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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 2008
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period to
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Commission file number 33-00215
UNITED STATES ANTIMONY CORPORATION
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(Exact name of registrant as specified 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
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 X No
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Indicate by check mark whether the registrant is a shell company as defined by
Rule 12b-2 of the Exchange Act.
YES No X
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At August 15, 2008 the registrant had outstanding 43,014,024 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 [_] Accelerated filer [_] Non-accelerated filer [_]
Smaller reporting company [X] (Do not check if a smaller reporting company)
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UNITED STATES ANTIMONY CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD
ENDED JUNE 30, 2008
TABLE OF CONTENTS
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements.................................................1-8
Item 2: Management's Discussion and Analysis of Results of Operations
and Financial Condition ............................................8-13
Item 3: Quantitative and Qualitative Disclosure about Market Risk.............14
Item 4: Controls and Procedures...............................................14
PART II - OTHER INFORMATION
Item 1: Legal Proceedings.....................................................15
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds...........15
Item 3: Defaults upon Senior Securities.......................................15
Item 4: Submission of Matters to a Vote of Security Holders...................15
Item 5: Other Information.....................................................15
Item 6: Exhibits and Reports on Form 8-K......................................15
SIGNATURE.....................................................................16
CERTIFICATIONS.............................................................17-18
[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 SHEET
(Unaudited)
June 30, December 31,
2008 2007
------------ ------------
ASSETS
Current assets:
Cash $ 12,780 $ 81,747
Accounts receivable, less allowance
for doubtful accounts of $30,000 51,652 168,676
Inventories 234,111 252,614
------------ ------------
Total current assets 298,543 503,037
Properties, plants and equipment, net 2,911,660 2,777,116
Restricted cash for reclamation bonds 80,186 65,736
------------ ------------
Total assets $ 3,290,389 $ 3,345,889
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Checks issued and payable $ 46,213 $ 69,484
Accounts payable 795,217 808,748
Accrued payroll and payroll taxes 133,519 113,612
Other accrued liabilities 103,126 99,851
Deferred revenue 83,840 287,238
Accrued interest payable 27,729 25,231
Payable to related parties 242,935 254,085
Convertible note payable to a related party 100,000 100,000
Long-term debt, current 86,252 91,890
------------ ------------
Total current liabilities 1,618,831 1,850,139
Deferred revenue, noncurrent -- 640,000
Long-term debt, noncurrent 76,483 19,711
Accrued reclamation and remediation costs, noncurrent 107,500 107,500
------------ ------------
Total liabilities 1,802,814 2,617,350
------------ ------------
Commitments and contingencies (Note 3)
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 $847,500 at December 31, 2007) 7,500 7,500
Series C: 177,904 shares issued and outstanding
(liquidation preference $97,847 at December 31, 2007) 1,779 1,779
Series D: 1,751,005 shares issued and outstanding
(liquidation preference and cumulative dividends of $4,549,838
at December 31, 2007) 17,509 17,509
Common stock, $0.01 par vaue, 50,000,000 shares authorized;
43,014,024 and 42,519,243 shares issued and outstanding, respectively 430,140 425,192
Additional paid-in capital 21,437,301 21,243,249
Accumulated deficit (20,406,654) (20,966,690)
------------ ------------
Total stockholders' equity 1,487,575 728,539
------------ ------------
Total liabilities and stockholders' equity $ 3,290,389 $ 3,345,889
============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE 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, June 30, June 30, June 30,
2008 2007 2008 2007
------------ ------------ ------------ ------------
ANTIMONY DIVISION
Revenues $ 999,289 $ 1,098,610 $ 2,113,031 $ 2,192,667
------------ ------------ ------------ ------------
Cost of sales:
Production costs 793,505 836,196 1,618,233 1,594,162
Depreciation 4,144 5,126 7,630 10,251
Freight and delivery 46,759 49,988 112,544 114,007
General and administrative 8,727 4,193 30,259 7,986
Direct sales expense 11,250 11,797 22,500 21,667
------------ ------------ ------------ ------------
Total cost of sales 864,385 907,300 1,791,166 1,748,073
------------ ------------ ------------ ------------
Gross profit - antimony 134,904 191,310 321,865 444,594
------------ ------------ ------------ ------------
ZEOLITE DIVISION
Revenues 415,362 268,968 729,014 524,676
------------ ------------ ------------ ------------
Cost of sales:
Production costs 261,861 278,996 528,184 577,368
Depreciation 47,609 30,814 93,808 60,084
Freight and delivery 33,980 22,907 53,203 38,889
General and administrative 42,714 76,616 80,138 101,909
Royalties 52,675 31,472 92,797 61,608
Direct sales expense 17,161 13,802 37,461 24,267
------------ ------------ ------------ ------------
Total cost of sales 456,000 454,607 885,591 864,125
------------ ------------ ------------ ------------
Gross profit (loss) - zeolite (40,638) (185,639) (156,577) (339,449)
------------ ------------ ------------ ------------
Total revenues - combined 1,414,651 1,367,578 2,842,045 2,717,343
Total cost of sales - combined 1,320,385 1,361,907 2,676,757 2,612,198
------------ ------------ ------------ ------------
Gross profit - combined 94,266 5,671 165,288 105,145
------------ ------------ ------------ ------------
Other operating (income) expenses:
Corporate general and administrative 63,351 83,736 191,029 180,003
Exploration expense 93,918 36,667 177,674 116,296
Expired exclusivity contract (800,000) -- (800,000) --
Gain on sale of properties, plants and equipment -- (38,493) (41,268) (97,541)
------------ ------------ ------------ ------------
Other operating (income) expenses (642,731) 81,910 (472,565) 198,758
------------ ------------ ------------ ------------
Income (loss) from operations 736,997 (76,239) 637,853 (93,613)
------------ ------------ ------------ ------------
Other expenses:
Interest expense, net 6,776 15,484 14,622 20,687
Factoring expense 28,991 22,364 63,194 44,575
------------ ------------ ------------ ------------
Other expenses 35,767 37,848 77,816 65,262
------------ ------------ ------------ ------------
Net income (loss) $ 701,230 $ (114,087) $ 560,037 $ (158,875)
============ ============ ============ ============
Net income (loss) per share of
common stock:
Basic $ 0.016 NIL $ 0.013 NIL
============ ============ ============ ============
Diluted $ 0.015 NIL $ 0.012 NIL
============ ============ ============ ============
Weighted average shares outstanding:
Basic 42,887,238 40,904,091 42,766,528 40,640,099
============ ============ ============ ============
Diluted 46,772,306 40,904,091 46,667,221 40,640,099
============ ============ ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
2
UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the six months ended
------------------------------
June 30, June 30,
2008 2007
------------ ------------
Cash Flows From Operating Activities:
Net income (loss) $ 560,037 $ (158,875)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation expense 101,438 70,335
Deferred financing costs as interest expense -- 3,750
Gain on sale of properties, plants and equipment (41,268) (97,541)
Gain on expiration of exclusivity agreement (800,000) --
Change in:
Accounts receivable 117,024 (218,536)
Inventories 18,503 85,765
Restricted cash for reclamation bonds (14,450) 10,872
Accounts payable (42,147) 70,379
Accrued payroll and payroll taxes 19,907 67,379
Other accrued liabilities 3,275 (2,467)
Deferred revenue (43,398) (28,932)
Accrued interest payable 2,498 (865)
Payable to related parties (11,150) 17,025
------------ ------------
Net cash used by operating activities (129,731) (181,711)
------------ ------------
Cash Flows From Investing Activities:
Purchase of properties, plants and equipment (150,595) (556,146)
Proceeds from sale of properties, plants and equipment 41,268 97,541
------------ ------------
Net cash used by investing activities (109,327) (458,605)
------------ ------------
Cash Flows From Financing Activities:
Proceeds from sale of common stock and warrants, net of commissions 199,000 475,128
Proceeds from long-term debt 6,081 47,713
Principal payments of long-term debt (11,719) (123,421)
Change in checks issued and payable (23,271) 26,686
------------ ------------
Net cash provided by financing activities 170,091 426,106
------------ ------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (68,967) (214,210)
Cash and cash equivalents at beginning of period 81,747 218,365
------------ ------------
Cash and cash equivalents at end of period $ 12,780 $ 4,155
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Non-cash investing and financing activities:
Properties, plants & equipment acquired with accounts payable $ 28,616 $ 51,966
------------ ------------
Properties, plants & equipment acquired with long-term debt $ 56,772 $ --
============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE 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 six month period ended June 30, 2008 are not necessarily indicative of
the results that may be expected for the full year ending December 31, 2008.
Certain consolidated financial statement amounts for the six month period
ended June 30, 2007 have been reclassified to conform to the 2008
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, 2007.
The financial statements have been prepared on a going concern basis, which
assumes realization of assets and liquidation of liabilities in the normal
course of business. At June 30, 2008, the Company had negative working
capital of approximately $1,320,000 and an accumulated deficit of
approximately $20.4 million. In addition, the Company has minimal available
authorized shares available to sell in order to raise additional funds (see
Note 6). These factors, among others, indicate that there is substantial
doubt that the Company will be able to meet its obligations and continue in
existence as a going concern. The financial statements do not include any
adjustments that may be necessary should the Company be unable to continue as
a going concern.
2. EARNINGS (LOSS) PER COMMON SHARE:
The Company accounts for its earnings and 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 or 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. At June 30, 2007 common stock equivalents,
including warrants to purchase the Company's common stock and common stock
issuable upon the conversion of a convertible note payable, including accrued
interest are excluded from the calculations when their effect is
antidilutive. For the three and six months ended June 30, 2008, common stock
equivalents of 3,885,068 and 3,900,693, respectively, are included as diluted
weighted average shares. For the same periods, 3,241,059 of common stock
equivalents are excluded from diluted weighted average shares because their
exercise price was greater than the average market price during the periods.
3. COMMITMENTS AND CONTINGENCIES:
The Company's management believes that USAC is currently in substantial
compliance with environmental regulatory requirements and that its accrued
environmental reclamation and remediation costs are representative of
management's estimate of costs required to fulfill its reclamation and
remediation 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 effect on the Company's
operations. The range of possible losses in excess of the amounts accrued
cannot be reasonably estimated at this time.
4
PART I - FINANCIAL INFORMATION, CONTINUED:
UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED), CONTINUED:
In March of 2007, the Company sustained an industrial accident at the BRZ
mine resulting in a penalty of approximately $88,000, which was recorded as a
liability. As of June 30, 2008 approximately $68,000 of this liability
remained.
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 is as follows:
For the six
months ended
and as of
June 30,
2008
------------
Capital expenditures:
Antimony
United States $ --
Mexico 111,201
------------
Subtotal Antimony 111,201
Zeolite 124,781
------------
$ 235,982
============
Properties, plants and equipment, net:
Antimony
United States $ 109,582
Mexico 1,061,682
------------
Subtotal Antimony 1,171,264
Zeolite 1,740,396
------------
$ 2,911,660
============
Inventory:
Antimony
United States $ 181,885
Mexico --
------------
Subtotal Antimony 181,885
Zeolite 52,226
------------
$ 234,111
============
Total Assets:
Antimony
United States $ 384,260
Mexico 1,061,682
------------
Subtotal Antimony 1,445,942
Zeolite 1,830,067
Corporate 14,380
------------
$ 3,290,389
============
5
PART I - FINANCIAL INFORMATION, CONTINUED:
UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED), CONTINUED:
5. DEFERRED REVENUE
On October 25, 2006, the Company entered into an agreement to exclusively
sell pozzlan zeolite (PZ) to one individual, who is a shareholder of the
Company, over the next five years. The agreement calls for the individual to
purchase a minimum of 3,000 tons of PZ per month. If the minimum sales are
not purchased for a 90-day period of time, the exclusivity of sales to this
individual is forfeited. The agreement called for a sales price between $30
and $40 per ton until June 1, 2007, at which time the Company can adjust its
price as necessary based on its production costs.
The agreement commenced upon receipt of $500,000 from the shareholder
(buyer), which occurred in 2006, and upon completion of permitting and
construction of the new mill with operational milling equipment (completed as
of December 31, 2007).
During the year ended December 31, 2007, the Company received an additional
$300,000 to extend the life of the agreement and provide exclusivity for
certain other sales areas. The extension agreement was with a company,
Zeolite Company of America (ZCA), of which the shareholder is part owner. The
extension agreement lowered the monthly sales requirement to 350 tons per
month and set the sale price at $40 per ton beginning December 31, 2007.
Should ZCA not purchase or pay for the 350 tons per month for any three month
period, ZCA would lose its exclusivity and price commitment.
During the second quarter of 2008 the exclusivity agreement became void due
to ZCA's failure to perform. As a result, the Company recognized the entire
$800,000 of deferred revenue related to the contract in the second quarter of
2008.
6. COMMON STOCK
The Company's Articles of Incorporation authorize 50,000,000 shares of $0.01
par value common stock available for issuance with such rights and
preferences, including liquidation, dividend, conversion and voting rights,
as the Board of Directors may determine. At June 30, 2008, the number of
common shares outstanding and reserved is as follows:
Common shares issued and outstanding 43,014,024
Allocated shares for:
Warrants to purchase common stock 7,141,752
Conversion of note payable, including accrued interest 700,000
United States Antimony Corporation 2000 stock plan 500,000
------------
8,341,752
Total outstanding and reserved 51,355,776
Authorized shares 50,000,000
------------
Number of shares overallocated (1,355,776)
============
In addition, the Company has shares of Series D stock of 1,751,005 and
warrants for purchase of 111,185 shares of Series D stock that is convertible
on a one to one basis for shares of common stock. However, such conversion is
subject to the availability of authorized but unissued shares of common
stock.
6
PART I - FINANCIAL INFORMATION, CONTINUED:
UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED), CONTINUED:
In order to ensure that the number of shares outstanding does not exceed the
amount authorized, the Company has no plans on selling additional shares of
common stock in the near future, will not authorize any grants under the
stock plan, and the president of the Company will not convert the note
payable due him. The Company plans to pursue increasing its authorized shares
during the second half of 2008. In the meantime, the Company is not able to
raise funds by selling shares of its common stock (see going concern
discussion in Note 1).
7. ADOPTION OF NEW ACCOUNTING PRINCIPLES
Effective January 1, 2008, we adopted the provisions of SFAS No. 157, "Fair
Value Measurements", for our financial assets and financial liabilities
without a material effect on our results of operations and financial
position. The effective date of SFAS No. 157 for non-financial assets and
non-financial liabilities has been deferred by FSP 157-2 to fiscal years
beginning after November 15, 2008, and we do not anticipate the impact of
adopting SFAS 157 for non-financial and non-financial liabilities to have a
material impact on our results of operations and financial position.
SFAS No. 157 expands disclosure requirements to include the following
information for each major category of assets and liabilities that are
measured at fair value on a recurring basis: The fair value measurement;
a. The level within the fair value hierarchy in which the fair value
measurements in their entirety fall, segregating fair value measurements
using quoted prices in active markets for identical assets or liabilities
(Level 1), significant other observable inputs (Level 2), and significant
unobservable inputs (Level 3);
b. For fair value measurements using significant unobservable inputs (Level
3), a reconciliation of the beginning and ending balances, separately
presenting changes during the period attributable to the following:
1) Total gains or losses for the period (realized and unrealized),
segregating those gains or losses included in earnings (or changes in
net assets), and a description of where those gains or losses
included in earnings (or changes in net assets) are reported in the
statement of income (or activities);
2) The amount of these gains or losses attributable to the change in
unrealized gains or losses relating to those assets and liabilities
still held at the reporting period date and a description of where
those unrealized gains or losses are reported;
3) Purchases, sales, issuances, and settlements (net); and 4) Transfers
in and/or out of Level 3.
At June 30, 2008, the company has no assets or liabilities that are measured
at fair value on a recurring basis.
We also adopted the provisions of SFAS No. 159, "The Fair Value Option for
Financial Liabilities", effective January 1, 2008. SFAS No. 159 permits
entities to choose to measure many financial assets and financial liabilities
at fair value. The adoption of SFAS No. 159 has not had a material effect on
our financial position or results of operations as of and for the six months
ended June 30, 2008.
7
PART I - FINANCIAL INFORMATION, CONTINUED:
UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED), CONTINUED:
8. NEW ACCOUNTING PRONOUNCEMENTS
In December 2007, the FASB revised SFAS No. 141 "Business Combinations". The
revised standard is effective for transactions where the acquisition date is
on or after the beginning of the first annual reporting period beginning on
or after December 15, 2008. SFAS No. 141(R) will change the accounting for
the assets acquired and liabilities assumed in a business combination, as
follows:
o Acquisition costs will be generally expensed as incurred;
o Noncontrolling interests (formally known as "minority interests") will be
valued at fair value at the acquisition date;
o Acquired contingent liabilities will be recorded at fair value at the
acquisition date and subsequently measured at either the higher of such
amount or the amount determined under existing guidance for non-acquired
contingencies;
o In-process research and development will be recorded at fair value as an
indefinite-lived intangible asset at the acquisition date;
o Restructuring costs associated with a business combination will be
generally expensed subsequent to the acquisition date; and
o Changes in deferred tax asset valuation allowances and income tax
uncertainties after the acquisition date generally will affect income tax
expense.
The adoption of SFAS No. 141(R) does not currently have a material effect on
our consolidated financial statements. However, any future business
acquisitions occurring on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008 will be accounted
for in accordance with this statement.
In December 2007, FASB issued SFAS No. 160 "Non Controlling Interests in
consolidated financial statements - an amendment of ARB No. 51," which is
effective for fiscal years and interim periods within those years beginning
on or after December 15, 2008. SFAS No. 160 amends ARB 51 to establish
accounting and reporting standards for the non controlling ownership interest
in a subsidiary and for the deconsolidation of a subsidiary. The Company is
currently evaluating the potential impact of this statement on our
consolidated financial statements.
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.
8
PART I - FINANCIAL INFORMATION, CONTINUED:
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION, CONTINUED
RESULTS OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED JUNE 30, 2008 COMPARED TO THE THREE MONTH
PERIOD ENDED JUNE 30, 2007.
The Company's operations resulted in net income of $701,230 for the
three-month period ended June 30, 2008, compared with a net loss of $114,087
for the same period ended June 30, 2007. The increase in income for the
second quarter of 2008 compared to the similar period of 2007 is primarily
due to an increase in zeolite revenues and recognition of revenue from an
expired exclusivity contract.
ANTIMONY DIVISION:
Total revenues from antimony product sales for the second quarter of 2008
were $999,289 compared with $1,098,610 for the comparable quarter of 2007, a
decrease of $99,321. During the three-month period ended June 30, 2008, 62%
of the Company's revenues from antimony product sales were from sales to one
customer. Sales of antimony products during the second quarter of 2008
consisted of 366,383 pounds at an average sale price of $2.73 per pound.
During the second quarter of 2007, sales of antimony products consisted of
441,080 pounds at an average sale price of $2.49 per pound.
The cost of antimony production was $793,505, or $2.17 per pound sold during
the second quarter of 2008 compared to $836,196 or $1.90 per pound sold
during the second quarter of 2007. The increase in price per pound was
primarily due to increased costs of raw materials.
Antimony depreciation for the second quarter of 2008 was $4,144 which was
comparable to $5,126 for the second quarter of 2007.
Antimony freight and delivery expense for the second quarter of 2008 was
$46,759 compared to $49,988 during the second quarter of 2007.
General and administrative expenses in the antimony division were $8,727
during the second quarter of 2008 compared to $4,193 during the same quarter
in 2007. The increase is due to an increase in bank charges, increased travel
expenses and increased insurance expenses.
Antimony sales expenses were $11,250 for the second quarter of 2008 compared
to $11,797 for the same quarter in 2007.
ZEOLITE DIVISION:
Total revenue from sales of zeolite products during the second quarter of
2008 were $415,362 at an average sales price of $129.64 per ton, compared
with the same quarter sales in 2007 of $268,968 at an average sales price of
$126.34 per ton. The increase in revenue for the second quarter of 2008
compared to the same quarter of 2007 was primarily due to the increase of
1,075 tons of zeolite sold during the second quarter of 2008.
The cost of zeolite production was $261,861, or $81.73 per ton sold, for the
second quarter of 2008 compared to $278,996, or $131.05 per ton sold, during
the second quarter of 2007. The decrease was due to increased production
during the second quarter of 2008 compared to the second quarter of 2007.
9
PART I - FINANCIAL INFORMATION, CONTINUED:
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION, CONTINUED
Zeolite depreciation for the second quarter of 2008 was $47,609 compared to
$30,814 for the second quarter of 2007. The increase in depreciation is due
to the continued purchase of capital assets associated with zeolite
production.
Zeolite freight and delivery for the second quarter of 2008 was $33,980
compared to $22,907 for the second quarter of 2007. The increase is due to an
increase in tons of zeolite sold during the second quarter of 2008.
During the second quarter of 2008, the Company incurred costs totaling
$42,714 associated with general and administrative expenses at Bear River
Zeolite Company, compared to $76,616 of such expenses in the comparable
quarter of 2007. The decrease was primarily due to a decrease in fine and
penalty expense which offset smaller increases in bank and interest charges.
Zeolite royalties expenses were $52,675 during the second quarter of 2008
compared to $31,472 during the second quarter of 2007. The increase is due to
an increase in tons of zeolite sold during the second quarter of 2008.
Zeolite sales expenses were $17,161 during the second quarter of 2008
compared to $13,802 during the second quarter of 2007. The increase is caused
by higher costs related to the direct selling expenses.
ADMINISTRATIVE OPERATIONS
General and administrative expenses for the corporation were $63,351 during
the second quarter of 2008 compared to $83,736 for the same quarter in 2007.
The decrease is primarily due to a decrease in professional fees and office
labor expense during the period.
Exploration expense has increased by $57,251 from the quarter ended June 30,
2007. The increase is primarily due to increased Mexico antimony exploration.
The Company recognized the entire $800,000 of deferred revenue related to an
expired exclusivity contract for zeolite in the second quarter of 2008. See
Note 5 to the consolidated financial statements in Part I of this Form 10Q.
The Company sold certain mining claims during the second quarter of 2007 that
resulted in a gain on sale of property $38,493. No mining claims were sold
during the second quarter of 2008.
Interest expense of $6,776 was incurred during the second quarter of 2008
compared to $15,484 during the second quarter of 2007. The decrease is due to
the payoff of a significant loan balance between periods.
Accounts receivable factoring expense was $28,991 during the second quarter
of 2008 compared to $22,364 during the second quarter of 2007.
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2008 COMPARED TO THE SIX MONTH PERIOD
ENDED JUNE 30, 2007.
The Company's operations resulted in net income of $560,037 for the six month
period ended June 30, 2008, compared with a net loss of $158,875 for the same
period ended June 30, 2007. The increase in income for the first six months
of 2008 compared to the similar period of 2007 is primarily due to the
recognition of revenue related to an expired exclusivity contract.
10
PART I - FINANCIAL INFORMATION, CONTINUED:
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION, CONTINUED
ANTIMONY DIVISION:
Total revenues from antimony product sales for the first six months of 2008
were $2,113,031 compared with $2,192,667 for the first six months of 2007, a
decrease of $79,636. During the six month period ended June 30, 2008, 68% of
the Company's revenues from antimony product sales were from sales to one
customer. Sales of antimony products during the first six months of 2008
consisted of 808,393 pounds at an average sale price of $2.61 per pound.
During the first six months of 2007, sales of antimony products consisted of
911,972 pounds at an average sale price of $2.40 per pound.
The cost of antimony production was $1,618,233, or $2.00 per pound sold
during the first six months of 2008 compared to $1,594,162 or $1.75 per pound
sold during the first six months of 2007. The increase in price per pound is
primarily due to increased raw materials cost.
Antimony depreciation for the first six months of 2008 was $7,630 which was
comparable to $10,251 for the first six months of 2007.
Antimony freight and delivery expense for the first six months of 2008 was
$112,544 compared to $114,007 during the first six months of 2007.
General and administrative expenses in the antimony division were $30,259
during the first six months of 2008 compared to $7,986 during the same period
in 2007. The increase is due to an increase in finance charges on purchases,
travel expenses and insurance expense.
Antimony sales expenses were $22,500 for the first six months of 2008
compared to $21,667 for the same period in 2007.
ZEOLITE DIVISION:
Total revenue from sales of zeolite products during the first six months of
2008 were $729,014 at an average sales price of $127.21 per ton compared with
the same period's sales in 2007 of $524,676 at an average sales price of
$129.17 per ton. The increase in revenue for the first six months of 2008
compared to the first six months of 2007 was primarily due to an increase of
1,669 tons sold during the first six months of 2008.
The cost of zeolite production was $528,184, or $92.16 per ton sold, for the
first six months of 2008 compared to $577,368, or $142.14 per ton sold,
during the first six months of 2007. The decrease was principally due to
increased efficiency and lower maintenance and supplies expenses.
Zeolite depreciation for the first six months of 2008 was $93,808 compared to
$60,084 for the first six months of 2007. The increase in depreciation is due
to the continued purchase of capital assets associated with zeolite
production.
Zeolite freight and delivery for the first six months of 2008 was $53,203
compared to $38,889 for the first six months of 2007. The increase is due to
a decrease in freight income, which is netted against freight and delivery
costs, for the first six months of 2008.
11
PART I - FINANCIAL INFORMATION, CONTINUED:
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION, CONTINUED
During the first six months of 2008, the Company incurred costs totaling
$80,138 associated with general and administrative expenses at Bear River
Zeolite Company, compared to $101,909 of such expenses in the comparable
period of 2007. The decrease was primarily due to a decrease in fine and
penalty expense.
Zeolite royalties expenses were $92,797 during the first six months of 2008
compared to $61,608 during the first six months of 2007.
Zeolite sales expenses were $37,461 during the first six months of 2008
compared to $24,267 during the first six months of 2007. The increase is
related to more commissions paid to sales personnel.
ADMINISTRATIVE OPERATIONS
General and administrative expenses for the corporation were $191,029 during
the first six months of 2008 compared to $180,003 for the first six months of
2007. The increase is primarily due to one time payments related to a stock
placement.
Exploration expense increased by $61,378 for the six months ended June 30,
2008 because of an increased focus exploration.
The Company recognized the entire $800,000 of deferred revenue related to an
expired exclusivity contract for zeolite in the first half of 2008.
The company sold certain mining claims during the first six months of 2008
that resulted in a gain on sale of property of $41,268 during the first six
months of 2008 compared to similar sales of $97,541 during the first six
months of 2007.
Interest expense of $14,622 was incurred during the first six months of 2008
compared to $20,687 during the first six months of 2007. The decrease in
interest resulted from increased interest income and lower outstanding debt
principle balances.
Accounts receivable factoring expense was $63,194 during the first six months
of 2008 compared to $44,575 during the first six months of 2007.
FINANCIAL CONDITION AND LIQUIDITY
At June 30, 2008, Company assets totaled $3,290,389 and total stockholders'
equity was $1,487,575. Total stockholders' equity increased $759,036 from
December 31, 2007, primarily because of net income resulting from the
recognition of revenue from an expired exclusivity contract. At June 30,
2008, the Company's total current liabilities exceeded its total current
assets by $1,320,288. To continue as a going concern, the Company must
generate profits from its antimony and zeolite sales and 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. The Company's management is confident, however,
given recent increases in metal prices, that it will be able to generate cash
from operations and financing sources that will enable it to meet its
obligations over the next twelve months.
12
PART I - FINANCIAL INFORMATION, CONTINUED:
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION, CONTINUED
As discussed in Note 6 to the financial statements, the Company has
convertible debt and stock warrants that, if converted, would cause the
number of outstanding shares of common stock to exceed the authorized amount.
In order to ensure that the number of shares outstanding does not exceed the
amount authorized, the Company has no plans on selling additional shares of
common stock in the near future, will not authorize any grants under the
stock plan, and the president of the Company will not convert the note
payable due him. The Company plans to pursue increasing its authorized shares
during 2008. In the meantime, the Company is not able to raise funds by
selling shares of its common stock (see going concern discussion in Note 1 to
the financial statements).
Cash used by operating activities during the first six months of 2008 was
$129,731, and resulted primarily from a decrease in accounts receivable and
payable and deferred revenue, and the non-cash affects of depreciation and
amortization expenses and the gain on sale of properties, plants and
equipment.
Cash used in investing activities during the first six months of 2008 was
$109,327 and primarily related to the purchase of property, plant and
equipment in Mexico for anticipated operations.
Net cash provided by financing activities was $170,091 during the first six
months of 2008 and was primarily generated from proceeds from the sale of
common stock and exercise of warrants.
13
PART I - FINANCIAL INFORMATION, CONTINUED:
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
Not applicable for small reporting company.
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 president, who
serves as the chief accounting 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, 2008.
Based upon this evaluation, it was determined that there were material
weaknesses affecting our internal control over financial reporting and, as a
result of those weaknesses, our disclosure controls and procedures were not
effective as of June 30, 2008. These material weaknesses are as follows:
o The Company does not have either internally or on its Board of
Directors the expertise to produce financial statements to be filed
with the SEC.
o 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.
o The Company lacks accounting personnel with sufficient skills and
experience to ensure proper accounting for complex, non-routine
transactions.
o 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.
There have been no changes during the quarter ended June 30, 2008 in the
Company's internal controls over financial reporting that have materially
affected, or are reasonably likely to materially affect, internal controls
over financial reporting.
14
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 June 30, 2008, the Company sold shares of
its restricted common stock and warrants as follows: 212,500 shares for $0.40
per share ($85,000). Both the common stock and the common stock underlying
the warrants are 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.
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
None
Reports on Form 8-K None
15
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: August 13, 2008
------------------------------------------ -------------------------
John C. Lawrence, Director and President
(Principal Executive, Financial and Accounting Officer)
16