
5,790
|
5,455
|
Common
stock issued for services
|
-
|
54,000
|
Common
stock accrued for directors fees
|
175,000
|
168,750
|
Foreign
exchange loss
|
32,600
|
-
|
Non-cash
miscellaneous income
|
(728
)
|
(1,595
)
|
Change
in:
|
|
|
Accounts
receivable
|
189,540
|
(129,446
)
|
Inventories
|
(59,072
)
|
238,601
|
Other
current assets
|
18,404
|
212,356
|
IVA
receivable and other assets
|
(58,539
)
|
(296,673
)
|
Accounts
payable
|
479,106
|
167,280
|
Accrued
payroll, taxes and interest
|
(28,412
)
|
(7,751
)
|
Other
accrued liabilities
|
45,610
|
(18,577
)
|
Deferred
revenues
|
(18,681
)
|
-
|
Income
taxes payable
|
-
|
410,510
|
Payables
to related party
|
8,143
|
(17,871
)
|
Net
cash provided by operating activities
|
716,705
|
425,837
|
|
|
|
Cash
Flows From Investing Activities:
|
|
|
Redemption
of reclamation bonds
|
-
|
12,810
|
Purchase
of properties, plants and equipment
|
(365,541
)
|
(595,839
)
|
Net
cash used by investing activities
|
(365,541
)
|
(583,029
)
|
|
|
|
Cash
Flows From Financing Activities:
|
|
|
Net
proceeds (to) from factor
|
(139,519
)
|
136,617
|
Proceeds
from notes payable to bank, net
|
25,248
|
36,645
|
Principal
payments of long-term debt
|
(211,529
)
|
(175,238
)
|
Change
in checks issued and payable
|
(7,434
)
|
35,682
|
Net
cash provided (used) by financing activities
|
(333,234
)
|
33,706
|
NET
INCREASE (DECREASE) IN CASH
|
|
|
AND
CASH EQUIVALENTS
|
17,930
|
(123,486
)
|
Cash
and cash equivalents at beginning of year
|
10,057
|
133,543
|
Cash
and cash equivalents at end of year
|
$
27,987
|
$
10,057
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
|
Interest
paid in cash (net of amount capitalized)
|
$
14,632
|
$
14,694
|
Income
taxes paid in cash
|
-
|
13,090
|
Noncash
investing and financing activities:
|
|
|
Properties,
plants & equipment acquired with long-term debt
|
40,278
|
42,735
|
Imputed
interest capitalized as property, plant and equipment
|
-
|
26,796
|
Common
stock payable issued to directors
|
168,750
|
137,500
|
The accompanying notes are an
integral part of these consolidated financial
statements.
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2017 and 2016
1. Background of Company and Basis of
Presentation
AGAU
Mines, Inc., predecessor of United States Antimony Corporation
("USAC" or "the Company"), was incorporated in June 1968 as a
Delaware corporation to mine gold and silver. USAC was incorporated
in Montana in January 1970 to mine and produce antimony products.
In June 1973, AGAU Mines, Inc. was merged into USAC. In December
1983, the Company suspended its antimony mining operations when it
became possible to purchase antimony raw materials more
economically from foreign sources. The principal business of the
Company has been the production and sale of antimony
products.
During
2000, the Company formed a 75% owned subsidiary, Bear River Zeolite
Company ("BRZ"), to mine and market zeolite and zeolite products
from a mineral deposit in southeastern Idaho. In 2001, an operating
plant was constructed at the zeolite site and zeolite production
and sales commenced. During 2002, the Company acquired the
remaining 25% of BRZ and continued to produce and sell zeolite
products.
During
2005, the Company formed a 100% owned subsidiary, Antimonio de
Mexico S.A. de C.V. (“AM”), to explore and develop
potential antimony properties in Mexico.
During
2006, the Company acquired 100% ownership in United States
Antimony, Mexico S.A. de C.V. (“USAMSA”), which became
a wholly-owned subsidiary of the Company.
2. Concentrations of Risk
The
Company’s financial instruments that were exposed to
concentrations consist primarily of sales and accounts
receivable.
Sales to
|
|
Largest Customers
|
|
|
Mexichem
Specialty Compounds Inc.
|
$
3,335,046
|
$
2,108,998
|
East
Penn Manufacturing Inc
|
512,621
|
1,147,854
|
Kohler
Corporation
|
1,928,962
|
1,474,854
|
|
$
5,776,629
|
$
4,731,706
|
% of Total Revenues
|
56.50
%
|
39.80
%
|
|
|
|
Largest
|
|
|
Accounts Receivable
|
|
|
Nutreco
Canada Inc.
|
$
25,657
|
|
GE
Lighting
|
|
$
162,582
|
Teck
American Inc
|
241,627
|
|
Kohler
Corporation
|
|
151,500
|
Ralco
Mix Products
|
16,000
|
|
|
$
283,284
|
$
314,082
|
% of Total Receivables
|
78.10
%
|
83.90
%
|
The
Company's revenues from antimony sales are strongly influenced by
world prices for such commodities, which fluctuate and are affected
by numerous factors beyond the Company's control, including
inflation and worldwide forces of supply and demand. The aggregate
effect of these factors is not possible to predict
accurately.
The accompanying notes are an integral part of these consolidated
financial statements.
F-6
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2017 and 2016
3. Summary of Significant Accounting Policies
Principles of Consolidation
The
Company's consolidated financial statements include the accounts of
BRZ, USAMSA and AM, all wholly-owned subsidiaries. Intercompany
balances and transactions are eliminated in
consolidation.
Use of Estimates
The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Significant and critical estimates include
property, plant and equipment depreciation and potential
impairment, metal content of mineral resources, accounts receivable
allowance for uncollectible accounts, deferred income taxes, income
taxes payable, environmental remediation liabilities and asset
retirement obligations. Actual results could differ from those
estimates.
Cash and Cash Equivalents
The
Company considers cash in banks and investments with original
maturities of three months or less when purchased to be cash
equivalents.
Restricted Cash
Restricted cash at
December 31, 2017 and 2016 consists of cash held for reclamation
performance bonds, and is held in certificates of deposit with
financial institutions.
Accounts Receivable
Accounts receivable
are stated at the amount that management expects to collect from
outstanding balances. Management provides for probable
uncollectible amounts through an allowance for doubtful accounts.
Changes to the allowance for doubtful accounts are based on
management’s judgment, considering historical write-offs,
collections and current credit conditions. Balances which remain
outstanding after management has used reasonable collection efforts
are written off through a charge to the allowance for doubtful
accounts and a credit to the applicable accounts receivable.
Payments received on receivables subsequent to being written off
are considered a bad debt recovery.
Inventories
Inventories at
December 31, 2017 and 2016 consisted of finished antimony products,
antimony metal, antimony concentrates, antimony ore, and finished
zeolite products, and are stated at the lower of first-in,
first-out weighted average cost or estimated net realizable value.
Finished antimony products, antimony metal and finished zeolite
products costs include raw materials, direct labor and processing
facility overhead costs and freight allocated based on production
quantity. Stockpiled ore is carried at the lower of average cost or
net realizable value. Since the Company's antimony inventory is a
commodity with a sales value that is subject to world prices for
antimony that are beyond the Company's control, a significant
change in the world market price of antimony could have a
significant effect on the net realizable value of inventories. The
Company periodically reviews its inventories to identify excess and
obsolete inventories and to estimate reserves for obsolete
inventories as necessary to reflect inventories at net realizable
value.
Translations of Foreign Currencies
All
amounts in the financial statements are presented in U.S. dollars,
which is the functional currency for all of our operations. Foreign
translation gains and losses relating to our Mexican subsidiaries
are recognized as foreign exchange gain or loss in our consolidated
statement of operations.
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2017 and 2016
3. Summary of Significant Accounting Policies,
continued:
Going Concern
Consideration
At
December 31, 2017, the Company’s financial statements show
negative working capital of approximately $2.4 million and
accumulated deficit of approximately $26.5 million. In
addition, the Company has incurred losses for the prior three
years. 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 to the production costs
incurred in Mexico. The other two operating divisions, precious
metals and zeolite, had gross profits of $310,373 and $408,403,
respectively, in 2017.
Regarding the
antimony division, in 2016 the Company endured some of the lowest
prices for antimony in the past seven years, with an average sales
price of only $2.98 per pound of metal contained. Prices
improved during 2017 with an average sale price of $4.01. Through
March 2018, the average sale price for antimony is approximately
$4.10 per pound. Additionally in November 2017, the Company
renegotiated its domestic sodium antimonite supply agreement
resulting in a lower cost per antimony per pound of approximately
$0.44. With the new supply agreement in place, most of the market
increase in antimony prices will result in increased Company cash
flow in 2018 from its antimony division.
In
2017, the Company reduced costs for labor at the Mexico locations
which has resulted in a lower overall production costs in Mexico
which will continue through 2018. The reduction was due to a large
reduction in the work force at the Madero smelter because of the
decrease in antimony concentrate from Hillgrove (see Note 10). In
the fourth quarter 2017, the Company also adjusted operating
approaches at Madero that will likely result in a decrease in
operating costs for fuel, natural gas, electricity, and reagents.
Although total production activity in Mexico decreased in 2017 due
to the lack of Hillgrove concentrates, the Company’s 2018
plan involves ramping up production at its own antimony properties
in Mexico. In addition, a new leach circuit expected to come on
line during 2018 in Mexico will result in more extraction of
precious metals.
In
2017, management implemented wage and other cost reductions at the
corporate level that will keep administrative costs stable in 2018.
The Company expects to continue paying a low cost for propane in
Montana, which in years past has been a major operating
cost.
Over
the past several years, the Company has been able to make required
principal payments on its debt from cash generated from operations
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 2018 through cash flows from
operations.
Management believes
that the current circumstances and cost reduction actions taken
will enable the Company to be actively operating for the next
twelve months.
Mineral Rights
The
costs to obtain the legal right to explore, extract and retain at
least a portion of the benefits from mineral deposits are
capitalized as mineral rights in the year of acquisition. These
capitalized costs are amortized on the statement of operations
using the straight line method over the expected life of the
mineral deposit when placed into production. Mineral rights are
assessed for impairment when facts and circumstances indicate that
the potential for impairment exists. No impairment has been
indicated for the years ended December 31, 2017 or 2016 as a result
of this assessment. Mineral rights are subject to write down in the
period the property is abandoned.
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2017 and 2016
3. Summary of Significant Accounting Policies,
continued:
Properties, Plants and Equipment
Properties, plants
and equipment are stated at historical cost and are depreciated
using the straight-line method over estimated useful lives of two
to thirty years. Vehicles and office equipment are stated at cost
and are depreciated using the straight-line method over estimated
useful lives of three to twelve years. Maintenance and repairs are
charged to operations as incurred. Betterments of a major nature
are capitalized. Expenditures for new property, plant, equipment,
and improvements that extend the useful life or functionality of
the asset are capitalized. The Company capitalized $405,819 and
$665,370 in plant construction and other capital costs for the
years ended December 31, 2017 and 2016, respectively. These amounts
include capitalized interest of $0 and $35,305, respectively. When
assets are retired or sold, the costs and related accumulated
depreciation are eliminated from the accounts and any resulting
gain or loss is reflected in operations.
Mineral
properties are amortized over the estimated economic life of the
mineral resource using the straight-line method, based upon
estimated lives of the properties, or the units-of-production
method, based upon estimated units of mineral
resource.
Management of the
Company periodically reviews the net carrying value of all of its
long-lived assets. These reviews consider the net realizable value
of each asset or group to determine whether a permanent impairment
in value has occurred and the need for any asset write-down. An
impairment loss is recognized when the estimated future cash flows
(undiscounted and without interest) expected to result from the use
of an asset are less than the carrying amount of the asset.
Measurement of an impairment loss is based on the estimated fair
value of the asset if the asset is expected to be held and
used.
Exploration and Development
The
Company records exploration costs as operating expenses in the
period they occur, and capitalizes development costs on discrete
mineralized bodies that have proven reserves in compliance with
Securities and Exchange Commission Industry Guide 7, and are in
development or production.
Asset Retirement Obligations and Reclamation Costs
All of
the Company's mining operations are subject to reclamation and
remediation requirements. Minimum standards for mine reclamation
have been established by various governmental agencies. Costs are
estimated based primarily upon environmental and regulatory
requirements and are accrued. The liability for reclamation is
classified as current or noncurrent based on the expected timing of
expenditures. Reclamation differs from an asset retirement
obligation in that no associated asset is recorded in the case of
reclamation liabilities.
It is
reasonably possible that because of uncertainties associated with
defining the nature and extent of environmental contamination,
application of laws and regulations by regulatory authorities, and
changes in remediation technology, the ultimate cost of remediation
and reclamation could change in the future. The Company continually
reviews its accrued liabilities for such remediation and
reclamation costs as evidence becomes available indicating that its
remediation and reclamation liability has changed.
The
Company records the fair value of an asset retirement obligation as
a liability in the period in which the Company incurs a legal
obligation for the retirement of long-lived assets if it is
probable that such costs will be incurred and they are reasonably
estimable. A corresponding asset is also recorded and depreciated
over the life of the assets on a straight line basis. After the
initial measurement of the asset retirement obligation, the
liability will be adjusted to reflect changes in the estimated
future cash flows underlying the obligation. Determination of any
amounts included in determination of fair value is based upon
numerous estimates and assumptions, including future retirement
costs, future inflation rates, and the Company’s
credit-adjusted risk-free interest rates.
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2017 and 2016
3. Summary of Significant Accounting Policies,
continued:
Revenue Recognition
Sales
of antimony and zeolite products are recorded either upon shipment
or delivery dependent on the term, and when title passes to the
customer. The Company's sales agreements do not provide for product
returns or allowances. Prepayments, which are not common, received
from customers prior to the time that products are processed and
shipped, are recorded as deferred revenue. When the related
products are shipped, the amount recorded as deferred revenue is
recognized as revenue.
Sales
of precious metals are recognized when pervasive evidence of an
arrangement exists, the price is reasonably determinable, the
product has been delivered, no obligations remain, and collection
is reasonably assured.
Common Stock Issued for Consideration Other than Cash
All
transactions in which goods or services are received for the
issuance of shares of the Company’s common stock are
accounted for based on the fair value of the consideration received
or the fair value of the common stock issued, whichever is more
readily determinable.
Income Taxes
Income
taxes are accounted for under the liability method. Under this
method, deferred income tax liabilities or assets are determined at
the end of each period using the tax rate expected to be in effect
when the taxes are actually paid or recovered. A valuation
allowance is recognized on deferred tax assets when it is more
likely than not that some or all of these deferred tax assets will
not be realized.
The
Company applies generally accepted accounting principles for
recognition of uncertainty in income taxes and prescribing a
recognition threshold and measurement attribute for the recognition
and measurement of a tax position taken or expected to be taken in
a tax return.
Income (Loss) Per Common Share
Basic
earnings per share is calculated by dividing net income (loss)
available to common stockholders by the weighted average number of
common shares outstanding during the period. Diluted earnings per
share is calculated based on the weighted average number of common
shares outstanding during the period plus the effect of potentially
dilutive common stock equivalents, including stock options,
warrants to purchase the Company's common stock and convertible
preferred stock. Management has determined that the calculation of
diluted earnings per share for the years ended December 31, 2017,
and 2016, does not add any shares to basic weighted average
shares.
As of
December 31, 2017 and 2016, potentially dilutive common stock
equivalents not included in the calculation of diluted earnings per
share are as follows:
|
|
|
Warrants
|
250,000
|
250,000
|
Convertible
preferred stock
|
1,751,005
|
1,751,005
|
Total
possible dilution
|
2,001,005
|
2,001,005
|
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2017 and 2016
3. Summary of Significant Accounting Policies,
continued:
Fair Value of Financial Instruments
The
Company’s financial instruments include cash and cash
equivalents, certificates of deposits, restricted cash, due to
factor, and long-term debt. The carrying value of these instruments
approximates fair value based on their contractual
terms.
Fair Value Measurements
When
required to measure assets or liabilities at fair value, the
Company uses a fair value hierarchy based on the level of
independent, objective evidence surrounding the inputs used. The
Company determines the level within the fair value hierarchy in
which the fair value measurements in their entirety fall. The
categorization within the fair value hierarchy is based upon the
lowest level of input that is significant to the fair value
measurement. Level 1
uses quoted prices in active markets for
identical assets or liabilities, Level 2 uses significant other
observable inputs, and Level 3 uses significant unobservable
inputs. The amount of the total gains or losses for the period are
included in earnings that are attributable to the change in
unrealized gains or losses relating to those assets and liabilities
still held at the reporting date. The Company has no financial
assets or liabilities that are adjusted to fair value on a
recurring basis.
Recent Accounting Pronouncements
In May
2014, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") No. 2014-09 Revenue
Recognition, replacing guidance currently codified in Subtopic
605-10 Revenue Recognition-Overall with various SEC Staff
Accounting Bulletins providing interpretive guidance. The new ASU
establishes a new five step principles-based framework in an effort
to significantly enhance comparability of revenue recognition
practices across entities, industries, jurisdictions, and capital
markets. In August 2015, the FASB issued ASU No. 2015-14 Revenue
from Contracts with Customers (Topic 606): Deferral of the
Effective Date. ASU No. 2015-14 defers the effective date of ASU
No. 2014-09 until annual and interim reporting periods beginning
after December 15, 2017. The Company has performed an assessment of
the impact of implementation of ASU No. 2014-09, and concluded it
will not change the timing of revenue recognition or amounts of
revenue recognized compared to how revenue is recognized under
current policies. ASU No. 2014-09 will require additional
disclosures, where applicable, on (i) contracts with customers,
(ii) significant judgments and changes in judgments in determining
the timing of satisfaction of performance obligations and the
transaction price, and (iii) assets recognized for costs to obtain
or fulfill contracts.
In
February 2016, the FASB issued ASU No. 2016-02 Leases (Topic 842).
The update modifies the classification criteria and requires
lessees to recognize the assets and liabilities on the balance
sheet for most leases. The update is effective for fiscal years
beginning after December 15, 2018, with early adoption permitted.
The Company is currently evaluating the potential impact of
implementing this update on the consolidated financial
statements.
In
August 2016, the FASB issued ASU No. 2016-15 Statement of Cash
Flows (Topic 230): Classification of Certain Cash Receipts and Cash
Payments. The update provides guidance on classification for cash
receipts and payments related to eight specific issues. The update
is effective for fiscal years beginning after December 15, 2017,
and interim periods within those fiscal years, with early adoption
permitted. The Company is currently evaluating the impact of
implementing this update on the consolidated financial
statements.
In
November 2016, the FASB issued ASU No. 2016-18 Statement of Cash
Flows (Topic 230): Restricted Cash. The update requires that a
statement of cash flows explain the change during the period in the
total of cash, cash equivalents, and amounts generally described as
restricted cash or restricted cash equivalents. The update is
effective for fiscal years beginning after December 15, 2017, and
interim periods within those fiscal years, with early adoption
permitted. The Company does not expect this update to have a
material impact on the consolidation financial
statements.
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2017 and 2016
3. Summary of Significant Accounting Policies,
continued:
In
January 2017, the FASB issued ASU No. 2017-01 Business Combinations
(Topic 805): Clarifying the Definition of a Business. The update
clarifies the definition of a business with the objective of adding
guidance to assist entities with evaluating whether transactions
should be accounted for as acquisitions (or disposals) of assets or
businesses. The update is effective for fiscal years beginning
after December 15, 2017, and interim periods within those fiscal
years. The Company will apply the provisions of the update to
potential future acquisitions occurring after the effective
date.
Other
accounting standards that have been issued or proposed by FASB that
do not require adoption until a future date are not expected to
have a material impact on the consolidated financial statements
upon adoption.
Reclassifications
Certain
reclassifications have been made to conform the prior year’s
data to the current year’s presentation. These
reclassifications have no effect on previously reported operations,
stockholders’ equity or cash flows.
4. Accounts Receivable and Due to Factor
The
Company factors designated trade receivables pursuant to a
factoring agreement with LSC Funding Group L.C., an unrelated
factor (the “Factor”). The agreement is for
a term of one year with automatic renewal for additional one-year
terms. The agreement specifies that eligible trade receivables are
factored with recourse. The performance of all obligations and
payments to the factoring company is personally guaranteed by John
C. Lawrence, the Company’s President and Chairman of the
Board of Directors. Selected trade receivables are submitted to the
factor, and the Company receives 85% of the face value of the
receivable by wire transfer. Upon payment by the customer, the
remainder of the amount due is received from the Factor, less a
one-time servicing fee of 2% for the receivables
factored. This servicing fee is recorded on the
consolidated statement of operations in the period of sale to the
factor.
Trade
receivables assigned to the Factor are carried at the original
invoice amount less an estimate made for doubtful
accounts. Under the terms of the recourse provision, the
Company is required to reimburse the Factor, upon demand, for
factored receivables that are not paid on
time. Accordingly, these receivables are accounted for
as a secured financing arrangement and not as a sale of financial
assets.
Receivables, net of
allowances, are presented as current assets and the amount
potentially due to the Factor is presented as a secured financing
in current liabilities.
Accounts Receivble
|
|
|
Accounts
receivable - non-factored
|
$
351,699
|
$
401,720
|
Accounts
receivable - factored with recourse
|
10,880
|
150,399
|
Accounts
receivable - net
|
$
362,579
|
$
552,119
|
Factoring fees paid
by the Company during the years ended December 31, 2017 and 2016,
were $35,993 and $35,182, respectively. For the years ended
December 31, 2017 and 2016, net accounts receivable of
approximately $1.70 million and $1.80 million, respectively, were
sold under the agreement.
Proceeds from the
sales were used to fund inventory purchases and operating
expenses.
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2017 and 2016
5. Inventories
The
major components of the Company's inventories at December 31, 2017
and 2016 were as follows:
|
|
|
Antimony
Metal
|
$
-
|
$
112,300
|
Antimony
Oxide
|
408,217
|
326,126
|
Antimony
Concentrates
|
35,554
|
30,815
|
Antimony
Ore
|
187,133
|
181,815
|
Total antimony
|
630,904
|
651,056
|
Zeolite
|
283,805
|
204,581
|
|
$
914,709
|
$
855,637
|
At
December 31, 2017 and 2016, antimony metal consisted principally of
recast metal from antimony-based compounds, and metal purchased
from foreign suppliers. Antimony oxide inventory consisted of
finished product oxide held at the Company's plant. Antimony
concentrates and ore were held primarily at sites in Mexico and are
essentially raw material, carried at cost. At December 31, 2017 and
2016, the antimony inventory in Mexico was valued at net realizable
value. The Company's zeolite inventory consists of salable zeolite
material held at BRZ's Idaho mining and production facility, and is
carried at cost.
6. Properties, Plants and Equipment
The
major components of the Company's properties, plants and equipment
at December 31, 2017 and 2016 are shown below:
|
|
|
|
2017
|
|
|
|
|
|
Plant
& Equipment
|
$
743,767
|
$
7,655,777
|
$
3,577,055
|
$
751,640
|
$
12,728,239
|
Buildings
|
247,210
|
900,992
|
349,946
|
|
1,498,148
|
Mineral
Rights and Interests
|
-
|
3,793,502
|
3,664
|
|
3,797,166
|
Land
& Other
|
3,274,572
|
2,529,294
|
15,310
|
|
5,819,176
|
|
4,265,549
|
14,879,565
|
3,945,975
|
751,640
|
23,842,729
|
Accumulated
Depreciation
|
(2,577,552
)
|
(3,427,058
)
|
(2,596,356
)
|
(108,866
)
|
(8,709,832
)
|
|
$
1,687,997
|
$
11,452,507
|
$
1,349,619
|
$
642,774
|
$
15,132,897
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
|
|
Plant
& Equipment
|
$
729,272
|
$
7,598,640
|
$
3,477,260
|
$
565,972
|
$
12,371,144
|
Buildings
|
247,210
|
900,992
|
349,946
|
|
1,498,148
|
Mineral
Rights and Interests
|
-
|
3,793,502
|
3,664
|
|
3,797,166
|
Land
& Other
|
3,274,572
|
2,529,294
|
15,310
|
|
5,819,176
|
|
4,251,054
|
14,822,428
|
3,846,180
|
565,972
|
23,485,634
|
Accumulated
Depreciation
|
(2,538,257
)
|
(2,836,164
)
|
(2,373,627
)
|
(41,620
)
|
(7,789,668
)
|
|
$
1,712,797
|
$
11,986,264
|
$
1,472,553
|
$
524,352
|
$
15,695,966
|
At
December 31, 2017 and 2016, the Company had $521,896 and $521,376,
respectively, of assets that were not yet placed in service and
have not yet been depreciated.
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2017 and 2016
7. Asset Retirement Obligation and Accrued Reclamation
Costs
Changes
to the asset retirement obligation balance during 2017 and 2016 are
as follows:
Asset Retirement Obligation
|
|
Balance
December 31, 2015
|
$
152,827
|
Accretion
during 2016
|
5,455
|
Balance
December 31, 2016
|
158,282
|
Accretion
during 2017
|
5,790
|
Balance
December 31, 2017
|
$
164,072
|
The
Company’s total asset retirement obligation and accrued
reclamation costs of $271,572 and $265,782, at December 31, 2017
and 2016, respectively, include reclamation obligations for the
Idaho and Montana operations of $107,500.
8. Long-Term Debt:
Long-Term
debt at December 31, 2017 and December 31, 2016, is as
follows:
|
|
|
|
|
|
Note
payable to First Security Bank, bearing interest at
6%;
|
|
|
payable
in monthly installments of $917; maturing
|
|
|
September
2018; collateralized by equipment.
|
$
8,054
|
$
18,245
|
Note
payable to Cat Financial Services, bearing interest at
6%;
|
|
|
payable
in monthly installments of $1,300; maturing
|
|
|
August
2019; collateralized by equipment.
|
27,096
|
40,556
|
Note
payable to Cat Financial Services, bearing interest at
6%;
|
|
|
payable
in monthly installments of $778; maturing
|
|
|
December
2022; collateralized by equipment.
|
40,278
|
-
|
Note
payable to Wells Fargo Bank, bearing interest at 4%;
|
|
|
payable
in monthly installments of $477; maturing
|
|
|
December
2016; collateralized by equipment.
|
-
|
473
|
Note
payable to De Lage Landen Financial Services,
|
|
|
bearing
interest at 3.51%; payable in monthly installments of
$655;
|
|
|
maturing
September 2019; collateralized by equipment.
|
13,344
|
20,581
|
Note
payable to De Lage Landen Financial Services,
|
|
|
bearing
interest at 3.51%; payable in monthly installments of
$655;
|
|
|
maturing
December 2019; collateralized by equipment.
|
15,776
|
22,944
|
Note
payable to Phyllis Rice, bearing interest
|
|
|
at 1%; payable in monthly installments of $2,000; originally
maturing
|
|
March
2015; collateralized by equipment.
|
14,146
|
14,146
|
Obligation
payable for Soyatal Mine, non-interest bearing,
|
|
|
annual payments of $100,000 or $200,000 through 2020, net of
discount
|
|
of
$49,360 and $84,750, respectively
|
715,709
|
776,319
|
Obligation
payable for Guadalupe Mine, non-interest bearing,
|
|
|
annual payments from $60,000 to $149,078 through 2026, net of
discount
|
|
of
$309,397 and $367,456, respectively
|
951,711
|
970,651
|
|
1,786,114
|
1,863,915
|
Less
current portion
|
(546,988
)
|
(391,046
)
|
Long-term
portion
|
$
1,239,126
|
$
1,472,869
|
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2017 and 2016
8. Long-Term Debt, Continued:
At
December 31, 2017, principal payments on debt are due as
follows:
Year Ending December
31,
|
|
2018
|
$
546,988
|
2019
|
312,150
|
2020
|
203,712
|
2021
|
115,253
|
2022
|
122,178
|
Thereafter
|
485,833
|
|
$
1,786,114
|
9.
Notes Payable to
Bank
At
December 31, 2017 and 2016, the Company had the following notes
payable to bank:
|
|
|
|
|
|
|
|
|
|
|
|
Promissory
note payable to First Security Bank of Missoula,
|
|
|
bearing
interest at 3.150%, payable on demand, collateralized
|
|
|
by
a lien on Certificate of Deposit
|
$
98,863
|
$
76,350
|
|
|
|
|
|
|
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
|
93,702
|
90,967
|
Total
notes payable to the bank
|
$
192,565
|
$
167,317
|
These
notes are personally guaranteed by John C. Lawrence the
Company’s President and Chairman of the Board of Directors.
The maximum amount available for borrowing under each note is
$99,998.
10. Hillgrove Advances Payable
On
November 7, 2014, the Company entered into an advance and
concentrate processing agreement with Hillgrove Mines Pty Ltd of
Australia (Hillgrove) by which Hillgrove advanced the Company funds
to be used to expand its smelter in Madero, Mexico, and in Thompson
Falls, Montana, so that they may process antimony and gold
concentrates produced by Hillgrove’s mine in Australia. The
agreement required that the Company construct equipment so that it
can process approximately 200 metric tons of concentrate initially
shipped by Hillgrove. The parties agreed that the equipment will be
owned by the Company. The agreement called for the Company to sell
the final product for Hillgrove, and Hillgrove to have approval
rights of the customers for their products. The agreement allows
the Company to recover its operating costs at a rate approved by
Hillgrove, and to charge a 7.5% processing fee and a 2.0% sales
commission on each sale. The initial term of the agreement is five
years; however, Hillgrove may suspend or terminate the agreement at
its discretion. The Company may terminate the agreement and begin
using the furnaces for their own production if Hillgrove fails to
recommence shipments within 365 days of a suspension
notice.
The
terms of the agreement require payment of the advance upon
Hillgrove’s issuance of a stop notice. Under terms of the
agreement, if a stop order is issued after two years, the repayment
obligation is 81.25% of the funds advanced at that point. As no
stop notice was issued during the initial two year period ended
November 7, 2016, the Company’s obligation to Hillgrove is
81.25% of total advanced funds. Through December 31, 2016,
Hillgrove advanced the Company a total of $1,396,721, resulting in
a net liability of $1,134,221 which is 81.25% of monies advanced.
No funds were advanced in 2017. Based on conversations with
Hillgrove, management does not anticipate receiving a stop notice
in 2018 thus the entire amount is classified as long
term.
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2017 and 2016
11. Stockholders'
Equity
Issuance of Common Stock for Cash
The
Company did not issue any common stock for cash in 2017 or
2016.
Issuance of Common Stock for Services to Directors and
Consultants
On
December 31, 2017, the Company awarded shares of unregistered
common stock to be paid to its directors for services during 2017,
having a fair value of $175,000, based on the stock price at the
date declared. The stock has not been issued as of the date of
issuance of these financial statements.
In
December of 2016, the Company issued Daniel Parks, the
Company’s Chief Financial Officer, 200,000 shares of the
Company’s common stock valued at $54,000 to retain his
services for a two year period. As part of the agreement, Mr.
Parks’ hours worked and normal compensation was
reduced.
During
2016, the Company awarded common stock with a fair value at
December 31, 2017 of $168,750 to its Board of Directors as
compensation for their services as directors. In connection with
the issuances, the Company recorded $168,750 as director
compensation expense and accrued stock payable. In March 2017, the
directors were issued 421,875 shares for this award.
Common Stock Warrants
The
Company's Board of Directors has the authority to issue stock
warrants for the purchase of preferred or unregistered common stock
to directors and employees of the Company.
At
December 31, 2017 and 2016, warrants for purchase of 250,000 shares
of the Company’s common stock for $0.25 per share are
outstanding and have no expiration date. These warrants are owned
by the Company’s president.
Preferred Stock
The
Company's Articles of Incorporation authorize 10,000,000 shares of
$0.01 par value preferred stock available for issuance with such
rights and preferences, including liquidation, dividend,
conversion, and voting rights, as the Board of Directors may
determine.
Series B
During
1993, the Board established a Series B preferred stock, consisting
of 750,000 shares. The Series B preferred stock has preference over
the Company's common stock and Series A preferred stock (none of
which are outstanding); has no voting rights (absent default in
payment of declared dividends); and is entitled to cumulative
dividends of $0.01 per share per year, payable if and when declared
by the Board of Directors. During the years ended December 31, 2017
and 2016 the Company recognized $7,500 in Series B preferred stock
dividend. In the event of dissolution or liquidation of the
Company, the preferential amount payable to Series B preferred
stockholders is $1.00 per share plus dividends in arrears. No
dividends have been declared or paid with respect to the Series B
preferred stock. The Series B Preferred stock is no longer
convertible to shares of the Company’s common stock. At
December 31, 2017 and 2016, cumulative dividends in arrears on the
outstanding Series B shares were $172,500 and $165,000,
respectively.
Series C
During
2000, the Board established a Series C preferred stock, consisting
of 205,996 shares. In 2002, 28,092 shares were converted to common
stock and cancelled, leaving 177,904 Series C preferred shares
authorized and outstanding. The Series C preferred stock has
preference over the Company’s common stock and has voting
rights equal to that number of shares outstanding, but no
conversion or dividend rights. In the event of dissolution or
liquidation of the Company, the preferential amount payable to
Series C preferred stockholders is $0.55 per share.
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2017 and 2016
11. Stockholders'
Equity, Continued:
Series D
During
2002, the Board established a Series D preferred stock, authorizing
the issuance of up to 2,500,000 shares. The Series D preferred
stock has preference over the Company’s common stock but is
subordinate to the liquidation preferences of the holders of the
Company’s outstanding Series A, Series B and Series C
preferred stock. Series D preferred stock carries voting rights and
is entitled to annual dividends of $0.0235 per share. The dividends
are cumulative and payable after payment and satisfaction of the
Series A, B and C preferred stock dividends. No dividends have been
declared or paid with respect to the Series D preferred stock. At
December 31, 2017 and 2016, the cumulative dividends in arrears on
the 1,751,005 outstanding Series D shares were $583,812 and
$542,664, respectively, payable if and when declared by the Board
of Directors. In the event of dissolution or liquidation of the
Company, the preferential amount payable to Series D preferred
stockholders is $2.50 per share. At December 31, 2017 and 2016, the
liquidation preference for Series D preferred stock was $4,961,327
and $4,920,178, respectively. Holders of the Series D preferred
stock have the right, subject to the availability of authorized but
unissued common stock, to convert their shares into shares of the
Company's common stock on a one-to-one basis without payment of
additional consideration and are not redeemable unless by mutual
consent. The majority of Series D preferred shares are held by John
Lawrence, president of the Company.
12. 2000 Stock Plan
In
January 2000, the Company's Board of Directors resolved to create
the United States Antimony Corporation 2000 Stock Plan ("the
Plan"). The purpose of the Plan is to attract and retain the best
available personnel for positions of substantial responsibility and
to provide additional incentive to employees, directors and
consultants to promote the success of the Company's business. The
maximum number of shares of common stock or options to purchase
common stock that may be issued pursuant to the Plan is 500,000. At
December 31, 2017 and 2016, 300,000 shares of the Company's common
stock had been previously issued under the Plan. There were no
issuances under the Plan during 2017 and 2016.
13. Income Taxes
Domestic and
foreign components of income (loss) from operations before income
taxes for the years ended December 31, 2017 and 2016, are as
follows:
|
|
|
Domestic
|
$
(374,478
)
|
$
(263,652
)
|
Foreign
|
(759,916
)
|
(747,410
)
|
Total
|
$
(1,134,394
)
|
$
(1,011,062
)
|
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2017 and 2016
13. Income Taxes, Continued:
At
December 31, 2017 and 2016, the Company had net deferred tax assets
as follows:
|
|
|
Deferred
tax assets:
|
|
|
Foreign
exploration costs
|
$
15,372
|
$
47,011
|
Foreign
net operating loss carry forward
|
1,537,420
|
1,309,445
|
Domestic
net operating loss carry forward
|
443,100
|
465,145
|
Other
|
1,455
|
-
|
Deferred
tax assets
|
1,997,347
|
1,821,601
|
|
|
|
Valuation
allowance (foreign)
|
(1,537,420
)
|
(1,309,445
)
|
Valuation
allowance (domestic)
|
(316,793
)
|
(299,522
)
|
Total
deferred tax assets
|
143,134
|
212,634
|
|
|
|
Deferred
tax liabilities:
|
|
|
Property,
plant, and equipment
|
(143,134
)
|
(210,912
)
|
Other
|
-
|
(1,722
)
|
Total
deferred tax liabilities
|
(143,134
)
|
(212,634
)
|
Net
deferred tax assets
|
$
-
|
$
-
|
At
December 31, 2017, the Company has federal net operating loss
(“NOL”) carry forwards of approximately $0.8 million
that expire at various dates between 2026 and 2038. In addition,
the Company has Montana state net operating loss carry forwards of
approximately $3.5 million which expire between 2017 and 2024, and
Idaho state net operating loss carry forwards of approximately $1.5
million, which expire between 2032 and 2038. The Company has
approximately $5.1 million of Mexican net operating loss carry
forwards which expire between 2023 and 2027.
At
December 31, 2017 and 2016, the Company had deferred tax assets
arising principally from net operating loss carry forwards for
income tax purposes. As management cannot determine that it is more
likely than not the benefit of the net deferred tax asset will be
realized, a valuation allowance equal to 100% of the net deferred
tax asset has been recorded at December 31, 2017 and
2016.
On
December 22, 2017, the United States enacted the Tax Cuts and Jobs
Act (the "Act") resulting in significant modifications to existing
law. The Company completed the accounting for the effects of the
Act during the quarter ended December 31, 2017. The Company did not
incur any income tax benefit or provision for the year ended
December 31, 2017 as a result of the changes to tax laws and tax
rates under the Act. The Company’s net deferred tax asset was
reduced by approximately $7,000 during the year ended December 31,
2017, which consisted primarily of the re-measurement of federal
deferred tax assets and liabilities from 35% to 21%.
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2017 and 2016
13. Income Taxes, Continued:
The
income tax provision differs from the amount of income tax
determined by applying the U.S. federal income tax rate to pretax
loss for the years ended December 31, 2017 and 2016, due to the
following:
|
|
|
Tax
benefit at federal statutory rate
|
$
(397,038
)
|
$
(353,872
)
|
State
income tax effect
|
(34,609
)
|
(21,754
)
|
Foreign
income tax effect
|
37,996
|
37,371
|
Non-deductible
items
|
930
|
3,263
|
Percentage
depletion
|
(58,056
)
|
(40,976
)
|
Change
in valuation allowance - Domestic
|
229,462
|
151,745
|
Change
in valuation allowance - Foreign
|
227,975
|
224,223
|
Impact
on change in federal tax rate
|
(6,660
)
|
-
|
Foreign
tax assessment
|
-
|
285,048
|
Alternative
minimum tax - Domestic
|
-
|
13,090
|
Total
|
$
-
|
$
298,138
|
Change
in valuation allowance is comprised of the following:
|
|
|
|
|
|
|
|
Domestic
|
|
|
Change
in deferred tax asset for current year
|
$
(229,462
)
|
$
(151,745
)
|
Adjustment
for prior year tax estimate to actual due to
|
|
|
transfer
pricing adjustment for Mexican operations
|
212,146
|
(57,557
)
|
|
$
(17,316
)
|
$
(209,302
)
|
Foreign
|
|
|
Change
in deferred tax asset for current year
|
$
(227,975
)
|
$
(224,223
)
|
Adjustment
for impact of tax assessment
|
-
|
285,048
|
Impact
on change in foreign exchange rate
|
-
|
421,643
|
Adjustment
for prior year tax estimates to actual
|
-
|
724,041
|
|
$
(227,975
)
|
$
1,206,509
|
During
the years ended December 31, 2017 and 2016, there were no material
uncertain tax positions taken by the Company. The Company’s
United States income tax filings are subject to examination for the
years 2015 through 2017, and 2014 through 2017 in Mexico. The
Company charges penalties on assessments to general and
administrative expense and charges interest to interest
expense.
Mexican Tax Assessment
In
2015, the Mexican tax authority (“SAT”) initiated an
audit of the USAMSA’s 2013 income tax return. In October
2016, as a result of its audit, SAT assessed the Company $13.8
million Mexican pesos, which was approximately $666,400 in U.S.
Dollars (“USD”) as of December 31, 2016. Approximately
$285,000 USD of the total assessment is interest and penalties.
SAT’s assessment is based on the disallowance of specific
costs that the Company deducted on the 2013 USAMSA income tax
return. These disallowed costs were incurred by the Company for
USAMSA’s business operations. SAT claims that the costs were
not deductible or were not supported by appropriate documentation.
At December 31, 2017, the assessed amount is approximately $699,000
in U.S dollars.
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2017 and 2016
13. Income Taxes, Continued:
Management has
reviewed the assessment notice from SAT and believes numerous
findings have no merit. The Company has engaged accountants and tax
attorneys in Mexico to defend its position.
At
December 31, 2016, management has estimated possible outcomes for
this assessment and concluded the Company will ultimately pay an
amount ranging from 30% to 100% of the total assessment. The 30% is
based on the Company’s agreement with the tax professionals
that the professionals will receive 30% of the amount of tax relief
they are able to achieve. At December 31, 2016, the Company accrued
a potential liability of $410,510 USD of which $285,048 was for
unpaid income taxes, $75,510 was for interest expense, and $49,952
was for penalties. The amount accrued represented
management’s best estimate of the amount that will ultimately
be paid. The outcome could vary from this estimate.
During
2017, the Company filed grievance and legal arguments regarding the
SAT audit and presented arguments to the court in September 2017.
The Company is waiting for the court’s ruling on the matter
and expects resolution in 2018. Based on this status, the Company
concluded that the estimate of potential assessment determined at
December 31, 2016 remains the most likely outcome at December 31,
2017. The December 31, 2016 income tax payable due of $410,510 was
increased by $32,600 due to the change in exchange rate between the
U.S. dollar and Mexican peso. Fluctuation in exchange rates will
have an ongoing impact on the amount the Company will pay in U.S.
dollars.
If an
issue addressed during the SAT audit is resolved in a manner
inconsistent with management expectations, the Company will adjust
its net operating loss carryforward, or accrue any additional
penalties, interest, and tax associated with the audit. The
Company’s tax professionals in Mexico have reviewed and filed
tax returns with the SAT for 2014, 2015, and 2016, and have advised
the Company that they do not expect the Company to have a tax
liability for those years relating to similar issues.
14. Related-Party Transactions
The
Company’s President and Chairman, John Lawrence, rents
equipment and an aircraft to the Company and charges the Company
for lodging and meals provided to consultants, customers and other
parties by an entity that Mr. Lawrence owns. The amount due to Mr.
Lawrence as of December 31, 2017 and 2016 was $22,668 and $14,525,
respectively. Expenses paid to Mr. Lawrence for the years ended
December 31, 2017 and 2016 were $13,603 and $16,791,
respectively.
15. Commitments and Contingencies
In
2005, Antimonio de Mexico, S. A. (“AM”) signed an
option agreement that gives AM the exclusive right to explore and
develop the San Miguel I and San Miguel II concessions for annual
payments. Total payments will not exceed $1,430,344, reduced by
taxes paid. During the year ended 2016 $65,000 was paid and
capitalized as mineral rights in accordance with the
Company’s accounting policies. At December 31, 2017 and 2016,
the Company has made all of the required payments under the
agreement.
In June
of 2013, the Company entered into a lease to mine antimony ore from
concessions located in the Wadley Mining district in Mexico. The
lease calls for a mandatory term of one year and requires payments
of $10,000 plus IVA tax of $1,600 per month. The lease is renewable
each year with a 15 day notice to the lessor, and agreement of
terms. The lease was renewed in June of 2017.
From
time to time, the Company is assessed fines and penalties by the
Mine Safety and Health Administration (“MSHA”). Using
appropriate regulatory channels, management may contest these
proposed assessments. At December 31, 2017 and 2016, the Company
has no accruals relating to such assessments.
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2017 and 2016
16. Business Segments
The
Company is currently organized and managed by four segments, which
represent the three operating units: United States antimony
operations, Mexican antimony operations and United States zeolite
operations, and a separate segment for revenue received from the
sale of precious metals recovered from the antimony process. The
Company’s precious metals segment was added as a new
reporting segment in 2016. The precious metals activity has been
reclassified from the antimony segment for 2017 and 2016. The
Company’s
Other operating
costs
include general and administrative expenses, freight
and delivery, and other non-production related costs.
Other income and expense
consists
primarily of interest income and expense and factoring
expense.
The
Madero smelter and Puerto Blanco mill at the Company’s Mexico
operation brings antimony up to an intermediate stage, which is
then shipped to the United States operation for finishing and sales
at the Thompson Falls, Montana plant. 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. Precious metal revenues are from
sales to customers in the United States and Canada.
Segment
disclosures regarding sales to major customers and for property,
plant, and equipment are located in Notes 2 and 6,
respectively.
Total Assets:
|
|
|
Antimony
|
|
|
United
States
|
$
2,510,323
|
$
2,514,306
|
Mexico
|
12,073,219
|
12,682,908
|
Subtotal
Antimony
|
14,583,542
|
15,197,214
|
Precious
Metals
|
642,774
|
524,352
|
Zeolite
|
1,904,938
|
2,044,432
|
Total
|
$
17,131,254
|
$
17,765,998
|
|
|
|
|
|
|
Antimony
|
|
|
United
States
|
$
32,961
|
$
1,331
|
Mexico
|
87,396
|
226,331
|
Subtotal
Antimony
|
120,357
|
227,662
|
Precious
metals
|
185,668
|
304,412
|
Zeolite
|
99,794
|
133,296
|
Total
|
$
405,819
|
$
665,370
|
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2017 and 2016
16. Business Segments, Continued:
Segment Operations for the
|
|
|
|
|
|
|
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$
7,588,470
|
$
-
|
$
7,588,470
|
$
374,872
|
$
2,266,636
|
$
10,229,978
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
57,761
|
623,899
|
681,660
|
64,499
|
222,729
|
968,888
|
|
|
|
|
|
|
|
Income
(loss) from operations
|
1,965,573
|
(3,579,810
)
|
(1,614,237
)
|
310,373
|
344,165
|
(959,699
)
|
|
|
|
|
|
|
|
Income
tax expense
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
Other
income (expense)
|
(35,853
)
|
(126,149
)
|
(162,002
)
|
-
|
(12,693
)
|
(174,695
)
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
$
1,929,720
|
$
(3,705,959
)
|
$
(1,776,239
)
|
$
310,373
|
$
331,472
|
$
(1,134,394
)
|
Segment Operations for the
|
|
|
|
|
|
|
Year ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$
8,740,602
|
$
3,568
|
$
8,744,170
|
$
672,871
|
$
2,473,094
|
$
11,890,135
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
62,863
|
678,639
|
741,502
|
44,367
|
213,868
|
999,737
|
|
|
|
|
|
|
|
Income
(loss) from operations
|
3,393,787
|
(5,083,832
)
|
(1,690,045
)
|
628,504
|
245,019
|
(816,522
)
|
|
|
|
|
|
|
|
Income
tax expense
|
(13,090
)
|
(285,048
)
|
(298,138
)
|
-
|
-
|
(298,138
)
|
|
|
|
|
|
|
|
Other
income (expense)
|
(34,262
)
|
(149,165
)
|
(183,427
)
|
-
|
(11,113
)
|
(194,540
)
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
$
3,346,435
|
$
(5,518,045
)
|
$
(2,171,610
)
|
$
628,504
|
$
233,906
|
$
(1,309,200
)
|
United States Antimony (AMEX:UAMY)
Historical Stock Chart
From Aug 2024 to Sep 2024
United States Antimony (AMEX:UAMY)
Historical Stock Chart
From Sep 2023 to Sep 2024