United States Antimony (US:UAMY)2024-04-12 21:23Part I Business USAC produces antimony, precious metals, and zeolite, recently ceasing Mexican operations and experiencing concentrated sales - The company's principal business is the production and sale of antimony, precious metals (primarily gold and silver), and zeolite products18 - In a major strategic shift, the company shut down its Mexican USAMSA subsidiary operations on March 11, 2024, and plans to sell, lease, or dispose of these assets, while retaining its Los Juarez mining claims in Mexico under its ADM subsidiary2027 Antimony Sales Performance (2022 vs. 2023) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Sales ($) | $5,904,480 | $7,631,670 | | Pounds Sold | 1,269,131 | 1,394,036 | | Average Price/Pound ($) | $4.65 | $5.47 | Customer Concentration | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Revenue from Top 3 Customers | $4,037,540 | $3,746,625 | | % of Total Revenues | 46% | 34% | - The company has significant environmental retirement and reclamation obligations, with accrued liabilities totaling $395,811 for its U.S. antimony sites, $571,330 for Mexico sites, and $670,886 for its Zeolite segment as of December 31, 2023474849 Risk Factors The company faces significant financial, operational, and regulatory risks, including historical losses, customer concentration, Mexican geopolitical instability, and internal control weaknesses - The company has a history of financial losses, having experienced a net loss in each fiscal year from 2019 to 2023, with the exception of 202257 - A significant operational risk is customer concentration, with the three largest customers accounting for 46% of consolidated revenues in 202370 - The company's operations in Mexico are subject to geopolitical risks, including political or social disruptions, changes in laws and regulations, and drug-related violence, which could adversely affect business82144145 - A material weakness in internal control over financial reporting has been identified, primarily due to a lack of segregation of duties, which could impair the ability to produce timely and accurate financial statements116 - The company faces substantial governmental regulation, including the Mine Safety and Health Act and complex environmental laws (such as the Clean Water Act and CERCLA), which involve significant compliance costs and potential liabilities121128130 Unresolved Staff Comments As a smaller reporting company, the company is exempt from providing disclosure under this item - The company is not required to provide this disclosure as it qualifies as a smaller reporting company149 Cybersecurity The company manages cybersecurity risks with third-party assistance and Board oversight, having experienced minor incidents without material business impact - The company engages a third-party information security officer to manage its cybersecurity risk processes, which include monitoring systems and assessing threats150 - The Board of Directors is responsible for risk oversight, with the CEO and CFO providing presentations on cybersecurity risks as necessary152 - The company has experienced past cybersecurity incidents, primarily phishing emails, but states they have not materially affected business strategy, operations, or financial condition151 Properties The company owns and leases operational properties in Montana, Idaho, and Mexico, including an antimony plant, a zeolite mine, and recently shut down Mexican processing plants - The company owns a 14-acre property in Sanders County, Montana, which houses its active U.S. antimony smelter and precious metals plant159 - The company's Mexican properties under the USAMSA subsidiary, including the Madero smelter and Puerto Blanco flotation mill, were active as of year-end but were shut down in March 2024, with plans to sell or lease these assets154164 - The Zeolite segment operates through Bear River Zeolite (BRZ) on a 320-acre leased property in Preston, Idaho, under a royalty agreement, with the current lease term ending on March 1, 2025174 Legal Proceedings The company is not involved in material legal proceedings but its subsidiary received and rectified 14 significant MSHA citations and 3 orders in 2023 - The company reports no pending material legal proceedings179 - In 2023, the company's subsidiary, Bear River Zeolite Company (BRZ), received fourteen significant and substantial citations and three orders from MSHA, all of which were rectified before the filing of this report180 Mine Safety Disclosures Mine safety disclosures required by the Dodd-Frank Act are provided in Exhibit 95 of this Annual Report - Mine safety disclosures required under the Dodd-Frank Act are provided in Exhibit 95 to this Form 10-K181 Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on NYSE American under UAMY, has not paid dividends in five years, and all Series D Preferred Stock converted to common stock in January 2023 - The company's common stock is traded on the NYSE American under the symbol UAMY183 - The company has not paid cash dividends on common stock for the past five years and does not plan to in the foreseeable future185 - On January 25, 2023, all 1,692,672 outstanding shares of Series D Preferred stock were converted into an equal number of common stock shares188301 Management's Discussion and Analysis of Financial Condition and Results of Operations The company experienced a significant financial decline in 2023 with a 21% revenue drop and a $6.3 million net loss, driven by lower sales, high Mexican costs leading to a shutdown, and reduced working capital - The company shut down its operational activities in Mexico on March 11, 2024, due to the operations being costly and generating cumulative losses since 2009193 Consolidated Financial Performance (2022 vs. 2023) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Revenues | $8,693,155 | $11,044,707 | | Gross Profit (Loss) | $(3,344,784) | $1,996,190 | | Income (Loss) from Operations | $(7,069,001) | $348,205 | | Net Income (Loss) | $(6,348,287) | $428,661 | - The decrease in gross profit was primarily due to higher processing costs and inventory write-downs in the Mexico antimony segment, a lower average antimony sales price, and production downtime at the zeolite operations200201 - The Mexico Antimony Segment generated significant negative cash flow of approximately $4.1 million in fiscal year 2023213 - Cash and cash equivalents decreased by $7.2 million during 2023 to a balance of $11.9 million at year-end, which the company believes is sufficient to fund operations for the next 12 months215217 Quantitative and Qualitative Disclosures About Market Risk This disclosure item is not applicable to the company - Disclosure under this item is not applicable224 Financial Statements and Supplementary Data Consolidated financial statements show significant deterioration in 2023 with a $6.3 million net loss, decreased assets and equity, driven by revenue decline and increased costs, alongside subsequent Mexican operations shutdown and favorable tax audit resolution Key Balance Sheet Data (As of Dec 31) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $11,899,574 | $19,060,378 | | Total current assets | $14,076,206 | $21,617,359 | | Total assets | $28,094,995 | $34,700,450 | | Total liabilities | $2,574,027 | $2,831,195 | | Total stockholders' equity | $25,520,968 | $31,869,255 | Key Income Statement Data (Year Ended Dec 31) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Revenues | $8,693,155 | $11,044,707 | | Cost of Revenues | $12,037,939 | $9,048,517 | | Gross Profit (Loss) | $(3,344,784) | $1,996,190 | | Net Income (Loss) | $(6,348,287) | $428,661 | | Basic & Diluted EPS | $(0.06) | Nil | - The inventory write-down to net realizable value for the Mexico Antimony Segment was $2,073,404 in 2023, a significant increase from $277,146 in 2022278 - In March 2024, the company received a favorable ruling on its appeal regarding a 2013 tax audit in Mexico, resulting in no assessment due, a matter that had been under appeal since 2022292294315 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure No changes in or disagreements with accountants on accounting and financial disclosure were reported - None reported316 Controls and Procedures Management concluded disclosure controls were ineffective as of December 31, 2023, due to a material weakness in internal control over financial reporting from lack of segregation of duties, with remediation efforts underway - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were not effective as of December 31, 2023317 - A material weakness was identified in internal control over financial reporting related to the segregation of duties, primarily due to the limited staff and small size of the company318322 - Remediation initiatives include replacing the CFO and Controller, adding experienced Board members to the audit committee, and implementing software to enhance segregation of duties and workflow authorization326327 Other Information No other information is reported under this item - None329 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This disclosure item is not applicable to the company - Not applicable330 Part III Directors, Executive Officers and Corporate Governance This section details the company's executive officers and directors, corporate governance structure with independent board committees, and the adopted Code of Ethics - The Board of Directors has standing Audit, Compensation, and Nominating and Corporate Governance committees343 - The Audit Committee consists of three independent directors, with Michael McManus qualifying as an "audit committee financial expert"344 - The company has adopted a Code of Ethics that applies to all directors, officers, and employees359 Executive Compensation The company details 2023 executive compensation, primarily base salary and health insurance, with performance-based incentives starting in 2024, and also provides director compensation 2023 Named Executive Officer Compensation | Name and Principal Position | Salary | Other Compensation | Total | | :--- | :--- | :--- | :--- | | John C. Gustavsen, President of Antimony Division | $140,994 | $10,642 | $151,636 | | Richard R. Isaak, SVP, Chief Financial Officer | $107,692 | $1,958 | $109,650 | | Kelly J. Stopher, former Chief Financial Officer | $115,080 | $ - | $115,080 | - For 2023, executive compensation consisted only of base salary and health insurance, with the company beginning to implement annual performance-based salary increases and equity incentive awards in 2024364 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters This section details beneficial ownership of common and preferred stock, identifying four >5% common stock owners, with directors and officers holding 1.1%, and 8.7 million shares available under the 2023 Equity Incentive Plan - As of March 18, 2024, four entities/individuals are reported as beneficially owning more than 5% of the company's common stock: Kenneth M Reed (7.5%), Lydia & Patrick Dugan (7.5%), Creative Planning, LLC (6.9%), and Russell Lawrence (6.3%)369 - All directors and executive officers as a group beneficially own 1,199,220 shares, representing 1.1% of the outstanding common stock369 - Under the shareholder-approved 2023 Equity Incentive Plan, 8,700,000 securities are available for future issuance, with no options, warrants, or rights outstanding under this plan as of December 31, 2023371373 Certain Relationships and Related Transactions, and Director Independence The company reported no material related party transactions in 2023, aside from minor costs of $12,884 for lodging and meals from a former President's entity - No material related party transactions were reported for 2023, except for $12,884 paid to an entity owned by former President Russell Lawrence for lodging and meals374 Principal Accountant Fees and Services The company discloses $188,568 in total fees paid to Assure CPA, LLC in 2023, an increase from 2022, with all services pre-approved by the audit committee Accountant Fees (Assure CPA, LLC) | Fee Type | 2023 | 2022 | | :--- | :--- | :--- | | Audit Fees | $169,738 | $133,459 | | Tax Fees | $14,430 | $12,000 | | All Other Fees | $4,400 | $2,438 | | Total | $188,568 | $147,897 | Part IV Exhibits and Financial Statement Schedules This section lists all exhibits filed with the Annual Report, including corporate governance documents, certifications, and mine safety disclosures - A list of all exhibits filed with the Form 10-K is provided, including the 2023 Equity Incentive Plan, subsidiaries list, officer certifications, and mine safety disclosures378 Form 10-K Summary This item is not applicable - Not applicable379