As filed with the Securities and Exchange Commission
on ________, 2000
Registration No. 333-45508
=================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________
AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT
Under
The Securities Act of 1933
__________________________________
UNITED STATES ANTIMONY CORPORATION
(Name of small business issuer in its charter)
Montana 3339 81-0305822
(State or other (Primary Standard (I.R.S.
jurisdiction of Industrial Employer
incorporation or Classification Code Number) Identifi-
organization) cation)
P.O. Box 643
1250 Prospect Creek Road
Thompson Falls, Montana 59873
Telephone: (406) 827-3523
(Address and telephone number of principal executive offices)
__________________________________
John C. Lawrence
President and Chairman
United States Antimony Corporation
P.O. Box 643
1250 Prospect Creek Road
Thompson Falls, Montana 59873
Telephone (406) 827-3523
(Name, address, and telephone
number of agent for service)
__________________________________
Approximate date of proposed sale to the public: From time to time
after the effective date of this Registration Statement.
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<PAGE>
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. [ ] ___________________________________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
___________________________________
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
___________________________________
If delivery of the prospectus is expected to be made pursuant to
Rule 434, check the following box. [ ]
<TABLE>
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<S> <C> <C> <C> <C>
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CALCULATION OF REGISTRATION FEE
------------------------------------------------------------------------------
Proposed Proposed Amount of
Maximum Maximum Registration
Title of Each Dollar Offering Aggregate Fee
Class of Securities Amount to be Price Per Offering
to be Registered(1) Registered Share(2) Price(2)
------------------------------------------------------------------------------
Common Stock, par
value $.01 per share $1,680,525 $0.39 $1,680,525 $443.66
------------------------------------------------------------------------------
</TABLE>
(1) This Registration Statement relates to the
registration of Five Million Three Hundred Forty-Eight Thousand Six
Hundred Four (5,348,604) shares of $.01 par value common stock
which we are obligated to register on behalf of Selling
Shareholders. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Financial Condition
and Liquidity at June 30, 2000, "Selling Security Holders."
(2) This Registration Statement covers (i) 3,476,395
shares of common stock issuable upon conversion of debentures at
$0.29125 per share, which we are required to register pursuant to
a financing agreement with purchasers of our convertible
debentures; (ii) 1,394,230 shares issuable upon exercise of related
warrants at $0.39 per share; and (iii) 477,979 shares held by
former holders of Series C preferred stock. Pursuant to Rule
457(c) and (g) under the Securities Act of 1933, the aggregate
offering price of the common shares underlying the debentures and
the warrants is computed on the basis of the debenture conversion
price and the warrant exercise price of $0.29125 and $0.39 per
share, respectively, and the aggregate offering price of the
remaining shares is computed based on $0.26 per share, the closing
price for the Company's common stock on the Over-the-Counter
Bulletin Board on November 13, 2000.
=================================================================
The registrant hereby amends this registration statement on such
date or dates as may be necessary to delay its effective date until
the registrant shall file a further amendment which specifically
states that this registration statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of
1933 or until the registration statement shall become effective on
such date as the Commission, acting pursuant to said Section 8(a),
may determine.
=================================================================
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<PAGE>
PROSPECTUS
UNITED STATES ANTIMONY CORPORATION
a Montana corporation
5,384,604 Shares of $0.01 Par Value Common Stock
This Prospectus relates to 5,384,604 shares of our $0.01 par value
common stock ("Shares"), which may be offered for sale by certain
of our shareholders ("Selling Shareholders"). See "Selling
Security Holders". There are two categories of Selling
Shareholders: First, the purchasers of the Company's 10%
convertible debentures and related warrants to purchase our common
stock ("Investors") may, following conversion of those debentures
and/or exercise of those warrants into shares of our common stock,
offer all or some portion of those Shares for sale from time to
time. Second, former holders of our convertible Series C Preferred
Stock who converted their preferred stock in the shares of our
common stock ("Series C Holders") may offer to sell, pursuant to
this Prospectus, up to 20% of the shares of our common stock which
they acquired upon conversion of their Series C Preferred Stock.
The Company will receive no part of the proceeds from any sale of
the Shares by the Investors or the Series C Holders.
PROSPECTIVE PURCHASERS OF OUR COMMON STOCK SHOULD CAREFULLY REVIEW
THE "RISK FACTORS" SECTION OF THIS PROSPECTUS BEGINNING ON PAGE 4.
Our common stock is currently trading on the Over The Counter (OTC)
Bulletin Board Market under the trading symbol "UAMY". The Shares
have not been registered for sale by the Investors or the Series C
Holders under the securities laws of any state as of the date of
this Prospectus. Brokers or dealers effecting transactions in the
Shares should confirm the registration of those Shares under the
securities laws of the states in which transactions occur or the
existence of any exemption from registration.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Prospectus is _________, 2000.
- 1 -
<PAGE>
=================================================================
TABLE OF CONTENTS
<TABLE>
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<S> <C>
Caption Page
------- ----
SUMMARY OF THE OFFERING 3
RISK FACTORS 4
CONDENSED CONSOLIDATED FINANCIAL INFORMATION 7
USE OF PROCEEDS 8
DETERMINATION OF OFFERING PRICE 8
DILUTION 8
SELLING SECURITY HOLDERS 9
PLAN OF DISTRIBUTION 10
DESCRIPTION OF SECURITIES 10
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 12
DESCRIPTION OF BUSINESS 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 17
DESCRIPTION OF PROPERTY 22
DIRECTORS AND EXECUTIVE OFFICERS 23
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT 24
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 25
EXECUTIVE COMPENSATION 27
LEGAL PROCEEDINGS 27
INTEREST OF NAMED EXPERTS AND COUNSEL 27
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT VIOLATIONS 28
WHERE YOU CAN FIND MORE INFORMATION 28
FINANCIAL STATEMENTS 29
</TABLE>
=================================================================
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<PAGE>
SUMMARY OF THE OFFERING
The following summary of certain information contained in this
Prospectus is qualified in its entirety by reference to the more
detailed information appearing elsewhere in this Prospectus.
Prospective investors are urged to carefully read the entire
Prospectus, including the Financial Statements, before making an
investment decision.
The Company. United States Antimony Corporation ("USAC", or
"Company") is a Montana corporation. Its principal business is the
production of antimony products including antimony metal, antimony
oxides and sodium antimonate. In the year ended December 31, 1999
and the six months ended June 30, 2000, antimony product sales
generated revenues of approximately $4.7 million and $2.4 million,
respectively.
The Company's antimony mining properties, mill and metallurgical
plant are located in Montana. Mining of antimony was suspended in
1983 because antimony can be purchased more economically from
foreign sources. The Company has acquired a 50% interest in United
States Antimony, Mexico S.A. de C.V. ("USAMSA"), which was
incorporated in Mexico in April 1998. USAMSA intends to produce
antimony metal and other products to be delivered to the Company's
Montana mill for processing. This Mexican company has not
commenced operations and is expected to remain in developmental
stages in the foreseeable future.
Previous gold mining and milling operations have been suspended or
abandoned due to depressed precious metals prices. Reclamation and
closure activities on the Company's gold mining properties, located
in Idaho, are nearing completion.
The complete mailing address and phone number of the Company's
principal executive offices are:
United States Antimony Corporation
P.O. Box 643
1250 Prospect Creek Road
Thompson Falls, Montana 59873
Telephone (406) 827-3523
The Debentures. Effective July 11, 2000, the Company entered into
a financing agreement to issue up to $1,500,000 of 10% convertible
debentures ("Debentures"). The first tranche of $600,000 principal
amount of Debentures was issued effective July 11, 2000. Proceeds
of those Debentures were applied to the settlement of certain
claims, resulting in an approximately $839,000 reduction of the
Company's stockholders' deficit and an improvement in its cash
flow. A second tranche of $75,000 principal amount of Debentures
was advanced to the Company on August 31, 2000. Proceeds of these
Debentures were used to purchase raw materials.
The Debentures are convertible into our common stock at a price per
share equal to 75% of the average of the three lowest closing bid
prices per share of our common stock as reported by Bloomburg L.P.
in the 20 trading days immediately preceding the closing date of
the Debenture sale or the conversion date, whichever is lower, but
in any event not greater than $0.90 per share. The exercise price
of the related warrants is equal to the closing bid price as
reported by Bloomburg L.P. on the trading day immediately preceding
the July 11, 2000 effective date of the financing agreement, or
$0.39 per share.
The $675,000 Debentures issued to date are convertible into
2,317,597 shares of USAC's common stock at the initial conversion
price of $0.29125 per share. (If the Company's stock price
declines below $0.29125 per share and the Debentures are converted,
the conversion price formula will result in a lower conversion
price and the Company will be required to issue a greater number of
Shares.) In addition, the Company issued warrants to or on behalf
of the Debenture purchasers ("Investors") for an aggregate of
1,394,230 shares of USAC's common stock exercisable for $0.39 per
share.
Registration Rights. Pursuant to a registration rights agreement
with the Debenture purchasers, the Company agreed to register (i)
the issuance of the Shares of common stock to be issued upon
conversion of the Debentures and upon exercise of the warrants, and
(ii) the resale of those Shares by the Investors. For the $675,000
Debentures issued to date, the registration rights agreement
requires that the Company register 150% of the conversion shares
and 100% of the warrant shares, or a total of 4,870,625 Shares of
our common stock. If the Company issues the
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<PAGE>
remaining $825,000 principal amount of Debentures, the Company will
be required by the registration rights agreement to register an
additional 4,777,773 shares of common stock (representing 150% of
the Shares issuable upon conversion of the additional Debentures
assuming a conversion price of $0.29125 per share plus 100% of the
shares issuable upon exercise of related warrants).
The Company is also obligated to register 477,979 shares of our
common stock held by former holders of Series C Preferred Stock
("Series C Holders") who converted that preferred stock into common
stock.
The Offering.
Securities Offered - This Prospectus relates to 4,870,625 shares
of our authorized but unissued common stock representing 150% of
the shares issuable upon conversion of our outstanding convertible
debentures (assuming a conversion price of $.29125) and 100% of the
shares issuable upon exercise of the related warrants that are held
by the Investors and that may be sold from time to time by the
Investors. In addition, this Prospectus also relates to 477,979
outstanding shares of our common stock that are held by former
holders of our Series C Preferred Stock who converted their
preferred stock into common stock.
Dividends - We have not paid any cash dividends on our common
stock during the last fiscal year. Payment of dividends is at the
sole discretion of our Board of Directors; and it is unlikely that
holders of our common stock will receive dividends during the next
fiscal year.
Voting Rights - Each holder of shares of our common stock is
entitled to one vote for each share on all matters (other than
election of directors) on which our shareholders are entitled to
vote. Each holder of shares of our common stock is entitled to
cumulate votes in the election of directors.
Preferred Stock - The Company's capitalization includes three
series of preferred stock, each of which has certain cumulative
dividend and liquidation preferences over the common stock. As of
June 30, 2000, the liquidation preferences of the preferred stock
aggregated approximately $1,020,000. The holder of our preferred
stock have certain voting rights. See "Description of Securities".
RISK FACTORS
A purchase of our common stock involves risks. You should consider
these risks before making a decision to purchase our common stock.
Prospective purchasers of our common stock must be prepared for the
possible loss of their entire investments. The order in which the
following risk factors are presented is arbitrary; and you should
not conclude, because of the order of presentation, that one risk
factor is more significant than another risk factor.
Risks Related to Our Business.
Operating losses and accumulated deficit raise going concern
doubts. As reported by our auditors, DeCoria, Maichel & Teague
P.S, in their December 31, 1999 financial statements, our recent
history of operating losses, negative working capital, and
stockholders' deficit raises substantial doubt about our ability to
continue as a going concern. At June 30, 2000 we had a
stockholders' deficit of $1,343,733 and negative working capital of
$1,745,511.
We are delinquent or in arrears on significant current
liabilities. We are delinquent on the payment of several current
liabilities including payroll and property taxes, accounts payable,
judgments payable and accrued interest payable. While we have made
payment arrangements with many of our creditors, there exists the
risk that these creditors individually or collectively could demand
immediate payment and jeopardize the Company's ability to fund
operations. Some of the Company's creditors are taxing and
regulatory authorities that have the power to seize the Company's
assets for payment of amounts past due.
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<PAGE>
A major portion of our bank debt consists of variable-rate
short-term obligations, which subjects us to interest rate and
refinancing risks. We currently obtain working capital through a
factoring arrangement secured by accounts receivable and other
collateral and through a line-of-credit and other short-term loans
secured by plant, property and equipment. We also have long-term
fixed-rate indebtedness to our bank, secured by plant property and
equipment. These obligations are personally guaranteed by the
Company's President, John C. Lawrence. The annual debt service for
our bank borrowings is approximately $147,000 at June 30, 2000.
Our working capital line-of-credit and short-term loans are
variable-rate, short-term obligations, which expose us to interest
rate and refinancing risks. Changes in interest rates could
adversely affect our results of operations; and there is no
assurance that we will be able to refinance our debt when it
matures.
Death or disability of John C. Lawrence could adversely affect the
management of our business and could result in acceleration of
guaranteed indebtedness. Mr. Lawrence is the Company's principal
executive officer and is directly involved, on a day-to-day basis,
in our marketing, production, research and development, and
environmental reclamation activities. His death or incapacity
could adversely affect our operations and future prospects. In
addition, Mr. Lawrence personally guarantees our long-term bank
debt and short-term lines-of-credit; and the death or incapacity of
the guarantor of that debt constitutes an event of default, which
would entitle the lender to accelerate maturity of the debt.
We are dependent on foreign sources for raw materials; and there
are risks of interruption in procurement from these sources and/or
volatile changes in world market prices for these materials that
are not controllable by the Company. We obtain antimony metal,
the raw material for our antimony products, primarily (75%) from
China. Changes in antimony metal export policy by the Chinese
government could impair availability of antimony metal and/or could
increase antimony metal prices, which could result in curtailed
production, decreased profits, operating result fluctuations or
breach of contractual obligations to provide antimony products to
our customers. Our principal supplier of Chinese antimony metal
has recently been unwilling to supply antimony metal at contract
prices which are lower than rapidly rising world prices; and the
supplier has indicated it may be unable to meet contractual volume
commitments to supply antimony at any price. The Company has
agreed to pay higher prices to assure a continued supply of metal
which, absent agreement of our principal customers to accept
corresponding price increases for the Company's antimony products,
could adversely affect sales and gross margins.
Capital to meet our future needs may be unavailable on acceptable
terms. We anticipate that we will require additional cash to
reduce dependence on foreign sources of antimony by developing
additional metal supplies (including development and expansion of
USAMSA's operations) and to expand our product lines to include
industrial minerals. Such additional cash may be received from
public or private financing transactions, as well as borrowing and
other resources. To the extent that additional cash is received by
the sale of equity or equity-related securities, the issuance of
such securities could result in dilution to our stockholders.
Further, additional funding may not be available on favorable
terms, if at all.
Any product recall or product return could materially adversely
affect our customer relations, sales or profitability. Our
antimony products are typically manufactured to meet individual
customer specifications, including maximum tolerance levels for
impurities, whiteness, color index, packaging requirements and bar
coding. Failure to meet those specifications may result in product
returns or recalls. Product recalls or returns may occur due to
disputed labeling claims, manufacturing issues, quality defects or
other reasons.
Uninsured loss, acts of God could impair our plant, property and
equipment. Our Thompson Falls, Montana processing facility is not
insured against fire or catastrophic loss. In the event of a major
earthquake, for example, our production plant could be rendered
inoperable for protracted periods of time, which would adversely
affect our financial condition. Should such an uninsured loss
occur, we could lose significant revenues and financial
opportunities in amounts which would not be compensated by
insurance proceeds.
We face aggressive competition in the antimony products industry.
Some of our competitors have substantially more financial
resources, marketing and development capabilities than we do.
Compliance with government regulations may be costly. We are
subject to various forms of government regulations, including
environmental, occupational health and safety, and mine safety laws
and regulations. The
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<PAGE>
Company has expended substantial resources and cash to comply with
environmental reclamation requirements imposed by federal and state
regulators. Our cash flow and profitability may be materially
adversely affected by current or future laws, rules, regulations,
and policies or by liabilities arising out of any of our past or
future conduct.
Risks Related to Environmental Matters
Our current and former operations expose us to risks of
environmental liabilities. Our research, development,
manufacturing and production processes may involve the controlled
use of hazardous materials, and we may be subject to various
environmental and occupational safety laws and regulations
governing the use, manufacture, storage, handling, and disposal of
such materials and certain waste products. The risk of accidental
contamination or injury from hazardous materials cannot be
completely eliminated. In the event of such an accident, we could
be held liable for any damages that result and any such liability
could exceed our financial resources. We also have three ongoing
environmental reclamation and remediation projects, one at our
current production facility in Montana and two at discontinued
mining operations in Idaho. Adequate financial resources may not
be available to ultimately finish the reclamation activities if
changes in environmental laws and regulations occur; and these
changes could materially and adversely affect our cash flow and
profitability. We do not have environmental liability insurance
now; and we do not expect to be able to obtain such insurance at a
reasonable cost. If we incur liability for environmental damages
while we are uninsured, it could have a material adverse effect on
the Company and its financial condition.
Risks Related to the Securities Markets and Ownership of Our Common
Stock
There is currently a limited public market for our common stock;
and the purchase of Shares should be considered only a long-term
investment. The prices of our common stock are quoted in the OTC
Bulletin Board, an electronic quotation service maintained by the
National Quotation Bureau for the National Association of
Securities Dealers, Inc. for securities not traded on a national,
regional or other securities exchange, under the symbol "UAMY."
The OTC Bulletin Board does not provide the level of liquidity
provided by securities exchanges and the public market may not
develop for our shares. In the event a significant market for our
common stock develops, the market price for our common stock may be
affected by stock market volatility, including volatility not
necessarily related to operating performance which characterizes
small and emerging companies. Consequently, the purchase of Shares
should be considered only a long-term investment.
Penny stock regulations include disclosure requirements which
may have the effect of reducing the trading activity in the
secondary market for our common stock. The SEC has adopted rules
that regulate broker-dealer practices in connection with
transactions in "penny stocks." Penny stocks generally are equity
securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on
the NASDAQ system, provided that current price and volume
information with respect to transactions in such securities is
provided by the exchange or system). The penny stock rules require
a broker-dealer, prior to a transaction in penny stock not
otherwise exempt from those rules, to deliver a standardized risk
disclosure document prepared by the SEC, which specifies
information about penny stocks and the nature and significance of
risks of the penny stock market. The broker-dealer also must
provide the customer with bid and other quotations for the penny
stock, the compensation of the broker-dealer and its salesperson on
the transaction, and monthly account statements specifying the
market value of each penny stock held in the customer account. In
addition, the penny stock rules require that, prior to a
transaction in a penny stock not otherwise exempt from those rules,
the broker-dealer must make a special written determination that
the penny stock is a suitable investment for the purchaser and
receive the purchaser's written agreement to that transaction. Our
common stock is subject to the penny stock rules, and purchasers of
shares may determine that it is quite difficult to sell their
shares.
Equity investment in our Shares is subordinate to debt financing.
Our corporate charter and bylaws do not contain any limitation on
the amount of indebtedness, funded or otherwise, we might incur.
Accordingly, we could become more highly leveraged, resulting in an
increase in debt service that could adversely affect our ability to
pay dividends to our stockholders and result in an increased risk
of default on our obligations. We are also subject to other risks
normally associated with debt financing. We expect to use
indebtedness and leveraging to finance operations and future
development of the Company.
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<PAGE>
Outstanding Convertible Debentures and Warrants, if Fully Converted
or Exercised, Would Substantially Dilute Our Outstanding Common
Stock. The Company recently issued convertible debentures and
warrants which, if fully converted (at the initial conversion
price) or exercised, could result in issuance of shares of common
stock representing (as of August 3, 2000) 16.4% of the outstanding
shares.
Our share price may decline because of the ability of the Selling
Shareholders to sell Shares of our common stock. Sales of
substantial amounts of our common stock by the Selling
Shareholders, or the possibility of such sales, could adversely
affect the prevailing market price of our common stock and impede
our ability to raise capital through the issuance of equity
securities. Subject to applicable federal and state securities
laws, after converting their Debentures and/or exercising their
warrants to purchase Shares of our common stock, the Investors may
sell any and all of those Shares. Sale of some or all of this
block of common stock by the Investors could depress the market
price of our stock.
Unexpected fluctuations in our quarterly operating results may
cause our stock price to decline. A large proportion of our costs,
including our selling, general and administrative expenses,
environmental reclamation costs, research and development costs,
and production costs, do not vary directly in relation to sales.
Thus, declines in revenue, even if small, could disproportionately
affect our quarterly operating results, could cause such results to
differ materially from expectations and could cause our stock price
to decline.
We do not anticipate paying dividends on our common stock in the
foreseeable future. Rather, we plan to retain earnings, if any,
for the operation and expansion of business.
Loss on Dissolution of the Company. In the event of our
dissolution, the proceeds (if any) realized from the liquidation of
our assets will be distributed to our shareholders only after
satisfaction of claims of our creditors and preferred shareholders.
The ability of a purchaser of Shares to recover all or any portion
of the purchase price for the Shares in that event will depend on
the amount of funds realized and the claims to be satisfied
therefrom.
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
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Balance Sheets
<S> <C> <C> <C> <C>
(Unaudited) (Unaudited)
June 30, March 31, December December
2000 2000 31, 1999 31, 1998
---------- ---------- ---------- ----------
Current Assets $ 292,128 $ 353,791 $ 337,031 $ 365,619
Noncurrent Assets 693,300 607,640 631,491 694,378
---------- ---------- ---------- ----------
Total Assets $ 985,528 $ 961,431 $ 968,522 $1,059,997
========== ========== ========== ==========
Current liabilities $2,037,639 $1,442,268 $ 968,522 $1,817,317
Noncurrent liabilities 291,622 1,640,218 1,476,675 1,951,773
---------- ---------- ---------- ----------
Total stockholders'
deficit (1,343,733) (2,121,055) (2,183,195) (2,709,093)
---------- ---------- ---------- ----------
Total liabilities
and Stockholders'
equity $ 985,528 $ 961,431 $ 968,522 $1,059,997
========== ========== ========== ==========
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<PAGE>
Statement of Operations
(Unaudited) (Unaudited)
June 30, March 31, December December
2000 2000 31, 1999 31, 1998
---------- ---------- ---------- ----------
Sales $2,363,463 $1,173,050 $4,710,278 $3,142,776
---------- ---------- ---------- ----------
Gross profit 275,443 198,820 380,977 394,896
---------- ---------- ---------- ----------
Operating expenses 541,452 315,710 601,299 670,276
Other expenses 125,880 38,970 87,355 193,047
---------- ---------- ---------- ----------
Operating loss (391,889) (155,860) (307,677) (468,427)
---------- ---------- ---------- ----------
Extraordinary item 917,726 0 611,692 0
---------- ---------- ---------- ----------
Net income (loss) $ 525,837 $ (155,860) $ 304,015 $ (468,427)
========== ========== ========== ==========
</TABLE>
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the Shares
of our common stock offered by the Selling Shareholders. The
proceeds of sale of the Debentures were used to discharge
indebtedness in the approximate amount of $1,500,000 and to
purchase raw materials. See "Management Discussion and Analysis -
Financial Condition and Liquidity at June 30, 2000".
DETERMINATION OF OFFERING PRICE
The Shares issued upon conversion of Debentures will be issued at
the conversion price which is the lower of $0.29125 per share or
75% of the average of the three lowest closing bid prices per share
of the common stock as reported by Bloomburg L.P. in the 20 trading
days preceding the conversion date. Shares will also be issued
upon exercise of related warrants at $0.39 per share. The
conversion price and warrant exercise price were determined in
arms-length negotiations between the Company and the purchaser of
its Debentures.
Upon resale of the Shares by the Investors on the Series C Holders,
the price per Share will be the market price established on the
OTCBB.
DILUTION
At the close of business on August 3, 2000, there were 17,860,384
outstanding shares of our $0.01 par value common stock. The number
of outstanding shares of common stock:
(i) includes 35,132 shares which holders of Series C
preferred stock were entitled to receive upon conversion of their
preferred stock into common stock. These shares were not issued at
the time of conversion because the Company's calculation of the
number of conversion shares inadvertently omitted to account for
the impact of certain antidilution provisions of the Series C
preferred stock, which were triggered by the Company's issuance of
common stock for less than the Series C conversion price. These
35,132 shares are being issued to the pertinent stockholders
retroactively to the date of conversion of their Series C preferred
stock.
(ii) excludes approximately 67,000 shares of common stock
representing an unreconciled discrepancy between the Company's
stock ledger and the transfer agent's records.
Pursuant to a Registration Rights Agreement with the purchasers of
our outstanding convertible debentures, we are required to register
5,384,604 Shares of our common stock, including up to 4,870,625
Shares that we will issue upon conversion of the Debentures and/or
exercise of related warrants which are currently issued and
outstanding and held by the Investors. We are also registering
477,979 Shares held by the Series C Holders.
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<PAGE>
The following table sets forth the net tangible book value per
share at June 30, 2000, and the net tangible book value per share
assuming that all 2,317,597 Shares were issued at June 30, 2000
upon conversion of Debentures at $0.29125 per share and 1,394,230
Shares were issued upon exercise of the related warrants at $0.39
per Share. Net tangible book value per share as of June 30, 2000
is calculated by dividing total tangible assets less total
liabilities, or ($1,343,733), by the number of shares outstanding,
17,725,252.
After giving effect to the issuance of 2,317,597 Shares upon
conversion of Debentures and 1,394,230 Shares upon exercise of the
related warrants, and after deducting offering expenses estimated
to be $35,000, our pro forma net tangible book value will increase
to $(159,983), or $(0.007) per share, representing an immediate
increase in pro forma net tangible book value of $0.069 per share
for existing shareholders.
<TABLE>
<CAPTION>
<S> <C>
Net tangible book value at June 30, 2000 $(0.076) per share
Net tangible book value after giving effect
to issuance of 2,317,597 Shares at
$0.29125 per Share and 1,394,230 Shares
at $0.39 per Share $(0.007) per share
Per share dilution to Investors $(0.3353) per share
Percent dilution to Investors (102)%
</TABLE>
SELLING SECURITY HOLDERS
In a transaction described in detail in "Management's Discussion
and Analysis of Financial Condition and Results of Operations --
Financial Condition and Liquidity at June 30, 2000", Thomson
Kernaghan & Co., Ltd., a Canadian investment banker acting for
itself and as agent for other possible participants (collectively,
"Investors"), purchased $600,000 in aggregate principal amount of
the Company's 10% convertible Debentures and related warrants to
purchase Company's common stock. Thomson Kernaghan subsequently
purchased an additional $75,000 principal amount of Debentures in
August 2000. As of the date of this Prospectus, Thomson Kernaghan
has not advised the Company of any persons other than Thomson
Kernaghan who have an interest in the Debentures. To the Company's
knowledge, Thomson Kernaghan is the only Investor in our Debentures
and the related warrants. Upon conversion of the Debentures and/or
exercise of those warrants into common stock, the Investors may
offer all or some portion of those Shares of our common stock for
sale from time to time. The Shares which may be offered for sale
by the Investors constitute all of the shares of common stock known
to the Company to be beneficially owned by the Investors, other
than 150,000 registered shares of common stock issued to Thomson
Kernaghan & Co. Ltd. in payment of consulting fees under the
Company's Key Employees 2000 Stock Plan. Thomson Kernaghan is not
an affiliate of the Company; and none of its officers or directors
is also an officer or director of the Company.
Pursuant to the agreement by which Thomson Kernaghan acquired the
Debentures and warrants to purchase common stock, we agreed to
prepare and file a registration statement for the issuance of our
common stock upon conversion of the Debentures and/or exercise of
the related warrants and for the resale of those Shares by the
Investors. We also agreed to pay all expenses, other than
underwriting discounts and commissions and other fees and expenses
of investment bankers and other than brokerage commissions, in
connection with the registration and sale of the Shares of common
stock which may be offered for sale by the Investors following
their acquisition of those Shares upon conversion of the Debentures
and/or exercise of the related warrants.
If all outstanding Debentures were converted to common stock at the
initial conversion price of $0.29125 per share and all of the
outstanding related warrants were exercised, the Investors would
own, and would be able to sell pursuant to this Prospectus,
3,711,827 shares of common stock representing, on a full dilution
basis, 16.4% of the then outstanding shares of common stock of the
Company.
In addition, the holders of common stock acquired upon conversion
of the Company's Series C Preferred Stock ("Series C Holders") are
entitled, pursuant to the Company's articles of incorporation, to
"piggyback" registration of twenty percent (20%) of the common
stock of the Company issued upon conversion of their Series C
shares.
- 9 -
<PAGE>
These "piggyback" registration rights are triggered by the
Company's filing of a registration statement with the U.S.
Securities and Exchange Commission as required by the Registration
Rights Agreement with Thomson Kernaghan & Co. Ltd.
The Investors and the Series C Holders are collectively referenced
in this Prospectus as "Selling Shareholders".
PLAN OF DISTRIBUTION
The Selling Shareholders may, from time to time, sell all or a
portion of the Shares in the OTC Bulletin Board market, or on any
national securities exchange on which our common stock may become
listed or traded. The Shares will not be sold in an underwritten
public offering, but may be sold directly or through brokers or
dealers.
We have filed a Registration Statement, of which this Prospectus
forms a part, with the U.S. Securities and Exchange Commission for
the issuance of the Shares to the Investors upon conversion of the
Debentures and/or exercise of the related warrants, for the
subsequent sale of the Investors' Shares of our common stock, and
for the sale of a portion of the common stock acquired by the
former Series C Holders upon conversion of their preferred stock
into common stock. We will pay all of the expenses incident to the
registration and issuance of the Investors' Shares and the
registration of the Series C Holders' Shares.
All of the 5,384,604 Shares of common stock which may be sold by
the Selling Shareholders pursuant to this Prospectus will be freely
tradable without restriction under the Securities Act, except for
any shares that may be acquired by an affiliate of the Company, as
that term is defined in Rule 144 under the Securities Act. Persons
who may be deemed to be affiliates generally include individuals or
entities that control, are controlled by, or are under common
control with the Company, and may include our directors or officers
as well as our significant stockholders, if any. Persons who are
affiliates will be permitted to sell the Shares of our common stock
that are acquired pursuant to this Prospectus only through
registration under the Securities Act, or under an exemption from
registration, such as the one provided by Rule 144.
The Shares may be sold in a block trade in which the broker or
dealer will attempt to sell the common stock as agent but may buy
and resell a portion of the block as principal to facilitate the
transaction. A broker or dealer may buy the Shares as principal
and resell them or keep them for its own account. The Shares may
also be sold in ordinary brokerage transactions and transactions in
which the broker solicits purchasers, or in privately negotiated
transactions. Brokers and dealers engaged in the sale of Shares
may receive commissions or discounts from the Investors or the
purchaser of the Shares.
Broker-dealers may agree to sell a specified number of Shares at a
stipulated price per share, and to purchase any unsold Shares at
the price required to fulfill the broker-dealer commitment to the
Investors. Broker-dealers who acquire Shares as principal may
thereafter resell the Shares from time to time in crosses and block
transactions and sales to and through other broker-dealers.
The Selling Shareholders may enter into hedging transactions with
broker-dealers, who may engage in short sales of our common stock.
The Selling Shareholders may also sell our common stock and
redeliver to close out their short positions. The Selling
Shareholders may also enter into option or other transactions with
broker-dealers which require the delivery to the broker-dealer of
its common stock. The Selling Shareholders may also lend or pledge
our common stock to a broker-dealer and, upon default, sell those
Shares. In addition to the foregoing, the Selling Shareholders
may, from time to time, enter into other types of hedging
transactions.
DESCRIPTION OF SECURITIES
Common Stock. We are authorized to issue 30,000,000 shares of
common stock, $0.01 par value, each share of common stock having
equal rights and preferences, including voting privileges. There
were 17,860,384 shares of common stock outstanding at the close of
business on August 3, 2000. In addition, 2,441,663 shares of
common stock were reserved for issuance upon exercise of
outstanding warrants to purchase our common stock; and 2,317,587
shares were reserved for issuance upon conversion of debentures at
$0.29125 per share.
- 10 -
<PAGE>
The shares of our common stock constitute equity interests in the
Company entitling each shareholder to a pro rata share of cash
distributions made to common shareholders, including dividend
payments. We had significant losses in our last fiscal year.
Therefore, it is unlikely that we will pay dividends on our common
stock in the next year. We currently intend to retain our future
earnings, if any, for use in our business. Any dividends declared
in the future will be at the discretion of our Board of Directors
and subject to any restrictions that may be imposed by our lenders.
The holders of our common stock are entitled to one vote for each
share of record. Shareholders are entitled to vote cumulatively
with respect to the election of directors of the Company.
Directors are elected by a plurality of the votes cast by the
voting stock entitled to vote at a meeting if a quorum is present.
With respect to matters other than the election of directors, a
matter is approved by the affirmative vote of the majority of the
votes cast at a meeting at which a quorum is present. In the event
of liquidation, dissolution or winding up of the Company, the
holders of common stock are entitled to share ratably in all assets
remaining available for distribution to them after payment of our
liabilities and after provision has been made for each class of
stock having preference in relation to our common stock. Holders
of our common stock have no conversion, preemptive or other
subscription rights; and there are no redemption provisions
applicable to our common stock. All of the outstanding shares of
our common stock are duly authorized, validly issued, fully paid
and non-assessable.
Preferred Stock. The Company's Articles of Incorporation authorize
10,000,000 shares of $.01 par value preferred stock. Subject to
amounts of outstanding preferred stock, additional shares of
preferred stock can be issued with such rights and preferences,
including voting rights, as the Board of Directors shall determine.
During 1986, Series A preferred stock was established by the Board
of Directors. These shares are nonconvertible, nonredeemable and
entitled to a $1.00 per share per year cumulative dividend. Series
A preferred stockholders have a total liquidation preference equal
to $45,000 plus dividends in arrears. At December 31, 1999,
cumulative dividends in arrears amounted to $60,750, or $13.50 per
share. The aggregate Series A liquidation preference was $108,000
at June 30, 2000. In addition, the holders of Series A preferred
stock are entitled to one vote for each share of record.
During 1993, Series B preferred stock was established by the Board
of Directors; and 1,666,667 shares were issued in connection with
the final settlement of litigation related to the nonpayment of
royalties under a sublease contract. The Series B preferred stock
has preference over the Company's common stock and Series A
preferred stock and is entitled to cumulative dividends of $.01 per
share per year payable when and if declared by the Company's Board
of Directors. No dividends have been declared or paid with respect
to the Series B preferred stock. In the event of dissolution or
liquidation of the Company, the preferential amount payable to
Series B restricted preferred stockholders, subject to the
preference in favor of the holders of the Series A preferred stock,
is $1.00 per share plus accumulated dividends. In 1995, 916,667
shares of Series B preferred stock were surrendered to the Company
in connection with the settlement of litigation against Bobby C.
Hamilton. At December 31, 1999, cumulative dividends in arrears
were $45,000, or $0.06 per share, with 750,000 shares currently
outstanding. The aggregate Series B liquidation preference at June
30, 2000 was $798,750. Holders of Series B preferred stock have no
voting rights except as required by the Montana Business
Corporation Act or during any period of time in which the Company
is in default in payment of dividends after declaration of
dividends on the Series B preferred stock.
During 1997, the Company issued 2,560,757 shares of Series C
preferred stock in connection with the conversion of debentures and
other debts owed by the Company. The rights, preferences,
privileges and limitations of the Series C preferred shares are set
forth below:
Optional Conversion. A holder of Series C preferred shares
had the right to convert the Series C shares, at the option of the
holder, at any time within 18 months following issuance, into
shares of common stock at the ratio of 1:1, subject to adjustment
as provided below. The 18 month conversion period has expired.
Voting Rights. The holders of Series C preferred shares shall
have the right to that number of votes equal to the number of
shares of common stock issuable upon conversion of such Series C
preferred shares.
Liquidation Preference. In the event of any liquidation or
winding up of the Company, the holders of Series C preferred shares
shall be entitled to receive as a preference over the holders of
common stock an
- 11 -
<PAGE>
amount per share equal to $0.55, subject to the preferences of the
holders of the Company's outstanding Series A and Series B
preferred stock. At June 30, 2000, the aggregate Series C
liquidation preference was $113,297.
Registration Rights. Twenty percent (20%) of the underlying
common stock issuable upon conversion of the Series C preferred
shares shall be entitled to "piggyback" registration rights when,
and if, the Company files a registration statement for its
securities or the securities of any other stockholder.
Redemption. The Series C preferred shares are not redeemable
by the Company.
Antidilution Provisions. The conversion price of the Series
C shares shall be subject to adjustments to prevent dilution in the
event that the Company issues additional shares at a purchase price
less than the applicable conversion price (other than shares issued
to employees, consultants and directors pursuant to plans and
arrangements approved by the Board of Directors, and securities
issued to lending or leasing institutions approved by the Board of
Directors). In such event, the conversion price shall be adjusted
according to a weighted-average formula, provided that a holder of
Series C shares purchases his pro rata share of the securities
being sold in the dilutive financing. The initial conversion price
for the Series C shares was $0.55 and was subsequently adjusted to
$0.5419 in accordance with the antidilution provisions.
Protective Provisions. The consent of a majority interest of
the holders of Series C preferred shares shall be required for any
action which (i) alters or changes the rights, preferences or
privileges of the Series C shares materially and adversely; or (ii)
creates any new class of shares having preference over or being on
a parity with the Series C shares.
During 1999, holders of 2,354,761 shares of Series C shares
converted their shares into 2,389,893 shares of common stock of
Company (including 35,132 shares issued in 2000 to account for
antidilution rights to which the Series C Holders were entitled
when they converted--see Dilution). At December 31, 1999 and at
June 30, 2000, 205,996 shares of Series C preferred stock remained
outstanding.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The following table sets forth the range of high and low bid prices
as reported by the OTC Bulletin Board ("OTCBB") for the periods
indicated. The quotations reflect inter-dealer prices without
retail mark-up, mark-down or commission, and may not necessarily
represent actual transactions. Currently, the stock is traded on
the OTCBB under the symbol "UAMY."
<TABLE>
<CAPTION>
<S> <C> <C>
2000 High Low
---- ---- ---
First Quarter $0.95 $0.22
Second Quarter $0.88 $0.20
Third Quarter $0.78 $0.32
1999 High Low
---- ---- ---
First Quarter $0.16 $0.20
Second Quarter 0.17 0.17
Third Quarter 0.31 0.38
Fourth Quarter 0.16 0.16
1998 High Low
---- ---- ---
First Quarter $0.20 $0.16
Second Quarter 0.28 0.16
Third Quarter 0.37 0.16
Fourth Quarter 0.28 0.13
</TABLE>
The approximate number of record holders of the Registrant's common
stock at December 31, 1999 is 2,700.
- 12 -
<PAGE>
No dividends have been paid or declared by the Registrant during
the last five years.
DESCRIPTION OF BUSINESS
General. Section 21E of the Securities Exchange Act of 1934
provides a "safe harbor" for forward-looking statements. Certain
information included herein contains statements regarding
management's expectations about future production and development
activities as well as other capital spending, financing sources and
effects of regulation. Such forward-looking information involves
important risks and uncertainties that could significantly affect
anticipated results in the future and, accordingly, such results
may differ from those expressed in any forward-looking statements
made herein. These risks and uncertainties include, but are not
limited to, those relating to the market price of metals,
production rates, production costs, availability of continued
financing, and the Company's ability to remain a going concern.
The Company cautions readers not to place undue reliance on any
forward-looking statements, and such statements speak only as of
the date made.
Summary. AGAU Mines, Inc., predecessor of United States Antimony
Corporation, was incorporated in June 1968 as a Delaware
corporation to explore, develop and mine gold and silver
properties. United States Antimony Corporation ("USAC" or "the
Company") was incorporated in Montana in January 1970 to mine and
produce antimony products. In June 1973, AGAU Mines, Inc. was
merged with and into USAC, with USAC the surviving corporation in
the merger. In December 1983, the Company suspended its antimony
mining operations when it became possible to purchase antimony raw
materials more economically from foreign sources. The principal
business of the Company has been the production of antimony
products and the mining and milling of gold.
The Company has been able to sustain its operations through gross
profit produced from its antimony operations, common stock sales,
and financing from banks and other sources. There can be no
assurance, however, that the Company will be able to continue to
meet its obligations and continue in existence as a going concern
(see Note 1 to the Financial Statements).
Antimony Division. The Company's antimony mining properties, mill
and metallurgical plant are located in the Burns Mining District of
Sanders County, Montana, approximately 15 miles west of Thompson
Falls. The Company holds 12 patented lode claims, some of which are
contiguous, and 2 patented mill sites.
Prior to 1984, the Company mined antimony ore underground by
driving drifts and using slushers in room and pillar type stopes.
Mining was suspended in December 1983, because antimony could be
purchased more economically from foreign sources. The Company's
underground antimony mining operations may be reopened in the
future should raw material prices warrant doing so. The Company
now purchases the majority of its raw antimony from China
(approximately 70%) and, to a lesser degree, Canada (approximately
15%). Antimony metal from Chinese sources has been obtained
primarily through a broker, Fortune America Trading Ltd.
Significant increases in world antimony metal prices have
necessitated renegotiation of the Company's supply contract with
the broker in order to assure continued availability of metal,
resulting in higher raw material costs. However, the increase in
world prices has enabled the Company to increase the prices of its
antimony products and to increase its gross profits. In addition,
the Company is covering its customer supply contract requirements
by obtaining antimony metal from other foreign and domestic
sources, including Harvey Ferrer, Amalgamated Metals Corporation,
Sunshine Mining Company and Cominco.
The Company currently owns 50% of the common stock of United States
Antimony, Mexico S.A. de C.V. ("USAMSA"), which was formed in April
1998. During 1998 and 1999, the Company invested capital and
surplus equipment from its Thompson Falls antimony operation in
USAMSA, which is being used for the construction of an antimony
processing plant in Mexico. To date, two antimony processing
furnaces and a warehouse building have been built and limited
antimony processing has taken place. USAMSA is pursuing the
assignment of mining concessions in the Mexican states of
Zacatecas, Coahuila, Sonora, Queretaro and Oaxaca. USAMSA is
expected in future years to produce antimony metal and other
products, utilizing its processing facilities as processing
opportunities become available and as antimony prices dictate.
These products would then be sent to the Company's plant near
Thompson Falls, Montana for processing.
- 13 -
<PAGE>
From refined antimony metal, the Company produces four antimony
oxide products of different particle size using proprietary furnace
technology, several grades of sodium antimonate using hydro
metallurgical techniques, and specialty antimony compounds.
Antimony oxide is a fine, white powder that is used primarily in
conjunction with a halogen to form a synergistic flame retardant
system for plastics, rubber, fiberglass, textile goods, paints,
coatings and paper. Antimony oxide is also used as a color
fastener in paint, as a catalyst for production of polyester resins
for fibers and film, as a phosphorescent agent in fluorescent light
bulbs and as a stabilizer for fluid lubricants. Sodium antimonate
is primarily used as a fining agent (degasser) for glass in cathode
ray tubes used in computer monitors and color television bulbs and
as a flame retardant. The Company also sells antimony metal for
use in bearings, storage batteries and ordnance.
The Company's present share of the domestic market for antimony
oxide products is approximately 10% to 12%. The Company has had
three principal domestic competitors. One of those competitors,
which accounts for about 25% of domestic sales, has announced its
intention to exit the antimony oxide business. The other two
domestic competitors have collectively accounted for about 25% of
domestic sales. The balance of domestic sales are foreign imports
(primarily from Chinese and Belgian suppliers).
The Company employed two full time sales managers in 1999 and
implemented administrative systems needed to manage sales
accounting and shipping logistics. In connection with these
efforts, the Company negotiated various commission-based sales
agreements with other chemical distribution companies, developed
its own web-site ("usantimony.com") and made substantial
improvements to its analytical and chemical research capabilities.
Since March 1998, the Company has employed a Chief Chemist who has
devoted approximately 30% of his working time to research and
development activities. Accordingly, approximately $15,000 in
salary and benefits have been related to research and development
activities during the past two fiscal years. Additionally, during
the past two fiscal years, the Company has invested approximately
$20,000 per year in lab equipment and facilities used in research
and development of new antimony products and applications. (None
of the Company's research and development costs have been borne by
customers of the Company.) These efforts have resulted in advances
in the Company's preparation, packaging and quality of its antimony
products. The Company believes that its ability to meet customer
product specifications gives it a competitive advantage. The
Company believes that it will be able to stay competitive in the
antimony business and generate increasing profits because of these
advances.
For the year ended December 31, 1999, the Company sold 5,517,443
pounds of antimony products generating approximately $4.7 million
in revenues. During 1998, the Company, through its relationships
with HoltraChem, Inc. and BCS, sold 2,834,186 pounds of antimony
products, which generated approximately $3.1 million in revenues.
During 1998, 1999 and 2000 year-to-date, approximately 20% of the
Company's antimony sales were made to one customer. However, the
Company has a stable and expanding customer base. Loss of any one
customer could have short-term impact on the Company's revenues but
would not materially adversely affect the Company's long-term
prospects.
Gold Division.
-------------
Yankee Fork Mining District. Until 1989, the Company mined and
milled and silver in the Yankee Fork Mining District in Custer
County, Idaho. The metals were recovered by gravity and flotation
mill, and the concentrates were leached with cyanide to produce a
bullion product at the Preachers Cove mill, which is located on the
Yankee Fork of the Salmon River. The Preachers Cove mill has been
dismantled and the site is undergoing environmental remediation
pursuant to an Idaho Department of Environmental Quality consent
decree. See "Environmental Matters". The Company owns two
patented lode mining claims in the Yankee Fork District, which are
now idle.
Yellow Jacket Mining District. In 1990, the Company entered into
a mining venture agreement to mine and mill gold and silver ores at
the Yellow Jacket Mine located in the Yellow Jacket Mining District
of Lemhi County, Idaho, approximately 70 miles southwest of
Salmon, Idaho. During the years from 1991 to 1996 the Company
mined, milled and sold gold bullion produced from the mine. In
1996, production at the Yellow Jacket was suspended due to
recurring operating losses and declines in precious metal prices.
The Yellow Jacket property was put on a care and maintenance
status. In 1999, the company abandoned its leasehold interests and
began environmental remediation activity at the Yellow Jacket (see
"Environmental Matters") and began reclamation of the Yellow Jacket
tailings ponds and pit area.
- 14 -
<PAGE>
Environmental Matters. The exploration, development and production
programs conducted in the United States are subject to local, state
and federal regulations regarding environmental protection.
Certain of the Company's production and mining activities are
conducted on public lands. The Company believes that its current
discharge of waste materials from its processing facilities is in
material compliance with environmental regulations and health and
safety standards. The USDA Forest Service extensively regulates
mining operations conducted in National Forests. Department of
Interior regulations cover mining operations carried out on most
other public lands. All operations by the Company involving the
exploration for or the production of minerals are subject to
existing laws and regulations relating to exploration procedures,
safety precautions, employee health and safety, air quality
standards, pollution of water sources, waste materials, odor,
noise, dust and other environmental protection requirements adopted
by federal, state and local governmental authorities. The Company
may be required to prepare and present to such authorities data
pertaining to the effect or impact that any proposed exploration
for or production of minerals may have upon the environment. Any
changes to the Company's reclamation and remediation plans which
may be required due to changes in federal regulations could have an
adverse effect on the Company's operations.
In 1994, the U.S. Forest Service, under the provisions of the
Comprehensive Environmental Response Liability Act of 1980,
designated the Company's cyanide leach plant at the Preachers Cove
mill, which is located six miles north of Sunbeam, Idaho on the
Yankee Fork of the Salmon River, as a contaminated site requiring
cleanup of cyanide solution. In 1996, the Company signed a consent
decree related to the reclamation and remediation at the Preachers
Cove mill in Idaho as required by the Idaho Department of
Environmental Quality. The Company has been reclaiming the
property; and, as of December 31, 1999, the cyanide solution
discharge was complete, the mill removed, and the cyanide leach
residue disposed of. Only earth moving and monitoring activities
remain to complete the activities prescribed by the consent decree.
Upon completion of reclamation activities at the Preachers Cove
mill site pursuant to the consent decree, the site will be closed
and the U.S. Forest Service will terminate the consent decree. The
Company anticipates substantial completion of reclamation sometime
in 2000.
The Company has environmental remediation obligations at its
antimony processing site near Thompson Falls, Montana ("the
Stibnite Hill Mine Site"). Under the regulatory jurisdiction of
the U.S. Forest Service and subject to the operating permit
requirements of the Montana Department of Environmental Quality,
the Company has performed substantial environmental reclamation
activities during 1998 and 1999. These activities included
installation of a PVC liner and a geotextile layer on two of the
tailings ponds and the removal of approximately 25,000 yards of
tailings material from a third pond. In 1999, the Company charged
approximately $51,000 to antimony plant operations for
environmental activities relating to current operations and the
disposition of its accrued obligations. The Company plans to line
a storm water pond and store a slag material pile in a lined
residue vault, thus fulfilling the majority of its environmental
responsibilities at the Stibnite Hill Mine site.
During the second quarter of 1999, the Company began final
reclamation and closure at the Yellow Jacket property. During the
third and fourth quarters of 1999 the Company began disassembly of
the mill and mill buildings and removed tailings waste from the
tailings ponds. The reclamation activity is being overseen by the
U.S. Forest Service and the Idaho Department of Environmental
Quality. The Company expensed approximately $74,000 relating to
these activities at the Yellow Jacket Mine during 1999.
Reclamation work is commencing on the clean-up of non-cyanide
tailings material at the property; and the Company believes this
project will be substantially completed by the end of 2001. In
2000, the U.S. Forest Service began releasing environmental bonding
funds to the Company that had been deposited for remediation of the
Yellow Jacket Mine.
Reclamation activities at the Yellow Jacket Mine and the Stibnite
Hill Mine Site have proceeded informally under supervision of the
U.S. Forest Service and state departments of environmental quality.
The Company has complied with regulators' requirements and does not
expect the imposition of substantial additional requirements. A
risk of material loss may exist, however, if state and federal
regulators require the Company to perform additional remediation
activities as environmental laws change.
The Company has posted cash performance bonds with a bank and the
U.S. Forest Service in connection with its reclamation activities.
Upon completion of reclamation activities, the bonds will be
terminated and the applicable regulatory authorities may release up
to $171,816 (shown as "Restricted Cash" on the Company's June 30,
2000 balance sheets).
- 15 -
<PAGE>
The Company believes it has accrued adequate reserves to fulfill
its environmental remediation responsibilities as of June 30, 2000.
The Company has made significant reclamation and remediation
progress on all its properties over the past three years and has
complied with regulatory agencies in its environmental remediation
efforts. A risk of material loss may exist, however, if state and
federal regulators require the Registrant to perform additional
remediation activities as environmental laws change. The change in
amounts accrued for environmental remediation activities in 1998,
1999 and as of September 30, 2000 is as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Thompson
Yankee Falls Yellow
Fork Antimony Jacket
Mill Site Plant Mine Totals
Balance December 31, 1997 $171,500 $270,000 $115,044 $556,544
Less: Reclamation work (55,472) (55,472)
Adjustment of Accrued
Remediation Costs 2,200 2,200
Balance December 31, 1998 $116,028 $272,200 $115,044 $503,272
Less: Reclamation work (118,586) (118,586)
Adjustment of Accrued
Remediation Costs (70,000) (70,000)
Balance December 31, 1999 $ 46,028 $153,614 $115,044 $314,686
Less: Reclamation work (35,300) (35,300)
Balance September 30, 2000 $ 46,028 $118,314 $115,044 $279,386
</TABLE>
Marketing. During the first quarter of 1999, and in prior years
dating back to 1991, the Company marketed its antimony products
with HoltraChem, Inc. and later its successor, BCS, in a 50/50
profit sharing arrangement. In March 1999, the Company notified
BCS that it was terminating the agreements that HoltraChem had
assigned BCS, and that the Company was going to market and
distribute antimony products independently. As a result the
Company took steps to market its products to existing and
prospective customers, and has been able to do so successfully.
The Company employs full time marketing personnel and has
negotiated various commission based sales agreements with other
chemical distribution companies.
Antimony Price Fluctuations. The operating results of the Company
have been and will continue to be directly related to the market
prices of antimony metal, which have fluctuated widely in recent
years. The volatility of such prices is illustrated by the
following table which sets forth the average prices of antimony
metal per pound as reported by sources deemed reliable by the
Company.
<TABLE>
<CAPTION>
<S> <C>
Year Average Price
---- -------------
1999 $0.58
1998 0.63
1997 0.93
1996 1.60
1995 2.28
</TABLE>
The range of sales prices for antimony oxide per pound was as
follows for the periods indicated:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Year High Low Average Price
---- ---- --- -------------
1999 $5.52 $0.65 $0.85
1998 5.57 0.83 1.13
1997 5.75 0.98 1.41
1996 4.50 1.53 1.86
1995 3.12 0.89 2.56
</TABLE>
- 16 -
<PAGE>
Antimony metal prices are determined by a number of variables over
which the Company has no control. These include the availability
and price of imported metals, the quantity of new metal supply, and
industrial and commercial demand. If metal prices decline and
remain depressed, the Company's revenues and profitability may be
adversely affected.
The Company uses antimony metal as a raw material for its products.
The Company obtains antimony metal from sources in China (70%),
Canada (15%) and the U.S. (15%). Purchases from Canadian and U.S.
sources have been made at world market prices, as established by
the London Metals Bulletin from time to time. Antimony metal from
Chinese sources has been supplied by Fortune America Trading Ltd.,
a New Jersey-based dealer, pursuant to a long-term supply contract
to supply antimony metal at a fixed price.
Until recently, antimony prices have been at a 35 year low.
Beginning in late June 2000, prices have risen dramatically,
primarily as a result of restrictions by the Chinese government on
exports of antimony metal from China, one of the principal
suppliers of antimony. The fixed price set by the supply contract
with the dealer in Chinese-sourced metal is below current market
price. The dealer has refused to supply metal at the contracted
price, forcing the Company to purchase antimony metal from this
dealer and other sources at current world market prices. However,
the Company has been able to raise its antimony product prices to
its customers and to increase its gross profits. The Company's
USAMSA venture is intended eventually to reduce the Company's
dependence on foreign sources but is not expected to provide
sufficient raw material for several years.
Other. The Company holds no material patents, licenses, franchises
or concessions, but it considers its antimony processing plant
proprietary in nature. The Company uses the trade name "Montana
Brand Antimony Oxide" for the marketing of its antimony products.
The Company is subject to the requirements of the Federal Mining
Safety and Health Act of 1977, requirements of the state of Montana
and the state of Idaho, Federal and State Health and Safety
statutes and Sanders County, Lemhi County and Custer County health
ordinances.
Employees. As of June 30, 2000, the Company employed 31 full-time
employees. The number of full-time employees may vary seasonally.
None of the Company's employees is covered by any collective
bargaining agreement.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This Prospectus includes forward-looking statements that involve
risks and uncertainties.
"Forward looking statements" can be identified by the use of
forward-looking terminology such as "believes," "could,"
"possibly," "anticipates," "estimates," "projects," "expects,"
"may," "will," or "should." Such statements are subject to certain
risks, uncertainties and assumptions. No assurances can be given
that the future results anticipated by forward looking statements
will be achieved. Our actual results may differ materially from
these forward-looking statements. You should not place undue
reliance on these forward-looking statements, which apply only as
of the date of this Prospectus.
Certain matters discussed are forward-looking statements that
involve risks and uncertainties, including the impact of antimony
prices and production volatility, changing market conditions and
the regulatory environment and other risks. Actual results may
differ materially from those projected. These forward-looking
statements represent the Company's judgment as of the date of this
filing. The Company disclaims, however, any intent or obligation
to update these forward-looking statements.
Results of 1999 Operations. The Company's reported net income of
$304,015 in 1999, or $0.02 per basic share, compared to a net loss
of $468,427 or $0.04 per basic share in 1998. The net income in
1999 is primarily due to an extraordinary gain recognized on the
conversion of certain debts to common stock of $611,692. Without
the effect of the extraordinary gain, the Company would have
experienced a net loss from its operating activities of $307,677
during 1999.
- 17 -
<PAGE>
Total revenues during 1999 were $4,710,278 compared to $3,142,776
in 1998. The increase was directly due to the Company's
independent marketing and sale of its antimony products during the
majority of 1999, compared to sharing 50% of antimony product sales
with affiliated sales companies during 1998. Sales of antimony
products in 1999 were $4,710,278 consisting of 5,517,443 pounds
sold at an average sales price of $ 0.85 per pound. Sales of
antimony products in 1998 were $3,130,332, consisting of 2,834,186
pounds sold at an average sales price of $1.10 per pound. Sales
made during 1999 included first quarter sales made with a sales
affiliate who recorded 50% of the quarter's total sales of $690,302
consisting of 684,322 pounds, on their financial statements. Gross
profit from antimony product sales was $380,977 in 1999, or 8% of
sales, compared to $394,896 in 1998, or 12% of sales. Almost all
of the antimony products sold were produced at the Company's plant
near Thompson Falls, Montana.
Combined care and maintenance costs and exploration and evaluation
costs at the Yellow Jacket property totaled $200,867 in 1999
compared to $362,722 in 1998. The decrease is due to the Company's
abandonment of exploration activities at the Yellow Jacket during
1999.
During 1999, the Company made adjustments to accrued reclamation
costs and accounts payable of $70,000 and $16,440, respectively.
The adjustments were made to adjust the balances of these
liabilities to reflect an accurate amount of the Company's
anticipated obligation. No such adjustments were proposed in 1998.
General and administrative expenses increased from $307,554 in 1998
to $400,432 in 1999, an increase of $92,878 or approximately 30%.
The increase in 1999 compared to 1998 was partially due to legal
costs of approximately $85,000 in 1999 compared to $50,000 during
1998. Legal costs during both years were principally related to
the Maguire litigation that commenced in 1998 and was settled
during 1999.
The Maguire settlement resulted from lawsuits in which the Walter
L. Maguire 1935-1 Trust sued USAC for alleged breach of the
Company's obligations to pay certain debentures allegedly owned by
the Trust. The Company counterclaimed against the Trust for
failing to honor an obligation to exchange the debentures for stock
and also sued Walter L. Maguire, Sr., a former Director of the
Company. The Trust held four debentures, totalling the principal
amount of $335,000, plus accrued and unpaid interest. Pursuant to
the November 5, 1999 settlement, the Trust exchanged the debentures
for 790,909 shares of USAC common stock.
Interest expense of $185,985 in 1999 decreased compared to interest
expense of $216,317 in 1998 primarily due to the conversion of
certain debts to common stock in 1999. Interest and other income
was $12,190 in 1999 and $23,270 in 1998. The decrease in interest
and other income during 1999 was primarily due to the absence of
other income in 1999 compared to 1998.
In 1999, the Company converted $682,397 of defaulted debenture
principal and interest and $144,339 of principal and interest
related to certain mining lease royalties (judgments payable) into
common stock of the Company. In connection with these conversions
the Company recorded an extraordinary gain of $611,692. No such
conversions or gains took place during 1998.
Financial Condition and Liquidity at December 31, 1999. At
December 31, 1999, Company assets totaled $968,522, and there was
a stockholders' deficit of $2,183,195. The stockholders' deficit
decreased $525,898 from the prior year, primarily due to the
conversion of debts to common stock. In order to continue as a
going concern, the Company is dependent upon (1) profitable
operations from the antimony division, (2) additional equity
financing, and (3) continued availability of bank financing.
Without financing and profitable operations, the Company may not be
able to meet its obligations, fund operations and continue in
existence. There can be no assurance that management will be
successful in its plans to improve the financial condition of the
Company.
Cash provided by operations during 1999 was $59,986 compared to
$16,598 in 1998. The increase in cash provided by operations in
1999 compared to cash provided by operations in 1998 was primarily
due to the increase in accounts payable and other current
liabilities during 1999.
Investing activities used $76,417 of cash in 1999 compared with
$31,182 in 1998. Cash used in investing activities during both
years related exclusively to purchases of properties, plants and
equipment, for the antimony division and the Company's investment
in USAMSA.
- 18 -
<PAGE>
Financing activities provided $16,431 of cash in 1999 and $14,584
in 1998. Cash from financing activities relates principally to
cash received from common stock sales and bank financing in 1998
and primarily bank from bank financing in 1999.
Other significant financial commitments for future periods will
include:
* Servicing notes payable to bank (See Note 8 to the
Consolidated Financial Statements).
* Servicing the note payable to Bobby C. Hamilton (See Note
9 to the Consolidated Financial Statements). In 1995, Hamilton and
USAC negotiated, as the result of litigation by USAC, a settlement
of all outstanding disputes and claims stemming from a 1993 joint
venture agreement in which Hamilton provided financing for USAC's
operations at the Yellow Jacket Mine. As part of the settlement,
Hamilton assigned to USAC 916,667 shares of Class B convertible
preferred stock and 250,000 shares of USAC common stock, all of his
right to the Yellow Jacket joint venture, and all of his right,
title, and interest in certain patented mining claims. In
addition, Hamilton released all claims against USAC, its assets,
officers and directors. In consideration, USAC agreed to pay
Hamilton $1,800,000 together with interest accruing at 7.5% per
annum, payable from 10% of USAC's gross income less loan proceeds
and revenue from stock or bond offerings; and USAC issued Hamilton
500,000 shares of USAC "lettered" common stock. The Note and
shares of common stock were bequeathed to the City of Moscow,
Idaho, upon Mr. Hamilton's death.
* Keeping current on property, payroll, and income tax
liabilities and accounts payable.
* Fulfilling responsibilities with environmental, labor
safety and securities regulatory agencies.
In 1999, the Yellow Jacket leases were terminated and reclamation
and closure activities began. As the Yellow Jacket property is
reclaimed, care-and-maintenance and reclamation costs will
eventually cease and the Company will be able to direct more
resources to funding its operations and paying its obligations.
Financial resources may also be generated from the disposal of
equipment at the Yellow Jacket.
During 1999, the Company negotiated a factoring arrangement,
pursuant to which the Company sells its accounts receivable and
utilizes the funds from these sales to finance operations.
Results of Operations for the six-month period ended June 30, 2000.
The Company's operations resulted in a net loss of $391,889 for
the six-month period ended June 30, 2000 compared with a net income
of $12,191 for the six-month period ended June 30, 1999. Net
income for the period ended June 30, 2000, after the extraordinary
gain on settlement of debt (see "Financial Condition and Liquidity
at June 30, 2000"), was $525,837.
Total revenues from antimony product sales for the first six months
of 2000 were $2,363,463 compared with $2,223,922 during the
comparable period in 1999. Sales of antimony products during the
first six months of 2000 consisted of 2,559,961 pounds at an
average sale price of $0.92 per pound. During the first six months
of 1999 sales of antimony products consisted of 2,233,421 pounds at
an average sale price of $1.00 per pound. The decrease in sale
prices of antimony products from the first two quarters of 1999
compared to the first two quarters of 2000 is the result of a
corresponding decrease in antimony metal prices. Gross profit from
antimony sales during the first six months of 2000 was $275,443,
compared with gross profit of $420,814 during the first six months
of 1999. The decrease in gross profit during the first six months
of 2000 compared to the comparable period of 1999 is primarily due
to decreased antimony product sales prices during 2000.
Costs related to the reclamation of Yellow Jacket were $77,906 for
the six-month period ended June 30, 2000, compared with care,
maintenance and reclamation costs of $43,770 during the six-month
period ended June 30, 1999. The increase was primarily due to the
increased reclamation activities during 2000 as compared to 1999.
Costs related to exploration and evaluation at Yellow Jacket were
$45,198 for the six-month period ended June 30, 1999, compared with
no exploration costs during the six-month period ended June 30,
2000.
- 19 -
<PAGE>
Sales expense was $194,351 for the six-month period ended June 30,
2000 compared to $63,960 for the same period in 1999. The increase
in sales expense during the first six months of 2000 as compared to
the same period of 1999 was due to the sales department's operation
for only three months of the six month period ended June 30, 1999.
General and administrative expenses increased $125,487 to $269,195
during the first six months of 2000 as compared to $143,708 during
the first six months of 1999. The increase was partially due to
financial consulting expense of $78,000 incurred in connection with
the settlement of debt in the first quarter of 2000 that was not
incurred in 1999.
Interest expense was $81,239 during six-month period ended June 30,
2000, compared to $116,072 for the same period in 1999. The
decrease in interest expense is primarily due to interest costs
relating to inventory purchased from a former sales affiliate
during 1999 that was not incurred in 2000.
Interest income was $4,647 during the six-month period ended June
30, 2000, and was comparable to $4,657 for the same period in 1999.
During the second quarter of 1999 a gain of $16,440, resulting from
the write off of certain accounts payable, was recognized. No such
gain was recognized for the comparable quarter of 2000.
Financial Condition and Liquidity at June 30, 2000. At June 30,
2000, Company assets totaled $985,528; and there was a
stockholders' deficit of $1,343,733. The stockholders' deficit
decreased $839,462 from December 31, 1999, due to the extraordinary
gain on settlement of debt. In order to continue as a going
concern, the Company is dependent upon profitable operations from
the antimony division and continuing 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.
Cash provided used by operating activities during the first six
months of 2000 was $316,486 compared with cash provided of $15,263
during the first six months of 1999. The change in cash from
operations for the first six months of 2000 compared to the same
period in 1999 was primarily due to the net loss of $361,889
(before extraordinary gain on the settlement of debt) incurred
during the first two quarters of 2000.
Cash used in investing activities during the first six months of
2000 was $35,079 compared to $45,732 used during the comparable
period of 1999. During both periods, cash used in investing
activities related to the Company's investment in antimony
processing plant and equipment.
Cash provided by financing activities was $351,565 during the first
six months of 2000 compared to $30,469 provided by financing
activities during the comparable period of 1999. The increase in
cash provided from financing activities was principally due to
advances from the Company's President of $70,000, common stock and
warrant sales of $155,000 and the issuance of $600,000 of
convertible debentures during the first six months of 2000. Cash
provided from financing activities during the first six months of
2000 was used to settle an outstanding debt (see below) and fund
operations.
In an effort to improve the Company's financial condition, the
Company's management began negotiations during the second quarter
of 2000 to settle a debt owed the Estate of Bobby C. Hamilton (the
"Estate"). The approximately $1,500,000 debt required minimum
annual payments of principal and interest totaling $200,000,
consuming 4% of the Company's gross revenues from sales. As a
result of management's negotiations, the Company entered into a
Settlement and Release of All Claims Agreement (the "Settlement
Agreement") with the Estate on June 23, 2000. The Settlement
Agreement extinguished the note payable to the Estate in exchange
for a cash payment of $500,000 and the issuance of 250,000 shares
of the Company's common stock. The cash payment was financed by
the issuance of $600,000 of Debentures pursuant to a financing
agreement with Thomson Kernaghan & Co., Ltd., a Canadian
investment banker, described in detail below. This settlement and
related financing transaction resulted in an extraordinary gain of
approximately $917,726.
The Settlement Agreement mutually released both parties from any
and all obligations between them, and includes the Company's
indemnification of the Estate against any liabilities and claims
that may result from environmental remediation responsibilities on
the Company's Idaho gold properties. The Settlement Agreement also
required the
- 20 -
<PAGE>
Company to arrange the purchase of 614,000 shares of the Estate's
unrestricted common stock of the Company by a third party for
$90,340.
In connection with the Settlement Agreement between the Company and
the Estate, the Company entered into a financing agreement with
Thomson Kernaghan effective July 11, 2000. The financing agreement
provides, among other things, for the sale of up to $1,500,000 of
the Company's convertible debentures ("Debentures") to the
investment banker and its affiliates. In addition, Thomson
Kernaghan agreed to purchase, pursuant to the Settlement Agreement,
614,000 shares of unrestricted common stock of the Company owned by
the Estate for $90,340. The financing agreement also provides for
an initial Debenture purchase of $600,000, and specifies that the
proceeds from the sale be used to 1) pay the Estate $500,000 and
extinguish the note payable owed it pursuant to the Settlement
Agreement, 2) pay the fees and expenses of Thomson Kernaghan's
counsel not to exceed $15,000, 3) pay Thomson Kernaghan's fee of
$60,000 relating to the placement of the Debentures, and 4) provide
$25,000 for the Company's working capital purposes. The Company
subsequently issued an additional $75,000 tranche of Debentures,
and used the proceeds to purchase raw material.
The Debentures are due June 30, 2002 and accrue interest at 10% to
be paid annually on each anniversary date of the issue. The
Debentures are convertible into shares of the Company's Common
Stock based on a formula setting the conversion price equal to 75%
of the average three lowest closing bid prices for the Company's
common stock as quoted by Bloomburg L.P. in the 20 trading days
immediately preceding (i) the effective date of the financing
agreement (July 11, 2000) or (ii) the conversion date of the
Debentures, whichever is lower; however, the conversion price shall
not exceed $0.90 per share. The agreed Debenture conversion price
for the $675,000 principal amount of Debentures is $0.29125 per
share.
Pursuant to the financing agreement, the Company issued to Thomson
Kernaghan, as additional consideration for the issuance of the
initial $600,000 tranche of Debentures, warrants to purchase
961,539 shares of the Company's Common Stock and also issued
warrants to purchase 384,615 shares of the Company's common stock
to the purchasers of the initial $600,000 tranche of Debentures.
In connection with the subsequent $75,000 tranche of Debentures,
the Company issued to the purchasers of the $75,000 Debenture
warrants to purchase 48,077 shares of the Company's common stock.
The warrants are exercisable for five years at $0.39 per share. If
additional Debentures are issued under the financing agreement, the
Company will issue additional warrants to purchase the Company's
common stock at $0.39 per share. The number of shares subject to
such additional warrants shall be equal to 25% of the face amount
of the additional Debentures divided by $0.39 per share.
The financing agreement required that the Company execute a
registration rights agreement, binding the Company to prepare and
file a registration statement with the Securities and Exchange
Commission registering the shares of common stock issuable upon
exercise of the warrants and upon conversion of the Debentures, and
to increase the number of its authorized but outstanding shares of
common stock to accommodate the exercise of the warrants and
conversion of the Debentures.
In connection with the sale of $675,000 tranche of Debentures
pursuant to the Thomson Kernaghan financing agreement, the Company
contractually committed to reserve for issuance to Debenture
holders and warrant holders and to contingently issue and deliver
to an escrow certificates for 4,870,625 shares of common stock
(consisting of 100% of the warrant shares and 150% of the
conversion shares calculated as if the conversion date were
July 11, 2000).
During the first six months of 2000, the Company the took the
following additional actions to minimize its losses, conserve its
cash flow, and improve its financial condition:
* Restructured its sales department, reducing overall
staffing expenses
* Refinanced a long-term note payable with a bank
* Negotiated an abatement of property taxes due an Idaho
county
* Negotiated a reduction in the "holdback" retainage on an
accounts receivable factoring agreement
- 21 -
<PAGE>
* Obtained additional advances from the Company's President
in the amount of $71,243
* Increased production from its old Thompson Falls slag
pile to decrease raw material costs
In 1996, the Yellow Jacket operation was put on a care-and-
maintenance basis after a long history of operating losses. During
the second quarter of 1999, the Company terminated its exploration
efforts at the Yellow Jacket, and began reclamation activities.
While the Yellow Jacket reclamation currently continues to consume
the Company's resources, management anticipates that additional
financial resources will be available when reclamation activities
are final, sometime in 2001. See "Environmental Matters".
The Company has reduced its long-term debt by settling (i) a
lawsuit brought by a former director, Walter L. Maguire, to collect
on outstanding debentures and (ii) indebtedness to the Estate of
Bobby C. Hamilton arising out of a profit-sharing agreement. Two
of the Company's five principal competitors have ceased production
of antimony products leading to growth in the Company's market
share in sales of antimony products; and margins on the Company's
antimony products have increased as antimony metal prices recently
rebounded from historical lows. The Company is nearing substantial
completion of reclamation activities at its mining properties,
which will free up substantial cash for other purposes, including
expansion of product lines and development of alternative sources
of antimony metal. Although management is optimistic that the
Company will be able to achieve profitable operations and meet its
financial obligations, there can be no assurance that it will do
so.
Significant financial commitments for future periods will include:
* Servicing notes payable to lender.
* Keeping current on property, payroll, and income tax
liabilities and accounts payable.
* Fulfilling responsibilities with environmental, labor
safety and securities regulatory agencies.
The Company may offer additional shares of its common stock for
sale to fund operations and reduce liabilities, although it has no
present plans to do so.
DESCRIPTION OF PROPERTY
Antimony Division. The Registrant's principal plant and mine are
located in the Burns Mining District, Sanders County, Montana,
approximately 15 miles west of Thompson Falls, Montana. The
Registrant holds 2 patented mill sites and 12 patented lode mining
claims covering 192 acres. The lode claims are contiguous within
two groups.
Antimony mining and milling operations were curtailed during 1983
due to continued declines in the price of antimony. The Company is
currently purchasing foreign raw antimony materials and continues
to produce antimony metal, oxide and sodium antimonate from its
antimony processing facility near Thompson Falls, Montana.
Gold Division.
-------------
Yankee Fork Mining District.
Estes Mountain. The Estes Mountain properties consist of 2
patented lode mining claims in the Yankee Fork Mining District of
Custer County, Idaho. These claims are located approximately 12
miles from the Company' former Preachers Cove Mill.
Preachers Cove Millsite. The Company had a 150-ton per day gravity
and flotation mill located approximately 50 miles west of Challis,
Idaho and 19 miles northeast of Stanley, Idaho on the Yankee Fork
of the Salmon River at Preachers Cove. The mill also had a cyanide
leach plant for the processing of concentrates into dore bullion.
The plant has been dismantled and the property is nearing final
reclamation.
- 22 -
<PAGE>
Yellow Jacket Mining District. The Yellow Jacket property
consisted of 12 patented and various unpatented lode mining claims
located in the Yellow Jacket Mining District of Lemhi County,
Idaho, approximately 70 miles southwest of Salmon, Idaho. In 1996,
Company personnel determined that the existing mineral resource was
not economical to mine without additional operating capital and an
increase in current metals prices. Accordingly, production
operations at the Yellow Jacket property were suspended and the
mine placed on a care-and-maintenance status. Subsequent to 1996,
the Company engaged in underground exploration activities at the
property. During the second quarter of 1999, due to depressed
precious metal prices and the absence of a discovery of mineralized
material that could be economically mined, the company abandoned
its leasehold interests in the Yellow Jacket property and began
final reclamation and closure activities. (See "Description of
Business-Environmental Matters.")
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Affiliation
Name Age with Registrant Expiration of Term
----- --- --------------- ------------------
John C. Lawrence 62 Chairman, President, Annual meeting
Secretary,and Treasurer;
Director
Robert A. Rice 76 Director Annual meeting
Leo Jackson 59 Director Annual meeting
</TABLE>
Business Experience of Directors and Executive Officers
-------------------------------------------------------
John C. Lawrence. Mr. Lawrence has been the President and a
Director of the Company since its inception. Mr. Lawrence was the
President and a Director of AGAU Mines, Inc., the predecessor of
the Company, since the inception of AGAU Mines, Inc., in 1968. He
is a member of the Society of Mining Engineers and a recipient of
the Uuno Sahinen Silver Medallion Award presented by Butte Tech,
University of Montana.
Robert A. Rice. Mr. Rice is a metallurgist, having been employed
by the Bunker Hill Company, a wholly owned subsidiary of Gulf
Resources and Chemical Corporation at Kellogg, Idaho, as Senior
Metallurgist and Mill Superintendent until his retirement in 1965.
Mr. Rice has been a Director of the Company since 1975.
Leo Jackson. Mr. Jackson is a resident of El Paso, Texas. For the
past 15 years, he has been a principal owner and the President of
Production Minerals, Inc., a company which has an indirect 25%
interest in the stock of USAMSA. Mr. Jackson is the principal
owner of Minera de Roja, S.A. de C.V., and has been involved in the
production and marketing of industrial minerals such as fluorspar
and celestite in the United States and Mexico for 25 years. Mr.
Jackson speaks fluent Spanish and has a BBA degree from the Sul
Ross State University in Texas. Mr. Jackson has been a Director of
the Company since February 1999.
The Company is not aware of any involvement by its directors or
executive officers during the past five years in legal proceedings
that are material to an evaluation of the ability or integrity of
such director or executive officer.
Board Meetings and Committees. The Company's Board of Directors
held twelve (12) regular meetings during the 1999 calendar year.
Each incumbent director attended at least 75% of the meetings held
during the 1999 calendar year, in the aggregate, by the Board and
each committee of the Board of which he was a member. The
Company's Board of Directors does not have a Compensation
Committee, an Audit Committee, or a Nominating Committee.
Board Member Compensation. The Company pays directors' fees in the
form of 6,000 shares of Company's Common Stock per year per
director. Directors are also reimbursed reasonable out-of-pocket
expenses in connection with attending meetings.
Section 16(a) Beneficial Ownership Reporting Compliance. Section
16(a) of the Securities Exchange Act of 1934 requires that the
Company's directors and executive officers and the holders of 10%
or more of the Company's
- 23 -
<PAGE>
Common Stock, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Officers, directors
and stockholders holding more than 10% of the Company's common
stock are required by the regulation to furnish the Company with
copies of all Section 16(a) forms they have filed.
Based on information received by the Company, Mr. Lawrence timely
filed a Form 4 report upon receipt of annual stock compensation;
Mr. Rice and Mr. Jackson have not timely filed a Form 4 upon
receipt of annual stock compensation.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
A person who directly or indirectly has or shares voting power or
investment power with respect to a security is considered a
beneficial owner of the security. Voting power is the power to
vote or direct the voting of shares and investment power is the
power to dispose of or direct the disposition of shares. Shares as
to which voting power or investment power may be acquired within 60
days are also considered as beneficially owned.
The following tables set forth certain information, as of August 3,
2000, regarding beneficial ownership of the Company's stock by (1)
each person who is known to the Company to own beneficially more
than 5% of any class of the Company's voting stock, and (2) (a)
each director and each nominee for the election as a director of
the Company, (b) each executive officer named in the Summary
Compensation Table set forth above , and (c) all current
directors and current executive officers of the Company as a group.
The information on beneficial ownership in the table and the
footnotes thereto is based upon the Company's records and, in the
case of holders of more than 5% of the Company's stock, the most
recent Schedule 13D or 13F filed by each such person or entity and
information supplied to the Company by such person or entity.
Unless otherwise indicated, to the Company's knowledge each
person has sole voting power and sole investment power with respect
to the shares shown.
Security Ownership of Certain Beneficial Owners. As of the close
of business on August 3, 2000, based on information
available to the Company, the following persons own beneficially
more than 5% of the outstanding voting securities of the Company:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Percent
Name and Address of Amount and Nature of of
Title of Class Beneficial owner Beneficial Ownership Class
-------------- ------------------- -------------------- -------
Common stock The Maguire Family 1,501,898 (2) 6.6(1)
and related entities
as a group c/o Walter L. Maguire, Sr.
P.O. Box 129
Keller, VA 23401
Common stock John C. Lawrence 2,717,450 (3) 12.0(1)
P.O. Box 643
Thompson Falls, MT 59873
Common stock The Dugan Family 2,239,517 (4) 9.9(1)
c/o A. W. Dugan
1415 Louisiana Street, Suite 3100
Houston, TX 77002
Common stock Thomson Kernaghan 1,768,178 (5) 7.8(1)
& Company Ltd.
365 Bay Street
Toronto, Ontario M5H 2V2
Preferred Series A. Gordon Clark, Jr. 4,500 (6) 100
A stock 2 Musket Trail
Simsbury, CT 06070
</TABLE>
- 24 -
<PAGE>
Security Ownership of Management as of August 3, 2000
-----------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Percent
Name of Amount of of
Title of Class Beneficial owner Beneficial Ownership Class
-------------- ------------------- -------------------- -------
Common stock John C. Lawrence 2,717,450 (3) 12.0
Common stock Robert A. Rice 194,929 (7) .9
Common stock Leo Jackson 35,700 .1
--------- ----
Common stock All Directors and executive
officers as a group 2,948,079 13.0
========= ====
</TABLE>
(1) Percent of ownership is based upon 22,619,644 shares of common
stock and common stock equivalents (including shares subject to
presently exercisable warrants, and $675,000 of debentures
convertible at $0.29125 per share), 4,500 shares of Series A
preferred stock, and 205,996 shares of Series C preferred stock
outstanding at August 3, 2000. The Company's 750,000 outstanding
shares of nonvoting Series B Preferred Stock are not included in
the calculation of the percentage ownership of voting stock.
(2) Includes 1,007,843 shares owned by the Maguire Foundation;
129,000 shares owned by Walter L. Maguire, Sr.; 45,500 shares owned
by Walter L. Maguire, Trustee; 219,555 shares owned by Walter L.
Maguire, Jr.; and warrants issued to donees of Walter L. Maguire,
Sr. to purchase 100,000 shares of common stock. Excludes 1,003,409
shares owned by the 1934 Maguire Trust.
(3) Includes 2,311,640 shares of common stock and warrants to
purchase 405,810 shares of common stock. Excludes 75,000 shares
owned by Mr. Lawrence's sister, as to which Mr. Lawrence disclaims
beneficial ownership.
(4) Includes 316,667 shares owned by Al Dugan; 183,333 shares
owned by Lydia Dugan; 60,000 shares owned by Joel and Ellen Dugan;
1,331,440 shares, in the aggregate, owned by companies owned and
controlled by Al Dugan; and warrants issued to Mr. Dugan to
purchase 348,077 shares of common stock.
(5) Includes 150,000 shares of common stock and 1,768,178 shares
issuable upon conversion of debentures at $0.29125 per share and/or
upon exercise of related warrants. Excludes 1,943,649 shares of
common stock issuable upon conversion of debentures at $0.29125 per
share and/or upon exercise of related warrants: Thomson Kernaghan
disclaims beneficial ownership of these shares based on a
restriction in the financing agreement which prohibits Thomson
Kernaghan from beneficially owning at any time more than 9.9% of
the issued and outstanding common stock of the Company determined
on an undiluted basis (which is equivalent to 7.8% of the
outstanding shares on a fully diluted basis). If not for this
contractual restriction, Thomson Kernaghan would beneficially own
3,861,827 shares (or 17.1% of the outstanding shares on a fully
diluted basis), including 150,000 shares of common stock; 2,317,597
shares issuable upon conversion of debentures at $0.29125 per
share; and warrants to purchase 1,394,230 shares.
(6) The outstanding Series A and C preferred shares carry voting
rights.
(7) Includes warrants to purchase 3,101 shares of common stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Described below are transactions during the last two years to which
the Company is a party and in which any Company director or
executive officer or any beneficial owner of ten percent (10%) or
more of any class of the Company's voting securities or certain
relatives of the Company's directors, executive officers or ten
percent (10%) beneficial owners has a direct or indirect material
interest. See also transactions described in notes 4, 7, 8, 10 and
13 to the Company's Financial Statements as of December 31, 1999.
- 25 -
<PAGE>
On August 28, 2000, the Company authorized the issuance of 21,611
shares of common stock to John C. Lawrence, a director and the
Chief Executive Officer of the Company, and 934 shares of common
stock to Robert A. Rice, a director. Mr. Lawrence and Mr. Rice
were entitled to receive these shares upon conversion of Series C
Preferred Stock in 1999. These shares were not issued at the time
of conversion because the Company's calculation of the number of
conversion shares inadvertently failed to account for the impact of
certain antidilution provisions of the Series C preferred stock,
which were triggered by the Company's issuance of common stock for
less than the Series C conversion price. These shares are being
issued retroactively to the date of conversion of the Series C
Preferred Stock, August 5, 1999. The adjusted conversion price was
$0.5419 per share.
John C. Lawrence, a director and the Chief Executive Officer of the
Company, advanced the Company $141,243, in the aggregate, in June
and July 2000. The advances were made in consideration of the
Company's agreement to issue 10% convertible debentures and
warrants on the same terms as the debentures and related warrants
issued to Thomson Kernaghan. See Management Discussion and
Analysis - Financial Condition and Liquidity at June 30, 2000.
Leo Jackson, a director of the Company, is a principal owner and
president of Production Minerals, Inc., a company which indirectly
owns 25% of the stock of USAMSA. The Company owns 50% of the stock
of USAMSA.
The Company reimburses John C. Lawrence, a director and the Chief
Executive Officer of the Company, for operational and maintenance
expenses incurred in connection with the Company's use of certain
equipment owned by Mr. Lawrence, including welding trucks,
backhoes, and an aircraft. See note 7 to the 1999 Financial
Statements.
On August 25, 2000, the Company sold 257,111 shares of its common
stock to Al Dugan, a stockholder and accredited investor, for
$0.29125 per share or $75,000 and issued to Mr. Dugan warrants
exercisable at $0.39 per share to purchase 48,077 shares of common
stock. The warrants expire August 25, 2002.
On July 12, 2000, the Company sold 100,000 shares of its common
stock to Nortex Corporation, a company controlled by Al Dugan, a
stockholder and accredited investor, for cash totaling $25,000, or
$0.25 per share.
On March 17, 2000, the Company issued to Thomson Kernaghan &
Company, Ltd., which subsequently has become the beneficial owner
of more than five percent of the Company's common stock, 150,000
shares of registered common stock pursuant to the Company's 2000
Stock Plan for Key Employees, in consideration of financial
consulting services including the preparation and analysis of the
Company's financial condition and financing options.
On March 16, 2000, the Company issued 100,000 shares of its common
stock to Al Dugan, a stockholder and accredited investor, for cash
totaling $25,000, upon exercise of previously granted warrants to
purchase common stock for $0.25 per share.
On February 2, 2000, the Company sold 125,000 shares of its common
stock to Delaware Royalty Company, Inc., a company controlled by Al
Dugan, a stockholder and accredited investor, for cash totaling
$50,000 or $0.40 per share.
On January 3, 2000, the Company agreed to issue to Al Dugan, a
principal shareholder, warrants to purchase 300,000 shares of the
Company's common stock in consideration of financial consulting
services rendered by Mr. Dugan. The warrants are exercisable at
$0.25 per share and expire January 25, 2003.
Effective December 31, 1999, the Company issued 6,000 shares of
common stock to each of the three directors of the Company for
services provided to the Company. These shares were valued at
$2,160 or $.12 per share.
On November 9, 1999, the Company issued 790,909 shares of common
stock to the Walter L. Maguire 1935-1 Trust in connection with the
settlement of litigation brought by the Trust. Walter L. Maguire,
Sr., a stockholder and former director of the Company, was a
beneficiary of the Trust. The settlement resulted in discharge of
the Company's obligations to the Trust under certain subordinated
convertible debentures and convertible debentures totaling
$682,397, including principal and interest.
- 26 -
<PAGE>
On March 29, 1999, the Company issued stock bonuses aggregating
20,000 shares of common stock to employees of the Company. The
shares were valued at $2,600 or $0.13 per share.
Effective December 31, 1998, the Company issued 25,000 shares of
common stock to Robert A. Rice, a director of the Company, in
exchange for a $5,000 note receivable from Mr. Rice. The note was
satisfied in 1999 when Mr. Rice transferred to the Company certain
equipment having a fair market value equal to the amount of the
note.
On December 31, 1998, the Company issued 23,491 shares of common
stock to Mike Price in consideration of construction services
provided by Mr. Rice, who is the grandson of Robert A Rice, a
director of the Company.
EXECUTIVE COMPENSATION
Summary Compensation Table. The Securities and Exchange Commission
requires the following table setting forth for fiscal years ending
December 31, 1999, 1998 and 1997, the compensation paid by the
Company to its principal executive officer.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Annual Compensation
--------------------------------------------------------------------------------
Other Annual
Name and Principal Position Year Salary Bonus Compensation (1)
--------------------------------------------------------------------------------
John C. Lawrence, President 1999 $72,000(2) N/A $4,154
John C. Lawrence, President 1998 $72,000 N/A $4,154
John C. Lawrence, President 1997 $72,000 N/A $4,154
<PAGE>
<S> <C> <C> <C> <C>
Long-Term Compensation
--------------------------------------------------------------------------------
Awards Payouts
---------------------- --------------------------
Restricted Securities
Options/ Underlying All Other All Other
Name and Principal Position Awards (3) LTIP SARs Payouts Compensation
--------------------------------------------------------------------------------
John C. Lawrence, President $720 None None None
John C. Lawrence, President $844 None None None
John C. Lawrence, President $855 None None None
</TABLE>
(1) Represents earned but unused vacation.
(2) Increased to $96,000 beginning August 1, 2000.
(3) These figures represent the fair values, as of the date of
issuance, of the annual Director's fee payable to Mr. Lawrence in
the form of 6,000 shares of Company's restricted Common Stock.
Warrant Grants in the Last Fiscal Year. The following table sets
forth certain information regarding stock options granted to the
named executive officers during the fiscal year ended December 31,
1999. No stock appreciation rights were granted to these
individuals during such year.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Number of Percent
Securities of Total
Under- Options Exercise
lying Granted to or
Options Grant Employees Base Expiration
Name Granted Date Fiscal Year Price Date
----- ------- ----- ----------- -------- ----------
John C. 250,000 March 29, 100% $0.25 March 29,
Lawrence 1999 per share 2002
</TABLE>
Directors' Compensation. Our directors do not receive cash
compensation for attending Board of Directors meetings, but each
director receives 6,000 shares of Company's common stock annually.
LEGAL PROCEEDINGS
There are no material legal proceedings to which we are currently
a party or to which our property is subject.
INTEREST OF NAMED EXPERTS AND COUNSEL
No "expert", as that term is defined pursuant to Regulation S-B,
Item 509(a), or "counsel", as that term is defined pursuant to
Regulation S-B, Item 509(b), was hired on a contingent basis, or
will receive a direct or indirect interest
- 27 -
<PAGE>
in the Company, or was a promoter, underwriter, voting trustee,
director, officer, or employee of the Company, at any time prior to
the date of this Prospectus.
The Financial Statements of the Company which are included in this
Prospectus have been audited by DeCoria, Maichel & Teague P.S. of
Spokane, Washington as stated in their report on the Company's 1999
year-end Financial Statements appearing in this Prospectus under
the caption "Financial Statements". The Financial Statements have
been included in this Prospectus in reliance on the auditors'
report given their authority as experts in accounting and auditing.
Hawley Troxell Ennis & Hawley LLP, a Boise, Idaho law firm, has
passed upon certain legal matters relating to the offering of the
Company's common stock, including the validity of the shares of
common stock being offered pursuant to this Prospectus.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT VIOLATIONS
In the opinion of the Securities and Exchange Commission,
indemnification for liabilities arising pursuant to the Securities
Act of 1933 is contrary to public policy and, therefore,
unenforceable.
WHERE YOU CAN FIND MORE INFORMATION
We file annual reports, quarterly reports and current reports,
proxy statements and other information with the U.S. Securities and
Exchange Commission (SEC). In addition, we have filed with the SEC
a Registration Statement on Form SB-2 under the Securities Act of
1933 with respect to our common stock offered in this Prospectus.
This Prospectus does not contain all of the information set forth
in the registration statement and the exhibits and schedules to
that registration statement. For further information with respect
to us and our common stock, we refer you to the registration
statement and its exhibits and schedules. With respect to
statements contained in this Prospectus as to the contents of any
contract or other document, reference is made to the copy of that
contract or document filed as an exhibit to the registration
statement, each of these statements being qualified in all respects
by that reference.
You may read and copy materials that we have filed with the SEC,
including the registration statement, at the following SEC Public
Reference Room:
450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549
You can call the SEC at 1-800-SEC-0330 for more information about
the operation of the Public Reference Room. Copies of our filings
with the SEC are also available to the public through the SEC's
Internet website at http:\\www.sec.gov.
- 28 -
<PAGE>
FINANCIAL STATEMENTS
- 29 -
<PAGE>
Report of Independent Accountants
The Board of Directors and Stockholders of
United States Antimony Corporation
We have audited the accompanying consolidated balance sheets of
United States Antimony Corporation and subsidiary as of December
31, 1999 and 1998, and the related consolidated statements of
operations, changes in stockholders' deficit and cash flows for the
years then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial
position of United States Antimony Corporation and subsidiary as of
December 31, 1999 and 1998, and the consolidated results of their
operations and their cash flows for the years then ended, in
conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern. As discussed in Note 1 to the financial statements, the
Company has negative working capital, an accumulated deficit and
total stockholders' deficit that raise substantial doubt about its
ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 1. The financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
/S/DECORIA, MAICHEL & TEAGUE P.S.
---------------------------------
Spokane, Washington
March 11, 2000
- 30 -
<PAGE>
United States Antimony Corporation and Subsidiary
Consolidated Balance Sheets
December 31, 1999 and 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1999 1998
ASSETS
Current assets:
Restricted cash $ 227 $ 221
Inventories 276,599 365,398
Accounts receivable, less allowance
for doubtful accounts of $50,000 60,205
------------ -----------
Total current assets $ 337,031 $ 365,619
Properties, plants and equipment, net 452,505 515,392
Restricted cash for reclamation bonds 178,986 178,986
------------ -----------
Total assets $ 968,522 $ 1,059,997
============ ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Checks issued and payable $ 45,544 $ 31,089
Accounts payable 467,596 256,373
Accrued payroll and property taxes 263,667 168,482
Accrued payroll and other 97,751 61,999
Judgments payable 40,645 164,084
Accrued interest payable 14,640 348,787
Due to related parties 42,841 37,635
Notes payable to bank, current 160,395 160,017
Note payable to Bobby C. Hamilton, current 87,596 31,398
Debentures payable 335,000
Accrued reclamation costs, current 256,000 222,453
------------- -----------
Total current liabilities $ 1,476,675 $ 1,817,317
Notes payable to bank, noncurrent 165,570 106,793
Note payable to Bobby C. Hamilton, noncurrent 1,450,785 1,564,161
Accrued reclamation costs, noncurrent 58,687 280,819
------------- -----------
Total liabilities $ 3,151,717 $ 3,769,090
------------- -----------
Commitments and contingencies (Notes 1 and 14)
Stockholders' deficit:
Preferred stock, $.01 par value,
10,000,000 shares authorized:
Series A: 4,500 shares issued
and outstanding (liquidation
preference $105,750) 45 45
Series B: 750,000 shares issued
and outstanding (liquidation
preference $795,000) 7,500 7,500
Series C: 205,996 and 2,560,762 shares
issued and outstanding (liquidation
preference $113,281) 2,060 25,608
Common stock, $.01 par value,
20,000,000 shares authorized;
16,900,252 and 13,425,925 shares
issued and outstanding 169,003 134,259
Additional paid-in capital 14,289,947 14,079,260
Accumulated deficit (16,651,750) (16,955,765)
------------ -----------
Total stockholders' deficit (2,183,195) (2,709,093)
------------ -----------
Total liabilities and
stockholders' deficit $ 968,522 $ 1,059,997
============ ===========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
- 31 -
<PAGE>
United States Antimony Corporation and Subsidiary
Consolidated Statements of Operations
for the years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1999 1998
Revenues:
Sales of antimony products and other $ 4,710,278 $ 3,142,776
Cost of antimony production 4,329,301 2,747,880
------------ -----------
Gross profit 380,977 394,896
------------ -----------
Other operating expenses:
Exploration and evaluations 53,985 164,871
Care and maintenance - Yellow Jacket property 146,882 197,851
General and administrative 400,432 307,554
------------ -----------
601,299 670,276
------------ -----------
Other (income) expense:
Gain from accrued reclamation costs adjustment (70,000)
Gain from accounts payable adjustment (16,440)
Interest expense 185,985 216,317
Interest income and other (12,190) (23,270)
------------ -----------
87,355 193,047
------------ -----------
Loss before extraordinary item (307,677) (468,427)
Extraordinary gain on conversion of debts
to common stock 611,692
------------ -----------
Net income (loss) $ 304,015 $ (468,427)
============ ===========
Basic net income (loss) per
share of common stock
Before extraordinary item $ (0.02)
Extraordinary item 0.04
------------
Net income (loss) $ 0.02 $ (0.04)
============ ===========
Diluted net income (loss) per share
of common stock
Before extraordinary item $ (0.02)
Extraordinary item 0.04
------------
Net income (loss) $ 0.02 $ (0.03)
============ ===========
Basic weighted average shares outstanding 14,597,917 13,309,379
============ ===========
Diluted weighted average shares outstanding 14,837,976 15,904,204
============ ===========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
- 32 -
<PAGE>
United States Antimony Corporation and Subsidiary
Consolidated Statements of Cash Flows
for the years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1999 1998
Cash flows from operating activities:
Net income (loss) $ 304,015 $ (468,427)
Adjustments to reconcile net income
(loss) to net cash provided by operations:
Depreciation 130,714 157,812
Write off of capitalized start-up costs 8,590
Extraordinary gain on conversion of
debts to common stock (611,692)
Gain from accrued reclamation costs
adjustment (70,000)
Gain from accounts payable adjustment (16,440)
Provision for doubtful accounts 50,000
Issuance of common stock to directors
as compensation 2,160 1,687
Issuance of common stock to employees
as compensation 2,600 3,289
Issuance of common stock for services 10,000
Restricted cash (6) 15,059
Accounts receivable (110,205)
Inventories 88,799 97,884
Prepaid expenses 7,727
Accounts payable 228,863 131,291
Accrued payroll and property taxes 95,185 49,681
Accrued payroll and other 35,752 18,292
Judgments payable 11,780 21,147
Accrued interest payable 13,250 28,500
Payable to related parties 5,206 5,928
Accrued reclamation costs (118,585) (53,272)
------------ -----------
Net cash provided by
operating activities 59,986 16,598
------------ -----------
Cash flows from investing activities:
Purchase of properties, plants
and equipment (76,417) (31,182)
------------ -----------
Net cash used in investing
activities (76,417) (31,182)
------------ -----------
Cash flows from financing activities:
Proceeds from issuance of common
stock and warrants 75,000
Proceeds from new borrowings 259,484 190,050
Payments on notes payable to bank (200,330) (190,588)
Change in checks issued and payable 14,455 (11,295)
Payments on note payable to
Bobby C. Hamilton (57,178) (48,583)
------------ -----------
Net cash provided by
financing activities 16,431 14,584
------------ -----------
Net decrease in cash 0 0
Cash, beginning of year 0 0
------------ -----------
Cash, end of year $ 0 $ 0
============ ===========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
- 33 -
<PAGE>
United States Antimony Corporation and Subsidiary
Consolidated Statements of Cash Flows, Continued:
for the years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1999 1998
Supplemental disclosures:
Cash paid during the year for interest $ 157,239 $ 187,818
============ ===========
Noncash financing activities:
Common stock issued in exchange
for note receivable $ 5,000
Judgment payable converted to
common stock $ 144,339
Debentures payable converted
to common stock 335,000
Accrued debenture interest
payable converted to common stock 347,397
Series C preferred stock converted
to common stock 23,548
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
- 34 -
<PAGE>
United States Antimony Corporation and Subsidiary
Consolidated Statements of Changes in Stockholders' Deficit
for the years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Preferred Stock
------------------------------------------------------
Series A Series B
------------------------------------------------------
Shares Amount Shares Amount
---------- --------- ---------- ----------
Balances, December
31, 1997 4,500 $ 45 750,000 $ 7,500
Issuance of stock
for cash
Value attributed to
issuance of warrants
Issuance of stock in
exchange for services
Issuance of stock for
note receivable
Issuance of stock to
directors for
compensation
Net loss
---------- --------- ---------- ----------
Balances, December
31, 1998 4,500 45 750,000 7,500
Issuance of stock
for cash purchased
by employees
Issuance of stock in
exchange for services
Issuance of common
stock for conversion
of debts
Issuance of stock to
employee for
compensation
Issuance of stock to
directors for
compensation
Conversion of series
C stock preferred
stock to common
Net Income
---------- --------- ---------- ----------
Balances, December
31, 1999 4,500 $ 45 750,000 $ 7,500
========== ========= ========== ==========
<PAGE>
<S> <C> <C> <C> <C>
Preferred Stock
------------------------
Series C Common Stock
------------------------ ------------------------
Shares Amount Shares Amount
---------- --------- ---------- ----------
Balances, December
31, 1997 2,560,762 $ 25,608 13,065,434 $ 130,654
Issuance of stock
for cash 300,000 3,000
Value attributed to
issuance of warrants
Issuance of stock in
exchange for services 23,491 235
Issuance of stock for
note receivable 25,000 250
Issuance of stock to
directors for
compensation 12,000 120
Net loss
---------- --------- ---------- ----------
Balances, December
31, 1998 2,560,762 $ 25,608 13,425,925 $ 134,259
Issuance of stock
for cash purchased
by employees 4,800 48
Issuance of stock in
exchange for services 40,000 400
Issuance of common
stock for conversion
of debts 1,036,761 10,368
Issuance of stock to
employee for
compensation 20,000 200
Issuance of stock to
directors for
compensation 18,000 180
Conversion of series
C stock preferred
stock to common (2,354,766) (23,548) 2,354,766 23,548
Net Income
---------- --------- ---------- ----------
Balances, December
31, 1999 205,996 $ 2,060 16,900,252 $ 169,003
========== ========= ========== ==========
<PAGE>
<S> <C> <C> <C>
Additional
Paid in Accumulated
Capital Deficit Total
----------- ------------ ------------
Balances, December 31, 1997 $13,997,889 $(16,487,338) $ (2,325,642)
Issuance of stock for cash 58,500 61,500
Value attributed to issuance
of warrants 13,500 13,500
Issuance of stock in exchange
for services 3,054 3,289
Issuance of stock for note
receivable 4,750 5,000
Issuance of stock to directors
for compensation 1,567 1,687
Net loss (468,427) (468,427)
----------- ------------ ------------
Balances, December 31, 1998 14,079,260 16,955,765 (2,709,093)
Issuance of stock for cash
purchased by employees 1,152 1,200
Issuance of stock in exchange
for services 9,600 10,000
Issuance of common stock for
conversion of debts 195,555 205,923
Issuance of stock to employee
for compensation 2,400 2,600
Issuance of stock to directors
for compensation 1,980 2,160
Conversion of series C stock
preferred stock to common
Net Income 304,015 304,015
----------- ------------ ------------
Balances, December 31, 1999 $14,289,947 $(16,651,750) $ (2,183,195)
=========== ============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
- 35 -
<PAGE>
Notes to Consolidated Financial Statements, Continued:
United States Antimony Corporation and Subsidiary
Notes to Consolidated Financial Statements
1. Background of Company and Basis of Presentation:
AGAU Mines, Inc., predecessor of United States Antimony
Corporation ("USAC" or "the Company"), was incorporated in June
1968 as a Delaware Corporation to mine gold and silver. USAC was
incorporated in Montana in January 1970 to mine and produce
antimony products. In June 1973, AGAU Mines, Inc. was merged into
USAC. In December 1983, the Company suspended its antimony mining
operations when it became possible to purchase antimony raw
materials more economically from foreign sources.
The principal business of the Company has been the production
and sale of antimony products. Up until the first quarter of 1999
the Company sold its products pursuant to a profit sharing
agreement with affiliated chemical sales companies. On March 31,
1999, the company terminated the agreement and started selling its
products independently.
The Company had acquired 50% interest in United States
Antimony, Mexico S.A. de C.V. ("USAMSA") to mine, mill and produce
antimony metal and other related products from certain states in
Mexico. At December 31, 1999, the Company had invested $111,088 in
plant and equipment in Mexico.
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 December 31, 1999,
the Company has negative working capital of approximately $1.14
million, an accumulated deficit of approximately $16.7 million and
a total stockholders' deficit of approximately $2.2 million. 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.
To improve the Company's financial condition, the following
actions have been initiated or taken by management:
* In March 1999, the Company notified its sales affiliate,
Basic Chemical Systems ("BCS"), that it was terminating certain
operating agreements with BCS relating to the marketing and sales
of antimony products. In connection with the cancellation, the
Company began acting independently in the production and sale of
antimony products.
* During 1999 the Company procured financing from an
accounts receivable factoring institution to supplement operating
capital and fund its antimony product sales efforts.
* In 1999 and 1998, the Company devoted substantial efforts
to the research and development of new antimony products and
applications. These efforts have resulted in advances in the
Company's preparation, packaging, and quality of the antimony
products it delivers to customers. The Company believes that it
will be able to stay competitive in the antimony business and
generate increasing profits because of these advances.
* In 1999, the Company converted debts totaling $826,736 in
principal and accrued interest into common stock of the company.
- 36 -
<PAGE>
Notes to Consolidated Financial Statements, Continued:
1. Background of Company and Basis of Presentation,
Continued:
* In 1998, the Company generated $75,000 through sales of
300,000 shares of unregistered common stock and warrants to
existing shareholders. The Company plans to raise additional
equity funding through additional stock sales in 2000. However,
there can be no assurance that the Company will be able to
successfully raise additional capital through the sale of its
stock.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
2. Concentration of Risk:
The Company purchases the majority of its raw antimony used in
the production of finished antimony products from Chinese producers
through metal brokers. If the supply of antimony from China is
reduced, it is possible that the Company's antimony product
operations could be adversely affected. During the years ended
December 31, 1999 and 1998, 20% and 19%, respectively, of the
Company's revenues from antimony products were from sales to one
customer.
Many of the Company's competitors in the antimony industry
have substantially more capital resources and market share than the
Company. Therefore, the Company's ability to maintain its market
share can be significantly affected by factors outside of the
Company's control.
The Company's revenues from antimony sales are strongly
influenced by world prices for such commodities, which fluctuate
and are affected by numerous factors beyond the Company's control,
including inflation and worldwide forces of supply and demand. The
aggregate effect of these factors is not possible to accurately
predict.
3. Summary of Significant Accounting Policies:
Principles of Consolidation
The Company's consolidated financial statements also include
the accounts of United States Antimony Montana ("USAM") a wholly
owned subsidiary. Intercompany balances and transactions are
eliminated in consolidation. The Company accounts for its
investment interest in its 50% foreign-owned entity USAMSA by the
equity method.
Restricted Cash
Restricted cash consists of cash held for investment in USAMSA
and reclamation performance bonds.
Inventories
Inventories at December 31, 1999 and 1998, consisted of
ownership in antimony metal, metal in process and finished goods
that are stated at the lower of first-in, first-out cost or
estimated net realizable value. Since the Company's inventory is a
commodity with a sales value that is subject to world prices for
antimony that are beyond the Company's control, a significant
change in the world market price of antimony could have a
significant effect on the net realizable value of inventories.
- 37 -
<PAGE>
Notes to Consolidated Financial Statements, Continued:
3. Summary of Significant Accounting Policies, Continued:
Properties, Plants and Equipment
Production facilities and equipment are stated at the lower of
cost or estimated net realizable value and are depreciated using
the straight-line method over their estimated useful lives (five to
fifteen years). Vehicles and office equipment are stated at cost
and are depreciated using the straight-line method over estimated
useful lives of three to five years. Maintenance and repairs are
charged to operations as incurred. Betterments of a major nature
are capitalized. When assets are retired or sold, the costs and
related accumulated depreciation are eliminated from the accounts
and any resulting gain or loss is reflected in operations.
Management of the Company periodically reviews the net
carrying value of all of its properties on a property-by-property
basis. These reviews consider the net realizable value of each
property to determine whether a permanent impairment in value has
occurred and the need for any asset write-down. The Company
considers current metal prices, cost of production, proven and
probable reserves and salvage value of the property and equipment
in its valuation.
Management's estimates of metal prices, operating capital
requirements and reclamation costs are subject to risks and
uncertainties of change affecting the recoverability of the
Company's investment in its properties, plants and equipment.
Although management has made its best estimate of these factors
based on current conditions, it is reasonably possible that changes
could occur in the near term which could adversely affect
management's estimate of net cash flows expected to be generated
from its properties, and necessitate asset impairment write-downs.
The Company has adopted the provisions of Statement of
Financial Accounting Standards No. 121 ("SFAS No. 121"),
"Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed of." SFAS No. 121 requires that an
impairment loss be recognized when the estimated future cash flows
(undiscounted and without interest) expected to result from the use
of an asset are less than the carrying amount of the asset.
Measurement of an impairment loss is based on the estimated fair
value of the asset if the asset is expected to be held and used.
Reclamation and Remediation
All of the Company's operations are subject to reclamation and
closure requirements. Minimum standards for mine reclamation have
been established by various governmental agencies. Costs are
estimated based primarily upon environmental and regulatory
requirements and are accrued and charged to expense over the
expected economic life of the operation using the units-of-
production method. The liability for reclamation is classified as
current or noncurrent based on the expected timing of expenditures.
Closure costs are not accrued for mines on a care-and-
maintenance basis until, if and when a decision to close the mine
is made.
The Company accrues costs associated with environmental
remediation obligations when it is probable that such costs will be
incurred and they are reasonably estimable. Costs of future
expenditures for environmental remediation are not discounted to
their present value. Such costs are based on management's current
estimate of amounts that are expected to be incurred when the
remediation work is performed within current laws and regulations.
The Company has restricted cash balances that have been provided to
ensure performance of its reclamation obligations.
- 38 -
<PAGE>
Notes to Consolidated Financial Statements, Continued:
3. Summary of Significant Accounting Policies, Continued:
Reclamation and Remediation, Continued:
It is reasonably possible that, due to uncertainties
associated with defining the nature and extent of environmental
contamination, application of laws and regulations by regulatory
authorities, and changes in remediation technology, the ultimate
cost of remediation and reclamation could change in the future. The
Company continually reviews its accrued liabilities for such
remediation and reclamation costs as evidence becomes available
indicating that its remediation and reclamation liability has
changed.
Income Taxes
The Company records deferred income tax liabilities and assets
for the expected future income tax consequences of events that have
been recognized in its financial statements. Deferred income tax
liabilities and assets are determined based on the temporary
differences between the financial statement carrying amounts and
the tax bases of assets and liabilities using enacted tax rates in
effect in the years in which the temporary differences are expected
to reverse.
Revenue Recognition
Sales of antimony products are recorded upon shipment to the
customer.
Income (Loss) Per Common Share
The Company accounts for its income (loss) per common share
according to the Statement of Financial Accounting Standards No.
128 ("SFAS No. 128,") "Earnings Per Share". 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. The diluted earnings per share
calculation is arrived at by dividing net income (loss) by the
weighted average number of shares outstanding, adjusted for the
dilutive effect of outstanding stock options, the conversion impact
of convertible preferred stock, and shares issuable under warrants
and other contracts.
During 1999 and 1998, the Company had outstanding common
stock warrants that were exercisable at prices higher than the
average trading value of the Company's stock and, therefore,
antidilutive. Accordingly, the warrants have no effect on the
calculation of basic or diluted weighted average number of shares.
At December 31, 1999 and 1998, the Company had 205,996 and
2,560,762, shares respectively, of Series C preferred stock that
were outstanding. The Series C preferred stock is convertible into
common stock of the Company and considered in the calculation of
diluted weighted average number of shares outstanding during 1999
and 1998.
Stock-Based Compensation
The Company recognizes compensation expense for employees and
directors awarded stock as compensation based upon the market value
of stock awarded at the time of the award.
- 39 -
<PAGE>
Notes to Consolidated Financial Statements, Continued:
3. Summary of Significant Accounting Policies, Continued:
Recent Accounting Pronouncements
In June 1998, Statement of Financial Accounting Standards No.
133 ("SFAS No. 133"), "Accounting for Derivative Instruments and
Hedging Activities" was issued. SFAS No. 133 establishes accounting
and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts
(collectively referred to as derivatives), and for hedging
activities. It requires that an entity recognize all derivatives
as either assets or liabilities in the balance sheet and measure
those instruments at fair value. SFAS No. 133 is effective for all
fiscal quarters of fiscal years beginning after June 15, 1999,
however, earlier application of all of the provisions of this
statement is encouraged as of the beginning on any fiscal quarter.
The Company believes the adoption of this standard will not have a
material impact its financial position or results of operations.
In April 1998, Statement of Position 98-5 ("SOP 98-5"),
"Reporting on the Costs of Start-up Activities" was issued. SOP
98-5 provides guidance on the financial reporting of start-up costs
and organizational costs. It requires costs of start-up
activities and organizational costs to be expensed as incurred.
During 1999, the Company expensed $8,590 of organizational costs
that had previously been capitalized relating to its investment in
USAMSA. No cumulative effect of a change in accounting principle
was recognized, however, due to the immateriality of the amount.
If a cumulative effect had been recognized, accumulated deficit at
December 31, 1998 would have been increased by $8,590.
4. Sales of Accounts Receivable:
The Company sells the majority of its accounts receivables to
a company pursuant to the terms of a factoring agreement entered
into on March 30, 1999. According to the terms of the agreement
the receivables are sold with full recourse and the Company assumes
all risks of collectibility. The performance of all obligations
and payments to the factoring company is personally guaranteed by
John C. Lawrence, the Company's president and director. As
consideration for Mr. Lawrence's guarantee, the Company granted a
mortgaged security interest to Mr. Lawrence collateralized by the
Company's real and personal property. In addition, Mr. Lawrence
was granted 250,000 warrants to purchase common stock of the
Company exercisable at $0.25 per share (See Note 10).
The Company maintains an allowance for doubtful accounts
receivable based upon the expected collectibility of all trade
receivables. The allowance for doubtful accounts was $50,000 at
December 31, 1999. The factoring agreement requires that the
Company pay 4% of the face amount of the receivables sold up to
$1,200,000, and 2% of the face amount of receivables sold
thereafter as a financing fee. Financing fees paid by the Company
during the year ended December 31, 1999 totaled $106,742 and were
recorded in the cost of antimony production. At December 31, 1999,
net accounts receivable of $3,909,774 had been sold under the
agreement, and were reflected as reductions of accounts receivable.
Proceeds from the sales were used to fund inventory purchases and
operating expenses. The agreement is for a term of one year with
automatic renewal for additional one-year terms. The Company's
sales of accounts receivable qualify as sales under the provisions
of Statement of Financial Standards No. 125 "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities."
- 40 -
<PAGE>
Notes to Consolidated Financial Statements, Continued:
5. Properties, Plants and Equipment:
The major components of the Company's properties, plants and
equipment at December 31, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1999 1998
Gold mill and equipment(1) $ 37,890 $ 37,890
Gold mining equipment(1) 1,265,392 1,265,392
Antimony mining buildings
and equipment(2) 168,746 168,746
Antimony mill and equipment(2) 518,190 518,190
Chemical processing and
office buildings 255,447 225,313
Chemical processing equipment 852,811 837,256
USAMSA(3) plant and equipment 111,088 99,098
Other 76,955 66,807
---------- -----------
3,286,519 3,218,692
Less accumulated depreciation and depletion 2,834,014 (2,703,300)
---------- -----------
$ 452,505 $ 515,392
========== ===========
</TABLE>
(1) The Company has removed the mill at Yankee Fork and some of
the mining and milling equipment as part of the reclamation
process. Substantially all of the remaining assets are fully
depreciated.
(2) At December 31, 1999 and 1998, substantially all of these
assets are fully depreciated and the antimony milling buildings and
equipment are idle.
(3) Amount represents the Company's expenditures for USAMSA plant
and equipment located in Mexico (see Note 1).
6. Judgments Payable:
At December 31, 1999 and 1998, the Company owed the following
judgments payable:
<TABLE>
<CAPTION>
<S> <C> <C>
1999 1998
Internal Revenue Service in collection
of former legal counsel's
Bankruptcy estate $ 40,645(1) $ 37,986
Geosearch, Inc. (see Note 10) 126,098
--------- ----------
$ 40,645 $ 164,084
========= ==========
</TABLE>
(1) Includes interest at the Federal Judgment Rate, which
approximated 6 % during 1999 and 1998. The amount is
collateralized by certain equipment.
- 41 -
<PAGE>
Notes to Consolidated Financial Statements, Continued:
7. Due to Related Parties:
Amounts due to related parties at December 31, 1999 and 1998
were as follows (see Note 13).
<TABLE>
<CAPTION>
<S> <C> <C>
1999 1998
Entity owned by John C. Lawrence, president
and director $ 788 $ 2,227
John C. Lawrence, president and director 7,340 2,485
Walter L. Maguire, Jr., a former director (1) 34,713 32,923
-------- ---------
$ 42,841 $ 37,635
======== =========
</TABLE>
(1) Interest accrues on the original principal balance
advanced at 10% per annum.
Transactions affecting the payable to Mr. Lawrence during 1999 and
1998 were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1999 1998
Balance, beginning of year $ 2,485 $ -0-
Equipment rental charges 30,616 38,865
Payments (25,761) (36,380)
-------- ---------
Balance, end of year $ 7,340 $ 2,485
======== =========
</TABLE>
8. Notes Payable to Bank:
Notes payable to First State Bank of Thompson Falls, Montana
("First State Bank") at December 31, 1999 were as follows:
Five-year term note bearing interest at 10.5%;
payable monthly equal to 1.5% of receipts from
all Company sales, up to $5,375 per month; due in
full April 2, 2004; collateralized by certain
equipment and patented and unpatented mining claims
in Sanders County, Montana; personally guaranteed
by John C. Lawrence, (president and director). $210,116
Note payable under a $50,500 revolving line-of-credit
agreement bearing interest at 10.5%; collateralized
by certain equipment and patented and unpatented
mining claims in Sanders County, Montana; principal
and accrued interest due at maturity on April 2, 2000;
personally guaranteed by John C. Lawrence. 34,259
Note payable under a $85,050 revolving line-of-credit
agreement bearing interest at 11%; collateralized
by certain equipment and patented and unpatented
mining claims in Sanders County, Montana; principal
and accrued interest due at maturity on February
15, 2000; personally guaranteed by John C. Lawrence. 71,342
Note payable under a revolving line-of-credit
agreement bearing interest at 11%; collateralized
by certain equipment and patented and unpatented
mining claims in Sanders County, Montana; principal
and interest due at maturity on January 2, 2000;
personally guaranteed by John C. Lawrence. 10,248
--------
- 42 -
<PAGE>
Notes to Consolidated Financial Statements, Continued:
8. Notes Payable to Bank, Continued:
Total 325,965
Less current portion 160,395
--------
Noncurrent portion $165,570
========
Based on the interest rates in effect at December 31, 1999,
principal payments on the notes payable to bank are due as follows:
Year Ending
December 31,
------------
2000 $160,395
2001 49,455
2002 54,905
2003 61,210
--------
$325,965
========
9. Note Payable to Bobby C. Hamilton:
The Company owed Bobby C. Hamilton ("Hamilton"), a
stockholder, an unsecured note payable of $1,538,381 and $1,595,559
at December 31, 1999 and 1998, respectively. The obligation arose
from the settlement of litigation brought against Hamilton by the
Company in 1995. The original terms for repayment of the note
included the payment of principal and interest at 7.5% per annum
equal to 10% of the gross sales of the Company's operations, with
a minimum total annual payment of principal and interest of
$150,000.
In April 1999, the Company renegotiated the repayment terms
such that the note is payable equal to 4% of the gross sales of the
Company's operations with a minimum total annual payment of
principal and interest of $200,000. Based on the minimum annual
payment requirement, principal payments on the Hamilton note
payable are due as follows:
Year Ending
December 31,
------------
2000 $ 87,596
2001 94,396
2002 101,724
2003 109,622
2004 118,132
Thereafter 1,026,911
----------
$1,538,381
==========
Interest expense paid to Hamilton, a stockholder, during the
years ended December 31, 1999 and 1998 was $117,755 and $127,957
respectively.
- 43 -
<PAGE>
Notes to Consolidated Financial Statements, Continued:
10. Stockholders' Deficit:
Stock Warrants
The Company's Board of Directors has the authority to issue
incentive stock warrants for the purchase of common stock to
directors and employees of the Company. The Company has also issued
warrants in exchange for services rendered the Company and in
settlement of certain litigation.
Transactions in stock warrants are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Number of Expiration
Warrants Exercise Prices Date
--------- --------------- ----------
Balance, December 31, 1997 894,356 $0.50-$0.80
Warrants issued in connection
with stock sale 100,000 $0.50 (A)
Warrants issued in connection
with stock sale 100,000 $0.25 (B)
---------
Balance, December 31, 1998 1,094,356 $0.25-$0.80
Warrants issued to John C.
Lawrence, president and
director, in connection
with his personal guarantee
of a financing arrangement 250,000 $0.25 (C)
Warrants issued to a consultant as
compensation for services 100,000 $0.55 (D)
Warrants expired (225,000) $0.50-$0.70
Balance, December 31, 1999 1,219,356 $0.25-0.80
========= ===========
</TABLE>
(A) Of total warrants issued in these stock sales, 60,000 are
exercisable on or before February 17, 2001, and 40,000 are
exercisable on or before January 12, 2001.
(B) Warrants are exercisable on or before July 28, 2001.
(C) Warrants are exercisable for as long as Mr. Lawrence
personally guarantees certain company financing arrangements.
(D) Warrants are exercisable on or before August 30, 2002.
Issuance of Common Stock to Employees
During 1999, the Company issued 20,000 shares of its
unregistered common stock to employees in recognition of their
service to the Company. The Company accounts for stock issued to
employees as compensation in accordance with Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," and accordingly recognized compensation expense of
$2,600 based on upon the fair value of the unregistered shares
issued.
- 44 -
<PAGE>
Notes to Consolidated Financial Statements, Continued:
10. Stockholders' Deficit, Continued:
Issuance of Common Stock in Connection with Conversion of Debts
In November 1999, the Company entered into a Settlement
Agreement and Release of all Claims ("the Agreement") with Ronald
Michael Meneo, Trustee of the Walter L. Maguire 1935-1 Trust ("the
Trust") and Walter L. Maguire Sr., beneficiary of the Trust and
stockholder and former director of the Company. The Agreement
settled litigations brought by the Trust against the Company for
default on certain of the Company's debentures held by the Trust
and the resulting counterclaim against the Trust and Mr. Maguire by
the Company. The Agreement called for the issuance of 790,909
shares of the Company's unregistered common stock to the Trust in
exchange for the extinguishment of all indebtedness claimed owing
to the Trust or Mr. Maguire.
In connection with the issuance, the Company extinguished
$335,000 of debenture principal and $347,397 of related accrued
interest thereon. The Company recorded an extraordinary gain of
$534,101 on the extinguishment based upon the value of the
restricted shares issued at the time.
In October 1999, the Company extinguished a debt due
Geosearch, Inc., a former lessor of a mining interest to the
Company, by issuing 245,852 shares of its unregistered common
stock. The debt extinguished totaled $144,339 of principal and
accrued interest. The Company recorded an extraordinary gain of
$77,591 on the extinguishment based upon the value of the
restricted shares issued at the time.
Issuance of Common Stock for Cash
During 1998, the Company sold 300,000 shares of its
unregistered common stock and warrants for $75,000. Of total stock
sales made during the year ended December 31, 1998, the Company
sold 200,000 shares of its unregistered common stock and warrants
to Walter L. Maguire Sr. and parties related to him for $50,000.
Mr. Maguire is a stockholder and was a director of the Company
until December 31, 1998.
Issuance of Common Stock in Exchange for Services
During 1999, the Company issued 40,000 shares of its
unregistered common stock and 100,000 warrants to purchase shares
of common stock at $0.55 per share until August 3, 2000, to a
consultant in exchange for professional services rendered to the
Company. These shares were valued at 75% of the market value of
the stock at the time they were issued.
During 1999, the Company issued 23,491 shares of its
unregistered common stock to the grandson of Robert L. Rice, a
director and stockholder, in exchange for services rendered to the
Company. The shares were valued at 75% of the market value of the
stock at the time they were issued, which approximated the value of
the services rendered. The Company recognized the issuance during
the year ended December 31, 1998, since the services were provided
to the Company prior to that date.
Issuance of Common Stock for Note Receivable
During 1998, the Company issued Robert L. Rice, a director and
stockholder, 25,000 shares of its unregistered common stock in
exchange for a $5,000 note receivable. The note was satisfied in
1998 when Mr. Rice transferred certain equipment to the
company as payment (See Note 13).
- 45 -
<PAGE>
Notes to Consolidated Financial Statements, Continued:
10. Stockholders' Deficit, Continued:
Preferred Stock
The Company's Articles of Incorporation authorize 10,000,000
shares of $.01 par value preferred stock. Subject to amounts of
outstanding preferred stock, additional shares of preferred stock
can be issued with such rights and preferences, including voting
rights, as the Board of Directors shall determine.
During 1986, Series A restricted preferred stock was
established by the Board of Directors. These shares are
nonconvertible, nonredeemable and are entitled to a $1.00 per share
per year cumulative dividend. Series A preferred stockholders have
voting rights for directors only and a total liquidation preference
equal to $45,000 plus dividends in arrears. At December 31, 1999,
cumulative dividends in arrears amounted to $60,750, or $13.50 per
share.
During 1993, Series B restricted preferred stock was
established by the Board of Directors and 1,666,667 shares were
issued in connection with the final settlement of litigation
related to the nonpayment of royalties under a sublease contract.
The Series B preferred stock has preference over the Company's
common stock and Series A preferred stock, has no voting rights and
is entitled to cumulative dividends of $.01 per share per year.
In the event of dissolution or liquidation of the Company, the
preferential amount payable to Series B restricted preferred
stockholders is $1.00 per share plus dividends in arrears. No
dividends have been declared or paid with respect to the Series B
preferred stock. In 1995, 916,667 shares of Series B preferred
stock were surrendered to the Company in connection with the
settlement of litigation against Bobby C. Hamilton. At December 31,
1999, cumulative dividends in arrears were $45,000, or $0.06 per
share.
During 1997, the Company issued 2,560,762 shares of Series C
preferred stock in connection with the conversion of certain debts
owed by the Company. The rights, preferences, privileges and
limitations of the Series C preferred shares issued upon conversion
of debt are set forth below:
Designation. The class of Convertible Preferred Stock, Series
C, $0.01 par value per share, shall consist of up to 3.8 million
shares of the Company.
Optional Conversion. A holder of Series C preferred shares
shall have the right to convert the Series C shares, at the option
of the holder, at any time within 18 months following issuance,
into shares of common stock at the ratio of 1:1, subject to
adjustment as provided below.
Voting Rights. The holders of Series C preferred shares shall
have the right to that number of votes equal to the number of
shares of common stock issuable upon conversion of such Series C
preferred shares.
Liquidation Preference. In the event of any liquidation or
winding up of the Company, the holders of Series C preferred shares
shall be entitled to receive as a preference over the holders of
common stock an amount per share equal to $0.55, subject to the
preferences of the holders of the Company's outstanding Series A
and Series B preferred stock.
- 46 -
<PAGE>
Notes to Consolidated Financial Statements, Continued:
10. Stockholders' Deficit, Continued:
Preferred Stock, Continued:
Registration Rights. Twenty percent (20%) of the underlying
common stock issuable upon conversion of the Series C preferred
shares shall be entitled to "piggyback" registration rights when,
and if, the Company files a registration statement for its
securities or the securities of any other stockholder.
Redemption. The Series C preferred shares are not redeemable
by the Company.
Antidilution Provisions. The conversion price of the Series
C shares shall be subject to adjustments to prevent dilution in the
event that the Company issues additional shares at a purchase price
less than the applicable conversion price (other than shares issued
to employees, consultants and directors pursuant to plans and
arrangements approved by the Board of Directors, and securities
issued to lending or leasing institutions approved by the Board of
Directors). In such event, the conversion price shall be adjusted
according to a weighted-average formula, provided that a holder of
Series C shares purchases his pro rata share of the securities
being sold in the dilutive financing. The initial conversion price
for the Series C shares is $0.55.
Protective Provisions. The consent of a majority interest of
the holders of Series C preferred shares shall be required for any
action which (i) alters or changes the rights, preferences or
privileges of the Series C shares materially and adversely; or (ii)
creates any new class of shares having preference over or being on
a parity with the Series C shares.
During 1999, holders of 2,354,766 shares of Series C shares
converted their shares into common stock of Company. At December
31, 1999, 205,996 shares of Series C preferred stock remained
outstanding.
11. Income Taxes:
The components of the deferred tax assets and liabilities at
December 31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1999 1998
Net operating losses $2,560,645 $2,646,065
Properties, plants and equipment 32,996 19,979
Reclamation costs 106,993 171,112
Allowance for doubtful accounts 17,000
---------- ----------
Total deferred tax assets 2,717,634 2,837,156
Less valuation allowance (2,717,634) (2,837,156)
---------- ----------
$ 0 $ 0
========== ==========
</TABLE>
Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," requires that a valuation allowance
be provided if it is more likely than not that some portion or all
of a deferred tax asset will not be realized. Although the Company
has significant deferred tax assets, principally in the form of net
operating loss carryforwards, its ability to generate future
taxable income to realize the benefit of these assets will depend
primarily the attainment of a consistent level of overall
profitability from operations.
- 47 -
<PAGE>
Notes to Consolidated Financial Statements, Continued:
11. Income Taxes, Continued:
The market, capital and environmental factors associated with
realizing this goal are considerable and uncertain. Therefore,
management believes that a full valuation allowance of the net
deferred tax assets is appropriate at December 31, 1999 and 1998.
However, if estimates of future taxable income change, the
valuation allowance could change in the future.
The change in the valuation allowance for the years ended
December 31, 1999 and 1998 is as follows:
<TABLE>
<CAPTION>
<S> <C>
Balance, December 31, 1997 $2,597,891
Increase due to non-utilization of net operating loss
carry forward 239,265
----------
Balance, December 31, 1998 2,837,156
Decrease due to utilization of net operating loss
carry forward (119,522)
----------
Balance, December 31, 1999 $2,717,634
==========
</TABLE>
During the year ended December 31, 1999, the Company utilized
approximately $251,000 of net operating losses for federal income
tax purposes.
At December 31, 1999, the Company had the following regular
tax basis net operating loss carryforward.
Expiring in
-----------
2000 $2,220,180
2001 916,998
2002 715,731
2003 866,362
2004 568,416
2005 715,049
2006 512,877
2007 154,235
2011 394,788
2018 466,672
----------
$7,531,308
==========
At December 31, 1999, the Company had net operating loss
carryforward for alternative minimum tax purposes of approximately
$7.1 million.
- 48 -
<PAGE>
Notes to Consolidated Financial Statements, Continued:
12. Loss Per Common Share:
The following table presents a reconciliation of the
numerators and denominators of the basic and diluted earnings per
share ("EPS") computations for the years ended December 31, 1999
and 1998:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1999
------------------------------------------------
Per Share
Loss Shares Amounts
---- ------ ---------
Basic EPS: $(307,677) 14,597,917 $(0.02)
Net loss before extra-
ordinary item
Effect of Dilutive Securities
Common stock warrants (1)
Series C preferred stock (2) 240,059 Nil
--------- ---------- ------
Diluted EPS:
Net loss before extra-
ordinary item $(307,677) 14,837,976 $(0.02)
========== ========== =======
<S> <C> <C> <C>
1998
------------------------------------------------
Per Share
Loss Shares Amounts
---- ------ ---------
Basic EPS: $(468,427) 13,309,379 $(0.04)
Net loss before extra-
ordinary term
Effect of Dilutive Securities
Common stock warrants (1)
Series C preferred stock (2) 2,594,825 0.01
--------- ---------- ------
Diluted EPS:
Net loss before extra-
ordinary item $(468,427) 15,904,204 $(0.03)
========== ========== =======
</TABLE>
(1) Common stock warrants totaling 1,219,356 and 1,094,356
outstanding during 1999 and 1998, respectively, were not included
in the computation of diluted EPS at December 31, 1999 or 1998
because the various exercise prices of the warrants were greater
than the average market price of the Company's common stock.
(2) Series C preferred stock is convertible into common stock
of the company on a share-for-share basis. The effect on the
computation of diluted weighted average shares outstanding is based
upon the potential conversion of the shares into common stock for
the period of time the preferred shares were outstanding and the
effect of Series C preferred stock anti-dilution provisions.
- 49 -
<PAGE>
Notes to Consolidated Financial Statements, Continued:
13. Related-Party Transactions:
In addition to transactions described in Notes 4, 7, 9, and
10 during 1999 and 1998, the Company had the following
transactions with related parties:
* During 1999 and 1998, the Company issued 18,000 shares of
its unregistered common stock to certain members of the Board of
Directors for their duties as directors. The issuance represented
an award of 6,000 shares per year per director eligible to receive
the award. The issuances have been recorded in the consolidated
financial statements as if they were issued in the year they were
earned. The stock awards were recorded as compensation expense
(director's fees) based upon the estimated value of the stock at
the date of issuance.
* At December 31, 1999, the Company owed Walter L. Maguire,
Jr., a stockholder and former director, $34,713 for amounts
advanced to the Company by Mr. Maguire. Annual interest expense
related to these notes was $1,790 for both 1999 and 1998. In
1996, a company controlled by Mr. Maguire sold the Company
packaging materials at a cost of $32,066. At December 31, 1999, the
Company owed Mr. Maguire's company $5,497 (included in accounts
payable), representing the unpaid balance on this purchase.
* During 1998, Robert L. Rice, a director and stockholder,
exchanged certain equipment for a $5,000 note receivable due the
Company.
* In February 1999, the Board of Directors nominated Leo
Jackson to serve as a director in the place of Walter L. Maguire,
Sr., who had resigned from the Board on December 31, 1998. Mr.
Jackson is a stockholder of the Company and owns 31.4% of
Production Minerals Inc., a company that has an indirect interest
of 25% in the stock of USAMSA. (See Note 1)
14. Commitments and Contingencies:
Until 1989, the Company mined, milled and leached gold and
silver in the Yankee Fork Mining District in Custer County, Idaho.
The metals were recovered by a 150-ton per day gravity and
flotation mill, and the concentrates were leached with cyanide to
produce a bullion product at the Preachers Cove mill, which was
located six miles north of Sunbeam, Idaho on the Yankee Fork of the
Salmon River. In 1994, the U.S. Forest Service, under the
provisions of the Comprehensive Environmental Response Liability
Act of 1980 (CERCLA), designated the cyanide leach plant as a
contaminated site requiring cleanup of the cyanide solution. The
Company has been reclaiming the property and as of December 31,
1999, the cyanide solution discharge was complete, the mill
removed, and a majority of the cyanide leach residue disposed of.
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, which the
Company signed in December 1996. The Company anticipates having
reclamation at the property completed in 2000.
The Company has accrued amounts on its balance sheet that it
believes to be representative of future costs required to fully
reclaim the property.
- 50 -
<PAGE>
Notes to Consolidated Financial Statements, Continued:
14. Commitments and Contingencies, Continued:
The Company also has environmental remediation obligations at
its antimony production facility near Thompson Falls, Montana and
its abandoned gold mining property (Yellow Jacket) in Lemhi County,
Idaho. The Company has accrued amounts on its balance sheet that
it estimates will be adequate to fulfill these obligations at
December 31, 1999. During 1999 substantial reclamation work was
performed at both of these sites.
15. Fair Value of Financial Instruments:
The following disclosure of the estimated fair value of
financial instruments is made in accordance with the requirements
of Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments." The
estimated fair value amounts have been determined using available
market information and appropriate valuation methodologies.
However, considerable judgment is required to interpret market data
and to develop the estimates of fair value. Accordingly, the
estimates presented herein are not necessarily indicative of the
amounts the Company could realize in a current market exchange.
The carrying amounts for cash, restricted cash, accounts
receivable, accounts payable and accrued expenses are a reasonable
estimate of their fair values. The fair value of amounts due to
related parties and judgments payable approximate their carrying
values of $42,841 and $40,645, respectively, at December 31, 1999,
and $37,635 and $164,084, respectively, at December 31, 1998, based
upon the contractual cash flow requirements.
It is not practicable to estimate the fair value of the
$1,538,381 note payable to Bobby C. Hamilton. The payments are
based upon future revenues, which are uncertain. There are no
similar financial instruments in the market to which the value can
be compared.
- 51 -
<PAGE>
United States Antimony Corporation and Subsidiary
Consolidated Balance Sheets
June 30, 2000 and December 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
(Unaudited)
June 30, December 31,
2000 1999
------------ -----------
ASSETS
Current assets:
Restricted cash $ 230 $ 227
Inventories 220,189 276,599
Accounts receivable, less allowance
for doubtful accounts of $30,000 and $50,000 69,962 60,205
Prepaid expenses 6,747
------------ -----------
Total current assets 292,128 337,031
Properties, plants and equipment, net 421,584 452,505
Restricted cash for reclamation bonds 171,816 178,986
Other assets 100,000
------------ -----------
Total assets $ 985,528 $ 968,522
============ ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Checks issued and payable $ 58,293 $ 45,544
Accounts payable 532,208 467,596
Accrued payroll and property taxes 255,501 263,667
Accrued payroll and other 65,722 97,751
Judgments payable 42,067 40,645
Accrued interest payable 14,640 14,640
Due to related parties 101,632 42,841
Notes payable to bank, current 146,876 160,395
Note payable to Bobby C. Hamilton, current 87,596
Current debentures payable 600,000
Accrued reclamation costs, current 220,700 256,000
------------ -----------
Total current liabilities 2,037,639 1,476,675
Notes payable to bank, noncurrent 232,935 165,570
Note payable to Bobby C. Hamilton, noncurrent 1,450,785
Accrued reclamation costs, noncurrent 58,687 58,687
------------ -----------
Total liabilities $ 2,329,261 $ 3,151,717
------------ -----------
Commitments and contingencies
Stockholders' deficit:
Preferred stock, $.01 par value,
10,000,000 shares authorized:
Series A: 4,500 shares issued
and outstanding 45 45
Series B: 750,000 shares issued
and outstanding 7,500 7,500
Series C: 205,996 shares issued
and outstanding 2,060 2,060
Common stock, $.01 par value,
20,000,000 shares authorized;
17,725,252 and 16,900,252 shares
issued and outstanding 177,252 169,003
Additional paid-in capital 14,595,323 14,289,947
Accumulated deficit (16,125,913) (16,651,750)
------------ -----------
Total stockholders' deficit (1,343,733) (2,183,195)
------------ -----------
Total liabilities and
stockholders' deficit $ 985,528 $ 968,522
============ ===========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
- 52 -
<PAGE>
United States Antimony Corporation and Subsidiary
Consolidated Statements of Operations
for the three and six-month periods ended June 30, 2000 and
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- -----------------------
2000 1999 2000 1999
----------- ----------- ----------- ----------
Revenues:
Sales of antimony
products and other $ 1,190,413 $ 1,533,620 $ 2,363,463 $2,223,922
----------- ----------- ----------- ----------
Antimony production
costs 995,888 1,089,553 1,844,043 1,076,928
Freight and delivery
costs 142,363 96,180 243,977 96,180
----------- ----------- ----------- ----------
1,138,251 1,185,733 2,088,020 1,803,108
----------- ----------- ----------- ----------
Gross profit 52,162 347,887 275,443 420,814
Operating expenses:
Care, maintenance,
and reclamation-
Yellow Jacket 50,105 4,906 77,906 43,770
Exploration and
evaluation-Yellow
Jacket 11,926 45,198
Sales expense 84,286 63,960 194,351 63,960
General and
administrative
expenses 91,351 81,588 269,195 143,708
----------- ----------- ----------- ----------
225,742 163,380 541,452 296,636
----------- ----------- ----------- ----------
Other expenses (income):
Gain from accrued
reclamation costs
adjustment (35,000) (35,000)
Gain from accounts
payable adjustment (16,440)
Accounts receivable
factoring expense 24,827 52,012 49,288 52,012
Interest expense 40,129 64,930 81,239 116,072
Interest income (2,507) (2,311) (4,647) (4,657)
----------- ----------- ----------- ----------
62,449 79,631 125,880 111,987
----------- ----------- ----------- ----------
Net income (loss)
before extra-
ordinary item (236,029) 105,876 (391,889) 12,191
Extraordinary gain on
settlement of debt 917,726 917,726
----------- ----------- ----------- ----------
Net income $ 681,697 $ 105,876 $ 525,837 $ 12,191
=========== =========== =========== ==========
Basic net income (loss)
per share of common
stock
Before extra-
ordinary item $ (.01) $ (0.02)
Extraordinary
item 0.05 0.05
----------- ----------- ----------- ----------
Net income
(loss) $ 0.04 $ 0.01 $ 0.03 Nil
=========== =========== =========== ==========
Diluted net income
(loss) per share of
common stock
Before extra-
ordinary item $ (.01) $ (0.02)
Extraordinary
item 0.05 0.05
----------- ----------- ----------- ----------
Net income
(loss) $ 0.04 $ 0.01 $ 0.03 Nil
=========== =========== =========== ==========
Basic weighted average
shares outstanding 17,684,126 13,450,725 17,257,572 13,445,076
=========== =========== =========== ==========
Diluted weighted average
shares outstanding 17,684,126 16,045,550 17,257,572 16,039,901
=========== =========== =========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
- 53 -
<PAGE>
United States Antimony Corporation and Subsidiary
Consolidated Statements of Cash Flows
for the six-month periods ended June 30, 2000 and 1999 (Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
June 30, June 30,
2000 1999
------------ -----------
Cash flows from operating activities:
Net income $ 525,837 $ 12,191
Adjustments to reconcile net loss to
net cash provided by (used in) operations:
Depreciation 66,000 62,623
Extraordinary gain on settlement of
debt (917,726)
Provision for doubtful accounts (20,000)
Issuance of common stock for
consulting services 78,000
Issuance of stock to employees as
compensation 1,050
Gain from accrued reclamation costs
adjustment (35,000)
Gain from accounts payable adjustment (16,440)
Change in:
Restricted cash (3) (1)
Inventories 56,410 (62,979)
Accounts receivable 10,243 (215,409)
Prepaid expenses (1,747)
Other assets (100,000)
Accounts payable 64,612 240,996
Restricted cash for reclamation bonds 7,170
Accrued payroll and property taxes (8,166) 54,709
Accrued payroll and other (32,029) 11,887
Judgments payable 1,422 1,151
Accrued debenture interest payable 13,250
Due to related parties (11,209) (5,228)
Accrued reclamation costs (35,300) (47,537)
------------ -----------
Net cash provided by
(used in) operations (316,486) 15,263
------------ -----------
Cash flows from investing activities:
Purchase of properties, plant
and equipment (35,079) (45,732)
------------ -----------
Net cash used in investing
activities (35,079) (45,732)
------------ -----------
Cash flows from financing activities:
Proceeds from issuance of common
stock and warrants 155,000
Proceeds from sale of convertible debentures 600,000
Advances from related party 70,000
Proceeds from notes payable to bank 53,846 250,000
Payments on notes payable to bank (199,960)
Increase in checks issued and payable 12,749 9,030
Payments on note payable to
Bobby C. Hamilton (540,030) (28,601)
------------ -----------
Net cash provided by
financing activities 351,565 30,469
------------ -----------
Net change in cash 0 0
Cash, beginning of period 0 0
------------ -----------
Cash, end of period $ 0 $ 0
============ ===========
Supplemental disclosures:
Cash paid during the period for interest $ 79,159 $ 86,591
============ ===========
Noncash financing activities:
Common stock issued as settlement for debt $ 80,625
============
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
- 54 -
<PAGE>
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 generally accepted
accounting principles for interim financial information, as well as
the instructions to Form 10-QSB and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles 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, 2000 are not necessarily
indicative of the results that may be expected for the full year
ending December 31, 2000. Certain consolidated financial statement
amounts for the six-month period ended June 30, 1999, have been
reclassified to conform to the 2000 presentation. These
reclassifications had no effect on the net income or accumulated
deficit as previously reported.
During the second quarter of 2000, the Company began
negotiations with the Estate of Bobby C. Hamilton to settle a note
payable owed the Estate (see Financial Condition and Liquidity).
Although the final closing of the settlement agreement did not take
place until July 2000, the Company has adjusted the June 30, 2000
consolidated financial statements to reflect the settlement of
debt, the extraordinary gain on the settlement, and the issuance of
debentures and common stock relating to the settlement.
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, 1999.
2. Commitments and contingencies:
Until 1989, the Company mined, milled and leached gold and
silver in the Yankee Fork Mining District in Custer County, Idaho.
The metals were recovered by a 150-ton per day gravity and
flotation mill, and the concentrates were leached with cyanide to
produce a bullion product at the Preachers Cove mill, which is
located nine miles north of Sunbeam, Idaho on the Yankee Fork of
the Salmon River. In 1994, the U.S. Forest Service, under the
provisions of the Comprehensive Environmental Response Liability
Act of 1980 (CERCLA), designated the cyanide leach plant as a
contaminated site requiring cleanup of the cyanide solution. In
1996, the Company signed a consent decree with the Idaho Department
of Environmental Quality relating to completing the reclamation
and remediation at the Preachers Cove mill. The Company believes
the cleanup will be complete sometime by 2001.
3. Income (loss) per common share:
The diluted share base for the six months ended June 30, 2000,
excludes incremental shares relating to outstanding stock purchase
warrants and shares convertible from debentures. These shares are
excluded due to their antidilutive effect as a result of the
Company's loss from continuing operations during the first six
months of 2000.
- 55 -
<PAGE>
The following table presents a reconciliation of the
numerators and denominators of the basic and diluted earnings per
share ("EPS") computations for the six-month periods ended June 30,
1999.
June 30, 1999
-------------
Income Shares Amounts
------- ------ -------
Basic EPS:
Loss $12,191 13,445,076 Nil
Series C preferred stock (1) 2,594,825
------- ---------- -------
Diluted EPS:
Loss $12,191 16,039,901 Nil
======= ========== =======
(1) Series C preferred stock is convertible into common stock of
the company on a share-for-share basis. The effect on the
computation of diluted weighted average shares outstanding is based
upon the potential conversion of the shares into common stock for
the period of time the preferred shares were outstanding and the
antidilutive provisions of the Series C shares.
- 56 -
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article X of the Company's Bylaws ("Bylaws") essentially adopts and
incorporates the mandatory and permissive indemnification
provisions of the Montana Business Corporation Act, specifically
Montana Code Annotated Sections 35-1-451 through 458. The
following discussion of the Bylaws and Sections 35-1-451 through
35-1-458 is only a summary and is qualified in its entirety by the
full text of the Bylaws and the Montana statutes.
The Company is required to provide mandatory indemnification of
reasonable expenses of a director or officer who is "wholly
successful" in the defense of any proceeding to which he was a
party because he is or was a director or officer. In addition, the
Company is authorized to indemnify, to the fullest extent permitted
by law, and (subject to receipt of the undertaking described below)
to advance expenses to any person who is or was a director or
officer of the Company, or was serving at the request of a
director, officer, employee or fiduciary of the Company, against
liabilities which may be incurred by such person by reason of (or
arising in part from) such capacity. In the case of third-party
claims, the Company is authorized to indemnify directors and
officers against liability incurred by reason of being a director
or officer and (subject to receipt of the undertaking described
below) against expenses reasonably incurred in connection with any
action, suit or proceeding seeking to establish such liability, if
the director or officer acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of
the corporation. Similarly, in the case of actions by or in the
right of the corporation, indemnification of reasonable expenses
only is (subject to receipt of the undertaking described below)
authorized if the director or officer acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interest of the corporation. Indemnification is authorized with
respect to any criminal action or proceeding where, in addition to
satisfying the foregoing good faith and reasonable belief
standards, the director or officer has no reasonable cause to
believe that his conduct was unlawful. A director or officer is
entitled to apply for court-ordered indemnification in view of all
the relevant circumstances even if the director or officer did not
meet the statutory standards of conduct or has been adjudged liable
to the Company or to have improperly received a personal benefit.
The Company's authorization to advance an officer's or director's
litigation expenses is conditioned on the officer or director
furnishing an undertaking to repay the advance in the event it is
determined that the acts of the officer or director were
unauthorized or improper. The Company is permitted to procure
liability insurance on behalf of an officer, director or employee.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
We will pay all expenses in connection with the registration of the
Shares of our common stock specified in this Prospectus and the
issuance of those Shares to the Selling Shareholders. We will not
pay any selling commissions or discounts allocable to sales of
those Shares by any Selling Shareholder or any fees and
disbursements of counsel and other representatives of the Investors
or the Series C Holders, or any stock transfer taxes payable by
reason of any such sale. The estimated expenses of registration
and issuance of the Shares to the Selling Shareholders are set
forth below.
II-1
<PAGE>
Registration Fees $ 443.66
Legal Fees (estimate) $20,000.00
Accounting Fees (estimate) $15,000.00
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
Below is a summary of sales of unregistered securities to
directors, investors, employees and consultants of the Company.
The Registrant believes that each transaction is exempt from
registration pursuant to Sections 4(2), 4(6) and/or Rule 506 of the
Securities Act of 1933. As to each of the transactions listed
below (1) the transaction did not involve a public offering; (2) no
commissions were paid; (3) no underwriters were involved; and (4)
a restrictive legend was placed on each certificate evidencing the
Shares. In instances where warrants were issued, the underlying
shares common stock are restricted as stated in the warrant
contract.
On August 25, 2000, the Registrant sold 257,111 shares of its
common stock and issued warrants to purchase 48,077 shares of
common stock to Al Dugan, a stockholder and accredited investor,
for $0.29125 per share or $75,000. The warrants are exercisable at
$0.39 per share and expire August 25, 2002.
On July 12, 2000, the Registrant sold 100,000 shares of its common
stock to Nortex Corporation, a company controlled by Al Dugan, a
stockholder and accredited investor, for cash totaling $25,000, or
$0.25 per share.
On June 23, 2000, the Registrant agreed to issue 250,000 shares of
its common stock to the City of Moscow, Idaho (the sole beneficiary
of the Estate of Bobby C. Hamilton) as partial consideration for
discharge of a debt due the Estate in the approximate amount of
$1,500,000. See "Management's Division and Analysis of Financial
Condition and Results of Operations - Financial Condition and
Liquidity at June 30, 2000".
On March 30, 2000, the Registrant sold 200,000 shares of its common
stock to Thomas H. McInish, an accredited investor, for $80,000
cash, or $0.40 per share.
On March 16, 2000, the Registrant issued 100,000 shares of its
common stock to Al Dugan, a stockholder and accredited investor,
for cash totaling $25,000, upon exercise of previously granted
warrants to purchase common stock for $0.25 per share.
On February 2, 2000, the Registrant sold 125,000 shares of its
common stock to Delaware Royalty Company, Inc., a company
controlled by Al Dugan, a stockholder and accredited investor, for
cash totaling $50,000 or $0.40 per share.
On January 3, 2000, the Registrant agreed to issue warrants to
purchase 300,000 shares of unregistered common stock at $0.25 per
share to Al Dugan. The warrants expire January 25, 2003 and were
issued in exchange for consulting services provided to the
Registrant.
Effective December 31, 1999, the Registrant issued 6,000 shares of
common stock to each of the three directors of the Company for
services provided the Company. These shares were valued at $2,160
or $.12 per share.
On November 9, 1999, the Registrant issued 790,909 shares of common
stock to the Walter L. Maguire 1935-1 Trust, a trust related to a
stockholder and former director of the Company, in connection with
the settlement of litigation brought by the Trust. The settlement
resulted in discharge of the Company's
- II-2 -
<PAGE>
obligations to the Trust under certain subordinated convertible
debentures and convertible debentures totaling $682,397, including
principal and interest.
On October 4, 1999, the Registrant issued 245,852 shares of common
stock in Geosearch Inc., a creditor of the Company, in satisfaction
of a debt due Geosearch Inc. totaling $144,339, including principal
and accrued interest.
On August 8, 1999, the Registrant issued 40,000 shares of common
stock and warrants to purchase 100,000 shares at $0.55 per share to
Carlos Tejada, a consultant for the Company, for services valued at
$10,000.
On March 29, 1999, the Registrant issued stock bonuses aggregating
20,000 shares of common stock to employees of the Company. The
shares were valued at $2,600 or $0.13 per share.
On March 29, 1999, the Registrant sold 4,800 shares of common stock
to an employee of the Company for cash of $1,200, or $0.25 per
share.
Effective December 31, 1998, the Registrant issued 25,000 shares of
common stock to Robert A. Rice, a director of the Company, in
exchange for a $5,000 note receivable from Mr. Rice. The note was
satisfied in 1999 when Mr. Rice transferred to the Company certain
equipment having a fair market value equal to the amount of the
note.
Effective December 31, 1998, the Registrant issued 6,000 shares of
common stock to each of the two directors of the Company for
services provided the Company. The shares were valued at $1,687 or
$0.14 per share.
Effective December 31, 1998, the Company sold 23,491 shares of its
common stock to Mike Rice, a relative of a director, Robert L.
Rice, for services provided the Company with a fair value of
$3,289.
On July 22, 1998, the Registrant sold 100,000 shares of its common
stock and 100,000 warrants to purchase the Company's common stock
to Al Dugan, a stockholder and accredited investor, for cash
totaling $25,000. The warrants are exercisable at $0.50 per share
and expire July 28, 2001.
On February 17, 1998, the Registrant sold 40,000 shares of its
common stock and 20,000 warrants to purchase the Company's common
stock to the Walter L. Maguire 1953 Trust, a trust related to
Walter S. Maguire, Sr., who was a director of the Company until
December 31, 1998, for cash of $10,000. The warrants are
exercisable at $0.50 per share and expire February 17, 2001.
On February 17, 1998, the Registrant sold 160,000 shares of its
common stock and 80,000 warrants to purchase the Company's common
stock to Walter L. Maguire, Sr., a former director, for cash of
$40,000. The warrants are exercisable at $0.50 per share and
expire February 17, 2001. Mr. Maguire was an accredited investor.
Effective December 31, 1997, the Registrant issued 2,560,757 shares
of its Series C Preferred stock (including 972,369 shares to
holders of certain subordinated convertible debentures and
convertible debentures collectively, 1,560,296 shares to three
directors of the Company collectively, and 28,092 to a vendor) in
exchange for cancellation of $1,408,419 of indebtedness. In
connection with the transaction, warrants to purchase 90,445
shares of common stock were issued to debenture holders
collectively, and warrants to purchase 158,911 shares of common
stock were issued to two directors of the Company collectively.
The warrants are exercisable at $0.70 per share and expire December
31, 2000.
Effective December 31, 1997, the Registrant issued 6,000 shares of
common stock to each of the three directors of the Company for
services provided to the Company having a collective value of
$2,565 ($0.1425 per share).
- II-3 -
<PAGE>
On July 7, 1997, the Registrant sold 206,000 and 4,000 shares of
its common stock and 206,000 and 4,000 warrants to purchase the
Company's common stock to a director and a trust related to the
director, respectively, for cash totaling $105,000. The warrants
were exercisable at $0.80 per share and expired March 18, 2000.
On April 22, 1997, the Registrant sold 210,000 shares of its common
stock and 210,000 warrants purchase the Company's common stock to
Thomas H. McInish, an accredited investor, for $105,000 cash. The
warrants were exercisable at $0.80 per share and expired March 18,
2000.
ITEM 27. EXHIBITS
The exhibits included as part of this Registration Statement are
listed on the Exhibit Index on page II-6 of this Registration
Statement.
ITEM 28. UNDERTAKINGS (pursuant to Regulation S-B Item 512(a),
(e))
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made by the Selling Stockholder, a post-effective amendment
to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
which, individually or together, represent a fundamental change in
the information set forth in this Registration Statement; and
(iii) To include any additional or changed material
information on the plan of distribution.
(2) For determining liability under the Securities Act, to
treat each post-effective amendment as a new registration statement
of the securities offered, and the offering of the securities at
that time shall be deemed to be the initial bona fide offering.
(3) To file a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of
the offering.
(e) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 ("Act") may be permitted to
directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification is against
public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form SB-2 and
has duly caused this Registration Statement to be signed on its
behalf by the undersigned, in Thompson Falls, State of Montana, on
November 21, 2000.
UNITED STATES ANTIMONY CORPORATION
By: /s/ John C. Lawrence
_____________________________________
John C. Lawrence
President and Chairman
In accordance with the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Capacity Date
--------- --------- ----
/s/ John C. Lawrence President and Chairman of the Board November 21, 2000
--------------------
John C. Lawrence (Principal Executive and Chief Financial
Officer and Director)
/s/ Robert A. Rice Director November 15, 2000
--------------------
Robert A. Rice
/s/ Leo Jackson Director November 17, 2000
--------------------
Leo Jackson
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
TO
REGISTRATION STATEMENT ON FORM SB-2
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit Number Description Page
-------------- ----------- ----
3.01 Articles of Incorporation of the Company,
filed as an exhibit to the Company's Form 10-KSB
for the fiscal year ended December 31, 1995,
(File No. 1-8675) are incorporated
herein by this reference.
3.02 Amended and Restated Bylaws of the Company II-9
4.01 Key Employees 2000 Stock Plan, filed as an
exhibit to the Company's Form S-8 Registration
Statement filed on March 10, 2000 (File No.
333-32216) incorporated herein by this
reference.
5.01 Opinion of Hawley Troxell Ennis & Hawley LLP II-42
10.0 Material Contracts
</TABLE>
Documents filed with the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1995 (File No. 1-8675), are
incorporated by this reference:
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit No. Item Dated
----------- ---- -----
10.10 Yellow Jacket Venture Agreement July 7, 1990
10.11 Agreement Between Excel-Mineral
Company and Bobby C. Hamilton August 29, 1991
10.12 Letter Agreement September 1, 1991
10.13 Columbia-Continental Lease
Agreement Revision April 3, 1993
10.14 Settlement Agreement with
Excel Mineral Company July 1993
10.15 Memorandum Agreement July 1993
10.16 Termination Agreement September 12, 1993
10.17 Amendment to Assignment of Lease
(Geosearch) September 9, 1994
10.18 Series B Stock Certificate to
Excel-Mineral Company, Inc. December 25, 1993
10.19 Division Order and Purchase and
Sale Agreement March 27, 1995
10.20 Inventory and Sales Agreement January 1, 1995
10.21 Processing Agreement July 1, 1995
10.22 Release and settlement agreement
II-6
<PAGE>
between Bobby C. Hamilton and
United States Antimony Corporation November 15, 1995
10.23 Columbia-Continental Lease Agreement September 27, 1996
10.24 Release of Judgment February 28, 1996
10.25 Covenant Not to Execute July 30, 1990
</TABLE>
Documents filed with the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1996 (File No. 1-8675), are
incorporated by this reference:
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit No. Item Dated
----------- ---- -----
10.26 Warrant Agreements Various
</TABLE>
Document filed with the Company's Quarterly Report on Form 10-QSB
for the quarter ended September 30, 1997 (File No. 001-08675) is
incorporated herein by this reference:
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit No. Item Dated
----------- ---- -----
10.27 Letter from EPA, Region 10 August 21, 1997
</TABLE>
Documents filed with the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1997 (File No. 001-08675) are
incorporated herein by this reference:
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit No. Item Dated
----------- ---- -----
10.28 Warrant Agreements Various
</TABLE>
Document filed with the Company's Quarterly Report on Forms 10-QSB
for the quarter ended September 30, 1998 (File No. 001-08675) are
incorporated herein by this reference:
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit No. Item Dated
----------- ---- -----
10.30 Answer, Counterclaim and Third-Party
Complaint October 13, 1998
</TABLE>
Documents filed with the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1998 (File No. 001-08675), are
incorporated herein by this reference:
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit No. Item Dated
----------- ---- -----
10.31 Warrant Issue-Al Dugan July 28, 1998
10.32 Amendment Agreement March 31, 1999
</TABLE>
Documents filed with the Company's Quarterly Report on Form 10-QSB
for the quarter ended March 31, 1999 (File No. 001-08675) are
incorporated by this reference:
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit No. Item Dated
----------- ---- -----
10.33 Warrant Issue-John C. Lawrence March 29, 1999
II-7
<PAGE>
10.34 PVS Termination Agreement March 31, 1999
</TABLE>
Documents filed as an exhibit to the Company's Form 10-KSB for the
year ended December 31, 1999 (File No. 001-08675) are incorporated
herein by this reference:
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit No. Item Dated
----------- ---- -----
10.35 Maguire Settlement Agreement November 5, 1999
10.36 Warrant Issue-Carols Tejada August 30, 1999
10.37 Warrant Issue-Al W. Dugan January 25, 2000
10.38 Memorandum of Understanding with
Geosearch Inc. October 4, 1999
10.39 Factoring Agreement-Systran
Financial Services Company March 30, 1999
10.40 Mortgage to John C. Lawrence April 19, 1999
</TABLE>
Document filed with the Company's Quarterly Report on Form 10-QSB
for the quarter ended March 31, 2000 (File No. 001-08675) is
incorporated herein by this reference:
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit No. Item Dated
----------- ---- -----
10.41 Warrant Issue-Al W. Dugan January 25, 2000
</TABLE>
Documents filed as an exhibit to the Company's form 10-QSB for the
quarter ended June 30, 2000 (File No. 001-08675) are incorporated
herein by this reference:
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit No. Item Dated
----------- ---- -----
10.42 Agreement between United States Antimony
Corporation and Thomson Kernaghan & Co.,
Ltd. July 11, 2000
10.43 Settlement agreement and release of all
claims between the Estate of Bobby C.
Hamilton and United States Antimony
Corporation June 23, 2000
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit No. Description Page
-------------- ----------- ----
10.44 Supply Contracts with Fortune America
Trading Ltd. II-44
21.01 Subsidiary of the Company II-54
23.01 Consent of Hawley Troxell Ennis & Hawley LLP
(included in Exhibit 5.01) II-42
23.02 Consent of DeCoria, Maichel & Teague P.S. II-55
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit No. Item Dated
----------- ---- -----
44.1 CERCLA Letter from U.S. Forest Service
filed as an exhibit to the Company's
Form 10-KSB for the year ended December
31, 1995 (File No. 1-8675) is incorporated
herein by this reference. February 11, 1994
</TABLE>
II-8
<PAGE>
