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.
3.02
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
10.27
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
10.28
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
10.30
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:
10.31
Warrant Issue-Al W.
Dugan
10.32
Amendment
Agreement
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:
10.35
Maguire Settlement
Agreement
10.36
Warrant
Issue-Carlos Tejada
10.37
Warrant Issue-Al W.
Dugan
10.38
Memorandum of
Understanding with Geosearch Inc.
10.39
Factoring
Agreement-Systran Financial Services Company
10.40
Mortgage to John C.
Lawrence
10.41
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
10.42
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
10.43
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.
10.44
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
10.45
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
10.46
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*
44.1
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.
Subsidiaries of Registrant, as of December 31, 2020
Bear
River Zeolite Company
C/o Box
643
Thompson
Falls, MT 59873
Antimonio
de Mexico, S.A. de C.V.
C/o Box
643
Thompson
Falls, MT 59873
United
States Antimony, Mexico, S.A. de C.V.
C/o Box
643
Thompson
Falls, MT 59873
Stibnite
Holding Company US Inc.
C/o Box
643
Thompson
Falls, MT 59873
Antimony
Mining and Milling US LLC
C/o Box
643
Thompson
Falls, MT 59873
AGUA
Mines, Inc
C/0 Box
643
Thompson
Falls, MT 59873
Pursuant
to Section 1503(a) of the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 (the “Dodd-Frank Act”),
issuers that are operators, or that have a subsidiary that is an
operator, of a coal or other mine in the United States are required
to disclose in their periodic reports filed with the SEC
information regarding specified health and safety violations,
orders and citations, related assessments and legal actions, and
mining-related fatalities. During the year ended December 31, 2020,
we had no material specified health and safety violations, orders
or citations, related assessments or legal actions, mining-related
fatalities, or similar events in relation to our United States
operations requiring disclosure pursuant to Section 1503(a) of the
Dodd-Frank Act, except as follows:
MSHA Actions for the year ended December 31, 2020
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)
By
/s/Russell
Lawrence Date: March 31,
2021
Russell Lawrence,
Interim President, Director, and Principal Executive
Officer
By
/s/Alicia Hill
Date:
March 31, 2021
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.
By
/s/Russell Lawrence
Date:
March 31, 2021
Russell
Lawrence, Interim Director and President
(Principal
Executive)
By
/s/Hart Baitis
Date:
March 31, 2021
Hart
Baitis, Director
By
/s/Blaise Aguirre
Date:
March 31, 2021
Blaise
Aguirre, Director
By
/s/ Joseph
Bardswich Date: March 31,
2021
Joseph
Bardswich, 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 (the "Company") as of December
31, 2020 and 2019, the related consolidated statements of
operations, changes in
stockholders’ equity and cash flows for each of 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, 2020 and 2019, and the
results of its operations and its cash flows for each of 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, an audit 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.
Critical Audit Matter
The critical audit matter communicated below is a matter arising
from the current-period audit of the financial statements that was
communicated or required to be communicated to the audit committee
and that (1) relates to accounts or disclosures that are material
to the financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of
critical audit matters does not alter in any way our opinion on the
financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or
disclosures to which it relates.
Assessment of Properties, Plants and Equipment for
Impairment
As described in Note 2 to the consolidated financial statements,
management reviews and evaluates the net carrying value of
properties, plants and equipment for impairment upon the occurrence
of events or changes in circumstances that indicate that the
related carrying amounts may not be recoverable. If deemed
necessary based on this review and evaluation, management performs
a test for impairment. The determination of whether an impairment
has occurred is based on an estimate of undiscounted future net
cash flows attributable to the assets as compared to the carrying
value of the assets.
In its review and evaluation, management determined that the
carrying amount of properties, plants and equipment located in
Mexico (“Mexican PPE”), which has a carrying value of
$8,438,413 as of December 31, 2020, may not be recoverable and
prepared an undiscounted future net cash flows analysis to
determine recoverability. Based on its analysis, management
concluded that the undiscounted future net cash flow exceeded the
net carrying value of the Mexican PPE and an impairment was not
recognized.
The undiscounted future net cash flow analysis prepared by
management is sensitive to assumptions including quantities of
recoverable minerals, expected metal prices, production levels, and
estimated operating costs of
production and capital.
We identified the impairment assessment of the Mexican PPE as a
critical audit matter due to the materiality of the Mexican PPE
balance, the high degree of auditor judgment and an increased level
of effort when performing audit procedures to evaluate the
reasonableness of management’s assumptions in determining the
undiscounted future net cash flows. The primary procedures we
performed to address this critical audit matter
included:
●
|
Evaluation of the Company’s identification of significant
events or changes in circumstances that have occurred indicating
the underlying Mexican PPE may not be recoverable by performing an
independent assessment.
|
●
|
Discussion with management of future business plans for the Mexican
PPE and assessment as to whether the undiscounted future net cash
flow analysis was consistent with the plans.
|
●
|
Comparison of key assumptions utilized in the current undiscounted
future net cash analysis to assumptions used in past analyses and
assessed whether the current analysis appropriately reflected the
impact of changes to the Company’s business plans and
operations, current metal prices, actual operating costs, and
industry-specific events.
|
●
|
In addition to ensuring key assumptions were consistent with
evidence obtained in other areas of the audit, evaluation of the
significant assumptions and judgements used in the Company’s
analysis including:
|
o
estimated metal
price through comparison to publicly available industry
information,
o
estimated future
operating and development costs through comparison to the
Company’s historical costs, and
o
estimated
quantities of recoverable minerals through comparison to historical
data and based on our knowledge and experience with the
Company.
/s/ Assure CPA, LLC
Assure CPA, LLC (formerly DeCoria, Maichel & Teague,
P.S.)
We have served as the Company's independent auditor since
1998.
Spokane, Washington
March
31, 2021
United States Antimony Corporation and Subsidiaries
|
|
|
Consolidated Balance Sheets
|
|
|
December 31, 2020 and 2019
|
|
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
Cash
and cash equivalents
|
$665,102
|
$115,506
|
Certificates
of deposit
|
254,212
|
253,552
|
Accounts
receivable
|
238,634
|
284,453
|
Inventories
|
650,213
|
626,244
|
Total
current assets
|
1,808,161
|
1,279,755
|
|
|
|
Properties,
plants and equipment, net
|
11,225,594
|
12,186,848
|
Restricted
cash for reclamation bonds
|
57,275
|
57,261
|
IVA
receivable and other assets
|
208,472
|
170,111
|
Total
assets
|
$13,299,502
|
$13,693,975
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
Current
liabilities:
|
|
|
Checks
issued and payable
|
$86,685
|
$17,633
|
Accounts
payable
|
1,876,874
|
2,328,977
|
Payable
to related parties
|
227,432
|
359,309
|
Accrued
liabilities
|
635,626
|
638,288
|
Notes
payable to bank
|
100,000
|
197,066
|
Export
tax assessment payable (Note 13)
|
1,120,730
|
-
|
Hillgrove
advances payable (Note 10)
|
378,074
|
378,074
|
Long-term
debt, current portion
|
52,122
|
56,334
|
Total
current liabilities
|
4,477,543
|
3,975,681
|
|
|
|
Long-term
debt, net of current portion
|
34,304
|
76,762
|
Hillgrove
advances payable (Note 10)
|
756,147
|
756,147
|
CARES
Act note payable (Note 17)
|
443,400
|
-
|
Stock
payable to directors for services
|
110,000
|
134,375
|
Asset
retirement obligations and accrued reclamation costs
|
291,719
|
283,868
|
Total
liabilities
|
6,113,113
|
5,226,833
|
Commitments
and contingencies (Notes 13 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 $945,000 and $937,500
|
|
|
respectively)
|
7,500
|
7,500
|
Series
C: 177,904 shares issued and outstanding
|
|
|
(liquidation
preference $97,847 both years)
|
1,779
|
1,779
|
Series
D: 1,751,005 shares issued and outstanding
|
|
|
(liquidation
preference $5,084,770 and $5,043,622
|
|
|
respectively)
|
17,509
|
17,509
|
Common
stock, $0.01 par value, 150,000,000 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
|
(32,650,794)
|
(29,363,990)
|
Total
stockholders' equity
|
7,186,389
|
8,467,142
|
Total
liabilities and stockholders' equity
|
$13,299,502
|
$13,693,975
|
The accompanying
notes are an integral part of these consolidated financial
statements.
F-3
United States Antimony Corporation and Subsidiaries
|
Consolidated Statements of Operations
|
|
|
For the years ended December 31, 2020 and 2019
|
|
|
|
|
|
|
|
|
|
REVENUES
|
$5,235,530
|
$8,268,005
|
|
|
|
COST OF REVENUES
|
5,029,832
|
9,084,256
|
|
|
|
GROSS PROFIT (LOSS)
|
205,698
|
(816,251)
|
|
|
|
OPERATING
EXPENSES:
|
|
|
General
and administrative
|
607,365
|
674,494
|
Exploration
expense
|
165,183
|
-
|
Salaries
and benefits
|
367,491
|
518,758
|
Export
tax assessment
|
1,120,920
|
-
|
Other
operating expenses
|
684,361
|
88,347
|
Professional
fees
|
246,618
|
245,091
|
Loss
on mineral properties
|
318,502
|
1,410,736
|
TOTAL
OPERATING EXPENSES
|
3,510,440
|
2,937,426
|
|
|
|
INCOME
(LOSS) FROM OPERATIONS
|
(3,304,742)
|
(3,753,677)
|
|
|
|
OTHER
INCOME (EXPENSE):
|
|
|
Interest
expense
|
(17,991)
|
(78,344)
|
Other
income (expense)
|
35,929
|
159,130
|
TOTAL
OTHER INCOME (EXPENSE)
|
17,938
|
80,786
|
|
|
|
NET INCOME (LOSS)
|
(3,286,804)
|
(3,672,891)
|
Preferred
dividends
|
(48,649)
|
(48,649)
|
|
|
|
Net
income (loss) available to common stockholders
|
$(3,335,453)
|
$(3,721,540)
|
|
|
|
Net
income (loss) per share of common stock:
|
|
|
Basic
and diluted
|
$(0.05)
|
$(0.05)
|
|
|
|
Weighted
average shares outstanding:
|
|
|
Basic
and diluted
|
72,513,814
|
69,004,897
|
The
accompanying notes are an integral part of these consolidated
financial statements.
F-4
United States Antimony Corporation and
Subsidiaries
|
|
|
|
|
|
Consolidated Statements of Changes in Stockholders'
Equity
|
|
|
|
For the years ended December 31, 2020 and 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances,
December 31, 2018
|
2,678,909
|
$26,788
|
68,227,171
|
682,271
|
$36,406,874
|
$(25,691,099)
|
$11,424,834
|
|
|
|
|
|
|
|
|
|
|
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
|
395,158
|
|
404,199
|
Net
loss
|
|
|
|
|
|
(3,672,891)
|
(3,672,891)
|
Balances,
December 31, 2019
|
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
|
|
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
|
|
|
|
|
|
(3,286,804)
|
(3,286,804)
|
Balances,
December 31, 2020
|
2,678,909
|
$26,788
|
75,949,757
|
759,496
|
$39,050,899
|
$(32,650,794)
|
$7,186,389
|
The accompanying notes are an integral part of these
consolidated financial statements.
F-5
United States Antimony Corporation and Subsidiaries
|
|
|
Consolidated Statements of Cash Flows
|
|
|
For the years ended December 31, 2020 and 2019
|
|
|
|
|
|
|
|
|
Cash
Flows From Operating Activities:
|
|
|
Net
income (loss)
|
$(3,286,804)
|
$(3,672,891)
|
Adjustments
to reconcile net income (loss) to net cash
|
|
|
provided
(used) by operating activities:
|
|
|
Depreciation
and amortization
|
885,843
|
895,990
|
Loss
on mineral properties
|
318,502
|
1,410,736
|
Write-down
of inventory to net realizable value
|
-
|
16,396
|
Amortization
of debt discount
|
-
|
54,112
|
Accretion
of asset retirement obligation
|
7,851
|
6,148
|
Common
stock issued for services
|
-
|
136,000
|
Common
stock payable for directors' fees
|
106,108
|
134,375
|
Other
non cash items
|
(660)
|
(598)
|
Change
in:
|
|
|
Accounts
receivable, net
|
45,819
|
153,938
|
Inventories
|
(23,969)
|
112,621
|
IVA
receivable and other assets
|
(38,361)
|
199,337
|
Accounts
payable
|
(452,103)
|
402,657
|
Accrued
liabilities
|
(2,662)
|
76,416
|
Export
tax assessment payable
|
1,120,730
|
-
|
Payables
to related parties
|
14,042
|
63,408
|
Net
cash provided (used) by operating activities
|
(1,305,664)
|
(11,355)
|
|
|
|
Cash
Flows From Investing Activities:
|
|
|
Payment
received on note receivable for sale of land
|
-
|
400,000
|
Purchases
of properties, plants and equipment
|
(243,091)
|
(792,925)
|
Net
cash used by investing activities
|
(243,091)
|
(392,925)
|
|
|
|
Cash
Flows From Financing Activities:
|
|
|
Change
in checks issued and payable
|
69,052
|
(28,849)
|
Proceeds
from issuance of common stock and warrants, net of issuance
costs
|
1,813,068
|
404,199
|
Advances
from related party
|
-
|
237,400
|
Payments
on advances from related party
|
(83,419)
|
(35,066)
|
Proceeds
from CARES Act note payable
|
443,400
|
-
|
Proceeds
(payments) on notes payable to bank, net
|
(97,066)
|
13,149
|
Principal
payments on long-term debt
|
(46,670)
|
(127,683)
|
Net
cash provided (used) by financing activities
|
2,098,365
|
463,150
|
|
|
|
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
549,610
|
58,870
|
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
|
$722,377
|
$172,767
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
Interest
paid in cash
|
$17,991
|
$24,233
|
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 these consolidated
financial statements.
F-6
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.
In 2018, the
Company acquired 100% ownership in Stibnite Holding Company US Inc.
(previously Lanxess Holding Company US Inc.), Antimony Mining and
Milling US LLC (previously Lanxess Laurel US LLC), a Delaware
limited liability company and Lanxess Laurel de Mexico, S.A. de C.V
(“Lanxess Laurel Mexico”), a Mexico corporation, both
of which became a wholly-owned subsidiary of the
Company.
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. The impact of these restrictions on our
business has been minimal. It is possible that future restrictions
could have an adverse impact on our operations or financial results
beyond 2020.
2.
Summary
of Significant Accounting Policies
Principles of Consolidation
The
Company's consolidated financial statements include the accounts of
its wholly-owned subsidiaries BRZ, USAMSA, AM, Stibnite Holding
Company US Inc., and Antimony Mining and Milling US LLC. All
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, net realizable value of
inventories, deferred income taxes, income taxes payable,
environmental remediation liabilities and asset retirement
obligations. Actual results could differ from those
estimates.
2.
Summary
of Significant Accounting Policies, continued:
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, 2020 and 2019 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, 2020 and 2019 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 the Company’s
operations. Foreign translation gains and losses relating to
Mexican subsidiaries are recognized as foreign exchange gain or
loss in the consolidated statement of operations.
Going Concern Consideration
At
December 31, 2020, the Company’s consolidated financial
statements show negative working capital of approximately $2.7
million and an accumulated deficit of approximately $32.7
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. The continuing losses are
principally a result of the Company’s antimony operations due
to both depressed antimony prices and production costs incurred in
Mexico. To improve conditions, the Company plans to continue
searching for areas to reduce these production costs.
Management expects improvement in cash flow in 2021 from the sale
of precious metals extracted from the leach circuit that came on
line in Mexico in the second half of 2020.
2.
Summary
of Significant Accounting Policies, continued:
Over
the past several years, the Company has been able to make required
principal payments on its debt from cash generated from operations.
The Company is confident it can make debt payments when due. In
March 2020, the Company applied for and received funds from a note
payable under the CARES Act for $443,400. In July 2020 the Company
was successful in raising $1,813,068 from the sale of shares of
common stock and warrants to fund capital projects in Mexico. In
the first quarter of 2021, the Company raised $23,497,180 (net of
$1,499,820 in agent’s fees) from sale of shares of its common
stock and warrants that will be used for general corporate
purposes, working capital, and to fund a geochemical, geological
and geophysical program at the Los Juarez property. With the funds
raised, management believes the Company has sufficient funds to
sustain its operations and meet its financial obligations during
the 12 months following the date of issuance of the consolidated
financial statements.
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. 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.
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. Mineral rights are subject to
write down in the period the property is abandoned. 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.
Impairment of Long-lived Assets
Management reviews
and evaluates the net carrying value of its long-lived assets for
impairment upon the occurrence of events or changes in
circumstances that indicate that the related carrying
amounts may not be recoverable. A test for
recoverability is performed based on the estimated undiscounted
future cash flows that will be generated from operations at each
property and the estimated salvage value of asset. Although
management has made what it believes to be a reasonable estimate of
factors based on current conditions and information, assumptions
underlying future cash flows, which includes the estimated value of
assets, are subject to significant risks and uncertainties.
Estimates of undiscounted future cash flows are dependent upon,
among other factors, estimates of: (i) product and metals to be
recovered from identified mineralization and other resources (ii)
future production and capital costs, (iii) estimated
selling
prices (considering current, historical, and future prices) over
the estimated remaining life of the asset and (iv) market values of
property, if appropriate. It is possible that changes could occur
in the near term that could adversely affect the estimate of future
cash flows to be generated from operating properties. If estimated
undiscounted cash flows are less than the carrying value of an
asset, an impairment loss is recognized for the difference between
the carrying value and fair value of the asset.
2.
Summary
of Significant Accounting Policies, continued:
Exploration and Development
The
Company expenses exploration costs as such in the period they
occur. The mine development stage begins once the Company has
determined an ore body can be economically developed. Expenditures
incurred during the development stage are capitalized as deferred
development costs. Costs to improve, alter, or rehabilitate primary
development assets which appreciably extend the life, increase
capacity, or improve the efficiency or safety of such assets are
also capitalized. The development stage ends when the production
stage of reserves begins. Deferred development costs 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.
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.
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
For
antimony and zeolite products, revenue is recognized upon the
completion of the performance obligation which is met when the
transaction price can be reasonably estimated and revenue is
recognized generally at the time when risk is transferred. The
Company has determined the performance obligation is met and title
is transferred either upon shipment from the Company’s
warehouse locations or upon receipt by the customer as specified in
individual sales orders. The performance obligation is met because
at that time, 1) legal title is transferred to the customer, 2) the
customer has accepted the product and obtained the ability to
realize all of the benefits from the product, 3) the customer has
the significant risks and rewards of ownership to it, 4) it is very
unlikely product will be rejected by the customer upon physical
receipt, and 5) the Company has the right to payment for the
product. Shipping costs related to the sales of antimony and
zeolite products are recorded to cost of sales as incurred. For
zeolite products, royalty expense due a third party by the Company
is also recorded to cost of sales upon sale in accordance with
terms of underlying royalty agreements.
2.
Summary
of Significant Accounting Policies, continued:
For
sales of precious metals, the performance obligation is met, the
transaction price is known, and revenue is recognized at the time
of transfer of control of the agreed-upon metal quantities to the
customer. Refining and shipping costs related to sales of precious
metals are recorded to cost of sales as incurred.
The
Company has determined that its contracts do not include a
significant financing component. Prepayments, which are not common,
received from customers prior to the time that products are
processed and shipped, are recorded as deferred revenue. For
antimony and zeolite sales contracts, the Company may factor
certain receivables and receive final payment within 30 days of the
performance obligation being met. For antimony and zeolite
receivables not factored, the Company typically receives payment
within 10 days. For precious metals sales,
a
provisional payment of 75% is typically received within 45 days of
the date the product is delivered to the customer. After an
exchange of assays, a final payment is normally received within 90
days of product delivery.
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 common stock
issued.
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. For the years ended December 31, 2020 and 2019,
potentially dilutive common stock equivalents not included in the
calculation of diluted earnings per share because they were
anti-dilutive are as follows:
|
|
|
Warrants
|
6,194,899
|
702,041
|
Convertible
preferred stock
|
1,751,005
|
1,751,005
|
Total possible
dilution
|
7,945,904
|
2,453,046
|
Fair Value of Financial Instruments
The
Company’s financial instruments include cash and cash
equivalents, certificates of deposits, restricted cash, due to
factor (included in accrued liabilities), notes payable to bank,
and notes payable. The carrying value of these instruments
approximates fair value based on their contractual
terms.
2.
Summary
of Significant Accounting Policies, continued:
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.
Contingencies
In
determining accruals and disclosures with respect to loss
contingencies, the Company evaluates such accruals and
contingencies for each reporting period. Estimated losses from loss
contingencies are accrued by a charge to income when information
available prior to issuance of the financial statements indicates
that it is probable that a liability could be incurred and the
amount of the loss can be reasonably estimated. Legal expenses
associated with the contingency are expensed as incurred. If a loss
contingency is not probable or reasonably estimable, disclosure of
the loss contingency is made in the financial statements when it is
at least reasonably possible that a material loss could be
incurred.
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.
Recent Accounting Pronouncements
Accounting Standards Updates Adopted
In August 2018, the Financial Accounting Standards
Board (“FASB”) issued Auditing Standards Update
(“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.
In August 2020, the FASB issued ASU
No.
2019-12 Debt with Conversion and Other Options (Subtopic
470-20) and Derivatives and Hedging—Contracts in
Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and
Contracts in an Entity’s Own Equity. The update is to address
issues identified as a result of the complexity associated with
applying generally accepted accounting principles for certain
financial instruments with characteristics of liabilities and
equity. The update is effective for fiscal years beginning after
December 15, 2021, including interim periods within those fiscal
years and with early adoption permitted. Management is evaluating
the impact of this update on the Company’s consolidated
financial statements.
Sales
of products for the years ended December 31, 2020 and 2019, were as
follows:
|
|
|
|
|
|
|
Antimony
|
$2,942,628
|
$5,450,649
|
Zeolite
|
2,118,823
|
2,623,117
|
Precious
metals
|
174,079
|
194,239
|
|
$5,235,530
|
$8,268,005
|
The
following is sales information by geographic area based on the
location of customers for the years ended December 31, 2020, and
2019.
|
|
|
|
|
|
|
United
States
|
$4,662,841
|
$7,454,163
|
Canada
|
572,689
|
813,842
|
Mexico
|
-
|
-
|
|
$5,235,530
|
$8,268,005
|
Sales
of products to significant customers were as follows for the years
ended December 31, 2020, and 2019:
|
|
Sales to Three
|
|
|
Largest Customers
|
|
|
Mexichem
Specialty Compounds Inc.
|
$633,846
|
$1,823,194
|
GE
Chaplin, Inc.
|
589,384
|
-
|
Nyacol
Nanotechnologies
|
417,501
|
1,099,504
|
Kohler
|
345,899
|
1,132,674
|
|
$1,986,630
|
$4,055,372
|
% of Total Revenues
|
38%
|
49%
|
Accounts receivable
from the Company’s largest customers were as follows for
December 31, 2020, and 2019:
|
|
|
Largest Accounts Receivable
|
|
|
Nutreco
Canada Inc.
|
$21,619
|
$21,219
|
Earth
Innovations Inc.
|
68,055
|
15,184
|
Ralco
Mix
|
16,600
|
12,800
|
Premier
Tech
|
12,255
|
-
|
Lake
Shore
|
-
|
27,854
|
Total
|
$118,529
|
$77,057
|
% of Total Receivables
|
50%
|
27%
|
The
Company’s trade accounts receivable balance related to
contracts with customers was $238,634 at December 31, 2020 and
$284,453 at December 31, 2019.
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 was personally guaranteed by John
C. Lawrence, the Company’s previous President and Chairman of
the Board of Directors. The existing agreement will be addressed in
2021 to account for Mr. Lawrence’s death and that impact on
the personal guarantee. 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 included in current accrued
liabilities.
Accounts Receivable
|
|
|
Accounts
receivable - non factored
|
$222,034
|
$273,573
|
Accounts
receivable - factored with recourse
|
16,600
|
10,880
|
Accounts
receivable - net
|
$238,634
|
$284,453
|
The
major components of the Company's inventories at December 31, 2020
and 2019 were as follows:
|
|
|
Antimony
Oxide
|
$67,377
|
$204,550
|
Antimony
Metal
|
268,100
|
5,654
|
Antimony
Ore
|
95,880
|
151,841
|
Total
antimony
|
431,357
|
362,045
|
Zeolite
|
218,856
|
264,199
|
|
$650,213
|
$626,244
|
At
December 31, 2020 and 2019, 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. At December 31, 2020 and 2019, the
antimony oxide and concentrates inventory in Mexico were valued at
estimated net realizable value resulting in write-downs of $13,137
and $16,396, respectively. The Company's zeolite inventory consists
of salable zeolite material.
6.
Properties,
Plants and Equipment
The
major components of the Company's properties, plants and equipment
by segment at December 31, 2020 and 2019 are shown
below:
|
|
|
Precious
Metals
|
|
2020
|
|
|
|
|
|
Plant
and equipment
|
$815,737
|
$8,757,775
|
$3,743,051
|
$1,266,697
|
$14,583,260
|
Buildings
|
247,210
|
613,449
|
410,780
|
-
|
1,271,439
|
Mineral
rights and interests
|
-
|
828,523
|
3,664
|
-
|
832,187
|
Land
and other
|
3,274,572
|
2,478,044
|
15,310
|
-
|
5,767,926
|
|
4,337,519
|
12,677,791
|
4,172,805
|
1,266,697
|
22,454,812
|
Accumulated
depreciation
|
(2,699,781)
|
(5,042,381)
|
(3,154,244)
|
(332,812)
|
(11,229,218)
|
|
$1,637,738
|
$7,635,410
|
$1,018,561
|
$933,885
|
$11,225,594
|
|
|
|
|
|
2019
|
|
|
|
|
|
Plant
and equipment
|
$783,290
|
$9,164,600
|
$3,729,061
|
$813,714
|
$14,490,665
|
Buildings
|
247,210
|
902,707
|
410,780
|
-
|
1,560,697
|
Mineral
rights and interests
|
-
|
816,786
|
3,664
|
-
|
820,450
|
Land
and other
|
3,274,572
|
2,529,294
|
15,310
|
-
|
5,819,176
|
|
4,305,072
|
13,413,387
|
4,158,815
|
813,714
|
22,690,988
|
Accumulated
depreciation
|
(2,673,972)
|
(4,612,567)
|
(2,971,625)
|
(245,976)
|
(10,504,140)
|
|
$1,631,100
|
$8,800,820
|
$1,187,190
|
$567,738
|
$12,186,848
|
United
States and Mexico components of properties, plants and
equipment:
|
|
|
United
States
|
$2,787,181
|
$2,961,895
|
Mexico
|
8,438,413
|
9,224,953
|
Total
|
$11,225,594
|
$12,186,848
|
The
Company’s precious metals segment includes properties, plants
and equipment in both the United States and Mexico. In the third
quarter of 2020, the Company decided not to renew the lease at the
Wadley Mining district in Mexico due to continuing low market price
for antimony and to reduce Mexican antimony production while
seeking other lower cost sources of antimony ore and concentrates.
The net carrying value of the mineral lease of $318,502 was
recognized as a loss on mineral properties during the year ended
December 31, 2020.
In the
fourth quarter of 2019, the Company abandoned the Soyatal and
Guadalupe mineral properties in Mexico. The net carrying value of
the mineral properties of $2,937,259 less the outstanding related
notes payable balances, resulted in a loss on mineral properties of
$1,410,736 which was recognized during the year ended December 31,
2019.
At
December 31, 2020 and 2019, the Company had $755,978 and
$1,306,579, respectively, of assets that were not yet placed in
service and have not yet been depreciated.
7.
Asset
Retirement Obligation and Accrued Reclamation Costs
Changes
to the asset retirement obligation balance during 2020 and 2019 are
as follows:
Asset Retirement Obligation
|
|
|
|
Balance
December 31, 2018
|
$170,220
|
Accretion
during 2019
|
6,148
|
Balance
December 31, 2019
|
176,368
|
Accretion
during 2019
|
7,851
|
Balance
December 31, 2019
|
$184,219
|
The
Company’s total asset retirement obligation and accrued
reclamation costs of $291,719 and $283,868, at December 31, 2020
and 2019, respectively, include reclamation obligations for the
Idaho and Montana operations of $107,500.
Long-Term
debt at December 31, 2020 and 2019 is as follows:
|
|
|
|
|
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.
|
$66,800
|
$100,000
|
Note
payable to Cat Financial Services, bearing interest at
6%;
|
|
|
payable
in monthly installments of $778; maturing
|
|
|
December
2022; collateralized by equipment.
|
17,480
|
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.
|
2,146
|
6,146
|
|
86,426
|
133,096
|
Less
current portion
|
(52,122)
|
(56,334)
|
Long-term
portion
|
$34,304
|
$76,762
|
At
December 31, 2020, principal payments on debt are due as
follows:
12 Months Ending December 31,
|
|
2021
|
52,122
|
2022
|
34,304
|
|
$86,426
|
In the
fourth quarter 2019, the Company abandoned the Soyatal and
Guadalupe mineral properties in Mexico. The balances of the related
debt, net of discount, on the date of abandonment is $603,743 and
$922,780, respectively. The carrying value of the mineral
properties, less the outstanding related notes payable balances
resulted in a loss of $1,410,736 recognized on the abandonment of
mineral properties during the year ended December 31,
2019.
At
December 31, 2020 and 2019, 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
|
$99,999
|
$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
|
1
|
99,999
|
|
|
|
Total notes payable
to the bank
|
$100,000
|
$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. As result of his death in June 2020,
the terms of the note, including the personal guarantee, will be
addressed in 2021.
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) 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 the past three 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 December 31, 2020
and 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 is likely
forthcoming in 2021. 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 December 31, 2020 and
2019.
In
December 2020, the number of authorized shares of the
Company’s common stock increased from 90,000,000 to
150,000,000.
Issuance of Common Stock for Cash
During
2020, the Company sold units consisting of 5,742,858 from sale of
shares of its common stock and 5,742,858 warrants to purchase
shares of common stock for total proceeds of $2,010,000. Offering
costs associated with the sale totaled $196,932.
During
2019, the Company sold units consisting of 904,082 shares of its
common stock and 452,041 warrants to purchase shares of common
stock for total proceeds of $433,960. Offering costs associated
with the sale totaled $29,761.
Issuance of Common Stock for Services to Officers and
Directors
During
the year ended December 31, 2020, the Company awarded, but did not
issue, common stock with a value of $110,000 to its Board of
Directors as compensation for their services as directors. In
connection with the issuances, the Company recorded $110,000 in
director compensation expense and accrued common stock
payable.
In June
2020, the Company issued the Board members 295,463 shares of the
Company’s common stock for services provided during 2019
which was accrued at December 31, 2019, with a value of
$130,483.
11.
Stockholders'
Equity, continued:
During
the years ended December 31, 2019, the Company awarded but did not
issue, common stock with a value of $134,375 to its Board of
Directors as compensation for their services as directors. In
connection with the issuances, the Company recorded $134,375 in
director compensation expense and accrued common stock
payable.
In
January 2019, the Company issued Daniel Parks, the Company’s
Chief Financial Officer, 200,000 shares of the Company’s
common stock with a fair value of $136,000 to retain his
services.
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, 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 and Chairman, John Lawrence. The
warrants were exercised on March 18, 2020 in exchange for a
reduction of $62,500 in an amount payable to Mr.
Lawrence.
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.
Warrants for
purchase of 5,742,858 shares of the Company’s common stock
were sold with shares of common stock in July
2020. The warrants have an exercise price of
$0.46 per share and expire in 2025. The warrants can be exercised
on a cashless basis. The warrants contain a repricing provision
whereby if the Company raises at least $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.
Transactions in
common stock purchase warrants for the years ended December 31,
2020 and 2019 are as follows:
|
|
|
Balance December
31, 2018
|
250,000
|
$0.25
|
Issued
|
452,041
|
$0.65
|
Balance December
31, 2019
|
702,041
|
$0.25 - $0.65
|
Issued
|
5,742,858
|
$0.46
|
Exercised
|
(250,000)
|
$0.25
|
Balance December
31, 2020
|
6,194,899
|
$0.46 - $0.65
|
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.
11.
Stockholders'
Equity, continued:
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 each of the years ended December
31, 2020 and 2019 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, 2020 and 2019, cumulative dividends in arrears on
the outstanding Series B shares were $195,000 and $187,500,
respectively.
Series C
During
2000, the Board established a Series C preferred stock. 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.
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, 2020 and 2019, the cumulative dividends in arrears on
the 1,751,005 outstanding Series D shares were $707,258 and
$666,109, 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, 2020 and 2019, the
liquidation preference for Series D preferred stock was $5,084,770
and $5,043,622, 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 the
Estate of John Lawrence, the previous President and Chairman of the
Company.
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, 2020 and 2019, 300,000 shares of the Company's common
stock had been previously issued under the Plan. There were no
issuances under the Plan during 2020 and 2019.
13.
Income
and Other Taxes
During
the year ended December 31, 2020 and 2019, the Company recognized
no income tax benefit (provision).
Domestic and
foreign components of net loss from operations before income taxes
for the years ended December 31, 2020 and 2019, are as
follows:
|
|
|
Domestic
|
$564,424
|
$462,292
|
Foreign
|
(3,851,228)
|
(4,135,183)
|
Total
|
$(3,286,804)
|
$(3,672,891)
|
The
income tax benefit differs from the amount of income tax determined
by applying the U.S. federal income tax rate to pre-tax net loss
for the years ended December 31, 2020 and 2019 due to the
following:
|
|
|
Tax
benefit at federal statutory rate
|
$(690,229)
|
$(771,307)
|
State
income tax effect
|
(120,541)
|
(177,435)
|
Foreign
income tax effect
|
(279,111)
|
(147,166)
|
Non-deductible
items
|
151
|
801
|
Percentage
depletion
|
(27,667)
|
(52,416)
|
Adjustment
to prior year tax estimates - Domestic
|
580,408
|
(269,906)
|
Adjustment
to prior year tax estimates - Foreign
|
(137,988)
|
641,438
|
Impact
on change in foreign exchange rate
|
75,899
|
103,218
|
Change
in valuation allowance - Domestic
|
(393,380)
|
926,873
|
Change
in valuation allowance - Foreign
|
992,458
|
(254,101)
|
Total
|
$-
|
$-
|
At
December 31, 2020 and 2019, the Company had net deferred tax assets
as follows:
|
|
|
Deferred
tax asset:
|
|
|
Domestic
net operating loss carry forward
|
$688,278
|
$1,111,779
|
Foreign
net operating loss carry forward
|
2,616,038
|
1,623,580
|
Deferred
tax asset
|
3,304,316
|
2,735,359
|
|
|
|
Valuation
allowance (domestic)
|
(628,449)
|
(1,021,829)
|
Valuation
allowance (foreign)
|
(2,616,037)
|
(1,623,580)
|
Total
deferred tax asset
|
59,830
|
89,950
|
|
|
|
Deferred
tax liability:
|
|
|
Property,
plant, and equipment
|
(57,650)
|
(88,292)
|
Other
|
(2,180)
|
(1,658)
|
Total
deferred tax liability
|
(59,830)
|
(89,950)
|
|
|
|
Net
deferred tax asset
|
$-
|
$-
|
13.
Income
and Other Taxes, continued:
At
December 31, 2020 and 2019, 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, 2020 and
2019.
At
December 31, 2020, the Company has federal net operating loss
(“NOL”) carry forwards of approximately $0.7 million
that expire at various dates between 2034 and 2037. In addition,
the Company has federal NOL carry forwards of $1.1 million that
will never expire but utilization of which is limited to 80% of
taxable income in any future year. The Company has Montana state
NOL carry forwards of approximately $3.4 million which expire
between 2021 and 2027, and Idaho state NOL carry forwards of
approximately $2.4 million, which expire between 2034 and 2039. The
Company has approximately $7.9 million of Mexican NOL carry
forwards which expire between 2024 and 2029.
In
2018, the Company acquired two subsidiaries have net operating loss
carryforwards in Mexico of approximately $800,000. Due to tax code
limitations, it is likely that a portion of this carryforward will
not be available to offset the Company’s future taxable
income in Mexico.
During
the years ended December 31, 2020 and 2019, 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 2017 through 2019, and 2016 through 2019 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 pesos, which was approximately $666,400 in U.S. Dollars
(“USD”) as of December 31, 2016. SAT’s assessment
was based on the disallowance of specific costs that the Company
deducted on the 2013 USAMSA income tax return. The Company engaged
accountants and tax attorneys in Mexico to defend its position. The
assessment was settled in 2018 with no assessment against the
Company.
In
early 2019, the Company was notified that SAT re-opened its
assessment of USAMSA’s 2013 income tax return and, in
November 2019, SAT assessed the Company $16.3 million pesos, which
was approximately $821,000 USD as of December 31,
2020.
Management reviewed
the 2019 assessment notice from SAT and, similar to the earlier
assessment, believes the findings have no merit. The Company
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. In August 2020, the Company filed a lawsuit
against SAT for resolution of the process and, in December 2020,
filed closing arguments. Management expects the appeal process to
continue through 2021.
At
December 31, 2020, management assessed the possible outcomes for
this tax audit and believes, based on 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 December
31, 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 current net operating loss carryforward, or accrue penalties,
interest, and tax associated with the assessment.
13.
Income
and Other Taxes, continued:
Other Taxes
In 2016, the Company, through its wholly owned subsidiary USAMSA,
imported coal from the United States to its smelter in Mexico to
process Australian concentrates associated with the Hillgrove
agreement (Note 10). At that time, the Company applied for and was
granted a Maquiladora (IMMEX) which the Company believed provided
an exemption from paying a 16% value-added tax (IVA) on imported
goods to Mexico that were ultimately exported in altered form. With
this understanding, the Company did not pay IVA on coal it imported
to process the Australian concentrates. In 2020, the Company was
informed by the SAT that it owed the 16% IVA for the coal it had
imported from 2016 to 2018. The initial assessment from SAT
included penalties and fees. In late 2020, the Company filed a
motion before the Taxpayer's Defense Agency but the motion was
denied. To avoid incurring additional penalties, the Company
elected to pay the assessed amount in early 2021. For the year
ended December 31, 2020, the Company recognized an export tax
expense of $1,120,730 and accrued a liability for this assessment.
Upon payment in early 2021, the Company believes that this matter
is settled.
14.
Related-Party
Transactions
On June 16, 2020, John C. Lawrence, the
Company’s previous 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. Russell Lawrence, son of Mr. Lawrence, has
been appointed the Company’s interim President and is the executor of Mr.
Lawrence’s estate.
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 owned. The amount due to Mr.
Lawrence as of December 31, 2020 and 2019 was $171,017 and
$156,975, respectively. Expenses paid to Mr. Lawrence for the years
ended December 31, 2020 and 2019 were $1,533 and $9,799,
respectively
During
2019, John Lawrence made advances to the Company totaling $227,200,
of which $170,985 had been repaid as of December 31, 2020, leaving
a balance of $56,215. During 2020, 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.
John C.
Gustaven advanced the Company $10,200 during 2019, of which $10,000
had been repaid as of December 31, 2020, leaving a balance of
$200.
15.
Commitments
and Contingencies
The
Company pays various royalties on the sale of zeolite products. On
a combined basis, royalties vary from 8%-13%. During the year ended
December 31, 2020 and 2019, the Company had royalty expense of
$224,875 and $266,388, respectively. At December 31, 2020 and 2019,
the Company had accrued royalties payable of $434,981 and $280,314,
respectively. The Company is currently in negotiations with certain
royalty holders to modify the terms of the agreements.
The
Company is currently organized and managed by four segments, which
represent the three operating units: United States antimony,
Mexican antimony, United States zeolite, and precious metals. The
Company’s other operating costs include general and
administrative expenses, freight and delivery, and other
non-production related costs. Other income and expense consist
primarily of non-operating income and interest
expense.
The
Madero smelter and Puerto Blanco mill at the Company’s Mexico
operation brings antimony up to a finished product or an
intermediate stage, which is then either shipped directly to
customers or 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 recovered from
the antimony process in the United States and Mexico is typically
sold 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 3 and 6,
respectively.
|
|
|
|
|
Total Assets:
|
|
|
Antimony
|
|
|
United
States
|
$2,798,283
|
$2,166,041
|
Mexico
|
7,953,190
|
9,193,521
|
Subtotal
antimony
|
10,751,473
|
11,359,562
|
Precious
metals
|
|
|
United
States
|
$130,882
|
$143,605
|
Mexico
|
803,003
|
424,133
|
Subtotal
precious metals
|
933,885
|
567,738
|
Zeolite
|
1,614,144
|
1,766,675
|
Total
|
$13,299,502
|
$13,693,975
|
|
|
|
|
|
|
|
|
Capital expenditures:
|
|
|
Antimony
|
|
|
United
States
|
$32,448
|
$8,429
|
Mexico
|
38,456
|
705,123
|
Subtotal
antimony
|
70,904
|
713,552
|
Precious
metals
|
|
|
United
States
|
10,219
|
21,086
|
Mexico
|
147,978
|
-
|
Subtotal
precious metals
|
158,197
|
21,086
|
Zeolite
|
13,990
|
58,287
|
Total
|
$243,091
|
$792,925
|
16.
Business
Segments, continued:
Segment Operations for the Year
|
|
|
|
|
|
|
Ended December 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$2,942,628
|
$-
|
$2,942,628
|
$174,079
|
$2,118,823
|
$5,235,530
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
$25,809
|
$590,579
|
$616,388
|
$86,835
|
$182,620
|
$885,843
|
|
|
|
|
|
|
|
Income
(loss) from operations
|
$192,511
|
$(3,851,228)
|
$(3,658,717)
|
$87,244
|
$266,731
|
$(3,304,742)
|
|
|
|
|
|
|
|
Other
income (expense):
|
21,808
|
-
|
21,808
|
-
|
(3,870)
|
17,938
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
$214,319
|
$(3,851,228)
|
$(3,636,909)
|
$87,244
|
$262,861
|
$(3,286,804)
|
Segment Operations for the Year
|
|
|
|
|
|
|
Ended December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$5,450,649
|
$-
|
$5,450,649
|
$194,239
|
$2,623,117
|
$8,268,005
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
$43,738
|
$596,719
|
$640,457
|
$69,067
|
$186,466
|
$895,990
|
|
|
|
|
|
|
|
Income
(loss) from operations
|
$(144,208)
|
$(4,239,123)
|
$(4,383,331)
|
$125,172
|
$513,052
|
$(3,745,107)
|
|
|
|
|
|
|
|
Other
income (expense):
|
(16,142)
|
103,940
|
87,798
|
-
|
(15,582)
|
72,216
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
$(160,350)
|
$(4,135,183)
|
$(4,295,533)
|
$125,172
|
$497,470
|
$(3,672,891)
|
On
April 20, 2020, the Company received a loan of $443,400 pursuant to
the Paycheck Protection Program (the “PPP”) under
Division A, Title I of the CARES Act, which was enacted March 27,
2020. The loan, which was in the form of a Note dated April 20,
2020 had a maturity date on April 19, 2022 and an interest rate of
1% per annum. It is anticipated that the loan will be forgiven
under the provisions of the CARES Act because the Company used the
funds for qualifying expenses. Qualifying expenses included payroll
costs, costs used to continue group health care benefits, rent, and
utilities. The amount of the PPP loan will be recognized as gain on
forgiveness of the CARES Act loan in the period the Company
receives formal notification of forgiveness.
In the
first quarter of 2021, the Company raised $23,497,180 (net of
$1,499,820 in agent’s fees) in two separate transactions from
sale of shares of its common stock and warrants for general
corporate purposes, working capital, and to fund a geochemical,
geological and geophysical program at the Los Juarez
property.
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