UAMY

Business Context and Reporting Period

Company: United States Antimony Corporation (USAC)
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: June 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 May 15, 2009, there were 50,843,535 shares of common stock outstanding.

Key Financial Metrics

Note: Working capital is calculated as Current Assets minus Current Liabilities. The company reported negative working capital of approximately $560,000 at June 30, 2009.

Material Changes vs. Prior Period

• Revenue Decline: Total revenues decreased by approximately 39% ($1.12 million) compared to the prior year. This was driven by a 50% drop in Antimony revenues (due to raw material shortages and lower prices) and an 8% drop in Zeolite revenues (due to lower volume).
• Profitability Shift: The company swung from a net income of $560,037 in the prior year to a net loss of $276,185. The prior year's income was significantly boosted by a one-time $800,000 gain from an expired exclusivity contract and a $41,268 gain on the sale of properties, neither of which occurred in 2009.
• Cost Efficiency: Despite lower sales volumes, production costs per unit decreased in both divisions. Antimony production costs dropped to $1.49/lb from $2.00/lb, and Zeolite costs dropped to $72.43/ton from $92.16/ton, attributed to renegotiated supply agreements and new management.
• Liquidity Improvement: Cash and cash equivalents increased from $53,848 at year-end 2008 to $92,900 at June 30, 2009, primarily due to financing activities (stock sales) rather than operations.

Guidance, Outlook, Risks, and Contingencies

• Going Concern: The filing explicitly states there is "substantial doubt" about the company's ability to continue as a going concern due to negative working capital and an accumulated deficit of approximately $20.9 million. Management relies on future profitable operations and additional financing to meet obligations.
• Outlook: Management expresses confidence in meeting obligations over the next twelve months based on recent price increases, expected new customers, and reduced capital spending.
• Customer Concentration: A significant risk exists regarding customer concentration. In Q2 2009, 37% of Antimony revenues came from a single customer. In the first six months of 2009, 20% of Antimony revenues came from one customer.
• 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 $50,802 for penalties at the Bear River Zeolite facility and is appealing. Future environmental expenditures cannot be reliably estimated due to regulatory uncertainties.

Investor Verification Checklist

• Financing Needs: Verify the company's ability to secure additional capital, as operations consumed $367,916 in cash and the company has negative working capital.
• Customer Dependency: Assess the stability of the "key" customer responsible for 37% of Q2 Antimony revenue.
• Raw Material Supply: Confirm the status of raw material availability for the Antimony division, which was cited as the primary cause for revenue decline.
• Internal Control Remediation: Review progress on fixing material weaknesses in financial reporting and segregation of duties.
• Environmental Liabilities: Monitor the outcome of the appeal regarding the $50,802 penalty and potential future reclamation costs.