UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (fee required)
For the quarterly period ended March 31, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (no fee required)
For the transition period___to___
Commission file number 33-00215
UNITED STATES ANTIMONY CORPORATION
(Name of small business issuer in its charter)
Montana 81-0305822
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer Identification No.)
P.O. Box 643, Thompson Falls, Montana 59873
(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 11, 1998, the registrant had outstanding 13,290,434 shares of par value
$.01 common stock.
PART I-FINANCIAL INFORMATION
ITEM 1. Financial Statements and Supplementary Data
United States Antimony Corporation and Subsidiary
Consolidated Balance Sheets
(Unaudited)
March 31, December 31,
1998 1997
ASSETS
Current assets:
Restricted cash $215 $15,280
Note receivable 5,000
Inventories 475,549 463,282
Prepaid expenses 11,480 7,727
------- -------
Total current assets 492,244 486,289
Properties, plants and equipment, net 617,892 637,022
Restricted cash, reclamation bonds 178,986 178,986
------- -------
Total assets $1,289,122 $1,302,297
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Checks issued and payable $44,138 $42,384
Accounts payable 127,075 125,082
Accrued payroll and property taxes 127,313 118,801
Accrued payroll and other 71,127 43,707
Judgments payable 143,052 142,937
Accrued interest payable 328,662 320,287
Payable to related parties 35,777 31,707
Notes payable to bank 198,962 177,079
Note payable to Bobby C. Hamilton, current 28,118 27,626
Debentures payable 335,000 335,000
Accrued reclamation costs, current 216,700 216,700
------- -------
Total current liabilities 1,655,924 1,581,310
--------- ---------
Notes payable to bank, noncurrent 73,231 90,269
Note payable to Bobby C. Hamilton, noncurrent 1,609,130 1,616,516
Accrued reclamation costs, noncurrent 339,844 339,844
--------- ---------
Total liabilities 3,678,129 3,627,939
--------- ---------
Commitments and contingencies
Stockholders' deficit:
Preferred stock, $.01 par value,
10,000,000 shares authorized:
Series A: 4,500 shares issued
and outstanding (liquidation preference
$96,750) 45 45
Series B: 750,000 shares issued and
outstanding (liquidation preference $780,000) 7,500 7,500
Series C: 2,560,762 shares issued and
outstanding(liquidation preference $1,408,419) 25,608 25,608
Common stock, $.01 par value, 20,000,000 shares
authorized; 13,290,434 and 13,065,434 shares
issued and outstanding 132,904 130,654
Additional paid-in capital 14,050,639 13,997,889
Accumulated deficit (16,605,703) (16,487,338)
----------- ------------
Total stockholders' deficit ( 2,389,007) (2,325,642)
----------- ------------
Total liabilities and stockholders'deficit $1,289,122 $1,302,297
=========== ============
The accompanying notes are an integral part of the consolidated financial
statements.
United States Antimony Corporation and Subsidiary
Consolidated Statements of Operations
for the three-month periods ended March 31, 1998 and 1997 (Unaudited)
March 31, March 31,
1998 1997
Revenues:
Sales of antimony products and other $919,724 $1,113,410
Cost of antimony production and other 829,896 980,787
------- -------
Gross profit 89,828 132,623
Other operating expenses:
Exploration and evaluations 30,108 36,249
Care-and-maintenance - Yellow Jacket 74,302 76,492
General and administrative 58,019 74,703
------ ------
162,429 187,444
------ ------
Other (income) expense:
Interest expense 48,287 71,866
Interest income and other (2,523) (5,812)
------ ------
45,764 66,054
------ ------
Net loss $118,365 $120,875
======= =======
Basic net loss per share of common stock $ .01 $ .01
======= =======
Diluted net loss per share of common stock $ .01 $ .01
======= =======
Basic weighted average shares outstanding 13,159,865 12,729,523
---------- ----------
Diluted weighted average shares outstanding 15,720,627 12,729,523
---------- ----------
The accompanying notes are an integral part of the consolidated financial
statements
United States Antimony Corporation and Subsidiary
Consolidated Statements of Cash Flows
for the three-month periods ended March 31, 1998 and 1997 (Unaudited)
March 31, March 31,
1998 1997
Cash flows from operating activities:
Net loss $(118,365) $(120,875)
Adjustments to reconcile net
loss to net cash provided by
(used in) operations:
Depreciation 39,113 40,732
Change in:
Restricted cash 15,065 (103,000)
Stock subscription receivable (20,000)
Accounts receivable 33,837
Inventories (12,267) 14,252
Prepaid expenses (3,753) 19,921
Accounts payable 1,993 (69,333)
Accrued payroll and property taxes 8,512 (11,255)
Accrued payroll and other 27,420 (378)
Judgments payable 115 2,007
Accrued interest payable 8,375 30,393
Payable to related parties 4,070 (13,737)
Accrued reclamation costs (974)
--------- ---------
Net cash used in operating activities (29,722) (198,410)
--------- ---------
Cash flows from investing activities:
Purchase of properties, plant and equipment (19,983) (25,115)
--------- ---------
Net cash used in investing activities (19,983) (25,115)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of common stock
and warrants 50,000 208,000
Proceeds from notes payable to bank 4,845
Payments on notes payable to bank (4,089)
Increase in checks issued and payable 1,754 30,274
Payments on note payable to Bobby C. Hamilton (6,894) (10,660)
--------- ---------
Net cash provided by financing activities 49,705 223,525
--------- ---------
Net change in cash 0 0
--------- ---------
Cash, beginning of year 0 0
--------- ---------
Cash, end of year $ 0 $ 0
--------- ---------
Supplemental disclosures:
Cash paid for interest $39,912 $41,473
--------- ---------
Noncash financing activities:
Common stock issued in exchange
for note receivable $5,000
---------
The accompanying notes are an integral part of the consolidated financial
statements.
PART I - FINANCIAL INFORMATION (Continued)
UNITED STATES ANTIMONY CORPORATION and SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Notes to December 31, 1997 consolidated financial statements:
The notes to the consolidated financial statements as of December 31, 1997, as
set forth in the Company's 1997 Annual Report on Form 10-KSB, substantially
apply to these interim consolidated financial statements and are not repeated
here.
2. Adjustments to financial statements:
The financial statements reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results for the interim
periods reported. All such adjustments are of a normal recurring nature. All
financial statements presented herein are unaudited. However, the balance
sheet as of December 31, 1997, was derived from the audited consolidated
balance sheet referred to in Note 1 above. Certain consolidated financial
statement amounts for the three-month period ended March 31, 1997 have been
reclassified to conform to the 1998 presentation.
These reclassifications had no effect on the net loss or accumulated deficit
as previously reported.
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. The metals were recovered
by a 150-ton per day gravity and flotation mill, and the concentrates were
leached with cyanide to produce a bullion product at the Preachers Cove mill,
which is located nine miles north of Sunbeam, Idaho on the Yankee Fork of the
Salmon River. 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 requiring cleanup of
the cyanide solution. In 1996, the Company signed a consent decree with the
Idaho Department of Environmental Quality relating to completing the
reclamation and remediation at the Preachers Cove mill. The Company
anticipates having the cleanup complete sometime in 1999.
4. Significant accounting policies:
Loss Per Common Share
In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings Per Share," which became effective for the Company for
reporting periods ending after December 15, 1997. Under the provisions of
SFAS No. 128, primary and full-diluted earnings per share were 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. The diluted
earnings per share calculation is arrived at by dividing net income (loss) by
the weighted-average number of shares outstanding, adjusted for the dilutive
effect of outstanding stock options, the conversion impact of convertible
preferred stock, and shares issuable under other contracts.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
4. Significant accounting policies, Continued:
During 1998 and 1997 the Company had outstanding common stock warrants
that were exercisable at prices higher than the trading value of the Company's
stock and, therefore, antidilutive. Accordingly, the warrants have no affect
on the calculation of basic or diluted weighted-average number of shares. In
1998, the Company had 2,560,762 shares of Series C preferred stock that were
outstanding during the period. The Series C preferred stock is
convertible into common stock of the Company and considered in the calculation
of diluted weighted-average number of shares outstanding.
The following table presents a reconciliation of the numerators and
denominators of the basic and diluted earnings per share ("EPS") computations
for the three-month periods ended March 31, 1998 and 1997.
March 31,
1998
Loss Shares Per Share
Amounts
Basic EPS:
Loss $(118,365) 13,159,865 $(0.01)
Common stock warrants(1)
Series C preferred stock(2) 2,560,762
--------- ---------- -----
Diluted EPS:
Loss $(118,365) 15,720,627 $(0.01)
--------- ---------- -----
March 31,
1997
Per share
Loss Shares Amounts
Basic EPS:
Loss $(120,875) 12,729,525 $(0.01)
Common stock warrants(1)
Series C preferred stock(2)
--------- ---------- -----
Diluted EPS:
Loss $(120,875) 12,729,525 $(0.01)
--------- ---------- -----
(1) Common stock warrants totaling 994,356 and 641,000 outstanding during
1998 and 1997,respectively,were not included in the computation of diluted
EPS at March 31, 1998 or 1997 because the various exercise prices of the
warrants were greater than the average market price of the Company's common
stock.
(2) Series C preferred stock is convertible into common stock of the company
on a share-for-share basis. The effect on the computation of diluted
weighted average shares outstanding is based upon the potential conversion of
the shares into common stock for the period of time the preferred shares were
outstanding.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
4. Significant accounting policies, Continued
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income." This statement establishes standards for
reporting the components of comprehensive income prominently within the
financial statements. Comprehensive income includes net income plus certain
transactions that are reported directly within stockholders' equity.
The provisions of this statement are effective with the first quarter of 1998
financial statements and have no material impact on financial position or
results of operations of the Company.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information." The
provisions of this statement require the disclosure of financial information
about a company's operating segments in interim and annual financial
statements. The definition of operating segments is to be based upon internal
management practices of the company. The statement is effective in 1998 and
its adoption has no material impact on the financial condition or results of
operations of the Company
ITEM 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
General
Certain matters discussed are forward-looking statements that involve risks
and uncertainties, including the impact of gold and 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 the Company's judgment
as of the date of this filing. The Company disclaims, however, any intent or
obligation to update these forward-looking statements.
Results of Operations
The Company's operations resulted in a net loss of $118,365 for the
three-month period ended March 31, 1998 compared with a net loss of $120,875
for the three-month period ended March 31, 1997.
Total revenues from antimony product sales for the first three months of 1998
were $919,724 compared with $1,113,410 for the comparable period in 1997, a
decrease of $193,686. The decrease in revenues during 1998 was due to a
decrease in antimony product prices in the first quarter of 1998 compared to
the first quarter of 1997. Sales of antimony products during the first three
months of 1998 consisted 781,793 pounds at an average sale price of $1.18 per
pound. During the first quarter of 1997 sales of antimony products consisted
of 761,657 pounds at average sale price of $1.46 per pound. The decrease in
sale prices of antimony products from the first quarter of 1997 to the first
quarter of 1998 is the result of a corresponding decrease in antimony metal
prices. Gross profit from antimony sales during the first three months of
1998 was $89,828, compared with gross profit of $132,623 during the first
three months of 1997. The decrease in gross profit during the first quarter of
1998 compared to the comparable quarter of 1997, is primarily due to decreased
antimony product sale prices.
The Company reports 50% of total antimony sales made by HoltraChem and the
Company. Total sales of antimony products by both companies was
$1,839,447 or 1,563,585 pounds during the first three months of 1998.
Substantially all of the antimony products sold were produced at the Company's
plant near Thompson Falls, Montana.
ITEM 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition, Continued
In August 1996, the Company discontinued mining operations at Yellow Jacket
due to recurring operating losses, and placed the property on a
care-and-maintenance basis. Concurrently, the Company began an underground
exploration program in an effort to discover mineralized material that could
be economically mined and processed.
Costs related to the care-and-maintenance of Yellow Jacket were $74,302 for
the three-month period ended March 31, 1998, compared with comparable costs
of $76,492 during the three-month period ended March 31, 1997. Costs related
to exploration and evaluation at Yellow Jacket were $30,108 for the three month
period ended March 31, 1998, compared with comparable costs of $36,249
during the three-month period ended March 31, 1997.
General and administrative expenses decreased $16,684 during the first three
months of 1998 as compared to the first three months of 1997. The decrease was
principally due to decreased accounting and professional fees incurred during
the first quarter of 1998 compared to the first quarter of 1997.
Interest expense was $48,287 during three-month period ended March 31,1998
compared to $71,866 for the first quarter of 1997. The reduction was due to
a decrease in outstanding debenture and director debt payable, which was
converted into Series C preferred stock during the fourth quarter of 1997.
Interest income was $2,523 during the three-month period ended March 31,
1998, compared to $5,812 for the same period in 1997. The decrease in
interest income was attributable to a corresponding decrease in restricted
cash held during the first quarter of 1998 compared to the first quarter of
1997.
Financial Condition and Liquidity
At March 31, 1998, the Company's assets totaled $1,289,122, and there was a
stockholders' deficit of $2,389,007. The stockholders' deficit increased
$118,365 from December 31, 1997 due to the net loss recognized from the
Company's operations during the first three months of 1998.
Cash used by operating activities during the first three months of 1998 was
$29,722 compared with $198,410 during the first three months of 1997. During
the first quarters of 1998 and 1997, the Company's net loss from operations
contributed most to cash used by operations. Cash used in investing
activities was $19,983 during the first quarter of 1998 and $25,115 during the
first quarter in 1997. Cash used during both periods of 1998 and 1997 related
to cash investment in antimony plant and equipment.
Cash provided by financing activities totaled $49,705 during the first
quarter of 1998 compared to $223,525 during the comparable period of 1997.
During both 1998 and 1997, proceeds from the issuance of common stock
and warrants contributed most of the cash provided from financing activities.
At March 31, 1998, the Company had completed its investment in its 50% share of
antimony inventory. Correspondingly, the Company began receiving a greater
percentage of profits from antimony sales with HoltraChem. These resources
will be available to meet the Company's obligations and fund operations.
The Company has been able to avoid bankruptcy and a termination of operations
through borrowings from stockholders and directors, common stock sales, lack
of creditor action and net income produced from operations in 1994 and 1995.
There can be no assurance, however, that the Company will be able to continue
to meet its obligations and continue in existence as a going concern.
ITEM 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition, Continued
To continue as a going concern the company must continue to generate cash from
operations and financing activities sufficient to address the following
financial commitments.
. Providing $5,000 per month for a "sinking fund" to pay
accrued interest related to debentures converted in 1997.
. Servicing borrowings from the bank.
. Servicing the Hamilton note payable at a minimum of
$150,000 annually.
. Keeping current on property, payroll, and income tax
liabilities and accounts payable.
. Fulfilling responsibilities with environmental, labor
safety and securities regulatory agencies.
. Paying annual care-and-maintenance costs at the Yellow
Jacket mine.
. Funding minimum annual royalty payments to Geosearch and
Yellow Jacket, Inc.
. Providing funding of the Company's antimony inventory
from antimony profits when the Company's share of antimony
inventory amountsto $750,000 or more or when its share of
inventory is less than 50% of total inventory.
. Funding legal fees and other costs incurred in resolving the
lawsuit brought against the Company, requesting payment of
defaulted debenture principal, related accrued interest, and
attorney's fees.
PART II- OTHER INFORMATION
ITEM 1. Legal Proceedings
On April 8, 1998, Ronald Michael Meneo, Trustee of the Walter L. Maguire
1935-1 Trust ("The Trust"), filed an action in the Twentieth Judicial District
Court of Sanders County, Montana against the registrant. The action seeks to
recover principal amounts totaling $335,000 due on defaulted convertible and
subordinated convertible debentures held by The Trust. The action also seeks
to recover accrued interest on the principal amounts of the debentures at the
rate of ten percent per annum that was due on the maturity dates of the
debentures, interest at ten percent on all principal and interest due on the
debentures accruing from the dates of maturity to the present, and all amounts
relating to The Trust's legal and attorney's fees incurred in bringing the
action.
On March 31, 1998, the Company had recorded $305,523 of accrued
interest on debentures held by The Trust. The Walter L. Maguire 1935-1 Trust
is a stockholder, and its beneficiaries include Walter L. Maguire Sr.,
a director and stockholder, and Walter L Maguire Jr., a stockholder.
ITEMS 2, 3, 4, and 5 are omitted from this report as inapplicable.
PART II- OTHER INFORMATION, CONTINUED
ITEM 6. Exhibits and Reports on Form 8-K
Documents filed with this report:
Exhibit No. Item Dated
10.29 SUMMONS and VERIFIED COMPLAINT April 8, 1998
from Montana Twentieth Judicial
District Court, Sanders County
No reports were filed on Form 8-K during the period
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/ John C. Lawrence Date: May 14, 1998
John C. Lawrence, Director and President
(Principal Executive, Financial and Accounting
Officer)