United States Antimony Corporation — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023. Unaudited results cover the company’s antimony, zeolite, and precious-metals businesses in the United States and Mexico.
Financial performance and liquidity
| Metric | Q1 2023 | Q1 2022 |
|---|---|---|
| Revenue | $2.21 million | $3.58 million |
| Gross profit (loss) | ($535,419); (24.2%) gross margin | $1.14 million; 31.8% gross margin |
| Operating income (loss) | ($1.01 million) | $779,580 |
| Net income (loss) | ($806,984); ($0.01) per share | $786,252; $0.01 per share |
| Operating cash flow | ($2.27 million) | $163,903 |
| Capital expenditures | $614,770 | $188,541 |
| EBITDA, non-GAAP | ($579,056) | $1.01 million |
At March 31, cash and cash equivalents were $15.36 million, working capital was $18.01 million, total assets were $32.86 million, and stockholders’ equity was $31.06 million. Total debt was $288,983, including $95,573 current. Cash and cash equivalents plus restricted cash declined $3.70 million during the quarter.
Material changes and operating drivers
- Revenue fell about 38% year over year. Antimony revenue declined 43% to $1.61 million: pounds sold fell to 343,044 from 433,350 and average price per pound decreased to $4.70 from $6.53. The company attributed lower volume to a third-party supplier’s equipment failures, which it said were fixed during Q1; lower prices, lower-concentrate ore, and higher supplier and labor costs also weighed on results.
- Zeolite revenue decreased 28% to $482,093, primarily because a main crusher failure curtailed production for about two months. The replacement cone was installed before quarter-end; management reported improved reliability and increased production afterward.
- Precious-metals revenue increased to $116,112 from $77,334.
- Cost of revenue included a $246,792 write-down of Mexican inventory to net realizable value because production cost exceeded expected sale proceeds.
- Operating cash use reflected, among other items, higher receivables and inventories and payment of royalties and dividends. Management said most of the receivable increase related to late-quarter shipments collected after quarter-end.
Outlook, risks, and other notable items
- No quantified revenue or earnings guidance is provided. The company plans to invest in operational improvements intended to increase production, reduce costs, and grow revenue. Management believes existing cash, operating cash flows, and potential equity or debt financing will be sufficient for planned operations and contractual obligations for the next 12 months.
- The company identifies supply interruptions, volatile metal prices, operating and processing disruptions, inflation, regulation, environmental hazards, financing and dilution, and Mexican labor, safety, and cartel-related issues among its risks.
- A Mexican tax appeal remains pending. The updated assessment was approximately $1.674 million, including $907,000 of unpaid tax and $767,000 of interest and penalties. No liability was accrued; management believes the company is most likely to succeed on appeal but cautions that an adverse outcome could materially affect results or financial position.
- Management concluded disclosure controls were ineffective because of a material weakness in segregation of accounting duties, attributed to the small accounting staff. Management relies on direct oversight and outside professionals and expects staffing growth to support improved segregation.
- In January 2023, holders converted 1,692,672 Series D preferred shares into common shares; the company also paid $787,730 in declared dividends. It cancelled 418,696 previously repurchased common shares. The filing reports 12,346,215 outstanding warrants, with exercise prices of $0.46 or $0.85.
- The cover-page response indicates the company had not filed all required reports during the preceding 12 months. The report was signed October 5, 2023, well after the quarter ended; the filing text does not explain this response or timing.
Important facts for investors to verify
- Whether antimony supply and unit economics improved after the supplier’s equipment repairs, and whether the reduced sales price and ore grade continue to affect margins.
- Whether the replacement zeolite crusher sustains higher production and whether the company can recover lost sales.
- Collection of quarter-end receivables and the pace of cash use, planned capital spending, and any financing needs.
- Progress and potential exposure in the Mexican tax appeal, including the unaccrued assessment.
- Remediation of the segregation-of-duties material weakness and the reason for the cover-page indication that required reports had not all been filed.