XASE:UAMY United States Antimony Corp Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q



(Mark One)

þ
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2012

o
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period __________ to __________
 
Commission file number 001-08675

UNITED STATES ANTIMONY CORPORATION
(Exact name of registrant as specified in its charter)

Montana
 
81-0305822
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)

P.O. Box 643, Thompson Falls, Montana
 
59873
(Address of principal executive offices)
 
(Zip code)


Registrant’s telephone number, including area code: (406) 827-3523

Indicate by check mark 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 þ    No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
YES o    No o
 
Indicate by check mark whether the registrant is a shell company as defined by Rule 12b-2 of the Exchange Act.
YES o    No þ
 
At August 10, 2012, the registrant had outstanding 61,803,109 shares of par value $0.01 common stock.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer
o
Accelerated filer
þ
Non-accelerated filer
o
Smaller reporting company
o
       
(Do not check if a smaller reporting company)
 
 


 
 

 
 
UNITED STATES ANTIMONY CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD
ENDED JUNE 30, 2012


TABLE OF CONTENTS

    Page  
       
PART I – FINANCIAL INFORMATION
     
       
Item 1: Financial Statements (unaudited)
    1-8  
         
Item 2: Management’s Discussion and Analysis of Results of Operations and Financial Condition
    9-10  
         
Item 3: Quantitative and Qualitative Disclosure about Market Risk
    11  
         
Item 4: Controls and Procedures
    11  
         
PART II – OTHER INFORMATION
       
         
Item 1: Legal Proceedings
    12  
         
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
    12  
         
Item 3: Defaults upon Senior Securities
    12  
         
Item 4: Mine Safety Disclosures
    13  
         
Item 5: Other Information
    13  
         
Item 6: Exhibits and Reports on Form 8-K
    13  
         
SIGNATURE
    14  
         
CERTIFICATIONS
       

 
[The balance of this page has been intentionally left blank.]
 
 
 

 
 
PART I-FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS
 
United States Antimony Corporation and Subsidiaries
Consolidated Balance Sheets
 
   
(Unaudited)
June 30, 2012
       
       
December 31, 2011
 
ASSETS
     
Current assets:
           
Cash and cash equivalents
  $ 3,444,003     $ 5,427  
Certificates of deposit (Note 4)
    242,800          
Accounts receivable, less allowance for doubtful accounts of $4,031 and $7,600, respectively
    456,508       1,291,975  
Inventories
    1,077,271       1,066,813  
Other current assets
    57,660       56,208  
Deferred tax asset
    470,869       396,558  
Total current assets
    5,749,111       2,816,981  
                 
Properties, plants and equipment, net
    7,484,436       6,047,004  
Restricted cash for reclamation bonds
    74,777       74,777  
Other assets
    128,686       54,766  
Total assets
  $ 13,437,010     $ 8,993,528  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
       
Current liabilities:
               
   Checks issued and payable
  $ -     $ 113,908  
Deferred revenue
    -       43,760  
Accounts payable
    829,329       994,940  
Accrued payroll, taxes and interest
    98,409       141,928  
Other accrued liabilities
    63,696       119,292  
Payables to related parties
    10,434       331,978  
Long-term debt, current
    258,988       79,631  
Total current liabilities
    1,260,856       1,825,437  
                 
Long-term debt, noncurrent
    134,503       158,218  
Asset retirement and accrued reclamation costs
    245,520       241,500  
Total liabilities
    1,640,879       2,225,155  
                 
Commitments and contingencies (Note 4)
               
                 
Stockholders' equity:
               
Preferred stock $0.01 par value, 10,000,000 shares authorized:
               
Series A:  no shares issued and outstanding
    -       -  
Series B: 750,000 shares issued and outstanding
               
(liquidation preference $877,500)
    7,500       7,500  
Series C: 177,904 shares issued and outstanding
               
(liquidation preference $97,847)
    1,779       1,779  
Series D: 1,751,005 shares issued and outstanding
               
(liquidation preference and cumulative dividends of $4,714,433)
    17,509       17,509  
Common stock, $0.01 par vaue, 90,000,000 shares authorized;
               
61,786,822 and 59,349,300 shares issued and outstanding, respectively
    617,868       593,492  
Additional paid-in capital
    30,750,974       25,635,129  
Accumulated deficit
    (19,599,499 )     (19,487,036 )
Total stockholders' equity
    11,796,131       6,768,373  
Total liabilities and stockholders' equity
  $ 13,437,010     $ 8,993,528  

The accompanying notes are an integral part of the consolidated financial statements.
 
 
1

 
 
United States Antimony Corporation and Subsidiaries
Consolidated Statements of Operations (Unaudited)
 
   
For the three months ended
   
For the six months ended
 
   
June 30, 2012
   
June 30, 2011
   
June 30, 2012
   
June 30, 2011
 
                         
REVENUES
  $ 3,498,301     $ 3,050,002     $ 6,551,855     $ 5,888,041  
                                 
COST OF REVENUES
    3,209,381       2,805,524       6,142,206       5,364,696  
                                 
GROSS PROFIT
    288,920       244,478       409,649       523,345  
                                 
OPERATING EXPENSES:
                               
     General and administrative
    228,411       89,967       415,984       170,316  
     Professional fees
    34,337       30,888       132,644       125,840  
TOTAL OPERATING EXPENSES
    262,748       120,855       548,628       296,156  
                                 
INCOME (LOSS) FROM OPERATIONS
    26,172       123,623       (138,979 )     227,189  
                                 
OTHER INCOME (EXPENSE):
                               
Interest income
    1,493       1,526       3,549       2,442  
Factoring expense
    (23,895 )     (38,721 )     (51,344 )     (73,414 )
TOTAL OTHER (EXPENSE)
    (22,402 )     (37,195 )     (47,795 )     (70,972 )
                                 
INCOME (LOSS) BEFORE INCOME TAXES
    3,770       86,428       (186,774 )     156,217  
                                 
INCOME TAX (EXPENSE) BENEFIT
    -       -       74,311       (24,426 )
                                 
NET INCOME (LOSS)
  $ 3,770     $ 86,428     $ (112,463 )   $ 131,791  
                                 
Net income (loss) per share of common stock:
                               
Basic
  $
Nil
    $
 Nil
    $
 Nil
    $
Nil
 
Diluted
  $
Nil
    $
Nil
    $
 Nil
    $
 Nil
 
                                 
Weighted average shares outstanding:
                               
Basic
    61,786,822       59,150,784       61,786,822       58,157,638  
Diluted
    62,427,710       59,662,620       61,786,822       58,618,325  
 
The accompanying notes are an integral part of the consolidated financial statements.
 
 
2

 
 
United States Antimony Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
 
   
For the six months ended
 
   
June 30, 2012
   
June 30, 2011
 
Cash Flows From Operating Activities:
           
Net income (loss)
  $ (112,463 )   $ 131,791  
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
               
Depreciation and amortization expense
    217,385       192,503  
Accretion of asset retirement obligation
    4,020          
Common stock issued to directors for services
    176,191       -  
Deferred income tax expense (benefit)
    (74,311 )     21,926  
Change in:
               
Accounts receivable, net
    835,467       (349,421 )
Inventories
    (10,458 )     (621,558 )
Other current assets
    250,736       (23,770 )
Other assets
    (73,920 )     (5,183 )
Accounts payable
    (165,611 )     428,132  
Accrued payroll, taxes and interest
    (43,519 )     12,839  
Other accrued liabilities
    (55,596 )     (44,330 )
Deferred revenue
    (43,760 )     -  
Payables to related parties
    (321,544 )     24,203  
Net cash provided (used) by operating activities
    582,617       (232,868 )
                 
Cash Flows From Investing Activities:
               
   Purchase of certificates of deposit
    (242,800 )     -  
Purchase of properties, plants and equipment
    (1,370,877 )     (1,037,912 )
Net cash used by investing activities
    (1,613,677 )     (1,037,912 )
                 
Cash Flows From Financing Activities:
               
Proceeds from sale of common stock, net of offering costs
    4,711,842       1,163,248  
Principal payments on long-term debt
    (128,298 )     (86,958 )
Payments received on stock subscription agreements
    -       59,907  
Change in checks issued and payable
    (113,908 )     -  
Net cash provided by financing activities
    4,469,636       1,136,197  
                 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    3,438,576       (134,583 )
                 
Cash and cash equivalents at beginning of period
    5,427       448,861  
Cash and cash equivalents at end of period
  $ 3,444,003     $ 314,278  
                 
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
               
Noncash investing and financing activities:
               
Properties, plants and equipment acquired with long-term debt
  $ 283,940     $ 229,100  
Properties, plants and equipment acquired with accounts payable
    -     $ 89,654  
Common stock issued for prepaid directors fees
  $ 358,800       -  
 
The accompanying notes are an integral part of the consolidated financial statements.
 
 
3

 

PART I - FINANCIAL INFORMATION, CONTINUED:

United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 
1.  Basis of Presentation:

The unaudited consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America for interim financial information, as well as the instructions to Form 10-Q.  Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of the Company’s management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation of the interim financial statements have been included. Operating results for the three and six month periods ended June 30, 2012 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2012.

Certain consolidated financial statement amounts for the three and six month periods ended June 30, 2011 have been reclassified to conform to the 2012 presentation.  These reclassifications had no effect on the net income or accumulated deficit as previously reported.

Management estimates their effective tax rate at 39% for the current year.

For further information refer to the financial statements and footnotes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

During the six months ended June 30, 2012 and 2011, the Company incurred interest expense of $23,600 and $5,470, respectively, all of which has been capitalized as part of the cost of constructing the Puerto Blanco Mill in Mexico.

2.  Income (Loss) Per Common Share:

Basic earnings per share is calculated by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period.  Diluted earnings per share is calculated based on the weighted average number of common shares outstanding during the period plus the effect of potentially dilutive common stock equivalents, including warrants to purchase the Company's common stock and convertible preferred stock.  Management has determined that the calculation of diluted earnings per share for the six month period ending June 30, 2012, is not applicable since any additions to outstanding shares related to common stock purchase warrants would be anti-dilutive.

As of June 30, 2012 and 2011, the potentially dilutive common stock equivalents not included in the calculation of diluted earnings per share as their effect would have been anti-dilutive are as follows:
 
   
June 30, 2012
   
June 30, 2011
   
June 30, 2012
   
June 30, 2011
 
Warrants
    1,248,779       88,164       1,889,667       139,313  
Convertible preferred stock
   
      1,751,005
     
    1,751,005
     
      1,751,005
     
      1,751,005
 
Total possible dilution
   
      2,999,784
     
    1,839,169
     
      3,640,672
     
    1,890,318
 

3.  Inventories
 
   
June 30, 2012
   
December 31, 2011
 
Antimony Metal
    11,760       152,026  
Antimony Oxide
    186,210       180,404  
Antimony Ore
    784,876       644,113  
     Total antimony
    982,846       976,543  
Zeolite
    94,425       90,270  
    $ 1,077,271     $ 1,066,813  
 
 
4

 

United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited), Continued:
 
4.  Commitments and Contingencies:

In 2005, a subsidiary of the Company signed an option agreement that gives it the exclusive right to explore and develop the San Miguel I and San Miguel II concessions for an annual payment of $50,000, and an option to purchase payment of $100,000 annually.  Total payments will not exceed $1,430,344, reduced by taxes paid.  During the six months ended June 30, 2012 and the year ended December 31, 2011, $0 and $186,956 respectively, was paid and capitalized as mineral rights in accordance with the Company’s accounting policies.

From time to time, the Company is assessed fines and penalties by the Mine Safety and Health Administration (“MSHA”). Using appropriate regulatory channels, management may contest these proposed assessments. The Company has accrued $14,263 in other accrued liabilities as of June 30, 2012, related to such assessments.

During the six months ended June 30, 2012, the Company negotiated a new credit facility increasing the Company’s lines of credit by $202,000.  As part of this agreement, we have pledged two $101,000 certificates of deposit as collateral.  The increased loan facility allows us access to borrowings at an interest rate of 3.15% for the portion of the credit line used.  At June 30, 2012, we did not have any outstanding line of credit debt.
 
5.  Long – Term Debt

Long-term debt at June 30, 2012 and December 31, 2011 is as follows:
 
   
2012
   
2011
 
Note payable to De Lage Landen financial Services, bearing interest
           
at 5.3%; payable in monthly installments of $549; maturing
           
March 2016; collateralized by equipment.
  $ 22,361     $ -  
                 
Note payable to Western States Equipment Co., bearing interest
               
at 6.15%; payable in monthly installments of $2,032; maturing
               
June 2015; collateralized by equipment.
    66,668       77,040  
                 
Note payable to CNH Capital America, LLC, bearing interest
               
at 4.5%; payable in monthly installments of $505; maturing
               
June 2013; collateralized by equipment.
    5,904       8,648  
                 
Note payable to GE Capital, bearing interest at 2.25%; payable in
               
monthly installments of $359; maturing July 2013; collateralized by
               
equipment.
    4,955       6,531  
                 
Note payable to Robert and Phyllis Rice, bearing interest
               
at 1%; payable in monthly installments of $2,000; maturing
               
March 2015; collateralized by equipment.
    65,206       80,882  
                 
Note payable to De Lage Landen Financial Services
               
at 5.2%; payable in monthly installments of $709; maturing
               
July 2014; collateralized by equipment.
    16,104       19,229  
                 
Note payable to Catepillar Finance, bearing interest
               
at 6.15%; payable in monthly installments of $766; maturing
               
August 2014; collateralized by equipment.
    18,597       21,990  
                 
Note payable to De Lage Landen Financial Services
               
at 5.2%; payable in monthly installments of $697; maturing
               
January 2015; collateralized by equipment.
    20,202       23,529  
                 
Note payable for Corral Blanco land, bearing interest
               
at 6%; payable in three installments; maturing
               
May 1, 2013; collateralized by land.
    173,494          
                 
Total debt
    393,491       237,849  
Less current portion
    (258,988 )     (79,631 )
Noncurrent portion
  $ 134,503     $ 158,218  
 
 
5

 
 
PART I - FINANCIAL INFORMATION, CONTINUED:
 
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited), Continued:

6.  Concentrations of Risk

During the six months ended June 30, 2012, approximately 86% of the Company's antimony revenues were generated by sales to three customers. Loss of any of the Company’s key customers could adversely affect its business.

7.  Related Party Transactions

During the first three and six months of 2012 and 2011, the Company paid $6,655 and $22,026 in 2012, and $45,452 and $79,409 in 2011, respectively, to directors of the Company for services provided in permitting and other construction related activities at Mexican mill sites.

During the first three and six months of 2012 and 2011, the Company paid $16,875 and $38,715 in 2012, and $28,679 and $44,582 in 2011, respectively, to John Lawrence, our president and Chief Executive Officer, as reimbursement for equipment used by the Company.

8.  Stockholder’s Equity

Issuance of Common Stock for Cash

During the six months ending June 30, 2012, the Company sold an aggregate of 2,056,334 shares of unregistered common stock to existing stockholders and other parties for $4,702,303.  In connection with the sales of the Company’s common stock, 1,028,167 warrants to purchase shares of the Company’s common stock at $2.50 per share, and 1,425,982 warrants at $3.50 per share, were issued.  Expenses of $414,661 connected to the issuance of the unregistered shares were deducted from additional paid in capital.  200,000 shares were issued as an exercise of warrants at $.30 per share for a total of $60,000.  Also in the first six months of 2012, 25,265 shares were issued in a cashless exercise of warrants, which resulted in an addition of $263 to capital stock, and a corresponding reduction to additional paid in capital.  No share or warrants to purchase shares of the Company’s common stock were issued in the first six months of 2011.

Issuance of Common Stock for Services
 
At December 31, 2011, the Company declared, but did not issue, 95,835 shares of unregistered common stock to be paid to its directors for services, having a fair value of $230,004, based on the current stock price at the date declared.  During the first six months of 2012, the company issued 149,500 shares of unregistered common stock with a fair market value of $358,800 to the Directors as compensation for past and future services. During the first six months of 2012, the Company awarded 39,406 of the remaining 53,665 shares of unregistered common stock to its directors for services, having a fair value of $151,190, based on the current stock price at the date awarded.  6,423 new shares with a fair value of $25,000 were issued to directors who were not board members at December 31, 2011. This expense is classified with general and administrative expense in the consolidated statement of operations.
 
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.
 
 
6

 
 
United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited), Continued:
 
Transactions in common stock warrants are as follows:
 
   
Number of
   
Exercise
 
   
Warrants
   
Prices
 
    Balance, December 31, 2010
    725,000     $ 0.20-$0.75  
Warrants exercised
    (125,000 )   $ 0.30-$0.40  
Balance, December 31, 2011
    600,000     $ 0.30-$0.60  
Warrants granted
    1,579,417     $ 2.50-$4.50  
Warrants exercised
    (52,500 )   $ 2.50  
Warrants expired
    (350,000 )   $ 0.30-$0.40  
Balance, June 30, 2012
    1,776,917     $ 0.20-$4.50  
The above common stock warrants expire as follows:
               
 
Year Ended December 31:
               
2014
    1,050,000          
2015
    476,917          
Thereafter
    250,000          
      1,776,917          
 
9. 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 and factoring is not allocated to the segments.  Selected information with respect to segments is as follows:
 
   
As of
June 30, 2012
   
As of
December 31, 2011
 
Properties, plants and equipment, net:
           
Antimony
           
United States
  $ 1,705,370     $ 1,657,473  
Mexico
    4,125,674       2,791,233  
Subtotal Antimony
    5,831,044       4,448,706  
Zeolite
    1,653,392       1,598,298  
   Total
  $ 7,484,436     $ 6,047,004  
                 
Total Assets:
               
Antimony
               
United States
  $ 6,409,667     $ 2,240,836  
Mexico
    4,973,792       4,291,187  
Subtotal Antimony
    11,383,459       6,532,023  
Zeolite
    2,053,551       2,461,505  
   Total
  $ 13,437,010     $ 8,993,528  
 
   
For the three months ended
   
For the six months ended
 
   
June 30, 2012
   
June 30, 2011
   
June 30, 2012
   
June 30, 2011
 
Capital expenditures:
                       
Antimony
                       
United States
  $ 17,850     $ 22,067     $ 62,618     $ 79,289  
Mexico
    671,987       997,867       1,434,827       1,089,236  
Subtotal Antimony
    689,837       1,019,934       1,497,445       1,168,525  
Zeolite
    116,485       188,140       157,372       188,140  
   Total
  $ 806,322     $ 1,208,074     $ 1,654,817     $ 1,356,665  
 
 
7

 

United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited), Continued:

   
For the three months ended
   
For the six months ended
 
   
June 30, 2012
   
June 30, 2011
   
June 30, 2012
   
June 30, 2011
 
Revenues:
                       
   Antimony
  $ 2,525,097     $ 2,421,903     $ 4,699,906     $ 4,686,136  
   Precious metals
    205,771       157,841       385,909       339,040  
   Zeolite
    767,433       470,258       1,466,040       862,865  
      Total
  $ 3,498,301     $ 3,050,002     $ 6,551,855     $ 5,888,041  
 
   
For the three months ended
   
For the six months ended
 
   
June 30, 2012
   
June 30, 2011
   
June 30, 2012
   
June 30, 2011
 
Gross profit:
                       
   Antimony
  $ 191,146     $ 246,991     $ 264,978     $ 528,237  
   Zeolite
    97,774       (2,513 )     144,671       (4,892 )
      Total
  $ 288,920     $ 244,478     $ 409,649     $ 523,345  
 
   
For the three months ended
   
For the six months ended
 
   
June 30, 2012
   
June 30, 2011
   
June 30, 2012
   
June 30, 2011
 
Depreciation and amortization:
                       
Antimony
  $ 57,553     $ 50,039     $ 115,106     $ 96,866  
Zeolite
    52,461       49,498       102,278       95,637  
   Total
  $ 110,014     $ 99,537     $ 217,384     $ 192,503  
 
 
8

 
 
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.
 
For the three and six month periods ended June 30, 2012 compared to the three and six month periods ended June 30, 2011.
 
Results of Operations by Division
                       
                         
   
2nd Qtr
   
2nd Qtr
   
Six Months
   
Six Months
 
Antimony - Combined USA  and Mexico
 
2012
   
2011
   
2012
   
2011
 
Lbs of Antimony Metal USA
    320,671       290,499       569,265       569,159  
Lbs of Antimony Metal Mexico
    70,259       29,663       165,617       72,364  
   Total Lbs of Antimony Metal Sold
    390,930       320,162       734,882       641,523  
Sales Price/Lb Metal
  $ 6.46     $ 7.56     $ 6.40     $ 7.30  
EBITDA/Lb Metal
  $ 0.64     $ 0.93     $ 0.52     $ 0.97  
Operating Income/Lb Metal
  $ 0.49     $ 0.77     $ 0.36     $ 0.82  
                                 
Gross antimony revenue - net of discount
  $ 2,525,097     $ 2,421,903     $ 4,699,906     $ 4,686,136  
Precious metals revenue
    205,771       157,841       385,909       339,040  
Production costs - USA
    (1,647,645 )     (1,922,781 )     (3,155,275 )     (3,516,347 )
Product cost - Mexico
    (328,110 )     (138,526 )     (773,433 )     (337,940 )
Direct sales and freight
    (139,518 )     (65,220 )     (213,977 )     (143,504 )
General and administrative
    (135,872 )     (50,062 )     (199,498 )     (106,687 )
Mexico non-production costs
    (231,024 )     (106,125 )     (363,548 )     (295,595 )
   EBITDA
    248,699       297,030       380,084       625,103  
Depreciation & amortization
    (57,553 )     (50,039 )     (115,106 )     (96,866 )
Operating income - antimony
  $ 191,146     $ 246,991     $ 264,978     $ 528,237  
                                 
Zeolite
                               
Tons sold
    3,251       3,133       6,717       5,843  
Sales Price/Ton
  $ 236.06     $ 150.10     $ 218.26     $ 147.67  
EBITDA/Ton
  $ 236.06     $ 150.10     $ 218.26     $ 147.67  
Operating Income (Loss)/Ton
  $ 30.08     $ (0.80 )   $ 21.54     $ (0.84 )
                                 
Gross zeolite revenue
  $ 767,433     $ 470,258     $ 1,466,040     $ 862,865  
Production costs
    (492,674 )     (315,310 )     (980,976 )     (588,612 )
Direct sales and freight
    (46,442 )     (28,980 )     (89,718 )     (45,090 )
Royalties
    (62,236 )     (52,139 )     (129,046 )     (97,051 )
General and administrative
    (15,846 )     (26,844 )     (19,351 )     (41,367 )
   EBITDA
    150,235       46,985       246,949       90,745  
Depreciation
    (52,461 )     (49,498 )     (102,278 )     (95,637 )
Operating income  (Loss) - zeolite
  $ 97,774     $ (2,513 )   $ 144,671     $ (4,892 )
                                 
Company-wide
                               
Gross revenue
  $ 3,498,301     $ 3,050,002     $ 6,551,855     $ 5,888,041  
Production costs
    (2,468,429 )     (2,376,617 )     (4,909,684 )     (4,442,899 )
Other operating costs
    (630,938 )     (329,370 )     (1,015,138 )     (729,294 )
   EBITDA
    398,934       344,015       627,033       715,848  
Depreciation & amortization
    (110,014 )     (99,537 )     (217,384 )     (192,503 )
Operating income
    288,920       244,478       409,649       523,345  
Net interest
    1,493       1,526       3,549       2,442  
General and administrative costs
    (132,657 )     (89,967 )     (211,466 )     (170,316 )
Board of Directors compensation
    (95,754 )             (204,518 )        
Professional fees
    (34,337 )     (30,888 )     (132,644 )     (125,840 )
Factoring expense
    (23,895 )     (38,721 )     (51,344 )     (73,414 )
Income tax benefit (expense)
                    74,311       (24,426 )
   Net income (loss)
  $ 3,770     $ 86,428     $ (112,463 )   $ 131,791  
 
 
9

 

PART I - FINANCIAL INFORMATION, CONTINUED:
 
ITEM 2.  Management’s Discussion and Analysis of Results of Operations and FinancialCondition, continued

The pounds of antimony produced and sold was up for the quarter, but the sales price per pound was down from the prior year.  A temporary decrease in the delivery of raw materials from a major supplier in June resulted in decreased results for the quarter, but the deliveries have resumed and are on schedule. The pounds of product (raw material) from Mexico increased for the quarter and the six months, and we should see additional increases in the upcoming quarters.  Costs incurred in getting the Mexico plants in operation were substantial in 2012, and will continue during the remainder of the year as production is being ramped up.  Conversely, we will have more antimony products from Mexico to sell, and the cost of raw material per pound of antimony produced will decrease as we are able to work more raw materials from Mexico into our production.  In addition, we expect to have increased revenue from precious metals as we process more of the raw materials supplied by our Mexico division.  We contracted in July 2012 to install a natural gas pipeline for our Mexico smelter operation.  Our fuel costs are our second largest expense after raw material in Mexico, and we are expecting the switch from propane to natural gas to decrease our Mexico fuel costs by 75%.  The pipeline should be completed in approximately nine to twelve months.

The tons of zeolite sold increased from the comparable periods for 2011, and the sales price per ton was also better than the prior year.  We expect this to continue through the remainder of the year.

Our general and administrative costs are significantly higher than the prior year, and management is aggressively seeking ways to bring this cost down.
 
Financial Condition and Liquidity
 
June 30, 2012
   
December 31, 2011
 
             
Current Assets
  $ 5,749,111     $ 2,816,981  
Current liabilities
    (1,260,856 )     (1,595,433 )
   Net Working Capital
  $ 4,488,255     $ 1,221,548  
                 
Cash provided (used) by operations
  $ 582,617     $ 564,041  
Cash (used) by investing
    (1,613,677 )     (2,239,441 )
Cash provided (used) by financing:
               
   Principal paid on long-term debt
    (128,298 )     (124,722 )
   Sale of Stock
    4,711,842       1,242,780  
   Other
    (113,908 )     113,908  
      Net change in cash
  $ 3,438,576     $ (443,434 )
 
Net cash provided by financing activities during the first six months of 2012 and 2011 was $4,469,636 and $1,136,197, respectively, and was primarily generated from the sale of common stock.

Our liquidity (cash) and working capital has improved by approximately $3.5 million from December 31, 2011.  This was primarily due to an increase in cash, which is approximately the net cash received from issuing $4.7 million of common stock, and expending $1.4 million for capital improvements and operations.  Decreases in our accounts receivable increased our cash position at June 30, 2012, and the primary decreases to cash were for payments of accounts payable, checks issued but not cleared at end of year, and payments on long term debt.  We have lines of credit of $202,000 which have not been drawn on at June 30, 2012.
 
 
10

 

PART I - FINANCIAL INFORMATION, CONTINUED:

ITEM 3.  Quantitative and Qualitative Disclosure about Market Risk

We sell our antimony products based on a world market price, and we buy a majority of our raw material based on the same market prices.  Analysis of our costs indicate that, for the quarter and six months ended June 30, 2012, raw materials were approximately 50% of our cost of goods sold.  Most of our production costs are fixed in nature, and could not be decreased readily without decreasing our production.  During the quarter and six months ending June 30, 2012, a $2 per pound decrease in our sales price would have likely caused our gross profit to decrease $1 per pound.

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 chief financial officer 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 June 30, 2012.

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 June 30, 2012. These material weaknesses are as follows:

  
The Company lacks proper segregation of duties. As with any company the size of ours, this lack of segregation of duties is due to limited resources. The president authorizes the majority of the expenditures and signs checks.

  
During its year-end audit, our independent registered accountants discovered material misstatements in our financial statements that required audit adjustments.

MANAGEMENT'S REMEDIATION INITIATIVES

We are aware of these material weaknesses and plan to put procedures in place to ensure that independent review of material transactions is performed. In addition, we plan to consult with independent experts when complex transactions are entered into.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

The Company appointed three independent Director’s to an Audit Committee which has been actively involved in the Company's internal controls over financial reporting through communications with the Company’s management and outside auditors.
 
 
11

 
 
PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

None

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three month period ended March 31, 2012, the Company sold shares of its restricted common stock directly and through the exercise of outstanding stock purchase warrants as follows: 1,102,500 shares for $2.00 per share ($2,205,000), and 200,000 shares for $.30 per share ($60,000).

During the three month period ended June 30, 2012, the Company sold shares of its restricted common stock directly and through the exercise of outstanding stock purchase warrants as follows: 953,834 shares for $3.00 per share ($2,851,964), and 25,265 shares were issued as a cashless exercise of warrants.

$414,661 was paid for fees in connection with the issuance of the above shares, and was recorded as a reduction of additional paid in capital.

Common stock sold is restricted as defined under Rule 144.  In management's opinion, the offer and sale of the securities were made in reliance on exemptions from registration provided by Section 4(2) and Rule 506 of Regulation D of the Securities Act of 1933, as amended and other applicable Federal and state securities laws.  Proceeds received on sales of common stock were used for general corporate purposes.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

The registrant has no outstanding senior securities.
 
 
12

 

ITEM 4.  MINE SAFETY DISCLOSURES

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 six month period ended June 30, 2012, the Company 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 the Company’s United States operations requiring disclosure pursuant to Section 1503(a) of the Dodd-Frank Act.
 
Mine
 
Mine Act §104 Violations (1)
   
Mine Act §104(b) Orders (2)
   
Mine Act §104(d) Citations and Orders (3)
   
Mine Act §(b)(2) Violations (4)
   
Mine Act §107(a) Orders (5)
   
Proposed Assessments from MSHA (In dollars$)
   
Mining Related Fatalities
   
Mine Act §104(e) Notice (yes/no) (6)
   
Pending Legal Action before Federal Mine Saftey and Health Review Commission (yes/no)
 
Bear River Zeolite
    0       0       0       0       0     $ 1,126.00       0       No       No  

ITEM 5.  OTHER INFORMATION

None
 
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

Certifications
Certifications Pursuant to the Sarbanes-Oxley Act
Reports on Form 8-K None
 
 
 
13

 

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:     Date:    
  John C. Lawrence, Director and President        
 
(Principal Executive)
       
           
By:     Date:    
 
Daniel L. Parks, Chief Financial Officer
       
 
14

 

XASE:UAMY United States Antimony Corp Quarterly Report 10-Q Filling

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