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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended September 30, 2005
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period _________ to _________
Commission file number 33-00215
UNITED STATES ANTIMONY CORPORATION
(Name of small business issuer in its charter)
MONTANA 81-0305822
------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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 [ ]
Indicate by check mark whether the registrant is a shell company as defined by
Rule 12b-2 of the Exchange act.
YES [ ] No [X]
Transitional Small Business Disclosure Format
YES [ ] No [X]
At November 14, 2005, the registrant had outstanding 32,806,620 shares of par
value $0.01 common stock.
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UNITED STATES ANTIMONY CORPORATION
QUARTERLY REPORT ON FORM 10-QSB
FOR THE PERIOD
ENDED SEPTEMBER 30, 2005
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements..................................................1
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations.............................................6
Item 3: Controls and Procedures...............................................9
PART II - OTHER INFORMATION
Item 1: Legal Proceedings....................................................10
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds..........10
Item 3: Defaults among Senior Securities.....................................10
Item 4: Submission of Matters to a Vote of Security Holders..................10
Item 5: Other Information....................................................10
Item 6: Exhibits and Reports on Form 8-K.....................................10
SIGNATURE....................................................................11
CERTIFICATIONS...............................................................12
[The balance of this page has been intentionally left blank.]
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
2005 2004
ASSETS
Current assets:
Cash $ 32,978 $ 11,642
Accounts receivable, less allowance
for doubtful accounts of $30,000 106,384 56,774
Inventories 131,722 237,806
------------ ------------
Total current assets 271,084 306,222
Investment in USAMSA, net 881 3,527
Properties, plants and equipment, net 850,515 683,003
Restricted cash for reclamation bonds 86,917 91,512
Deferred financing costs, net amortization 16,875 22,500
------------ ------------
Total assets $ 1,226,272 $ 1,106,764
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 469,485 $ 441,085
Accrued payroll and related taxes 132,952 102,428
Other accrued liabilities 74,831 76,385
Deferred revenue 0 30,000
Accrued interest payable 44,866 30,890
Payable to related parties 285,514 287,687
Long-term debt, current 58,222 30,235
Accrued reclamation costs, current 71,250 100,000
------------ ------------
Total current liabilities 1,137,120 1,098,710
Convertible notes payable 350,000 350,000
Long-term debt, noncurrent 618,688 636,695
Accrued reclamations costs, noncurrent 71,250 42,500
------------ ------------
Total liabilities 2,177,058 2,127,905
------------ ------------
Commitments and contingencies (Note 3) Stockholders' deficit:
Preferred stock, $0.01 par value, 10,000,000 shares authorized:
Series A: None and 4,500 shares issued and outstanding 0 45
Series B: 750,000 shares issued and outstanding 7,500 7,500
Series C: 177,904 shares issued and outstanding 1,779 1,779
Series D: 2,014,600 and 1,899,672 shares issued
and outstanding 20,146 18,996
Common stock, $0.01 par value, 50,000,000 shares
authorized; 32,701,700 and 31,528,816 issued and outstanding 327,017 315,289
Additional paid-in capital 18,464,807 18,117,824
Accumulated deficit (19,772,035) (19,482,574)
------------ ------------
Total stockholders' deficit (950,786) (1,021,141)
------------ ------------
Total liabilities and stockholders' deficit $ 1,226,272 $ 1,106,764
============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
1
UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2005 2004 2005 2004
Revenues:
Sales of antimony products $ 506,414 $ 569,361 $ 1,862,453 $ 1,662,100
Sales of zeolite products 255,783 249,585 943,461 786,683
------------ ------------ ------------ ------------
762,197 818,946 2,805,914 2,448,783
------------ ------------ ------------ ------------
Cost of sales:
Cost of antimony production 365,482 432,357 1,357,928 1,281,592
Antimony depreciation 11,200 8,425 31,800 29,025
Antimony freight and delivery 28,114 38,671 120,453 118,354
Cost of zeolite production 201,057 130,795 699,221 477,715
Zeolite depreciation 26,583 22,031 62,983 49,631
Zeolite freight and delivery 2,445 65,434 51,297 195,948
------------ ------------ ------------ ------------
634,881 697,713 2,323,682 2,152,265
------------ ------------ ------------ ------------
Gross profit 127,316 121,233 482,232 296,518
------------ ------------ ------------ ------------
Other operating expenses:
Corporate general and administrative 61,305 93,937 206,034 246,108
Antimony general and administrative 1,365 5,872 33,888 6,245
Antimony sales expenses 19,794 11,249 46,779 37,123
Bear River Zeolite general and administrative 60,199 56,936 207,198 146,886
Bear River Zeolite sales expenses 29,874 13,243 93,860 47,834
------------ ------------ ------------ ------------
172,537 181,237 587,759 484,196
------------ ------------ ------------ ------------
Other (income) expense:
USAMSA expense 882 0 2,646 0
Interest expense 38,027 18,823 111,876 76,608
Factoring expense 17,504 25,113 71,449 65,356
Interest income and other (1,384) (383) (2,037) (2,846)
55,029 43,553 183,934 139,118
Net loss $ (100,250) $ (103,557) $ (289,461) $ (326,796)
============ ============ ============ ============
Basic net loss per share of common stock $ Nil $ Nil $ Nil $ Nil
============ ============ ============ ============
Basic weighted average shares outstanding 32,546,137 30,929,251 31,951,659 29,958,360
============ ============ ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
2
UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2005 2004
Cash flows from operating activities:
Net loss $ (289,461) $ (326,796)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation and amortization 103,054 86,731
Change in:
Restricted cash 4,595 105,649
Accounts receivable (49,610) (80,733)
Inventories 106,084 20,395
Accounts payable 28,400 (121,001)
Accrued payroll and related taxes 30,524 (49,692)
Other accrued liabilities (1,554) (4,525)
Judgment payable 0 2,550
Deferred revenue (30,000) 0
Accrued interest payable 46,417 4,974
Payable to related parties (2,173) 54,756
---------- ----------
Net cash used by operating activities (53,724) (307,692)
---------- ----------
Cash flows from investing activities:
Purchase of properties, plants and equipment (262,295) (170,023)
---------- ----------
Net cash used by investing activities (262,295) (170,023)
---------- ----------
Cash flows from financing activities:
Proceeds from issuance of common stock and warrants 51,000 10,000
Proceeds from exercise of common stock warrants 253,375 427,215
Proceeds from exercise of Series D preferred stock warrants 23,000 0
Principal payments on notes payable to bank (73,039) (153,679)
Proceeds from notes payable to bank 58,019 174,419
Proceeds from related party note payable 25,000 0
Change in checks issued and payable 0 19,760
---------- ----------
Net cash provided by financing activities 337,355 477,715
---------- ----------
Net change in cash 21,336 0
Cash, beginning of period 11,642 0
---------- ----------
Cash, end of period $ 32,978 $ 0
========== ==========
Supplemental disclosures:
Non cash financing activities:
Common stock issued in satisfaction of accounts payable $ 150,145
==========
Common stock issued for conversion of accrued interest $ 32,441
==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
3
PART I - FINANCIAL INFORMATION, CONTINUED:
UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION:
The unaudited consolidated financial statements have been prepared by the
Company in accordance with accounting principles generally accepted in the
United States of America for interim financial information, as well as the
instructions to Form 10-QSB. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial statements.
In the opinion of the Company's management, all adjustments (consisting of
only normal recurring accruals) considered necessary for a fair presentation
of the interim financial statements have been included. Operating results
for the three and nine-month periods ended September 30, 2005 are not
necessarily indicative of the results that may be expected for the full year
ending December 31, 2005. Certain consolidated financial statement amounts
for the three and nine-month periods ended September 30, 2004 have been
reclassified to conform to the 2005 presentation. These reclassifications
had no effect on the net loss or accumulated deficit as previously reported.
For further information refer to the financial statements and footnotes
thereto in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 2004.
2. LOSS PER COMMON SHARE:
The Company accounts for its income (loss) per common share according to the
Statement of Financial Accounting Standards No. 128 "Earnings Per Share"
("SFAS No. 128"). Under the provisions of SFAS No. 128, primary and fully
diluted earnings per share are replaced with basic and diluted earnings per
share. Basic earnings per share is arrived at by dividing net income (loss)
available to common stockholders by the weighted average number of common
shares outstanding, and does not include the impact of any potentially
dilutive common stock equivalents. Common stock equivalents, including
warrants to purchase the Company's common stock and common stock issuable
upon the conversion of debentures are excluded from the calculations when
their effect is antidilutive.
3. COMMITMENTS AND CONTINGENCIES:
Until 1989, the Company mined, milled and leached gold and silver in the
Yankee Fork Mining District in Custer County, Idaho. In 1994, the U.S.
Forest Service, under the provisions of the Comprehensive Environmental
Response Liability Act of 1980 ("CERCLA"), designated the cyanide leach
plant as a contaminated site. In 1996, the Idaho Department of Environmental
Quality requested that the Company sign a consent decree related to
completing the reclamation and remediation at the Preachers Cove mill. The
Company believes its reclamation is substantially complete.
In November of 2001, the Environmental Protection Agency ("EPA") listed two
by-products of the Company's antimony oxide manufacturing process as
hazardous wastes under subtitle C of the Resource Conservation and Recovery
Act ("RCRA"), and emergency notification requirements for releases to the
environment under CERCLA. On November 26, 2002, the Company received a
notice of violation related to a hazardous waste discharge that was
discovered during a hazardous waste compliance evaluation inspection
conducted at the Company's Thompson Falls antimony facility. In response to
the notice, the Company removed certain antimony materials from its
production area and agreed to ensure that future releases of hazardous waste
would not occur.
4
3. COMMITMENTS AND CONTINGENCIES, CONTINUED:
UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED), CONTINUED:
The Company's management believes that USAC is currently in substantial
compliance with environmental regulatory requirements and that its accrued
environmental reclamation costs are representative of management's estimate
of costs required to fulfill its reclamation obligations. Such costs are
accrued at the time the expenditure becomes probable and the costs can
reasonably be estimated. The Company recognizes, however, that in some cases
future environmental expenditures cannot be reliably determined due to the
uncertainty of specific remediation methods, conflicts between regulating
agencies relating to remediation methods and environmental law
interpretations, and changes in environmental laws and regulations. Any
changes to the Company's reclamation plans as a result of these factors
could have an adverse affect on the Company's operations. The range of
possible losses in excess of the amounts accrued cannot be reasonably
estimated at this time.
4. BUSINESS SEGMENTS
The Company has two operating segments, antimony and zeolite. Management
reviews and evaluates the operating segments exclusive of interest and
factoring expenses. Therefore, interest expense is not allocated to the
segments. Selected information with respect to segments for the three and
nine month periods ended September 30, 2005 and 2004 are as follows:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 2005 SEPTEMBER 30, 2005
2005 2004 2005 2004
Revenues:
Antimony $ 506,414 $ 569,361 $ 1,862,453 $ 1,662,100
Zeolite 255,783 249,585 943,461 786,683
---------- ---------- ------------ ------------
$ 762,197 $ 818,946 $ 2,805,914 $ 2,448,783
========== ========== ============ ============
Cost of sales:
Production and freight and delivery:
Antimony $ 393,596 $ 471,028 $ 1,478,381 $ 1,399,946
Zeolite 203,502 196,229 750,518 673,663
Depreciation:
Antimony 11,200 8,425 31,800 29,025
Zeolite 26,583 22,031 62,983 49,631
---------- ---------- ------------ ------------
$ 634,881 $ 697,713 $ 2,323,682 $ 2,152,265
========== ========== ============ ============
Gross profit $ 127,316 $ 121,233 $ 482,232 $ 296,518
========== ========== ============ ============
Other operating expenses:
Sales expense:
Antimony $ 19,794 $ 11,249 $ 46,779 $ 37,123
Zeolite 29,874 13,243 93,860 47,834
General and administrative expense:
Corporate 61,305 93,937 206,034 246,108
Antimony 1,365 5,872 33,888 6,245
Zeolite 60,199 56,936 207,198 146,886
---------- ---------- ------------ ------------
$ 172,537 $ 181,237 $ 587,759 $ 484,196
========== ========== ============ ============
Capital expenditures:
Antimony $ 36,349 $ 0 $ 36,349 $ 19,700
Zeolite 16,414 42,735 225,946 150,323
---------- ---------- ------------ ------------
$ 52,763 $ 42,735 $ 262,295 $ 170,023
========== ========== ============ ============
Properties, plant and equipment, net: $ 850,515 $ 645,678 $ 850,515 $ 645,678
========== ========== ============ ============
5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
GENERAL
This report contains both historical and prospective statements concerning
the Company and its operations. Prospective statements (known as
"forward-looking statements") may or may not prove true with the passage of
time because of future risks and uncertainties. The Company cannot predict
what factors might cause actual results to differ materially from those
indicated by prospective statements.
RESULTS OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 2005 COMPARED TO THE THREE
MONTH PERIOD ENDED SEPTEMBER 30, 2004
The Company's operations resulted in a net loss of $100,250 for the
three-month period ended September 30, 2005, compared with a net loss of
$103,557 for the same period ended September 30, 2004. The decrease in the
loss for the third quarter of 2005 compared to the similar period of 2004 is
primarily due to an increase in sales of zeolite.
Total revenues from antimony product sales for the third quarter of 2005
were $506,414 compared with $569,361 for the comparable quarter of 2004, a
decrease of $62,947. During the three-month period ended September 30, 2005,
72% of the Company's revenues from antimony product sales were from sales to
one customer (Kohler, Inc.). Sales of antimony products during the third
quarter of 2005 consisted of 311,732 pounds at an average sale price of
$1.62 per pound. During the third quarter of 2004 sales of antimony products
consisted of 392,872 pounds at an average sale price of $1.45 per pound.
Sales of zeolite products during the third quarter of 2005 were $255,783
compared with the same quarter sales in 2004 of $249,585. The increase in
sales for the third quarter of 2005 compared to the same quarter of 2004 was
due to the Company's marketing efforts and a corresponding increase in the
number of zeolite customers. Gross profit from antimony and zeolite sales
during the third quarter of 2005 was $127,316 compared with gross profit of
$121,233 during the third quarter of 2004.
The cost of antimony production was $365,482, or $1.17 per pound sold,
during the third quarter of 2005 compared to $432,357 or $1.10 per pound
sold, during the third quarter of 2004. The increase in price per pound was
due to decreased volume of production and increased costs of electricity and
fuel.
The cost of zeolite production was $201,057 for the third quarter of 2005
compared to $130,795 during the third quarter of 2004. The increase was
principally due to the increase in costs of fuel and a jaw crusher repair.
Antimony depreciation for the third quarter of 2005 was $11,200 compared to
$8,425 for the third quarter of 2004. The increase in depreciation directly
related to the purchase of capital assets.
Zeolite depreciation for the third quarter of 2005 was $26,583 compared to
$22,031 for the third quarter of 2004. The increase in depreciation is due
to the continued purchase of capital assets associated with zeolite
production.
Antimony freight and delivery for the third quarter of 2005 was $28,114
compared to $38,671 of freight and delivery expense during the third quarter
of 2004. The decrease is directly related to the decrease in sales of
antimony in the third quarter of 2005 compared to the same quarter of 2004.
Zeolite freight and delivery for the third quarter of 2005 was $2,445
compared to $65,434 for the third quarter of 2004. The decrease is due to
customers using their own trucking.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION CONTINUED
During the third quarter of 2005, the Company incurred costs totaling
$60,199 associated with general and administrative expenses of its 100%
owned subsidiary, Bear River Zeolite Company, compared to $56,936 of such
expenses in the comparable quarter of 2004. These expenses included
royalties.
Zeolite sales expenses were $29,874 during the third quarter of 2005
compared to $13,243 during the third quarter of 2004. The increase is
directly related to the increase in zeolite sales.
General and administrative expenses in the antimony division were $1,365
during the third quarter of 2005 compared to $5,872 during the same quarter
of 2004.
Antimony sales expenses were $19,794 in the third quarter of 2005 and were
comparable with $11,249 during the third quarter of 2004.
Interest expense of $38,027 was incurred during the third quarter of 2005
compared to $18,823 during the third quarter of 2004. The increase was
primarily due to an increase in funding.
Accounts receivable factoring expense was $17,504 during the third quarter
of 2005 compared to $25,113 during the third quarter of 2004. The decrease
was primarily due to a decrease in sales.
Interest and other income increased from $383 during the third quarter of
2004 to $1,384 during the third quarter of 2005. The increase was the result
of finance charges associated with an account receivable during the third
quarter of 2005.
General and administrative expenses for the corporation were $61,305 during
the third quarter of 2005 compared to $93,937 for the same quarter in 2004.
The decrease is primarily due to the decrease in general and administrative
activities associated with reclamation.
FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2005 COMPARED TO THE NINE-
MONTH PERIOD ENDED SEPTEMBER 30, 2004
The Company's operations resulted in a net loss of $289,461 for the
nine-month period ended September 30, 2005, compared with a net loss of
$326,796 for the nine-month period ended September 30, 2004. The decrease in
net loss for the first nine months of 2005 compared to the first nine months
of 2004 is primarily due an increase in gross profit from product sales in
2005.
Total revenues from antimony product sales for the first nine months of 2005
were $1,862,453 compared with $1,662,100 for the comparable period of 2004,
an increase of $200,353. During the nine-month period ended September 30,
2005, 59% of the Company's revenues from antimony products sales were from
sales to one customer (Kohler, Co.) and 6% were from sales to a second
individual customer. Sales of antimony products during the first nine months
of 2005 consisted of 1,244,765 pounds at an average sale price of $1.50 per
pound. During the first nine months of 2004 sales of antimony products
consisted of 1,120,833 pounds at an average sale price of $1.48 per pound.
The increase in pounds of antimony sold is attributed to difficulties
customers are having in procuring product which meets their specifications.
The increase in sale prices of antimony products from the first nine months
of 2005 to the first nine months of 2004 is the result of a corresponding
increase in antimony metal prices.
Sales of zeolite products during the first nine months of 2005 were $943,461
compared to sales of $786,683 during the comparable period of 2004. The
increase in sales of zeolite is due to the Company expanding its zeolite
plant and expanding its customer base.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION CONTINUED:
Gross profit from antimony and zeolite sales during the first nine-month
period of 2005 was $482,232 compared with gross profit of $296,518 during
the same nine-month period of 2004.
During the first nine months of 2005, the Company incurred expenses totaling
$207,198 associated with sales development and general and administrative
expenses of its wholly owned subsidiary, Bear River Zeolite, compared to
$146,886 of expenses during the comparable period of 2004. The increase in
BRZ expenses was principally due to an increase in royalty expense directly
related to increase in sales.
Antimony general and administrative expenses were $33,888 during the first
nine months of 2005, compared to $6,245 during the first nine months of
2004. The increase in general and administrative expenses during the first
nine months of 2005 compared to the same period of 2004 was due travel and
expenses related to the new project in Mexico to research another possible
source of antimony ore to expand our present available sources.
Antimony sales expenses were $46,779 during the first nine months of 2005
compared with $37,123 in the first nine months of 2004. The increase in
sales expenses is directly related to the increase in sales.
Interest expense was $111,876 during the first nine months of 2005, compared
to interest expense of $76,608 incurred during the first nine months of
2004. The increase was due to an increase in convertible note funding in
2005.
Accounts receivable factoring expense was $71,449 during the first nine
months of 2005 compared to $65,356 of factoring expense incurred during the
first nine months of 2004. The increase was primarily due to an increase in
sales of antimony factored.
Interest and other income decreased from $2,846 during the first nine months
of 2004 to $2,037 during the first nine months of 2005. The decrease was due
to a corresponding decrease in cash bonds.
General and administrative expenses for the corporation were $206,034 during
the nine-month period ending September 2005 compared to $246,108 for the
same quarter in 2004. The decrease is primarily due to the decrease in
reclamation expense and a decrease in the telephone expense directly related
to the toll free line.
FINANCIAL CONDITION AND LIQUIDITY
At September 30, 2005, Company assets totaled $1,226,272, and there was a
stockholders' deficit of $950,786. The stockholders' deficit decreased
$70,355 from December 31, 2004, primarily due to the operating loss. during
the nine months ended September 30, 2005. At September 30, 2005 the
Company's total current liabilities exceeded its total current assets by
$866,036. Due to the Company's operating losses, negative working capital,
and stockholders' deficit, the Company's independent accountants included a
paragraph in the Company's 2004 financial statements relating to a going
concern uncertainty. To continue as a going concern the Company must
generate profits from its antimony and zeolite sales and to acquire
additional capital resources through the sale of its securities or from
short and long-term debt financing. Without financing and profitable
operations, the Company may not be able to meet its obligations, fund
operations and continue in existence. While management is optimistic that
the Company will be able to sustain profitable operations and meet its
financial obligations, there can be no assurance of such. The Company's
management is confident, however, 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.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION CONTINUED:
Cash used by operating activities during the first nine months of 2005 was
$53,724, and resulted from net loss of $289,461 during the first nine months
of 2005 as adjusted by increasing accounts payable, decreasing inventories
and the non-cash affects of depreciation and amortization expenses.
Cash used in investing activities during the first nine months of 2005 was
$262,295 and primarily related to the construction of capital assets at the
Bear River Zeolite facility.
Net cash provided by financing activities was $337,355 during the first nine
months of 2005 was primarily generated from proceeds from the exercise of
common stock warrants.
ITEM 3. CONTROLS AND PROCEDURES
The term "disclosure controls and procedures" is defined in Rules 13a-15(e)
and 15d-15(e) of the Securities Exchange Act of 1934, or the Exchange Act.
This term refers to the controls and procedures of a company that are
designed to ensure that information required to be disclosed by a company in
the reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified by the
Securities and Exchange Commission.
In connection with the review of the Company's consolidated financial
statements for the three and nine month periods ended September 30, 2005,
the Company's independent registered public accounting firm advised the
Board of Directors and management of certain significant internal control
deficiencies that they considered to be, in the aggregate, a material
weakness. In particular, our independent registered public accounting firm
identified the following weaknesses in our internal control systems: (1)
lack of segregation of duties and (2) lack of formal procedures relating to
all areas of financial reporting including a lack of review by management.
The independent registered public accounting firm indicated that they
considered these deficiencies to be reportable conditions as that term is
defined under standards established by the American Institute of Certified
Public Accountants. A material weakness is a significant deficiency in one
or more of the internal control components that alone or in the aggregate
precludes our internal controls from reducing to an appropriately low level
of risk that material misstatements in our financial statements will not be
prevented or detected on a timely basis. The Company considered these
matters in connection with the period-end closing of accounts and
preparation of related consolidated financial statements and determined that
no prior period financial statements were materially affected by such
matters. We believe that the material weakness began in 2003 and existed at
the end of the period covered by this report.
The size of the Company has prevented us from being able to employ
sufficient resources at this time to enable us to have an adequate level of
supervision and segregation of duties within our internal control system. We
will continue to monitor and assess the costs and benefits of additional
staffing within the Company. However, we have not taken any formal steps at
this time to correct the material weaknesses identified by our independent
registered public accounting firm. If we are unable to correct these
material weaknesses, there is more than a remote likelihood that a material
misstatement to our SEC reports will not be prevented or detected, in which
case investors could lose confidence in the accuracy and completeness of our
financial reports. This could have an adverse effect on our ability to raise
additional capital and could also have an adverse effect on our stock price.
As required by the SEC rules, we have evaluated the effectiveness of the
design and operation of the Company's disclosure controls and procedures as
of the end of the period covered by this Quarterly Report. This evaluation
was performed under the supervision and with the participation of the
Company's
9
management, including the President & Chief Executive Officer and Vice
President Finance, Secretary and Treasurer. Based upon that evaluation, our
President & Chief Executive Officer and Vice President Finance, Secretary
and Treasurer have concluded that the Company's controls and procedures
were not effective as of the end of the period covered by this Quarterly
Report due to inadequate supervision and segregation of duties.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the nine month period ended September 30, 2005 the Company sold
170,000 shares of its restricted common stock for $0.30 per share or $51,000
and issued 890,167 shares of its restricted common stock to exercising
warrant holders for approximately $0.28 per share or $253,375. During the
three month period ended September 30, 2005 the Company sold 85,000 Series D
preferred shares to a director for approximately $0.27 per share or $23,000.
Proceed from sales of restricted common stock and Series D preferred shares
were used to fund the Company's operations.
In addition, during the three month period ended September 30, 2005, the
Company exchanged 108,137 shares of its restricted common stock for accrued
interest due a company controlled by Al Dugan, a significant share holder of
$32,441 ($0.30 per share).
The Company also issued 4,500 shares of its restricted common stock in
exchange for 4,500 shares of Series A preferred shares during nine month
period ended September 30, 2005.
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
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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: November 30. 2005
-------------------------- --------------------
John C. Lawrence, Director
and President (Principal
Executive, Financial and
Accounting Officer)
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