United States Antimony Corporation (UAMY) — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. Unaudited consolidated results cover antimony, precious metals recovery, and zeolite operations.
Financial results
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | $2.276 million | $1.585 million | $3.529 million | $3.328 million |
| Gross profit (loss) | $196,398 | ($16,061) | $408,555 | $85,116 |
| Gross margin | 8.6% | (1.0%) | 11.6% | 2.6% |
| Operating loss | ($232,190) | ($277,875) | ($573,916) | ($582,813) |
| Net income (loss) | $337,141 | ($274,283) | $1,653 | ($583,165) |
| Operating cash flow | Not separately presented for Q2 | ($2.237 million) | ($279,322) | |
| Cash and cash equivalents | — | $22.365 million | Not stated as a comparable balance |
Q2 net income included $443,400 of PPP loan-forgiveness income and a $113,422 gain on settlement of Hillgrove advances; these nonrecurring gains substantially exceeded the operating loss. For the first half, the company reported $575,569 of total other income, including those gains. Management-reported EBITDA was $557,085 for Q2 and $444,061 for the first half, versus ($50,916) and ($133,517), respectively, in 2020; EBITDA is a non-GAAP measure.
Liquidity, debt, and capital
- Working capital was $21.634 million at June 30, 2021, versus a deficit of $2.669 million at December 31, 2020. Cash rose from $665,102 to $22.365 million.
- Operating activities used $2.237 million of cash in the first half. Financing activities provided $23.841 million, mainly from $23.342 million of net common-stock proceeds and $1.791 million from warrant exercises.
- Total liabilities were $2.435 million, including $58,500 of long-term debt; bank notes, Hillgrove advances, and the $443,400 CARES Act loan were paid or settled/forgiven during the period.
- Common shares outstanding increased from 75.950 million at year-end to 106.005 million at June 30, largely following February stock sales. A further 12.490 million warrants remained outstanding at June 30, with exercise prices of $0.46–$0.85.
Changes, operations, and outlook
- Q2 revenue increased 43.5% year over year; first-half revenue rose 6.0%. Q2 antimony sales revenue increased to $1.429 million from $910,484, while first-half antimony revenue was slightly lower year over year. Average antimony selling prices rose to $4.21/lb in Q2 and $4.00/lb for the first half, from $3.90 and $3.84.
- Zeolite generated Q2 net income of $140,746, versus $113,038, but first-half net income fell to $207,231 from $248,176. Precious-metals revenue increased to $130,195 in Q2 and $206,428 for the first half.
- Management cited labor shortages in Montana and Idaho, higher wage costs, and efforts to increase Mexican smelter capacity and reduce production costs. It expected improved cash flow in the remainder of 2021, citing antimony prices and sales of antimony and zeolite, but gave no quantified earnings or revenue guidance.
- Management said available funds were sufficient for operations and financial obligations for the 12 months after issuance of the statements. Planned uses include working capital, staffing and facility improvements, potential Mexican antimony reserves, and evaluation of the Los Juarez property. A geological study and possible partnership were under consideration; processing and further development depend on study results.
Risks, contingencies, and notable disclosures
- The company had an accumulated deficit of approximately $32.6 million and reported losses in the prior two fiscal years. Management attributed historical antimony-operation losses chiefly to depressed prices and Mexican production costs.
- A Mexican tax authority assessment of approximately $818,000 related to the 2013 income-tax return remained under appeal. Management expected to prevail and recorded no liability; the filing cautions that an adverse outcome could materially affect results or financial position.
- The company paid a separate $1.121 million Mexican IVA/export-tax assessment in Q1 2021, which had been accrued in 2020.
- Royalty expense on zeolite sales was $131,567 for the first half; the company was negotiating changes to certain royalty agreements.
- Disclosure controls and procedures were deemed ineffective at June 30, 2021 due to material weaknesses in financial-reporting control design and monitoring, segregation of duties, and management oversight, including antifraud controls. Management described remediation plans; no significant control changes had been made during the quarter.
- Four largest customers represented 56.2% of Q2 revenue and 54.0% of first-half revenue, indicating customer concentration. Q2 and first-half results are not necessarily indicative of full-year results.
Most important facts for investors to verify
- Whether ongoing operations can generate positive cash flow without reliance on one-time PPP forgiveness and settlement gains.
- Progress in reducing Mexican antimony production costs, resolving labor constraints, and converting higher antimony prices into sustainable margins.
- Outcome and potential exposure from the Mexican tax appeal, and status of negotiations with zeolite royalty holders.
- Execution and effectiveness of remediation for the disclosed internal-control material weaknesses.
- Customer retention and concentration, along with dilution from outstanding warrants and future equity funding needs.
- Whether Los Juarez evaluation, zeolite growth initiatives, and planned capital improvements proceed as described and within available resources.