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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2005
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period _____________ to _____________
Commission file number 33-00215
UNITED STATES ANTIMONY CORPORATION
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(Name of small business issuer in its charter)
MONTANA 81-0305822
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. BOX 643, THOMPSON FALLS, MONTANA 59873
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (406) 827-3523
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES [X] No [_]
At May 19, 2005, the registrant had outstanding 31,595,483 shares of par value
$0.01 common stock.
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UNITED STATES ANTIMONY CORPORATION
QUARTERLY REPORT ON FORM 10-QSB
FOR THE QUARTERLY PERIOD
ENDED MARCH 31, 2005
TABLE OF CONTENTS
Page
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PART I - FINANCIAL INFORMATION
Item 1: Financial Statements...................................................1
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations..................................6
Item 3: Controls and Procedures................................................7
PART II - OTHER INFORMATION
Item 1: Legal Proceedings......................................................8
Item 2: Changes in Securities..................................................8
Item 3: Defaults among Senior Securities.......................................8
Item 4: Submission of Matters to a Vote of Security Holders....................8
Item 5: Other Information......................................................8
Item 6: Exhibits and Reports on Form 8-K.......................................8
SIGNATURE......................................................................9
CERTIFICATIONS................................................................10
[The balance of this page has been intentionally left blank.]
PART I-FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
MARCH 31, DECEMBER 31,
2005 2004
--------------- ---------------
ASSETS
Current assets:
Cash $ 11,642
Accounts receivable, less allowance for doubtful accounts
of $30,000 $ 52,314 56,774
Inventories 239,203 237,806
--------------- ---------------
Total current assets 291,517 306,222
Investment in USAMSA, net 2,645 3,527
Properties, plants and equipment, net 763,314 683,003
Restricted cash for reclamation bonds 89,417 91,512
Deferred financing costs, net amortization 20,625 22,500
--------------- ---------------
Total assets $ 1,167,518 $ 1,106,764
=============== ===============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Checks issued and payable $ 82,229 $ 0
Accounts payable 427,441 441,085
Accrued payroll and related taxes 125,979 102,428
Other accrued liabilities 71,355 76,385
Deferred revenue 25,916 30,000
Accrued interest payable 36,728 30,890
Payable to related parties 291,319 287,687
Long-term debt, current 69,514 30,235
Accrued reclamation costs, current 80,000 100,000
--------------- ---------------
Total current liabilities 1,210,481 1,098,710
Secured convertible and convertible notes payable 350,000 350,000
Long-term debt, noncurrent 605,198 636,695
Accrued reclamations costs, noncurrent 62,500 42,500
--------------- ---------------
Total liabilities 2,228,179 2,127,965
--------------- ---------------
Commitments and contingencies (Note 3) Stockholders' deficit:
Preferred stock, $0.01 par value, 10,000,000 shares authorized:
Series A: 4,500 shares issued and outstanding 45 45
Series B: 750,000 shares issued and outstanding 7,500 7,500
Series C: 177,904 shares issued and outstanding 1,779 1,779
Series D: 1,899,600 shares issued and outstanding 18,996 18,996
Common stock, $0.01 par value, 50,000,000 shares authorized;
31,627,500 issued and outstanding 316,275 315,289
Additional paid-in capital 18,144,838 18,117,824
Accumulated deficit (19,550,094) (19,482,574)
--------------- ---------------
Total stockholders' deficit (1,060,661) (1,021,141)
--------------- ---------------
Total liabilities and stockholders' deficit $ 1,167,518 $ 1,106,764
=============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
1
UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED
-----------------------------------
MARCH 31, MARCH 31,
2005 2004
--------------- ---------------
Revenues:
Sales of antimony products and other $ 722,535 $ 582,415
Sales of zeolite products 309,989 195,085
--------------- ---------------
1,032,524 777,500
Cost of sales:
Cost of antimony production 483,704 406,621
Antimony depreciation 10,300 10,300
Antimony freight and delivery 50,384 44,156
Cost of zeolite production 258,395 154,600
Zeolite depreciation 18,200 13,800
Zeolite freight and delivery 22,562 14,671
--------------- ---------------
843,545 644,148
Gross profit 188,979 133,352
--------------- ---------------
Other operating expenses:
Corporate general and administrative 81,437 93,532
Antimony general and administrative 6,233 4,364
Antimony sales expenses 13,766 14,068
Bear River Zeolite sales expenses 19,469 19,164
Bear River Zeolite general and administrative 71,299 71,161
--------------- ---------------
192,204 194,933
Other (income) expense:
USAMSA expense 882
Interest expense 35,486 27,313
Factoring expense 28,259 19,279
Interest income and other (332) (486)
--------------- ---------------
64,295 46,106
--------------- ---------------
Net loss $ 67,520 $ 107,687
=============== ===============
Basic net loss per share of common stock $ Nil $ Nil
=============== ===============
Basic weighted average shares outstanding 31,542,593 28,590,273
=============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
2
UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED
-----------------------------------
MARCH 31, MARCH 31,
2005 2004
--------------- ---------------
Cash flows from operating activities:
Net loss $ (67,520) $ (107,687)
Adjustments to reconcile net loss to net cash used
by operations:
Depreciation and amortization 31,257 27,625
Series D stock issued to directors 0 0
Change in:
Restricted cash 2,095 0
Accounts receivable 4,460 13,395
Inventories (1,397) 38,945
Accounts payable (13,644) (211,202)
Accrued payroll and property taxes 23,551 (45,813)
Accrued other (5,030) (125)
Judgment payable 0 850
Deferred Revenue (4,084) 0
Accrued interest payable 5,838 461
Payable to related parties 3,632 (432)
--------------- ---------------
Net cash used by operating activities (20,842) (284,137)
--------------- --------------
Cash flows from investing activities:
Purchase of properties, plants and equipment (108,812) (29,071)
--------------- --------------
Net cash used in investing activities (108,812) (29,071)
--------------- --------------
Cash flows from financing activities:
Proceeds from issuance of common stock and warrants 0 10,000
Proceeds from exercise of warrants 28,000 227,215
Payments on notes payable to bank 0 (30,221)
Proceeds from notes payable to bank 7,782 100,000
Change in checks issued and payable 82,230 6,214
--------------- ---------------
Net cash provided by financing activities 118,012 313,208
--------------- ---------------
Net change in cash (11,642) 0
Cash, beginning of period 0 0
--------------- ---------------
Cash, end of period $ 0 $ 0
=============== ===============
Supplemental disclosures:
Common stock issued in satisfaction of accounts payable $ 0 $ 150,145
=============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
3
PART I - FINANCIAL INFORMATION, CONTINUED:
UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION:
The unaudited consolidated financial statements have been prepared by the
Company in accordance with accounting principles generally accepted in the
United States of America for interim financial information, as well as the
instructions to Form 10-QSB. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial statements.
In the opinion of the Company's management, all adjustments (consisting of
only normal recurring accruals) considered necessary for a fair presentation
of the interim financial statements have been included. Operating results
for the three-month period ended March 31, 2005 are not necessarily
indicative of the results that may be expected for the full year ending
December 31, 2005. Certain consolidated financial statement amounts for the
three-month period ended March 31, 2004 have been reclassified to conform to
the 2005 presentation. These reclassifications had no effect on the net loss
or accumulated deficit as previously reported.
For further information refer to the financial statements and footnotes
thereto in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 2004.
2. LOSS PER COMMON SHARE:
The Company accounts for its income (loss) per common share according to the
Statement of Financial Accounting Standards No. 128 "Earnings Per Share"
("SFAS No. 128"). Under the provisions of SFAS No. 128, primary and fully
diluted earnings per share are replaced with basic and diluted earnings per
share. Basic earnings per share is arrived at by dividing net income (loss)
available to common stockholders by the weighted average number of common
shares outstanding, and does not include the impact of any potentially
dilutive common stock equivalents. Common stock equivalents, including
warrants to purchase the Company's common stock and common stock issuable
upon the conversion of debentures are excluded from the calculations when
their effect is antidilutive.
3. COMMITMENTS AND CONTINGENCIES:
Until 1989, the Company mined, milled and leached gold and silver in the
Yankee Fork Mining District in Custer County, Idaho. In 1994, the U.S.
Forest Service, under the provisions of the Comprehensive Environmental
Response Liability Act of 1980 ("CERCLA"), designated the cyanide leach
plant as a contaminated site. In 1996, the Idaho Department of Environmental
Quality requested that the Company sign a consent decree related to
completing the reclamation and remediation at the Preachers Cove mill. The
Company has been diligently reclaiming the property and anticipates it will
have the reclamation complete in the near term.
In November of 2001, the Environmental Protection Agency ("EPA") listed two
by-products of the Company's antimony oxide manufacturing process as
hazardous wastes under subtitle C of the Resource Conservation and Recovery
Act ("RCRA"), and emergency notification requirements for releases to the
environment under CERCLA. On November 26, 2002, the Company received a
notice of violation related to a hazardous waste discharge that was
discovered during a hazardous waste compliance evaluation inspection
conducted at the Company's Thompson Falls antimony facility. In response to
the notice, the Company removed certain antimony materials from its
production area and agreed to ensure that future releases of hazardous waste
would not occur. At March 31, 2005, management believes that no additional
liability will result from the violation.
4
3. COMMITMENTS AND CONTINGENCIES, CONTINUED:
UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED), CONTINUED:
The Company's management believes that USAC is currently in substantial
compliance with environmental regulatory requirements and that its accrued
environmental reclamation costs are representative of management's estimate
of costs required to fulfill its reclamation obligations. Such costs are
accrued at the time the expenditure becomes probable and the costs can
reasonably be estimated. The Company recognizes, however, that in some cases
future environmental expenditures cannot be reliably determined due to the
uncertainty of specific remediation methods, conflicts between regulating
agencies relating to remediation methods and environmental law
interpretations, and changes in environmental laws and regulations. Any
changes to the Company's reclamation plans as a result of these factors
could have an adverse affect on the Company's operations. The range of
possible losses in excess of the amounts accrued cannot be reasonably
estimated at this time.
4. BUSINESS SEGMENTS
The Company has two operating segments, antimony and zeolite. Management
reviews and evaluates the operating segments exclusive of interest and
factoring expenses. Therefore, interest expense is not allocated to the
segments. Selected information with respect to segments for the quarters
ended March 31, 2004 and 2005 are as follows:
2005 2004
---------------- ---------------
Revenues:
Antimony $ 722,535 $ 510,324
Zeolite 309,989 342,013
---------------- ---------------
$ 1,032,524 $ 852,337
================ ===============
Cost of sales:
Production and freight and delivery:
Antimony $ 587,991 $ 478,140
Zeolite 280,957 308,163
Depreciation:
Antimony 10,300 10,300
Zeolite 18,200 13,800
---------------- ---------------
$ 897,448 $ 810,403
================ ===============
Gross profit (loss) $ 135,076 $ 41,934
================ ===============
Other operating expenses:
Sales expense:
Antimony $ 13,766 $ 11,805
Zeolite 19,469 15,428
General and administrative expense:
Antimony 6,236 4,364
Zeolite 71,299 18,789
---------------- ---------------
$ 108,026 $ 50,386
================ ===============
Capital expenditures:
Antimony $ 0 $ 19,700
Zeolite 108,812 58,218
---------------- ---------------
$ 108,812 $ 77,218
================ ===============
Properties, plant and equipment, net:
Antimony $ 102,857 $ 128,208
Zeolite 660,458 505,192
---------------- ---------------
$ 763,315 $ 633,400
================ ===============
5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
GENERAL
This report contains both historical and prospective statements concerning
the Company and its operations. Prospective statements (known as
"forward-looking statements") may or may not prove true with the passage of
time because of future risks and uncertainties. The Company cannot predict
what factors might cause actual results to differ materially from those
indicated by prospective statements.
RESULTS OF OPERATIONS
The Company's operations resulted in a net loss of $67,520 for the
three-month period ended March 31, 2005, compared with a net loss of
$107,687 for the three-month period ended March 31, 2004. The decrease in
the loss for the first quarter of 2005 compared to the similar quarter of
2004 is primarily due to increased sales prices for antimony oxide and an
increase in sales of zeolite during the first quarter of 2005.
Total revenues from antimony product sales for the first quarter of 2005
were $ 722,535 compared with $582,415 for the comparable quarter of 2004, an
increase of $140,120. During the three-month period ended March 31, 2005,
62% of the Company's revenues from antimony product sales were from sales to
one customer and 18% were from sales to a second individual customer. Sales
of antimony products during the first quarter of 2005 consisted of 528,376
pounds at an average sale price of $1.37 per pound. During the first quarter
of 2004 sales of antimony products consisted of 401,496 pounds at an average
sale price of $1.17 per pound. The increase in sale prices of antimony
products from the first quarter of 2004 to the first quarter of 2005 is the
result of a corresponding increase in antimony metal prices.
Sales of zeolite products during the first quarter of 2005 were $309,989
compared with first quarter sales in 2004 of $195,085. The increase in sales
for the first quarter of 2005 compared to the first quarter of 2004 was due
to the Company's marketing efforts and a corresponding increase in the
number of zeolite customers. Gross profit from antimony and zeolite sales
during the first three-month period of 2005 was $188,979 compared with gross
profit of $133,352 during the first three-month period of 2004.
The cost of antimony sales was $483,704, or $.92 per pound sold, during the
first quarter of 2005 compared to $406,621 or $1.01 per pound sold, during
the first quarter of 2004. The decrease was due to increased volume of
production.
The cost of zeolite sales was $258,395 for the first quarter of 2005
compared to $154,600 during the first quarter of 2004. The increase was
principally due to the construction of the new plant and the increase in
sales of zeolite.
Antimony depreciation for the first quarter of 2005 was $10,300 compared to
$10,300 for the first quarter of 2002.
Zeolite depreciation for the first quarter of 2005 was $18,200 compared to
$13,800 for the first quarter of 2004. The increase in depreciation is due
to the continued purchase of capital assets associated with zeolite
production.
Antimony freight and delivery for the first quarter of 2005 was $50,384 and
was comparable to $44,156 of freight and delivery expense during the first
quarter of 2004.
Zeolite freight and delivery for the first quarter of 2005 was $22,562
compared to $14,671 for the first quarter of 2004. The increase is due to a
corresponding increase in zeolite sales.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION, CONTINUED:
During the first quarter of 2005, the Company incurred costs totaling
$71,299 associated with general and administrative expenses of it's 100%
owned subsidiary, Bear River Zeolite Company, compared to $71,161 of such
expenses in the comparable quarter of 2004. These expenses included
royalties.
Zeolite sales expenses were $19,469 during the first quarter of 2004
compared to $19,164 during the first quarter of 2004.
General and administrative expenses in the antimony division were $6,233
during the first quarter of 2005 compared to $4,364 during the first quarter
of 2004.
Antimony sales expenses were $13,766 in the first quarter of 2005 and were
comparable with $14,068 during the first quarter of 2004.
Interest expense of $35,486 was incurred during the first quarter of 2005
compared to $27,313 during the first quarter of 2004.
Accounts receivable factoring expense was $28,259 of factoring expense
incurred during the first quarter of 2005 compared to $19,279 during the
first quarter of 2004. The increase was primarily due to an increase in
sales during the first quarter of 2005.
Interest and other income decreased from $486 during the first quarter of
2004 to $332 during the first quarter of 2005. The decrease was the result
of the decrease in interest rates during the first quarter of 2005.
FINANCIAL CONDITION AND LIQUIDITY
At March 31, 2005, Company assets totaled $1,167,518, and there was a
stockholders' deficit of $1,060,661. The stockholders' deficit increased
$39,520 from December 31, 2004, primarily due to the net loss incurred
during the first quarter of 2005. At March 31, 2005 the Company's total
current liabilities exceeded its total current assets by $918,964. Due to
the Company's operating losses, negative working capital, and stockholders'
deficit, the Company's independent accountants included a paragraph in the
Company's 2004 financial statements relating to a going concern uncertainty.
To continue as a going concern the Company must generate profits from its
antimony and zeolite sales and to acquire additional capital resources
through the sale of its securities or from short and long-term debt
financing. Without financing and profitable operations, the Company may not
be able to meet its obligations, fund operations and continue in existence.
While management is optimistic that the Company will be able to sustain
profitable operations and meet its financial obligations, there can be no
assurance of such.
Cash used by operating activities during the first three months of 2005 was
$25,975, and resulted from the first quarter net loss of $173,710 as
adjusted by increasing accounts payable, decreasing inventories and the
non-cash affects of depreciation and amortization expenses.
Cash used in investing activities during the first three months of 2003 was
$9,474 and primarily related to the construction of capital assets at the
Bear River Zeolite facility.
Net cash provided by financing activities was $35,449 during the first three
months of 2005 was primarily generated from an increase in checks issued and
payable.
ITEM 3. CONTROLS AND PROCEDURES
An evaluation was performed by the Company's president and principal
financial officer of the effectiveness of the design and operation of our
disclosure controls and procedures. And on that evaluation, the Company's
president and principal financial officer concluded that disclosure controls
7
and procedures were effective as of March 31, 2005, in ensuring that all
material information required to be filed in this quarterly report has been
made known to them in a timely fashion.
There has been no change in our internal controls over financial reporting
during the quarter ended March 31, 2005 that has materially affect or is
reasonable likely to materially affect, our internal controls over financial
reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
Neither the constituent instruments defining the rights of the registrant's
securities filers nor the rights evidenced by the registrant's outstanding
common stock have been modified, limited or qualified.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The registrant has no outstanding senior securities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit: 10.51 Consulting Agreement Dated March 1, 2003
Reports on Form 8-K None
8
SIGNATURE
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/ John C. Lawrence Date: May 20, 2005
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John C. Lawrence, Director and President
(Principal Executive, Financial and Accounting Officer)
9