Business Context and Reporting Period
Company: United States Antimony Corp (USAC)
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: March 31, 2009
Business Overview: USAC operates two primary segments: Antimony and Zeolite. The company is classified as a smaller reporting company. As of May 15, 2009, 49,718,535 shares of common stock were outstanding.
Key Financial Metrics
| Metric | Q1 2009 | Q1 2008 |
|---|---|---|
| Total Revenues | $795,453 | $1,427,394 |
| Net Loss | $(239,044) | $(141,193) |
| Net Loss Per Share (Basic/Diluted) | $(0.01) | $0.00 |
| Cash Flow from Operations | $(197,334) | $(141,760) |
| Cash Flow from Financing | $256,861 | $91,732 |
| Cash and Equivalents (End of Period) | $65,946 | $23,624 |
| Total Assets | $3,278,306 | $3,271,114 |
| Total Liabilities | $1,129,451 | $1,487,616 |
| Working Capital | $(729,886) | Not explicitly stated |
Segment Performance:
- Antimony Division: Revenues of $474,736 (Gross Profit: $52,241). Sales volume dropped to 219,412 lbs at $2.16/lb compared to 442,010 lbs at $2.52/lb in Q1 2008.
- Zeolite Division: Revenues of $320,717 (Gross Loss: $(67,129)). Sales volume increased slightly, but costs remained high relative to revenue.
Material Changes vs. Prior Period
- Revenue Decline: Total revenues decreased by approximately 44% year-over-year, driven primarily by a 57% drop in Antimony revenues due to inadequate raw material supply.
- Increased Net Loss: Net loss widened by $97,851 compared to Q1 2008, despite a reduction in operating expenses and interest costs.
- Cost Reductions: Antimony production costs per pound fell to $1.63 from $1.87. Factoring expenses dropped significantly to $15,663 from $34,203 due to lower sales volume.
- Debt Restructuring: A $100,000 convertible note to a related party was converted into 500,000 shares of common stock. Additionally, $200,000 of related party debt was forgiven via warrant exercises.
- Capital Expenditures: Investing cash outflows increased to $47,429, primarily for property, plant, and equipment in Mexico.
Outlook, Risks, and Contingencies
Going Concern Status: The filing explicitly states substantial doubt regarding the company's ability to continue as a going concern. The company has negative working capital of approximately $730,000 and an accumulated deficit of $20.9 million. Continued existence depends on generating profits or securing additional financing.
Management Commentary: Management expresses confidence in meeting obligations over the next 12 months based on recent price increases, expected new customers, and reduced capital spending.
Risks and Contingencies:
- Customer Concentration: Approximately 70% of Antimony revenues in Q1 2009 came from a single customer.
- Environmental Penalties: The company is negotiating MSHA penalties at the Bear River Zeolite facility. While no amount is accrued, the maximum potential liability is approximately $50,000.
- Internal Controls: The company identified material weaknesses in internal controls, including a lack of segregation of duties, insufficient accounting expertise, and prior material misstatements requiring audit adjustments.
Investor Verification Checklist
- Liquidity Runway: Verify the sufficiency of the $65,946 cash balance against the $729,886 negative working capital and upcoming debt obligations.
- Financing Progress: Confirm the status of the equity sales mentioned (2.9M shares at $0.20 and 250k shares at $0.30) and whether proceeds were fully utilized for general corporate purposes.
- Raw Material Supply: Assess the timeline for resolving the raw material shortage that caused the 57% drop in Antimony sales.
- Regulatory Resolution: Monitor the outcome of the MSHA penalty appeal at the Bear River Zeolite facility.
- Internal Control Remediation: Review subsequent filings for evidence of remediation regarding the identified material weaknesses in financial reporting.