UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2020
 
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from to
 
Commission File No. 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
(Address of principal executive offices)
 
Registrant’s telephone number: (406 )827-3523
 
Securities registered pursuant to Section 12(g) of the Act:
 
Title of Each Class
Trading Symbol(s)
Name of Each Exchange on Which Registered
Common Stock, $0.01 par value
UAMY
NYSE American
 
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes 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, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
 
Large Accelerated Filer ☐
Accelerated Filer ☐
Non-Accelerated Filer
Small Reporting Company
Emerging Growth Company ☐
 
Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):
Yes ☐ No
 
APPLICABLE ONLY TO CORPORATE ISSUERS:
 
At November 16, 2020, the registrant had outstanding 75,949,757 shares of par value $0.01 common stock.
 

 
 
 
UNITED STATES ANTIMONY CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD
ENDED SEPTEMBER 30, 2020
 
TABLE OF CONTENTS
 
 
 
 
[The balance of this page has been intentionally left blank.]
 
 
 
 
 
 
 
PART I-FINANCIAL INFORMATION
 
Item 1. Financial Statements
United States Antimony Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited)
 
 
ASSETS
 
 
 
September 30,
2020
 
 
December 31,
2019
 
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 $1,435,225 
 $115,506 
Certificates of deposit
  254,213 
  253,552 
Accounts receivable
  222,054 
  284,453 
Inventories
  565,050 
  626,244 
Total current assets
  2,476,542 
  1,279,755 
 
    
    
Properties, plants and equipment, net
  11,421,503 
  12,186,848 
Restricted cash for reclamation bonds
  57,261 
  57,261 
IVA receivable and other assets
  159,992 
  170,111 
Total assets
 $14,115,298 
 $13,693,975 
 
    
    
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
    
    
    Checks issued and payable
 $14,754 
 $17,633 
Accounts payable
  2,076,794 
  2,328,977 
Due to factor
  5,848 
  10,880 
Accrued payroll, taxes and interest
  215,973 
  260,800 
Other accrued liabilities
  404,804 
  334,208 
Payable to related parties
  253,564 
  359,309 
Deferred revenue
  32,400 
  32,400 
Notes payable to bank
  150,796 
  197,066 
Hillgrove advances payable (Note 10)
  378,074 
  378,074 
Long-term debt, current portion
  55,956 
  56,334 
Total current liabilities
  3,588,963 
  3,975,681 
 
    
    
Long-term debt, net of current portion
  46,264 
  76,762 
Hillgrove advances payable (Note 10)
  756,147 
  756,147 
Note payable-SBA (Note 15)
  443,400 
  - 
Stock payable to directors for services
  93,750 
  134,375 
Asset retirement obligations and accrued reclamation costs
  289,986 
  283,868 
Total liabilities
  5,218,510 
  5,226,833 
Commitments and contingencies (Note 4 and 10)
    
    
 
    
    
Stockholders' equity:
    
    
Preferred stock $0.01 par value, 10,000,000 shares authorized:
    
    
Series A: -0- shares issued and outstanding
  - 
  - 
Series B: 750,000 shares issued and outstanding
    
    
(liquidation preference $937,500 and $930,000
    
    
 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 $5,043,622 and $5,002,473
    
    
 respectively)
  17,509 
  17,509 
Common stock, $0.01 par value, 90,000,000 shares authorized;
    
    
75,949,757 and 69,661,436 shares issued and outstanding, respectively
  759,496 
  696,614 
Additional paid-in capital
  39,050,899 
  37,107,730 
Accumulated deficit
  (30,940,395)
  (29,363,990)
Total stockholders' equity
  8,896,788 
  8,467,142 
Total liabilities and stockholders' equity
 $14,115,298 
 $13,693,975 
 
The accompanying notes are an integral part of the consolidated financial statements.
 
 
1
 
 
United States Antimony Corporation and Subsidiaries
Consolidated Statements of Operations (Unaudited)
 
 
 
  For the three months ended  
 
 
  For the nine months ended  
 
 
 
September 30, 2020
 
 
September 30, 2019
 
 
September 30, 2020
 
 
September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
REVENUES
 $1,007,231 
 $1,787,934 
 $4,335,413 
 $6,516,582 
 
    
    
    
    
COST OF REVENUES
  1,442,322 
  2,058,751 
  4,685,388 
  7,029,647 
 
    
    
    
    
GROSS PROFIT (LOSS)
  (435,091)
  (270,817)
  (349,975)
  (513,065)
 
    
    
    
    
OPERATING EXPENSES:
    
    
    
    
     General and administrative
  108,643 
  139,456 
  425,174 
  498,539 
     Salaries and benefits
  82,308 
  91,178 
  288,455 
  424,208 
     Other operating expenses
  - 
  - 
  24,250 
  86,630 
     Professional fees
  43,557 
  40,010 
  161,167 
  163,204 
    Loss on abandonment of mineral properties
  318,502 
  - 
  318,502 
  - 
TOTAL OPERATING EXPENSES
  553,010 
  270,644 
  1,217,548 
  1,172,581 
 
    
    
    
    
INCOME (LOSS) FROM OPERATIONS
  (988,101)
  (541,461)
  (1,567,523)
  (1,685,646)
 
    
    
    
    
OTHER INCOME (EXPENSE):
    
    
    
    
Interest income
  19 
  19 
  854 
  791 
Interest expense
  (3,750)
  (24,444)
  (14,937)
  (71,160)
Grant income (Note 15)
  - 
  - 
  10,000 
  - 
Factoring expense
  (1,408)
  (2,706)
  (4,799)
  (6,076)
TOTAL OTHER INCOME (EXPENSE)
  (5,139)
  (27,131)
  (8,882)
  (76,445)
 
    
    
    
    
NET INCOME (LOSS)
  (993,240)
  (568,592)
  (1,576,405)
  (1,762,091)
     Preferred dividends
  (12,162)
  (12,162)
  (36,487)
  (36,487)
 
    
    
    
    
   Net income (loss) available to common stockholders
 $(1,005,402)
 $(580,754)
 $(1,612,892)
 $(1,798,578)
 
    
    
    
    
Net income (loss) per share of common stock:
    
    
    
    
Basic and diluted
 $(0.01)
 $(0.01)
 $(0.02)
 $(0.03)
 
    
    
    
    
Weighted average shares outstanding:
    
    
    
    
Basic and diluted
  73,240,218 
  69,224,297 
  71,033,733 
  68,818,050 
 
 
2
 
 
United States Antimony Corporation and Subsidiaries
Consolidated Statement of Changes in Stockholders' Equity (Unaudited)
 
For the three month periods ended September 30, 2020 and 2019         
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional
 
 
 
 
 
Total
 
 
 
Total Preferred Stock
 
 
Common Stock
 
 
Paid
 
 
Accumulated
 
 
Stockholders'
 
Three months ended September 30, 2020
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
In Capital
 
 
Deficit
 
 
Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances, July 1, 2020
  2,678,909 
 $26,788 
  70,206,899 
 $702,068 
 $37,295,259 
 $(29,947,155)
 $8,076,960 
 
    
    
    
    
    
    
    
Issuance of common stock and warrants for cash
    
    
  5,742,858 
  57,428 
  1,952,572 
    
  2,010,000 
Common stock issuance costs
    
    
    
    
  (196,932)
    
  (196,932)
Net loss
    
    
    
    
    
  (993,240)
  (993,240)
Balances, September 30, 2020
  2,678,909 
 $26,788 
  75,949,757 
 $759,496 
 $39,050,899 
 $(30,940,395)
 $8,896,788 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional
 
 
 
 
 
Total
 
 
 
Total Preferred Stock
 
 
Common Stock
 
 
Paid
 
 
Accumulated
 
 
Stockholders'
 
Three months ended September 30, 2019
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
In Capital
 
 
Deficit
 
 
Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances, July 1, 2019
  2,678,909 
 $26,788 
  68,757,354 
 $687,573 
 $36,712,572 
 $(26,884,598)
 $10,542,335 
 
    
    
    
    
    
    
    
Issuance of common stock for cash
    
    
  904,082 
  9,041 
  422,281 
    
  431,322 
Net loss
    
    
    
    
    
  (568,592)
  (568,592)
Balances, September 30, 2019
  2,678,909 
 $26,788 
  69,661,436 
 $696,614 
 $37,134,853 
 $(27,453,190)
 $10,405,065 
 
For the nine month periods ended September 30, 2020 and 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional
 
 
 
 
 
Total
 
 
 
Total Preferred Stock
 
 
Common Stock
 
 
Paid
 
 
Accumulated
 
 
Stockholders'
 
Nine months ended September 30, 2020
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
In Capital
 
 
Deficit
 
 
Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances, January 1, 2020
  2,678,909 
 $26,788 
  69,661,436 
 $696,614 
 $37,107,730 
 $(29,363,990)
 $8,467,142 
Issuance of common stock upon exercise of warrants (Note 10)
    
    
  250,000 
  2,500 
  60,000 
    
  62,500 
Issuance of common stock to Directors
    
    
  295,463 
  2,954 
  127,529 
    
  130,483 
Issuance of common stock and warrants for cash
    
    
  5,742,858 
  57,428 
  1,952,572 
    
  2,010,000 
Common stock issuance costs
    
    
    
    
  (196,932)
    
  (196,932)
Net loss
    
    
    
    
    
  (1,576,405)
  (1,576,405)
Balances, September 30, 2020
  2,678,909 
 $26,788 
  75,949,757 
 $759,496 
 $39,050,899 
 $(30,940,395)
 $8,896,788 
 
    
    
    
    
    
    
    
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional
 
 
 
 
 
Total
 
 
 
Total Preferred Stock
 
 
Common Stock
 
 
Paid
 
 
Accumulated
 
 
Stockholders'
 
Nine months ended September 30, 2019
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
In Capital
 
 
Deficit
 
 
Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances, January 1, 2019
  2,678,909 
 $26,788 
  68,227,171 
 $682,271 
 $36,406,874 
 $(25,691,099)
 $11,424,834 
 
    
    
    
    
    
    
    
Issuance of common stock to chief financial officer
    
    
  200,000 
  2,000 
  134,000 
    
  136,000 
Issuance of common stock to Directors
    
    
  330,183 
  3,302 
  171,698 
    
  175,000 
Issuance of common stock for cash
    
    
  904,082 
  9,041 
  422,281 
    
  431,322 
Net loss
    
    
    
    
    
  (1,762,091)
  (1,762,091)
Balances, September 30, 2019
  2,678,909 
 $26,788 
  69,661,436 
 $696,614 
 $37,134,853 
 $(27,453,190)
 $10,405,065 
 
The accompanying notes are an integral part of the consolidated financial statements.
 

 
 
3
 
 
United States Antimony Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
 
 
 
For the nine months ended
 
 
 
September 30, 2020
 
 
September 30, 2019
 
Cash Flows From Operating Activities:
 
 
 
 
 
 
Net income (loss)
 $(1,576,405)
 $(1,762,091)
Adjustments to reconcile net income (loss) to net cash
    
    
provided (used) by operating activities:
    
    
Depreciation and amortization
  667,298 
  732,702 
Loss on abandonment of mineral properties
  318,502 
    
Amortization of debt discount
  - 
  54,110 
Accretion of asset retirement obligation
  6,118 
  4,611 
Common stock issued for services
  - 
  136,000 
Common stock payable for directors' fees
  89,858 
  96,875 
Other non cash items
  (661)
  (598)
Change in:
    
    
Accounts receivable, net
  62,399 
  115,451 
Inventories
  61,194 
  47,187 
IVA receivable and other assets
  10,119 
  39,501 
Accounts payable
  (252,183)
  134,237 
Accrued payroll, taxes and interest
  (44,827)
  41,325 
Other accrued liabilities
  70,596 
  47,465 
Payables to related parties
  21,405 
  29,683 
Net cash provided (used) by operating activities
  (566,587)
  (283,542)
 
    
    
Cash Flows From Investing Activities:
    
    
Payment received on note receivable for sale of land
  - 
  400,000 
Purchases of properties, plants and equipment
  (220,455)
  (677,837)
Net cash used by investing activities
  (220,455)
  (277,837)
 
    
    
Cash Flows From Financing Activities:
    
    
Change in checks issued and payable
  (2,879)
  42,580 
Net proceeds from (payments to) factor
  (5,032)
  (14,777)
Proceeds from issuance of common stock and warrants, net of issuance costs
  1,813,068 
  431,322 
Advances from related party
  - 
  237,400 
Payments on advances from related party
  (64,650)
  (17,387)
Proceeds from note payable-SBA
  443,400 
  - 
Proceeds from notes payable to bank, net of payments
  (46,270)
  14,311 
Principal payments on long-term debt
  (30,876)
  (116,961)
Net cash provided (used) by financing activities
  2,106,761 
  576,488 
 
    
    
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
  1,319,719 
  15,109 
Cash and cash equivalents and restricted cash at beginning of period
  172,767 
  113,897 
Cash and cash equivalents and restricted cash at end of period
 $1,492,486 
 $129,006 
 
    
    
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
    
    
Noncash investing and financing activities:
    
    
Common stock payable issued to directors
 $130,483 
 $175,000 
      Payable to related party satisfied with exercise of stock
    
    
        purchase warrant
 $62,500 
    
.
The accompanying notes are an integral part of the consolidated financial statements.
 

4
4
 
 
PART I - FINANCIAL INFORMATION, CONTINUED:
 
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 
1.
Basis of Presentation
 
The unaudited consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America for interim financial information, as well as the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of the Company’s management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation of the interim financial statements have been included. Operating results for the three and nine month periods ended September 30, 2020 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2020.
 
For further information refer to the financial statements and footnotes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
 
Going Concern Consideration
 
At September 30, 2020, the Company’s consolidated financial statements show negative working capital of approximately $1.1 million and an accumulated deficit of approximately $30.9 million.  With the exception of 2018, the Company has incurred losses for the past several years.  The net income in 2018 was primarily due to non-recurring events which contributed approximately $2.5 million to net income. These factors indicate that there is substantial doubt regarding the ability to continue as a going concern for the next twelve months. 
 
Over the past several years, the Company has been able to make required principal payments on its debt from cash generated from operations.  The abandonment of the mineral properties in Mexico in November 2019 resulted in the removal of approximately $1,500,000 of debt and the related payments which were $86,000 in 2019 and $193,000 in 2018.  In March of 2020, the Company applied for and received funds from a note payable-Small Business Administration (“SBA”) for $443,400. Management believes that the Company can make debt payments when due.  In August 2019 and in July 2020 the Company was successful in raising $404,199 and $1,813,068, respectively, from the sale of shares of common stock to fund capital projects in Mexico.   
 
The continuing losses are principally a result of the Company’s antimony operations, due to both depressed antimony prices and high production costs incurred in Mexico.  To improve conditions, the Company plans to continue searching for areas to reduce production costs, and we have decided to de-emphasize our antimony production and concentrate our resources on finishing the precious metals system in Mexico to take advantage of the current high prices for silver and gold.  Management expects improvement in cash flow in 2021 from the sale of precious metals extracted from the leach circuit scheduled to come on line in Mexico in the second half of 2021.  
 
There can be no assurance that management plans will alleviate the doubt regarding the Company’s ability to continue as a going concern over the next twelve months, particularly during the current period of market instability related to the COVID-19 pandemic.  If the going concern assumption were not appropriate for these financial statements, then adjustments would be necessary to the carrying values of the assets and liabilities, the reported revenues and expenses, and the balance sheet classifications used.
 
 
 
5
 
 
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 
2. 
Developments in Accounting Pronouncements
 
Accounting Standards Updates Adopted
 
In August 2018, the FASB issued ASU No. 2018-13 Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The update removes, modifies and makes additions to the disclosure requirements on fair value measurements. The update was adopted as of January 1, 2020, and its adoption did not have a material impact on the Company’s consolidated financial statements.
 
Accounting Standards Updates to Become Effective in Future Periods
 
In December 2019, the FASB issued ASU No. 2019-12 Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The update contains a number of provisions intended to simplify the accounting for income taxes. The update is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. Management is evaluating the impact of this update on the Company’s consolidated financial statements.
 
3. 
Income (Loss) Per Common Share
 
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.
 
At September 30, 2020 and 2019, the potentially dilutive common stock equivalents not included in the calculation of diluted earnings per share as their effect would have been anti-dilutive are as follows:
 
 
 
September 30, 2020
 
 
September 30, 2019
 
Warrants
  6,194,899 
  702,041 
Convertible preferred stock
  1,751,005 
  1,751,005 
Total possible dilution
  7,945,904 
  2,453,046 
 
4. 
Revenue Recognition
 
Products consist of the following:
 
Antimony: includes antimony oxide, sodium antimonate, antimony trisulfide, and antimony metal
Zeolite: includes coarse and fine zeolite crushed in various sizes
Precious Metals: includes unrefined and refined gold and silver
 
 
 
6
 
 
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 
4.       
Revenue Recognition, Continued:
 
Sales of products for the three and nine month periods ended September 30, 2020 and 2019, were as follows:
 
 
 
Three Months Ended
 
 
Nine Months Ended
 
 
 
September 30,
 
 
September 30,
 
 
 
2020
 
 
2019
 
 
2020
 
 
2019
 
Antimony
 $477,273 
 $1,080,871 
 $2,509,183 
 $4,294,281 
Zeolite
  481,126 
  651,563 
  1,653,201 
  2,081,751 
Precious metals
  48,832 
  55,500 
  173,029 
  140,550 
 
 $1,007,231 
 $1,787,934 
 $4,335,413 
 $6,516,582 
 
The following is sales information by geographic area based on the location of customers for the three and nine month periodss ended September 30, 2020 and 2019:
 
 
 
Three Months Ended
 
 
Nine Months Ended
 
 
 
September 30,
 
 
September 30,
 
 
 
2020
 
 
2019
 
 
2020
 
 
2019
 
United States
 $891,090 
 $1,570,364 
 $3,893,374 
 $5,498,640 
Canada
  116,141 
  217,570 
  442,039 
  544,350 
Mexico
  - 
  - 
  - 
  473,592 
 
 $1,007,231 
 $1,787,934 
 $4,335,413 
 $6,516,582 
 
Sales of products to significant customers were as follows for the three and nine month periods ended September 30, 2020 and 2019:
 
 
 
 For the Three Months Ended
 
 
 For the Nine Months Ended
 
Sales to Three
 
September 30,
 
 
September 30,
 
 
September 30,
 
 
September 30,
 
Largest Customers
 
2020
 
 
2019
 
 
2020
 
 
2019
 
Axens North America
 
 
 
 $128,805 
 
 
 
 
 
 
GE Chaplin, Inc.
 $114,075 
  - 
 $404,447 
 
 
 
Mexichem Specialty Compounds Inc.
  - 
  314,008 
  523,660 
 $1,373,533 
Kohler Corporation
  131,360 
  - 
  345,899 
  1,028,624 
Nyacol Nanotechnologies
  105,865 
  374,070 
  - 
  778,394 
 
 $351,300 
 $816,883 
 $1,274,006 
 $3,180,551 
% of Total Revenues
  35%
  46%
  29%
  49%
 
 
 
 
7
 
 
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 
4.       
Revenue Recognition, Continued:
 
Accounts receivable from largest customers were as follows at September 30, 2020 and December 31, 2019:
 
Largest Accounts Receivable
 
September 30,
2020
 
 
December 31,
2019
 
Nutreco Canada Inc.
 $14,172 
 $21,219 
Earth Innovations Inc.
  24,570 
  - 
Axens North America Inc.
  15,770 
  - 
Lake Shore Gold
  - 
  27,854 
Commerce Industrial Chemical
  - 
  54,684 
 
 $54,512 
 $103,757 
% of Total Receivables
  24.55%
  36.48%
 
Our trade accounts receivable balance related to contracts with customers was $222,054 at September 30, 2020 and $284,453 at December 31, 2019. Our products do not involve any warranty agreements and product returns are not typical.
 
5.
Inventories
 
Inventories at September 30, 2020 and December 31, 2019 consisted primarily of finished antimony products, antimony metal, antimony ore, and finished zeolite products that are stated at the lower of first-in, first-out cost or estimated net realizable value. Finished antimony products, antimony metal and finished zeolite products costs include raw materials, direct labor and processing facility overhead costs and freight. Inventories at September 30, 2020 and December 31, 2019, are as follows:
 
 
 
September 30,
2020
 
 
December 31,
2019
 
Antimony Oxide
 $47,981 
 $204,550 
Antimony Metal
  28,807 
  5,654 
Antimony Ore
  151,841 
  151,841 
     Total antimony
  228,629 
  362,045 
Zeolite
  336,421 
  264,199 
 
 $565,050 
 $626,244 
 
Antimony oxide inventory consisted of finished product oxide held at the Company's plants in Montana and Mexico. Antimony concentrates and ore were held primarily at sites in Mexico and are essentially raw material. The Company's zeolite inventory consists of salable zeolite material.
 
At September 30, 2020 and December 31, 2019, the antimony inventory in Mexico was valued at estimated net realizable value resulting in write-downs of $7,502 and $16,396, respectively.
 
 
 
8
 
 
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 
6.
Accounts Receivable and Due to Factor
 
Factoring fees paid by the Company for the three and nine month periods ended September 30, 2020 were $1,408 (2019: $2,706) and $4,799 (2019: $6,076), respectively. For the three and nine month periods ended September 30, 2020, net accounts receivable of approximately $70,350 (2019: $135,300) and $239,950 (2019: $303,800), respectively, were sold under the agreement with the factor.
 
We present the receivables, net of allowances, as current assets and we present the amount potentially due to the Factor as secured financing in current liablities.
 
Accounts Receivble
 
September 30,
2020
 
 
December 31,
2019
 
Accounts receivable - non factored
 $216,206 
 $273,573 
Accounts receivable - factored with recourse
  5,848 
  10,880 
      Accounts receivable - net
 $222,054 
 $284,453 
 
7. 
Commitments and Contingencies
 
In June of 2013, the Company entered into a lease to mine antimony ore from concessions located in the Wadley Mining district in Mexico. The lease called for a term of one year and required payments of $10,000, plus a tax of $1,700, per month. The lease was renewable each year with a 15 day notice to the lessor and agreement of terms. The lease renewal was scheduled for renewal in June 2020. Subsequent to quarter end, and after discussions with the lessor, in July 2020, the Company decided not to renew the lease due to the continuing low market price for antimony and to reduce Mexican antimony production while seeking other lower cost sources of antimony ore and concentrates. The Company wrote off $318,502 of assets at the Wadley mine, which was determined to be impaired as of September 30, 2020.
 
8. 
Notes Payable to Bank
 
At September 30, 2020 and December 31, 2019, the Company had the following notes payable to bank:
 
 
September 30,
 
 
December 31,
 
 
 
2020
 
 
2019
 
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
 $88,585 
 $97,067 
 
    
    
Promissory note payable to First Security Bank of Missoula,
    
    
bearing interest at 3.150%, payable on demand, collateralized
    
    
by a lien on Certificate of Deposit
  62,211 
  99,999 
 
    
    
Total notes payable to the bank
 $150,796 
 $197,066 
 
These notes were personally guaranteed by John C. Lawrence, the Company’s previous Chief Executive Officer and Chairman of the Board of Directors. The maximum amount available for borrowing under each note is $99,999. Mr. Lawrence passed away on June 16, 2020. The Company and the bank are considering changes to the guarantee.
 
 
9
 
 
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited), Continued:
 
9. 
Debt
 
Long-Term debt at September 30, 2020 and December 31, 2019 is as follows:
 
September 30,
 
 
December 31,
 
 
 
2020
 
 
2019
 
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.
 $75,100 
 $100,000 
Note payable to Cat Financial Services, bearing interest at 6%;
    
    
payable in monthly installments of $778; maturing
    
    
December 2022; collateralized by equipment.
  20,974 
  26,250 
Note payable to De Lage Landen Financial Services,
    
    
bearing interest at 3.51%; payable in monthly installments of $655;
    
    
maturing September 2019; collateralized by equipment.
    
  700 
Note payable to Phyllis Rice, bearing interest
    
    
at 1%; payable in monthly installments of $2,000; originally maturing
    
    
March 2015; collateralized by equipment.
  6,146 
  6,146 
 
  102,220 
  133,096 
Less current portion
  (55,956)
  (56,334)
Long-term portion
 $46,264 
 $76,762 
 
At September 30, 2020, principal payments on debt are due as follows:
 
12 Months Ending September 30,
 
Principal Payment
 
2021
  55,956 
2022
  41,920 
2023
  4,344 
 
 $102,220 
 
10. 
Related Party Transactions
 
On June 16, 2020, John C. Lawrence, the Company’s founder, Chief Executive officer, and Chairman of the Board of Directors, passed away. The Company’s Executive Vice-President, John C. Gustaven, has been appointed to Interim Chief Executive Officer.
 
The Company’s previous President and Chairman, John Lawrence, rented equipment to the Company and charged 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’s estate as of September 30, 2020 and December 31, 2019 was $178,380 and $156,974, respectively. For the three and nine months ended September 30, 2020, the Company paid $0 and $1,532, respectively, compared to $1,764 and $8,034 for the three and nine months ended September 30, 2019, respectively, to John Lawrence, our previous President and Chief Executive Officer, as reimbursement for equipment used by the Company.
 
During 2019, Mr. Lawrence advanced funds to the Company that had a balance at December 31, 2019 of $192,134. During the three and nine month periods ended September 30, 2020, the Company paid First Security Bank on behalf of Mr. Lawrence $18,490 and $117,150, respectively, on these advances. A portion of this amount was in the form of the exercise of a warrant held by Mr. Lawrence for 250,000 shares of common stock at an exercise price of $0.25 or $62,500. The balance of the advances due to Mr. Lawrence at September 30, 2020 is $74,984.
 
 
10
 
 
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited), Continued:
 
10. 
Related Party Transactions, Continued:
 
John C. Gustaven, Interim Chief Executive Officer of the Company, has an advance due from the Company of $200 and $10,200, respectively, at September 30, 2020 and December 31, 2019. During the three and nine month periods ended September 30, 2020, the Company paid Mr. Gustaven $0 and $10,000, respectively, on these advances.
 
11. 
Stockholder’s Equity
 
During the nine month periods ended September 30, 2020 and September 30, 2019, the Company accrued $89,858 and $96,875, respectively, in directors’ fees payable that will be paid in common stock.
 
During the nine months ended September 30, 2020, the Company issued 250,000 shares of common stock to John Lawrence, the Company’s previous president, upon exercise of a warrant.
 
Warrants
 
At December 31, 2019, warrants for purchase of 250,000 shares of the Company’s common stock for $0.25 per share were outstanding and have no expiration date. These warrants were owned by the Company’s previous president. The warrants were exercised on March 18, 2020.
 
Warrants for purchase of 452,041 shares of the Company’s common stock were sold with shares of common stock in 2019.    The warrants have an exercise price of $0.65 per share and expire in 2022.   None have been exercised and all are outstanding at September 30, 2020 and December 31, 2019.
 
Warrants for purchase of 5,742,858 shares of the Company’s common stock were sold with shares of common stock in July of 2020.    The warrants have an exercise price of $0.46 per share and expire in 2025.   None have been exercised and all are outstanding at September 30, 2020. The warrants can be exercised on a cashless basis. The warrants contain a repricing provision whereby if the Company raises at leaset $6,000,000 in gross proceeds from the sale of its common stock at an effective price per share less than the warrants’ exercise price, the exercise price of the warrants will be repriced to the lower price.
 
12. 
Income Taxes
 
During the three and nine month periods ended September 30, 2020 and year ended December 31, 2019, the Company determined that a valuation allowance equal to 100% of any deferred tax asset was appropriate, as management of the Company cannot determine that it is more likely than not the Company will realize the benefit of its net deferred tax asset. The net effect is that the deferred tax asset is fully reserved for at September 30, 2020 and December 31, 2019. Management estimates the effective tax rate at 0% for the current year.
 
In early 2019, the Company was notified by the Mexican tax authority (“SAT”) began its re-assessment of USAMSA’s 2013 income tax return. In November 2019, SAT assessed the Company $16.3 million pesos, which was approximately $738,000 USD as of September 30, 2020. 
 
Management has reviewed the 2019 assessment notice from SAT and believes the findings have no merit. The Company has engaged a tax attorney in Mexico to defend its position. An appeal was filed by the Company in November 2019 suspending SAT from taking immediate action regarding the assessment. The Company posted a guarantee of the amount in March 2020 as is required under the appeal process. Management expects the appeal process to continue through 2020 and into 2021.
 
 
11
 
 
 
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited), Continued:
 
12. 
Income Taxes, Continued:
 
At September 30, 2020, management assessed the possible outcomes for this tax audit and believes, based on its discussions with its tax attorney in Mexico, that the most likely outcome will be that the Company will be successful in its appeal resulting in no tax due. Management determined that no amount should be accrued at September 30, 2020 relating to this potential tax liability. There can be no assurance that the Company’s ultimate liability, if any, will not have a material adverse effect on the Company’s results of operations or financial position.
 
If an issue addressed during the SAT audit is resolved in a manner inconsistent with management expectations, the Company will adjust its net operating loss carryforward, or accrue penalties, interest, and tax associated with the assessment.
 
13. 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) in which the Company was advanced funds from Hillgrove to build facilities to process Hillgrove antimony concentrate. The Company has not processed Hillgrove concentrate for more than two years. The agreement requires the Company to pay the advance balance after Hillgrove issues a stop notice. Payments would begin 90 days after the stop notice issue date and be made in six equal and quarterly installments. The balance of the advance liability due to Hillgrove was $1,134,221 at both September 30, 2020 and December 31, 2019. Hillgrove was acquired by Red River Resources LTD (“Red River”) during 2019. Although the Company has not received a stop notice through the date these financial statements were issued, management has determined that one might be forthcoming during the next twelve months. Based on management’s assessment of likelihood and the payment terms of the agreement, $378,074 of the balance is classified as current as of September 30, 2020 and December 31, 2019.
 
14. 
Business Segments
 
The Company is currently organized and managed by four segments, which represent our operating units: United States antimony operations, Mexican antimony operations, precious metals recovery and United States zeolite operations.
 
The Puerto Blanco mill and the Madero smelter at the Company’s Mexico operation bring antimony up to an intermediate or finished stage, which may be sold directly or shipped to the United States operation for finishing at the Thompson Falls, Montana plant. The Puerto Blanco mill in Mexico is the site of our crushing and flotation plant, and a cyanide leach plant which will recover precious metals after the ore goes through the crushing and flotation cycles. A precious metals recovery plant is operated in conjunction with the antimony processing plant at Thompson Falls, Montana, where a 99% precious metals mix will be produced. 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, although the Company does have a sales operation in Canada.
 
 
 
12
 
 
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited), Continued:
 
14. 
Business Segments. Continued:
 
Segment disclosure regarding sales to major customers is located in Note 4.
 
Properties, plants
  and equipment, net:
 
September 30,
2020
 
 
December 31,
2019
 
Antimony
 
 
 
 
 
 
United States
 $1,641,364 
 $1,631,100 
Mexico
  7,782,821 
  8,800,820 
Subtotal Antimony
  9,424,185 
  10,431,920 
Precious metals
  934,312 
  567,738 
Zeolite
  1,063,006 
  1,187,190 
   Total
 $11,421,503 
 $12,186,848 
 
At September 30, 2020 and December 31, 2019, the Company had $841,503 and $1,306,579, respectively, of assets that were not yet placed in service and have not yet been depreciatied.
 
 
 
For the Three Months Ended
 
 
For the Nine Months Ended
 
 
 
September 30, 2020
 
 
September 30, 2019
 
 
September 30, 2020
 
 
September 30, 2019
 
Capital expenditures:
 
 
 
 
 
 
 
 
 
 
 
 
Antimony
 
 
 
 
 
 
 
 
 
 
 
 
United States
 
 
 
 
 
 
 $32,448 
 $2,713 
Mexico
 $2,923 
 $190,861 
  33,585 
  607,564 
Subtotal Antimony
  2,923 
  190,861 
  66,033 
  610,277 
Precious Metals
  17,366 
  4,095 
  138,211 
  17,247 
Zeolite
    
  9,304 
  16,211 
  50,313 
   Total
 $20,289 
 $204,260 
 $220,455 
 $677,837 
 
 
 
 
 
13
 
 
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited), Continued:
 
14.            
Business Segments, Continued:
 
Segment Operations for the three
 
Antimony
 
 
Antimony
 
 
Total
 
 
Precious
 
 
 
 
 
 
 
months ended September 30, 2020
 
USA
 
 
Mexico
 
 
Antimony
 
 
Metals
 
 
Zeolite
 
 
Totals
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 $477,273 
 $- 
 $477,273 
 $48,832 
 $481,126 
 $1,007,231 
 
    
    
    
    
    
    
Depreciation and amortization
 $7,395 
 $146,099 
 $153,494 
 $22,141 
 $42,015 
 $217,650 
 
    
    
    
    
    
    
Income (loss) from operations
 $(208,676)
 $(904,337)
 $(1,113,013)
 $26,691 
 $98,221 
 $(988,101)
 
    
    
    
    
    
    
Other income (expense):
  (2,883)
  (4)
  (2,887)
  - 
  (2,252)
  (5,139)
 
    
    
    
    
    
    
NET INCOME (LOSS)
 $(211,559)
 $(904,341)
 $(1,115,900)
 $26,691 
 $95,969 
 $(993,240)
 
Segment Operations for the three
 
Antimony
 
 
Antimony
 
 
Total
 
 
Precious
 
 
 
 
 
 
 
months ended September 30, 2019
 
USA
 
 
Mexico
 
 
Antimony
 
 
Metals
 
 
Zeolite
 
 
Totals
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 $1,080,871 
 $- 
 $1,080,871 
 $55,500 
 $651,563 
 $1,787,934 
 
    
    
    
    
    
    
Depreciation and amortization
 $10,935 
 $210,766 
 $221,701 
 $17,630 
 $46,825 
 $286,156 
 
    
    
    
    
    
    
Income (loss) from operations
 $227,712 
 $(921,965)
 $(694,253)
 $37,869 
 $114,923 
 $(541,461)
 
    
    
    
    
    
    
Other income (expense):
  (4,602)
  (18,037)
  (22,639)
  - 
  (4,492)
  (27,131)
 
    
    
    
    
    
    
NET INCOME (LOSS)
 $223,110 
 $(940,002)
 $(716,892)
 $37,869 
 $110,431 
 $(568,592)
 
 
 
 
 
14
 
 
 
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited), Continued:
 
14.            
Business Segments, Continued:
 
Segment Operations for the nine
 
Antimony
 
 
Antimony
 
 
Total
 
 
Precious
 
 
 
 
 
 
 
months ended September 30, 2020
 
USA
 
 
Mexico
 
 
Antimony
 
 
Metals
 
 
Zeolite
 
 
Totals
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 $2,509,183 
 $- 
 $2,509,183 
 $173,029 
 $1,653,201 
 $4,335,413 
 
    
    
    
    
    
    
Depreciation and amortization
 $22,184 
 $438,297 
 $460,481 
 $66,422 
 $140,395 
 $667,298 
 
    
    
    
    
    
    
Income (loss) from operations
 $156,884 
 $(2,182,979)
 $(2,026,095)
 $106,607 
 $351,965 
 $(1,567,523)
 
    
    
    
    
    
    
Other income (expense):
  (1,058)
  (4)
  (1,062)
  - 
  (7,820)
  (8,882)
 
    
    
    
    
    
    
NET INCOME (LOSS)
 $155,826 
 $(2,182,983)
 $(2,027,157)
 $106,607 
 $344,145 
 $(1,576,405)
 
    
    
    
    
    
    
 
Segment Operations for the nine
 
Antimony
 
 
Antimony
 
 
Total
 
 
Precious
 
 
 
 
 
 
 
months ended September 30, 2019
 
USA
 
 
Mexico
 
 
Antimony
 
 
Metals
 
 
Zeolite
 
 
Totals
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 $3,820,689 
 $473,592 
 $4,294,281 
 $140,550 
 $2,081,751 
 $6,516,582 
 
    
    
    
    
    
    
Depreciation and amortization
 $32,690 
 $508,934 
 $541,624 
 $51,652 
 $139,426 
 $732,702 
 
    
    
    
    
    
    
Income (loss) from operations
 $1,083,360 
 $(3,318,053)
 $(2,234,693)
 $88,898 
 $460,149 
 $(1,685,646)
 
    
    
    
    
    
    
Other income (expense):
  (10,388)
  (54,375)
  (64,763)
  - 
  (11,682)
  (76,445)
 
    
    
    
    
    
    
NET INCOME (LOSS)
 $1,072,972 
 $(3,372,428)
 $(2,299,456)
 $88,898 
 $448,467 
 $(1,762,091)
 
15.  Note Payable-Small Business Administration Loans and Grant
 
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (the “CARES Act”) Act was signed into United States law.   
 
On April 22, 2020, the Company received a loan of $443,400 pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I, Section 1102 and 1106 of the CARES Act.  The loan, which was in the form of a promissory note, as amended, dated April 22, 2020 issued by the Company (the “Note”); the Note matures on April 13, 2022 and bears interest at a rate of 1% per annum. The Note may be prepaid by the Company at any time prior to maturity with no prepayment penalties. Under the terms of the PPP, certain amounts of the loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. Qualifying expenses include payroll costs, costs used to continue group health care benefits, mortgage payments, rent, and utilities. As of September 30, 2020, the Company has used funds from the loan to pay qualifying expenses.  The Company intends to apply for forgiveness of the loan when it receives instructions from the lender at which time grant income of $443,400 will be recognized.
 
During the three months ended September 30, 2020, the Company received $10,000 under Division A, Title I, Section 1110 of the CARES Act. The Company is not required to pay this amount back and thus recognized $10,000 as government grant income during the period.
 
16. Subsequent Events
 
None
 
 
 
 
 
 
15
 
 
ITEM 2.     
Management’s Discussion and Analysis of Results of Operations and FinancialCondition
 
COVID-19 Coronavirus Pandemic Response and Impact
 
Following the outbreak of the COVID-19 coronavirus global pandemic ("COVID-19") in early 2020, in March 2020 the U.S. Centers for Disease Control issued guidelines to mitigate the spread and health consequences of COVID-19. The Company implemented changes to its operations and business practices to follow the guidelines and minimize physical interaction, including using technology to allow employees to work from home when possible and altering production procedures and schedules, asset maintenance, and limiting discretionary spending.  As long as they are required, the operational practices implemented could have an adverse impact on our operating results due to deferred production and revenues or additional costs.  The negative impact of COVID-19 remains uncertain, including on overall business and market conditions.  There is uncertainty related to the potential additional impacts COVID-19 could have on our operations and financial results for the year.
 
General
 
Certain matters discussed are forward-looking statements that involve risks and uncertainties, including the impact of antimony prices and production volatility, changing market conditions and the regulatory environment and other risks. Actual results may differ materially from those projected. These forward-looking statements represent our judgment as of the date of this filing. We disclaim, however, any intent or obligation to update these forward-looking statements.
 
 
16
 
 
 

 
Three Months Ended
 
 
Three Months Ended
 
 
Nine Months Ended
 
 
Nine Months Ended
 
Antimony - Combined USA and Mexico
 
September 30, 2020
 
 
September 30, 2019
 
 
September 30, 2020
 
 
September 30, 2019
 
Lbs of Antimony Metal USA
  89,052 
  187,889 
  375,519 
  597,308 
Lbs of Antimony Metal Mexico
  57,790 
  155,549 
  300,474 
  607,407 
   Total Lbs of Antimony Metal Sold
  146,842 
  343,438 
  675,993 
  1,204,715 
Average Sales Price/Lb Metal
 $3.25 
 $3.15 
 $3.71 
 $3.56 
Net loss/Lb Metal
 $(7.60)
 $(2.09)
 $(3.00)
 $(1.91)
 
    
    
    
    
Gross antimony revenue
 $477,273 
 $1,080,871 
 $2,509,183 
 $4,294,281 
 
    
    
    
    
Cost of sales - domestic
  (491,092)
  (628,050)
  (1,559,018)
  (2,271,512)
Cost of sales - Mexico
  (557,399)
  (892,714)
  (1,805,127)
  (3,138,309)
Operating expenses
  (223,293)
  (254,360)
  (852,631)
  (1,119,153)
Non-operating expenses
  (2,887)
  (22,639)