United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited),
Continued:
Long-Term debt at
March 31, 2021 and December 31, 2020 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.
|
$58,500
|
$66,800
|
Note payable to Cat
Financial Services, bearing interest at 6%;
|
|
|
payable in monthly
installments of $778; maturing
|
|
|
December 2022;
collateralized by equipment.
|
15,408
|
17,480
|
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
|
|
73,908
|
86,426
|
Less current
portion
|
(40,770)
|
(52,122)
|
Long-term
portion
|
$33,138
|
$34,304
|
At
March 31, 2021, principal payments on debt are due as
follows:
12 Months Ending
March 31,
|
|
2022
|
40,770
|
2023
|
33,138
|
|
$73,908
|
9.
Related
Party Transactions
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 owned. The amount due to Mr.
Lawrence’s estate as of March 31, 2021 and December 31, 2020
was $6,094 and $171,017, respectively. During the three months
ended March 31, 2021, the Company paid $164,922 to John
Lawrence’s estate as reimbursement for these
advances.
During
2019, Mr. Lawrence advanced funds to the Company that had a balance
at December 31, 2020 of $56,216. During the three month period
ended March 31, 2021, the Company paid First Security Bank on
behalf of Mr. Lawrence $56,216. The balance of the advances due to
Mr. Lawrence at March 31, 2021 is $0.
John C.
Gustaven, Interim Chief Executive Officer of the Company, has an
advance due from the Company of $200 at December 31, 2020. During
the three month period ended March 31, 2021, the Company did not
make any payments to Mr. Gustaven on these advances.
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited),
Continued:
During
the three month period ended March 31, 2021, the Company sold
shares of its common stock in two separate transactions: on
February 3, 2021, 15,300,000 shares were sold at $0.70 for gross
proceeds of $10,710,000; and on February 18, 2021, 10,990,000
shares were sold at $1.30 for gross proceeds of $14,287,000. A
total of $1,654,820 of issuance costs were incurred on these
sales.
During
the three month period ended March 31, 2021 and March 31, 2020, the
Company accrued $28,125 and $28,125, respectively, in
directors’ fees payable that will be paid in common
stock.
During
the three month period ended March 31, 2021, the Company issued
3,723,810 shares of common stock and received $1,763,619 in cash
from the exercise of warrants. During the three month period ended
March 31, 2020, warrants for purchase of 250,000 shares of the
Company’s common stock for $0.25 per share were exercised by
the Company’s previous President and Chairman, John Lawrence.
The warrants were exercised in exchange for a reduction of $62,500
in an amount payable to Mr. Lawrence.
Warrants
Transactions in
common stock purchase warrants for the three month period ended
March 31, 2021 and the year ended December 31, 2020 are as
follows:
|
|
|
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
|
Issued
|
-
|
|
Exercised
|
(3,723,810)
|
$0.46 - $0.65
|
Balance March 31,
2021
|
2,471,089
|
$0.46 - $0.65
|
These
warrants expire as follows:
|
|
|
185,374
|
$0.65
|
2022
|
2,285,715
|
$0.46
|
2025
|
2,471,089
|
|
|
11.
Income
and Other Taxes
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.
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited),
Continued:
11.
Income
and Other Taxes , Continued:
In
early 2019, the Company was notified that SAT re-opened its audit
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 March 31, 2021. 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
March 31, 2021 and 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 March 31, 2021 and 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.
Other Taxes
In
2016, USAMSA imported coal from the United States to its smelter in
Mexico to process Australian concentrates associated with the
Hillgrove agreement (Note 12). At that time, the Company
applied for and was granted a Maquiladora (IMMEX), in accordance
with a Manufacturing and Export Services Industry program offered
by the Mexican government to attract and promote foreign investment
in Mexico. With the IMMEX, all imported goods to Mexico that
are also exported in altered form are exempt from the requirement
of paying the 16% tax (IVA). The Company did not pay IVA on
any of the imported coal used to process the Australian
concentrates. In 2020, the Company was informed by the
SAT that it owed the 16% IVA money for all the coal imported for
the processing of the Australian concentrates. Additionally,
there were penalties and fees that SAT added to the total
amount. In late 2020, the Company filed a motion before the
Taxpayer's Defense Agency (PRODECON), but the motion was
denied. To avoid exorbitant 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. The
assessment was settled with a payment of $1,120,730 during the
three month period ended March 31, 2021.
12. 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. Hillgrove was acquired by Red
River Resources LTD (“Red River”) during 2019. The
total balance of the advance liability due was $1,134,221 at March
31, 2021 and December 31, 2020. After March 31, 2021, the Company
successfully negotiated a settlement with Red River for an agreed
upon amount of $1,020,799. This balance was paid on April 8,
2021.
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited),
Continued:
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.
Segment
disclosure regarding sales to major customers is located in Note
4.
Properties,
plants
|
|
|
and
equipment, net:
|
|
|
Antimony
|
|
|
United
States
|
$1,629,846
|
$1,637,738
|
Mexico
|
7,495,331
|
7,635,410
|
Subtotal
Antimony
|
9,125,177
|
9,273,148
|
Precious
metals
|
924,707
|
933,885
|
Zeolite
|
976,544
|
1,018,561
|
Total
|
$11,026,428
|
$11,225,594
|
At
March 31, 2021 and December 31, 2020, the Company had $739,435 and
$755,978, respectively, of assets that were not yet placed in
service and have not yet been depreciated.
|
For the three
months ended
|
Capital
expenditures:
|
|
|
Antimony
|
|
|
United
States
|
$-
|
$23,121
|
Mexico
|
4,872
|
26,765
|
Subtotal
Antimony
|
4,872
|
49,886
|
Precious
Metals
|
18,426
|
38,521
|
Zeolite
|
-
|
7,864
|
Total
|
$23,298
|
$96,271
|
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited),
Continued:
13.
Business Segments, Continued:
Segment
Operations for the three
|
|
|
|
|
|
|
months ended
March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
$657,107
|
$-
|
$657,107
|
$76,233
|
$519,947
|
$1,253,287
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
7,891
|
144,952
|
152,843
|
27,604
|
42,017
|
222,464
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
(218,669)
|
(238,568)
|
(457,237)
|
48,630
|
66,881
|
(341,726)
|
|
|
|
|
|
|
|
Other income
(expense):
|
6,635
|
-
|
6,635
|
-
|
(397)
|
6,238
|
|
|
|
|
|
|
|
NET INCOME
(LOSS)
|
$(212,034)
|
$(238,568)
|
$(450,602)
|
$48,630
|
$66,484
|
$(335,488)
|
Segment
Operations for the three
|
|
|
|
|
|
|
months ended
March 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
$1,121,425
|
$-
|
$1,121,425
|
$62,206
|
$559,360
|
$1,742,991
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
7,395
|
146,098
|
153,493
|
23,598
|
49,190
|
226,281
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
239,352
|
(719,066)
|
(479,714)
|
38,608
|
136,168
|
(304,938)
|
|
|
|
|
|
|
|
Other income
(expense):
|
(2,915)
|
-
|
(2,915)
|
-
|
(1,029)
|
(3,944)
|
|
|
|
|
|
|
|
NET INCOME
(LOSS)
|
$236,437
|
$(719,066)
|
$(482,629)
|
$38,608
|
$135,139
|
$(308,882)
|
14. Note Payable-Small Business Administration
Loan
On
March 27, 2020, the Coronavirus Aid, Relief, and Economic Security
(the “CARES Act”) Act was signed into United States
law.
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. The application for
forgiveness was submitted to the bank on January 24, 2021, and the
bank submitted the application to the SBA on February 12, 2021. On
April 26, 2021, the bank notified the Company that the amount had
been paid in full by the SBA.
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited),
Continued:
15.
Subsequent Events
The
Company has been in contact with Midas Gold for over a decade
regarding its potential interest in opening its Stibnite Mine in
Idaho. On May 3, 2021, the Company signed a Collaboration Agreement
with Perpetua Resources (“Perpetua”) (formerly Midas
Gold) to study the feasibility of processing Perpetua’s
concentrates at the Company’s Montana facilities. Perpetua is
in the process of permitting an antimony and gold resource in
Idaho.
ITEM
2.
Management’s
Discussion and Analysis of Results of Operations and Financial
Condition
COVID-19 Coronavirus Pandemic Response and Impact
One of
the principal recent challenges facing the Company in 2021 as a
result of stimulus funding from Covid-19 has been the evaporation
of available labor. This issue has seriously impacted both
operations in Montana and at its zeolite operation in Idaho. The
following measures are being taken in an attempt to obtain and
retain laborers:
1.
The Company has
raised the starting wage and as a result increased its labor costs
for existing laborers.
2.
The Company has
advertised on multiple job search platforms and is also advertising
in two languages on conventional job search platforms as well as on
multiple social media sites.
3.
The Company is
investigating methods to obtain labor from Mexico.
4.
The Company is
investigating hiring from alternative potential labor pools,
including addiction recovery centers.
General
Certain
matters discussed are forward-looking statements that involve risks
and uncertainties, including the impact of antimony prices and
production volatility, changing market conditions and the
regulatory environment and other risks. Actual results may differ
materially from those projected. These forward-looking statements
represent our judgment as of the date of this filing. We disclaim,
however, any intent or obligation to update these forward-looking
statements.
|
|
|
|
|
|
Antimony
- Combined USA and Mexico
|
|
|
Lbs of Antimony
Metal USA
|
181,969
|
166,908
|
Lbs of Antimony
Metal Mexico:
|
-
|
128,545
|
Total
Lbs of Antimony Metal Sold
|
181,969
|
295,453
|
Average Sales
Price/Lb Metal
|
$3.61
|
$3.06
|
Net
loss/Lb Metal
|
$(2.48)
|
$(1.63)
|
|
|
|
Gross antimony
revenue - net of discount
|
657,107
|
902,746
|
Tri-sulfide
revenue
|
-
|
218,679
|
Total
revenue
|
$657,107
|
$1,121,425
|
|
|
|
Cost of sales -
domestic
|
(543,322)
|
(533,289)
|
Cost of sales -
Mexico
|
(26,318)
|
(684,061)
|
Operating
expenses
|
(544,704)
|
(383,789)
|
Non-operating
expenses
|
6,635
|
(2,915)
|
|
(1,107,709)
|
(1,604,054)
|
|
|
|
Net
loss - antimony
|
(450,602)
|
(482,629)
|
Depreciation,&
amortization
|
152,843
|
153,493
|
EBITDA
- antimony
|
$(297,759)
|
$(329,136)
|
|
|
|
Precious
Metals
|
|
|
Ounces
sold
|
|
|
Gold
|
7.28
|
15.00
|
Silver
|
3,354
|
5,048
|
|
|
|
Gross precious
metals revenue
|
$76,233
|
$62,206
|
Production costs,
royalties, and shipping costs
|
(27,604)
|
(23,598)
|
Net
income - precious metals
|
48,629
|
38,608
|
Depreciation
|
27,604
|
23,598
|
EBITDA
- precious metals
|
$76,233
|
$62,206
|
|
|
|
Zeolite
|
|
|
Tons
sold
|
2,743
|
2,809
|
Average Sales
Price/Ton
|
$189.55
|
$199.13
|
Net
income (Loss)/Ton
|
$24.24
|
$48.11
|
|
|
|
Gross zeolite
revenue
|
$519,947
|
$559,360
|
Cost of
sales
|
(443,886)
|
(400,866)
|
Operating
expenses
|
(9,179)
|
(22,326)
|
Non-operating
expenses
|
(397)
|
(1,029)
|
Net
income - zeolite
|
66,485
|
135,139
|
Depreciation
|
42,017
|
49,190
|
EBITDA
- zeolite
|
$108,502
|
$184,329
|
|
|
|
Company-wide
|
|
|
Gross
revenue
|
$1,253,287
|
$1,742,991
|
Production
costs
|
(1,041,130)
|
(1,641,814)
|
Operating
expenses
|
(553,883)
|
(406,115)
|
Non-operating
expenses
|
6,238
|
(3,944)
|
Net
income (loss)
|
(335,488)
|
(308,882)
|
Depreciation,&
amortization
|
222,464
|
226,281
|
EBITDA
|
$(113,024)
|
$(82,601)
|
PART I - FINANCIAL INFORMATION, CONTINUED:
ITEM
2.
Management’s
Discussion and Analysis of Results of Operations and
FinancialCondition, continued:
Company-Wide
For the
first quarter of 2021, we recognized a net loss of $335,488 on
sales of $1,253,287, after depreciation and amortization of
$224,464. We reported a net loss of $308,882 in the first quarter
of 2020 on sales of $1,742,991, after depreciation and amortization
of $226,281.
For the
three months ended March 31, 2021, EBITDA was a negative $113,024
compared to a negative $82,601 for the same period in
2020.
Net
non-cash expense items totaled $309,190, for the three months ended
March 31, 2021 and included $222,464 for depreciation and
amortization, $28,125 for director compensation, $57,530 for the
write-down of inventory and $1,071 for other items. Net non-cash
expense items totaled $278,875 for the first three months of 2020
and included $226,281 for depreciation and amortization, $28,125
for director compensation, $22,475 for the write-down of and $1,994
for other items.
For the
three months ended March 21, 2021, general and administrative
expenses were $170,050 compared to $199,971 for the same period of
2020.
Antimony
For the
three month period ended March 31, 2021, we sold 181,969 pounds of
antimony compared to 295,453 pounds for the three month period
ended March 31, 2020. The raw material received from our North
American supplier increased by approximately 107,086 for the three
month period ended March 31, 2021, compared to the same quarter for
2020. We had a decrease in raw material from Mexico of
approximately 63,000 for the three month period ended March 31,
2021, compared to the same quarter for 2020.
The
average sales price of antimony during the three month period ended
March 31, 2021 was $3.61 per pound compared to $3.06 during the
same period in 2020.
Precious Metals
The
caustic leach of flotation concentrates from Los Juarez has been
successful. The Company is delaying the processing of the ore from
Los Juarez pending its survey and study of the property’s
reserves and an analysis of its current flotation tailings. The
impact of Covid-19 has forced a delay in the geological,
geophysical, and geochemical study of the Los Juarez property but
the Company plans to conduct the Los Juarez study as soon as
practical given the current situation.
For the
three month period ended March 31, 2021, income for precious metals
from North American sources was $76,233 compared to $62,206 for the
same periods of 2020.
Current
and prior periods’ revenue from precious metals is as
follows:
Precious
Metal Sales Silver/Gold
|
For
the three months ended March 31,
|
Montana
|
|
|
Ounces Gold Shipped
(Au)
|
7.28
|
15.00
|
Ounces Silver
Shipped (Ag)
|
3,354.00
|
5,048.00
|
Total
Revenues
|
$76,233
|
$62,206
|
Bear River Zeolite (BRZ)
For the
three month period ended March 31, 2021, BRZ sold 2,743 tons of
zeolite compared to 2,809 tons in the same periods of
2020.
For the
three month period ended March 31, 2021, BRZ realized net income of
$66,485 after depreciation of $42,017 compared to a net income of
$135,139 after depreciation of $49,190 for the same period of
2020.
A
non-trivial portion of our zeolite sales have been generated by its
use in swimming pools, and that activity is resuming now but was
severely impacted by the pandemic. We expect resumption of normal
sales in this sector this summer and in the future as the covid-19
restrictions are reduced. The Company has halted sales of
low-volume product as its associated packaging and shipping costs
did not justify them. It is concentrating on larger-volume sales
and has received many orders recently from new clients. With the
addition of improved management, the addition of an excellent sales
person, and improvement in its crushing and sorting circuits, the
Company anticipates substantial growth in zeolite
sales.
BRZ
realized an EBITDA for the three month period ended March 31, 2021
of $108,502 compared to $184,329 for the same periods in
2020.
Financial Position
Financial
Condition and Liquidity
|
|
|
|
|
|
Current
assets
|
$24,604,720
|
$1,808,161
|
Current
liabilities
|
(3,030,427)
|
(4,477,543)
|
Net
Working Capital
|
$21,574,293
|
$(2,669,382)
|
|
For the
Three Months Ended
|
|
|
|
Cash provided
(used) by operations
|
$(2,449,854)
|
$(36,265)
|
Cash provided by
collection of note receivable
|
|
|
Cash provided
(used) by investing:
|
|
|
Cash used for
capital outlay
|
(23,298)
|
(96,271)
|
Cash provided
(used) by financing:
|
|
|
Payments on notes
payable to bank
|
(100,000)
|
-
|
Proceeds from notes
payable to bank
|
-
|
2,488
|
Proceeds from
common stock issued, net
|
23,342,180
|
62,500
|
Proceeds from
exercise of warrants
|
1,763,619
|
-
|
Principal paid on
long-term debt
|
(12,518)
|
(10,906)
|
Payments on
advances from related party
|
(56,216)
|
-
|
Checks issued and
payable
|
(86,685)
|
56,102
|
Net
change in cash and restricted cash
|
$22,377,228
|
$(22,352)
|
Our net
working capital increased by $24,243,675 from December 31, 2020 to
March 31, 2021. Our cash and cash equivalents increased by
$22,377,228 during the same period. We spent $23,298 for capital
items, and our debt decreased by approximately $169,000 and our
accrued liabilities decreased by approximately $1.9 million
including $1,120,730 paid to eliminate our export tax assessment
payable . During the quarter, we raised approximately $23.3 million
from sale of shares of common stock and approximately $1.8 million
for the exercise of warrants.
We have
estimated commitments and improvements of less than $100,000 to
finish building and installing the precious metals leach circuits.
However, this funding will be implemented after its geological
study of the Los Juarez property. The Company plans to conduct a
proper study of the Los Juarez property and its tailings at its
flotation plant and pending the results of these studies decide how
to proceed regarding a drill program and/or mining of the property.
The study may involve a partnership with a junior mining Company in
order to assist US Antimony in the proper characterization of the
deposit. Should the deposit be of great value, the Company will
likely move the flotation plant closer to the mine. We believe that
with our current cash balance, along with the future cash flow from
operations and operating agreements, we have adequate liquid assets
to meet these commitments and service our debt for the next twelve
months.
At
March 31, 2021, the Company’s consolidated financial
statements show working capital of approximately $21.6 million and
an accumulated deficit of approximately $33 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 antimony and
zeolite.
In the
first quarter of 2021, the Company raised net proceeds of
approximately $23.3 million from sale of shares of its common stock
and approximately $1.8 million from the exercise of stock purchase
warrants. These funds have been and will continue to be used for
general corporate purposes, working capital, hiring of additional
labor, leverage for reducing legacy contracts, a geochemical,
geological, and geophysical study of the Los Juarez property, an
analysis and survey of the tailings at its Puerto Blanco floatation
mill, additional managerial staff at USAC and BRZ headquarters, a
revised website including measures aimed at increased visibility
for advertising, more labor at its Mexican smelter, repair and
improved infrastructure at the Mexican smelter, potential
securement of additional antimony mine reserves in Mexico, and
improvement of furnaces in Montana. 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 these consolidated financial
statements.
ITEM 3.
None
ITEM 4. Controls and Procedures
EVALUATION
OF DISCLOSURE CONTROLS AND PROCEDURES
We
maintain disclosure controls and procedures that are designed to
ensure that information required to be disclosed in our reports
under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the
SEC's rules and forms, and that such information is accumulated and
communicated to management, as appropriate, to allow timely
decisions regarding required disclosure. Our Interim President
& Director conducted an evaluation of the effectiveness of the
Company's disclosure controls and procedures (as defined in the
Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as
of March 31, 2021. It was determined that there were material
weaknesses affecting our disclosure controls and procedures and, as
a result of those weaknesses, our disclosure controls and
procedures were not effective as of March 31, 2021. These material
weaknesses are as follows:
●
Inadequate design
of internal control over the preparation of the financial
statements and financial reporting processes;
●
Inadequate
monitoring of internal controls over significant accounts and
processes including controls associated with domestic and Mexican
subsidiary operations and the period-end financial reporting
process; and
●
The absence of
proper segregation of duties within significant processes and
ineffective controls over management oversight, including antifraud
programs and controls.
We are
aware of these material weaknesses and will develop procedures to
ensure that independent review of material transactions is
performed. The Interim President will develop internal control
measures to mitigate the lack of inadequate documentation of
controls and the monitoring of internal controls over significant
accounts and processes including controls associated with the
period-ending reporting processes, and to mitigate the segregation
of duties within significant accounts and processes and the absence
of controls over management oversight, including antifraud programs
and controls.
We plan
to consult with independent experts when complex transactions are
entered into.
CHANGES
IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There
were no significant changes made to internal controls over
financial reporting for the quarter ended March 31,
2021.