UAMY

Business Context and Reporting Period

Company: United States Antimony Corporation (USAC)
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: September 30, 2009
Business Overview: USAC operates two primary segments: Antimony (mining and processing) and Zeolite (mining and processing). The company is classified as a smaller reporting company. As of November 16, 2009, there were 51,687,091 shares of common stock outstanding.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Decline: Total revenues for the nine months ended September 30, 2009, decreased to $2.94 million from $4.27 million in the same period in 2008.
  • Antimony: Revenue dropped 38% ($1.86M vs $2.99M) due to lower commodity prices and reduced raw material supplies. Average sales price fell to $2.21/lb from $2.65/lb.
  • Zeolite: Revenue dropped 16% ($1.08M vs $1.28M) due to decreased tons sold.
• Profitability Shift: The company reported a net loss of $325,903 for the nine months ended September 30, 2009, compared to a net income of $485,256 in the prior year.
  • The 2008 income included a one-time $800,000 gain from an expired exclusivity contract and a $66,268 gain on the sale of properties, neither of which occurred in 2009.
  • Operating losses were driven by Mexican exploration expenses ($266,253 for the nine months).
• Cost Efficiency: Despite revenue declines, production costs per unit decreased in both divisions due to renegotiated supply agreements (Antimony) and reduced labor expenses (Zeolite).
• Liquidity: Cash and cash equivalents decreased from $53,848 at year-end 2008 to $23,422 at September 30, 2009. The company has negative working capital of approximately $554,000.

Outlook, Risks, and Management Commentary

• Going Concern: The financial statements are prepared on a going concern basis, but the company notes substantial doubt regarding its ability to continue as a going concern due to negative working capital and an accumulated deficit of approximately $21 million. Management relies on future profitable operations and financing to meet obligations.
• Management Outlook: Management expresses confidence in meeting obligations over the next twelve months based on recent price increases, expectations of acquiring new customers, and reduced capital spending.
• Customer Concentration: Approximately 50% of Antimony revenues in Q3 2009 came from a single customer. The loss of this customer could adversely affect the business.
• Internal Controls: The company identified material weaknesses in internal controls, including a lack of segregation of duties, insufficient accounting expertise on the Board, and material misstatements discovered during the prior year's audit.
• Environmental Contingencies: The company has accrued $40,802 for penalties at the Bear River Zeolite facility and is appealing. Future environmental expenditures remain uncertain.

Investor Verification Checklist

• Cash Runway: Verify the sufficiency of the $23,422 cash balance against the $554,000 negative working capital and ongoing operating losses.
• Financing Plans: Confirm the status of the common stock sales and warrant exercises used to fund operations in the first nine months of 2009.
• Customer Dependency: Assess the stability of the single customer representing 50% of Antimony revenue.
• Internal Controls: Review the remediation plan for the disclosed material weaknesses in financial reporting and segregation of duties.
• Exploration ROI: Evaluate the return on the $266,253 spent on Mexican exploration expenses during the period.