UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X]ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 1999
[ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period______to______
Commission file number 33-00215
UNITED STATES ANTIMONY CORPORATION
(Name of small business issuer in its charter)
Montana 81-0305822
(State or other jurisdiction
of incorporation or organization) (I.R.S. Employer Identification No.)
P.O. Box 643, Thompson Falls, Montana 59873
(Address of principal executive offices) (Zip code)
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Registrant's telephone number, including area code: (406) 827-3523
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [ ]
The registrant's revenues for its most recent fiscal year were $4,710,278.
The aggregate market value of the voting stock held by non-affiliates of the registrant, based on the average bid price of such stock, was $9,446,389 as of March 27, 2000.
At March 27, 2000, the registrant had 17,175,252 outstanding shares of par value $.01 common stock.
TABLE OF CONTENTS
PART I
ITEM 1. DESCRIPTION OF BUSINESS 1
General 1
Summary 1
Antimony Division 1
Gold Division 2
Environmental Matters 3
Marketing 4
Antimony 4
Other 5
Employees 5
ITEM 2. DESCRIPTION OF PROPERTIES 5
Antimony Division 5
Gold Division 5
ITEM 3. LEGAL PROCEEDINGS 6
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 6
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS 6
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS 7
ITEM 7. FINANCIAL STATEMENTS F1-F23
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE 9
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS, COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
ACT 9
ITEM 10. EXECUTIVE COMPENSATION 10
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT 10
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 12
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K 12
SIGNATURES 14
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SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(D) OF THE EXCHANGE ACT BY NON-REPORTING ISSUERS 15
PART I
Item 1. Description of Business
General
Section 21E of the Securities Exchange Act of 1934 provides a "Safe Harbor" for forward-looking statements. Certain information included herein contains statements regarding management's expectations about future production and development activities as well as other capital spending, financing sources and effects of regulation. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made herein. These risks and uncertainties include, but are not limited to, those relating to the market price of metals, production rates, production costs, availability of continued financing, and the Company's ability to remain a going concern. The Company cautions readers not to place undue reliance on any forward-looking statements, and such statements speak only as of the date made.
Summary
AGAU Mines, Inc., predecessor of United States Antimony Corporation, was incorporated in June 1968 as a Delaware Corporation to explore, develop and mine gold and silver properties. United States Antimony Corporation ("USAC," "the Company" or "the Registrant") was incorporated in Montana in January 1970 to mine and produce antimony products. In June 1973, AGAU Mines, Inc. was merged with and into USAC, with USAC the surviving corporation in the merger. In December 1983, the Company suspended its antimony mining operations when it became possible to purchase antimony raw materials more economically from foreign sources. The principal business of the Company has been the production of antimony products and the mining and milling of gold.
The Company has been able to sustain its operations through gross profit produced from its antimony operations, common stock sales, and financing from banks and other sources. There can be no assurance, however, that the Company will be able to continue to meet its obligations and continue in existence as a going concern (see Note 1 to the consolidated financial statements).
Antimony Division
The Company's antimony properties, mill and metallurgical plant are located in the Burns Mining District of Sanders County, Montana, approximately 15 miles west of Thompson Falls. The Company holds 12 patented lode claims, some of which are contiguous, and 2 patented mill sites.
Prior to 1984, the Company mined antimony ore underground by driving drifts and using slushers in room and pillar type stopes. Mining was suspended in December 1983, because antimony could be purchased more economically from foreign sources. The Company's underground antimony mining operations may be reopened in the future should raw material prices warrant doing so. The Company now purchases the majority of its raw antimony from China and, to a lesser degree, Canada.
The Company currently is pursuing the acquisition of a 50% interest in United States Antimony, Mexico S.A. de C.V. ("USAMSA") to produce antimony metal and other products from the Mexican states of Zacatecas, Coahuila, Sonora, Queretaro and Oaxaca. These products would then be sent to the Company's plant near Thompson Falls, Montana for processing.
Antimony Division, Continued:
During 1999 and 1998, the Company invested capital and surplus equipment from its Thompson Falls antimony operation into the construction of an antimony processing plant in Mexico. To date, two antimony processing furnaces and a warehouse building have been built and limited antimony processing has taken place. The company anticipates utilizing the processing facilities as processing opportunities become available and as antimony prices dictate.
From refined antimony metal, the Company produces four antimony oxide products of different particle size using proprietary furnace technology, and several grades of sodium antimonate using hydro metallurgical techniques. Antimony oxide is a fine, white powder that is used primarily in conjunction with a halogen to form a synergistic flame retardant system for plastics, rubber, fiberglass, textile goods, paints, coatings and paper. Sodium antimonate is primarily used as a fining agent for glass in cathode ray tubes used in computer monitors and television bulbs and as a flame retardant.
On September 1, 1991, the Company entered into Agreements with HoltraChem, Inc. ("HoltraChem") whereby the Company was to process raw material purchased by HoltraChem into finished antimony products. The Company then delivered the finished products to HoltraChem for sale, and shared in the profits or losses from sales with HoltraChem on a 50/50 basis. In September of 1998, HoltraChem sold its interest in the antimony business to Basic Chemical Solutions ("BCS"). In connection with the sale, HoltraChem assigned the Agreements to BCS with the Company's consent. During the fourth quarter of 1998 the Company participated in the antimony business with BCS under substantially the same terms as it had with HoltraChem. In March of 1999, the Company notified BCS that it was exercising its privileges pursuant to the Agreements to cancel the Agreements and operate the antimony business independently.
The Company employed two full time sales managers in 1999 and implemented administrative systems needed to manage sales accounting and shipping logistics. In connection with these efforts, the Company negotiated various commission-based sales agreements with other chemical distribution companies, developed its own web-site ("usantimony.com") and made substantial improvements to its analytical and chemical research capabilities. In 1999, the Company devoted substantial efforts to the research and development of new antimony products and applications. These efforts have resulted in advances in the Company's preparation, packaging, and quality of its antimony products. The Company believes that it will be able to stay competitive in the antimony business and generate increasing profits because of these advances.
For the year ended December 31, 1999, the Company sold 5,517,443 pounds of antimony products generating approximately $4.7 million in revenues. During 1998, the Company, through its relationship with HoltraChem and BCS, sold 2,834,186 pounds of antimony products, which generated approximately $3.1 million in revenues. During 1999 and 1998, 20% and 19%, respectively, of the Company's antimony sales were made to one customer.
Gold Division
Yankee Fork Mining District
Until 1989, the Company mined and milled and silver in the Yankee Fork Mining District in Custer County, Idaho. The metals were recovered by gravity and flotation mill, and the concentrates were leached with cyanide to produce a bullion product at the Preachers Cove mill, which is located on the Yankee Fork of the Salmon River. The Preachers Cove mill has been dismantled and the site is undergoing environmental remediation pursuant to an Idaho Department of Environmental Quality consent decree. See "Environmental Matters."The Company owns two patented lode mining claims in the Yankee Fork District, which are now idle.
Gold Division, Continued:
Yellow Jacket Mining District
In 1990, the Company entered into a mining venture agreement to mine and mill gold and silver ores at the Yellow Jacket Mine located in the Yellow Jacket Mining District of Lemhi County, Idaho, approximately 70 miles southwest of Salmon, Idaho. During the years from 1991 to 1996 the Company mined, milled and sold gold bullion produced from the mine. In 1996, production at the Yellow Jacket was suspended due to recurring operating losses and declines in precious metal prices. The Yellow Jacket property was put on a care and maintenance status.
Subsequent to the curtailment of production at Yellow Jacket, the Company began an underground exploration program and proceeded in reopening an abandoned tunnel on the property (the No. 3 Tunnel). Up until the second quarter of 1999, the Company pursued exploration and core drilling activities at Yellow Jacket without the discovery of mineralized material that could be mined economically. In 1999, the company abandoned its leasehold interests and began environmental remediation activity at the Yellow Jacket (see "Environmental Matters") and began reclamation of the Yellow Jacket tailings ponds and pit area.
Environmental Matters
The exploration, development and production programs conducted in the United States are subject to local, state and federal regulations regarding environmental protection. Certain of the Company's mining and production activities are conducted on public lands. The USDA Forest Service extensively regulates mining operations conducted in National Forests. Department of Interior regulations cover mining operations carried out on most other public lands. All operations by the Company involving the exploration for or the production of minerals are subject to existing laws and regulations relating to exploration procedures, safety precautions, employee health and safety, air quality standards, pollution of water sources, waste materials, odor, noise, dust and other environmental protection requirements adopted by federal, state and local governmental authorities. The Company may be required to prepare and present to such authorities data pertaining to the effect or impact that any proposed exploration for or production of minerals may have upon the environment. Any changes to the Company's reclamation and remediation plans which may be required due to changes in federal regulations could have an adverse effect on the Company's operations.
In 1994, the U.S. Forest Service, under the provisions of the Comprehensive Environmental Response Liability Act of 1980 (CERCLA) designated the Company's cyanide leach plant at the Preachers Cove mill, which is located six miles north of Sunbeam, Idaho on the Yankee Fork of the Salmon River, as a contaminated site requiring cleanup of the cyanide solution. The Company has been reclaiming the property and, as of December 31, 1999, the cyanide solution discharge was complete, the mill removed, and the cyanide leach residue disposed of. The Company anticipates having the reclamation substantially complete sometime in 2000. In 1996, the Company signed a consent decree related to completing the reclamation and remediation at the Preachers Cove mill in Idaho as required by the Idaho Department of Environmental Quality.
The Company has environmental remediation obligations at its antimony processing site near Thompson Falls, Montana ("the Stibnite Hill Mine Site"). Under the regulatory jurisdiction of the U.S. Forest service and subject to the operating permit requirements of the Montana Department of Environmental Quality, the Company has performed substantial environmental reclamation activities during 1999 and 1998.
Environmental Matters, Continued:
These activities included installation of a PVC liner and a geotextile layer on two of the tailings ponds and the removal of approximately 25,000 yards of tailings material from a third pond. During 2000, the Company plans to line a storm water pond and store a slag material pile in a lined residue vault, thus fulfilling the majority of its environmental responsibilities at the Stibnite Hill Mine site.
During the second quarter of 1999, the Company abandoned its exploration efforts at the Yellow Jacket property and began final reclamation and closure. During the third and fourth quarters of 1999 the Company began disassembly of the mill and mill buildings and removed tailings waste from the tailings ponds. The reclamation activity is being overseen by the U.S. Forest Service and the Idaho Department of Environmental Quality. The Company hopes to have the majority of its environmental obligations relating to the Yellow Jacket property fulfilled by the end of 2000.
Marketing
During the first quarter of 1999, and in prior years dating back to 1991, the Company marketed its antimony products with HoltraChem and later its successor, BCS, in a 50/50 profit sharing arrangement. In March 1999, the Company notified BCS that it was terminating the agreements that HoltraChem had assigned BCS, and that the Company was going to market and distribute antimony products independently. As a result the Company took steps to market its products to existing and prospective customers, and has been able to do so successfully. The Company employs full time marketing personnel and has negotiated various commission based sales agreements with other chemical distribution companies.
Antimony
The operating results of the Company have been and will continue to be directly related to the market prices of antimony metal, which have fluctuated widely in recent years and are currently at a 35 year low. The volatility of such prices is illustrated by the following table which sets forth the average prices of antimony metal per pound as reported by sources deemed reliable by the Company.
Antimony Year Average Price
Metal 1999 $ 0.58
1998 0.63
1997 0.93
1996 1.60
1995 2.28
The range of sales prices for antimony oxide per pound was as follows for the
periods indicated:
Antimony Year High Low Average Price
Oxide 1999 $ 5.52 $ 0.65 $ 0.85
1998 5.57 0.83 1.13
1997 5.75 0.98 1.41
1996 4.50 1.53 1.86
1995 3.12 0.89 2.56
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Antimony, Continued:
Antimony metal prices are determined by a number of variables over which the Company has no control. These include the availability and price of imported metals, the quantity of new metal supply, and industrial and commercial demand. If metal prices decline further and continue to remain depressed, the Company's operations may be adversely affected.
Other
The Company holds no material patents, licenses, franchises or concessions, but it considers its antimony processing plant proprietary in nature. The Company uses the trade name "Montana Brand Antimony Oxide" for the marketing of its antimony products.
The Company is subject to the requirements of the Federal Mining Safety and Health Act of 1977, requirements of the state of Montana and the state of Idaho, Federal and State Health and Safety statutes and Sanders County, Lemhi County and Custer County health ordinances.
Management of the Company believes that its current discharge of waste materials from its processing facilities is in material compliance with environmental regulations and health and safety standards. See "Environmental Matters."
Employees
As of March 27, 2000, the Company and its wholly-owned subsidiary employed 31 people, which number may adjust seasonally. None of the Company's employees are covered by collective bargaining agreements.
Item 2. Description of Properties
Antimony Division
The Registrant's principal plant and mine are located in the Burns Mining District, Sanders County, Montana, approximately 15 miles west of Thompson Falls, Montana. The Registrant holds 2 patented mill sites and 12 patented lode mining claims covering 192 acres. The lode claims are contiguous within two groups.
Antimony mining and milling operations were curtailed during 1983 due to continued declines in the price of antimony. The Company is currently purchasing foreign raw antimony materials and continues to produce antimony metal, oxide and sodium antimonate from its antimony processing facility near Thompson Falls, Montana.
Gold Division
Yankee Fork Mining District
Estes Mountain
The Estes Mountain properties consist of 2 patented lode mining claims in the Yankee Fork Mining District of Custer County, Idaho. These claims are located approximately 12 miles from the Company's former Preachers Cove Mill.
Gold Division, Continued:
Preachers Cove Millsite
The Company had a 150-ton per day gravity and flotation mill located approximately 50 miles west of Challis, Idaho and 19 miles northeast of Stanley, Idaho on the Yankee Fork of the Salmon River at Preachers Cove. The mill also had a cyanide leach plant for the processing of concentrates into doré bullion. The plant has been dismantled and the property is nearing final reclamation.
Yellow Jacket Mining District
The Yellow Jacket property consisted of 12 patented and various unpatented lode mining claims located in the Yellow Jacket Mining District of Lemhi County, Idaho, approximately 70 miles southwest of Salmon, Idaho. In 1996, Company personnel determined that the existing mineral resource was not economical to mine without additional operating capital and an increase in current metals prices. Accordingly, production operations at the Yellow Jacket property were suspended and the mine placed on a care-and-maintenance status. Subsequent to 1996, the Company engaged in underground exploration activities at the property. During the second quarter of 1999, due to depressed precious metal prices and the absence of a discovery of mineralized material that could be economically mined, the company abandoned its leasehold interests in the Yellow Jacket property and began final reclamation and closure activities. (See "Environmental Matters")
Item 3. Legal Proceedings
At December 31, 1999, the company was involved in no material legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
The Company has not had a meeting of security holders since October 3, 1997, nor have any matters been submitted to a vote of security holders.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
The following table sets forth the range of high and low bid prices as reported by the Over the Counter Bulletin Board ("OTCBB") for the periods indicated. The quotations reflect inter-dealer prices without retail mark-up, mark-down or commission, and may not necessarily represent actual transactions. Currently, the stock is traded on the OTCBB under the symbol "UAMY." Prior to 1997, the Company's stock was traded over-the-counter on the pink sheets and has had minimal trading activity since 1990. Therefore, the following prices do not reflect an active market.
1999 High Low First Quarter $0.16 $0.20 Second Quarter 0.17 0.17 Third Quarter 0.31 0.38 Fourth Quarter 0.16 0.16 |
Item 5. Market for Common Equity and Related Stockholder Matters, Continued:
1998 High Low First Quarter $0.20 $0.16 Second Quarter 0.28 0.16 Third Quarter 0.37 0.16 Fourth Quarter 0.28 0.13 |
The approximate number of record holders of the Registrant's common stock at December 31, 1999 is 2,700.
No dividends have been paid or declared by the Registrant during the last five years.
Item 6. Management's Discussion and Analysis or Plan of Operations
Certain matters discussed are forward-looking statements that involve risks and uncertainties, including the impact of antimony prices and production volatility, changing market conditions and the regulatory environment and other risks. Actual results may differ materially from those projected. These forward-looking statements represent the Company's judgment as of the date of this filing. The Company disclaims, however, any intent or obligation to update these forward-looking statements.
Results of Operations
The Company's reported net income of $304,015 in 1999, or $0.02 per basic share, compared to a net loss of $468,427 or $0.04 per basic share in 1998. The net income in 1999 is primarily due to an extraordinary gain recognized on the conversion of certain debts to common stock of $611,692. Without the effect of the extraordinary gain, the Company would have experienced a net loss from its operating activities of $307,677 during 1999.
Total revenues during 1999 were $4,710,278 compared to $3,142,776 in 1998. The increase was directly due to the Company's independent marketing and sale of its antimony products during the majority of 1999, compared to sharing 50% of antimony product sales with affiliated sales companies during 1998. Sales of antimony products in 1999 were $4,710,278 consisting of 5,517,443 pounds sold at an average sales price of $ 0.85 per pound. Sales of antimony products in 1998 were $3,130,332, consisting of 2,834,186 pounds sold at an average sales price of $1.10 per pound. Sales made during 1999 included first quarter sales made with a sales affiliate who recorded 50% of the quarter's total sales of $690,302 consisting of 684,322 pounds, on their financial statements. Gross profit from antimony product sales was $380,977 in 1999, or 8% of sales, compared to $394,896 in 1998, or 12% of sales. Almost all of the antimony products sold were produced at the Company's plant near Thompson Falls, Montana.
Combined care and maintenance costs and exploration and evaluation costs at the Yellow Jacket property totaled $200,867 in 1999 compared to $362,722 in 1998. The decrease is due to the Company's abandonment of exploration activities at the Yellow Jacket during 1999.
During 1999, the Company made adjustments to accrued reclamation costs and accounts payable of $70,000 and $16,440, respectively. The adjustments were made to adjust the balances of these liabilities to reflect an accurate amount of the Company's anticipated obligation. No such adjustments were proposed in 1998.
Results of Operations, Continued:
General and administrative expenses increased from $307,554 in 1998 to $400,432 in 1999, an increase of $92,878 or approximately 30%. The increase in 1999 compared to 1998 was principally due to legal costs associated with settling the Maguire litigation during 1999.
Interest expense of $185,985 in 1999 decreased compared to interest expense of $216,317 in 1998 primarily due to the conversion of certain debts to common stock in 1999. Interest and other income was $12,190 in 1999 and $23,270 in 1998. The decrease in interest and other income during 1999 was primarily due to the absence of other income in 1999 compared to 1998.
In 1999, the Company converted $682,397 of defaulted debenture principal and interest and $144,339 of principal and interest related to certain mining lease royalties (Judgements payable) into common stock of the Company. In connection with these conversions the Company recorded an extraordinary gain of $611,692. No such conversions or gains took place during 1998.
Financial Condition and Liquidity
At December 31, 1999, Company assets totaled $968,522, and there was a stockholders' deficit of $2,183,195. The stockholders' deficit decreased $525,898 from the prior year, primarily due to the conversion of debts to common stock. In order to continue as a going concern, the Company is dependent upon (1) profitable operations from the antimony division, (2) additional equity financing, and (3) continued availability of bank financing. Without financing and profitable operations, the Company may not be able to meet its obligations, fund operations and continue in existence. There can be no assurance that management will be successful in its plans to improve the financial condition of the Company.
Cash provided by operations during 1999 was $59,986 compared to $16,598 in 1998. The increase in cash provided by operations in 1999 compared to cash provided by operations in 1998 was primarily due to the increase in accounts payable and other current liabilities during 1999.
Investing activities used $76,417 of cash in 1999 compared with $31,182 in 1998. Cash used in investing activities during both years related exclusively to purchases of properties, plants and equipment, for the antimony division and the Company's investment in USAMSA.
Financing activities provided $16,431 of cash in 1999 and $14,584 in 1998. Cash from financing activities relates principally to cash received from common stock sales and bank financing in 1998 and primarily bank from bank financing in 1999.
Other significant financial commitments for future periods will include:
-Servicing notes payable to bank.
-Servicing the note payable to Bobby C. Hamilton.
-Keeping current on property, payroll, and income tax liabilities and accounts payable.
-Fulfilling responsibilities with environmental, labor safety and securities regulatory agencies.
Financial Condition and Liquidity, Continued:
During the second quarter of 1999, the Company began to operate its antimony business independently. Accordingly, the Company should experience an increase in its overall profitability (if and when antimony prices return to pre-1999 levels) in the antimony business as a result of the change. This increase in profitability will assist the Company in meeting its obligations.
In 1999, the Yellow Jacket leases were terminated and reclamation and closure activities began. As the Yellow Jacket property is reclaimed, care-and-maintenance and reclamation costs will eventually cease and the Company will be able to direct more resources to funding its operations and paying its obligations. Financial resources may also be generated from the disposal of equipment at the Yellow Jacket.
During 1999, the Company negotiated a factoring arrangement with a company that will allow the Company to sell its accounts receivable and utilize the funds from these sales to finance operations.
In 1998, 300,000 additional unregistered common stock shares and common stock purchase warrants were sold to a director and others for $75,000. The Company plans to offer additional shares of its common stock for sale to fund operations and reduce liabilities.
Year 2000
The Company experienced no material adverse impacts in connection with the year 2000 date change. No adversities were encountered from its own operating systems or indirectly from year 2000 problems experienced by its customers or suppliers. Although some minor impacts could still affect the Company indirectly from year 2000 problems experienced by the vendors and customers the Company does business with, it is unlikely that these problems will have a material affect on the Company's financial position.
Item 7. Financial Statements
The consolidated financial statements of the registrant are included herein on pages F-1 to F-23.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons,
Compliance with Section 16(a) of the Exchange Act
Identification of Directors and Executive Officers are as follows:
Affiliation
Name Age with Registrant Expiration of Term
John C. Lawrence 61 President, Director Annual meeting
Robert A. Rice 75 Director Annual meeting
Leo Jackson 58 Director Annual meeting
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The Company is not aware of involvement in any legal proceedings by its directors or executive officers during the past five years that are material to an evaluation of the ability or integrity of such director or executive officer.
Business Experience of Directors and Executive Officers:
John C. Lawrence. Mr. Lawrence has been the President and a Director of the Company since its inception. Mr. Lawrence was the President and a Director of AGAU Mines, Inc., the predecessor of the Company.
Robert A. Rice. Mr. Rice is a metallurgist, previously employed by the Bunker Hill Company, a subsidiary of Gulf Resources at Kellogg, Idaho, as Senior Metallurgist and Mill Superintendent until his retirement in 1965. Mr. Rice has been affiliated as a Director of the Registrant since 1975.
Leo Jackson. Mr. Jackson is a resident of El Paso, Texas. He is currently the President of Production Minerals, Inc., and has been involved in the production and marketing of industrial minerals such as fluorspar and celestite in the United States and Mexico for 25 years. Mr Jackson speaks fluent Spanish and has a BBA degree from the Sul Ross State University in Texas.
The Registrant does not have standing audit, nominating or compensation committees of the Board of Directors or committees performing similar functions.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires that the Company's officers and directors and persons who own more than 10% of a registered class of the Company's equity securities, file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and stockholders holding more than 10% of the Company's common stock are required by the regulation to furnish the Company with copies of all Section 16(a) forms they have filed.
Based on information received by the Company, Mr. Lawrence had timely filed a Form 4 upon receipt of annual stock compensation. Mr. Rice and Mr. Jackson had not timely filed a Form 4 upon receipt of annual stock compensation.
Item 10. Executive Compensation
Summary compensation for the Company's principal executive officer is as follows:
Annual Compensation Long-Term Compensation
Awards Payouts
Securities
Name and Other Restricted Underlying
Principal Annual Stock Options/ LTIP All Other
Position Year Salary Bonus Compensation(1) Awards SARs Payouts Compensation
John C. Lawrence, 1999 $72,000 $4,154 250,000 None None None
President 1998 72,000 4,154
1997 72,000 4,154
(1) Represents earned but unused vacation.
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Item 11. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners:
As of the close of business on March 27, 2000, based on information available to the Company, the following persons own beneficially more than 5% of the outstanding voting securities of the Company:
Name and Address of Amount and Nature of Percent of
Title of Class Beneficial Owner Beneficial Ownership Class(1)
Common stock The Maguire Family and related
entities as a group 2,825,807(2) 15.1
c/o Walter L. Maguire, Sr.
P.O. Box 129
Keller, VA 23401
Common stock John C. Lawrence and related 2,930,838(3) 15.7
family members
P.O. Box 643
Thompson Falls, MT 59873
Common stock The Dugan Family 2,360,942(4) 12.6
c/o A. W. Dugan
1415 Louisiana Street, Suite 3100
Houston, TX 77002
Preferred A. Gordon Clark,Jr. 4,500(5) 100
Series A stock 2 Musket Trail
Simsbury, CT 06070
(b) Security Ownership of Management:
Amount of Percent of
Title of Class Name of Beneficial Owner Beneficial Ownership Class (1)
Common stock John C. Lawrence 2,855,838(6) 15.3
Common stock Robert A. Rice 193,994(7) 1.0
Common stock Leo Jackson 35,700 Nil
(1)Percent of ownership is based upon 18,694,608 shares of common stock
and exercisable warrants, 4,500 shares of Series A preferred stock,
and 205,996 shares of Series C preferred stock outstanding at
March 27,2000.
(2)Includes 410,000 warrants to purchase common stock.
(3)Includes 405,810 warrants to purchase common stock.
(4)Includes 600,000 warrants to purchase common stock.
(5)The outstanding Series A and C preferred shares carry voting
rights for the election of directors.
(6)Does not include 75,000 shares owned by family members of John C.
Lawrence.
(7)Includes 3,101 warrants to purchase common stock
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Item 12. Certain Relationships and Related Transactions See Notes 4, 7, 9, 10 and 13 to the consolidated financial statements included herein. Item 13. Exhibits and Reports on Form 8-K Documents filed with this report: |
Exhibit No. Item Dated
10.35 Maguire Settlement Agreement November 5, 1999
10.36 Warrant Issue-Carlos Tejada August 30, 1999
10.37 Warrant Issue-Al Dugan January 25, 2000
10.38 Memorandum of Understanding-Geosearch, Inc. October 4, 1999
10.39 Factoring Agreement-Systran Financial March 30, 1999
10.40 Mortgage to John C. Lawrence April 19, 1999
21 List of subsidiaries N/A
27 Financial Data Schedule N/A
Documents filed with the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1995, and incorporated by reference to such:
Exhibit No. Item Dated
3.1 Articles of Incorporation -
United States Antimony Corporation-Montana August 18, 1995
10.10 Yellow Jacket Venture Agreement July 7, 1990
10.11 Agreement Between Excel-Mineral Company and Bobby C. Hamilton August 29, 1991
10.12 Letter Agreement September 1, 1991
10.13 Columbia-Continental Lease Agreement Revision April 3, 1993
10.14 Settlement Agreement with Excel Mineral Company July 1993
10.15 Memorandum Agreement July 1993
10.16 Termination Agreement September 12, 1993
10.17 Amendment to Assignment of Lease (Geosearch) September 9,1994
10.18 Series B Stock Certificate to Excel-Mineral Company, Inc. December 25, 1993
10.19 Division Order and Purchase and Sale Agreement March 27, 1995
10.20 Inventory and Sales Agreement January 1, 1995
10.21 Processing Agreement July 1, 1995
10.22 Release and settlement agreement between Bobby C. Hamilton
and United States Antimony Corporation November 15, 1995
10.23 Columbia-Continental Lease Agreement September 27, 1996
10.24 Release of Judgment February 28, 1996
10.25 Covenant Not to Execute July 30, 1990
99.1 CERCLA Letter from U.S. Forest Service February 11, 1994
Documents filed with the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1996, and incorporated by reference to such:
Exhibit No. Item Dated
10.26 Warrant Agreements Various
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Item 13. Exhibits and Reports on Form 8-K, Continued:
Documents filed with the Company's Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1997, and its Annual Report on Form 10-KSB for the
year ended December 31, 1997, respectively, and incorporated by reference to
such:
Exhibit No. Item Dated
10.27 Letter from EPA, Region 10 August 21, 1997
10.28 Warrant Agreements Various
Documents filed with the Company's Quarterly Report on Forms 10-QSB for the
quarters ended June 30, and September 30, 1998, and its Annual Report on Form
10-KSB for the year ended December 31, 1998, and incorporated by reference to
such:
Exhibit No. Item Dated
10.29 Summons and Verified Complaint April 8, 1998
10.30 Answer, Counterclaim and Third-Party
Complaint October 13, 1998
10.31 Warrant Issue-Al Dugan July 28, 1998
10.32 Amendment Agreement March 31, 1999
Documents filed with the Company's quarterly report on Form 10-QSB for the
quarter ended March 31, 1999, and incorporated by reference to such:
Exhibit No. Item Dated
10.33 Warrant Issue-John C. Lawrence March 29, 1999
10.34 PVS Termination Agreement March 31, 1999
There were no reports on Form 8-K filed during the quarter ended December 31,
1999.
|
Exhibit 21.1
Subsidiary of Registrant, as of December 31, 1998
United States Antimony Corporation, Montana
Box 643
Thompson Falls, MT 59873
SIGNATURES
Pursuant to the requirements of Section 13 or 15(b) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
UNITED STATES ANTIMONY CORPORATION
(Registrant)
By: /s/ John C. Lawrence John C. Lawrence, President, Director and Principal Executive Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By: /s/ John C. Lawrence Date: March 30, 2000
John C. Lawrence, Director and President
(Principal Executive, Financial and Accounting
Officer)
By: /s/ Leo Jackson Date: March 30, 2000
Leo Jackson, Director
By: /s/ Robert A. Rice Date: March 30, 2000
Robert A. Rice, Director
|
Supplemental Information to be Furnished with Reports Filed Pursuant to
Section 15(d) of the Exchange Act by Non-Reporting Issuers.
Not Applicable.
Report of Independent Accountants
The Board of Directors and Stockholders of United States Antimony Corporation
We have audited the accompanying consolidated balance sheets of United States Antimony Corporation and subsidiary as of December 31, 1999 and 1998, and the related consolidated statements of operations, changes in stockholders' deficit and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of United States Antimony Corporation and subsidiary as of December 31, 1999 and 1998, and the consolidated results of their operations and their cash flows for the years then ended, in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has negative working capital, an accumulated deficit and total stockholders' deficit that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/S/DECORIA, MAICHEL & TEAGUE P.S. Spokane, Washington March 11, 2000 |
United States Antimony Corporation and Subsidiary
Consolidated Balance Sheets
December 31, 1999 and 1998
1999 1998
ASSETS
Current assets:
Restricted cash $ 227 $ 221
Inventories 276,599 365,398
Accounts receivable, less allowance
for doubtful accounts of $50,000 60,205
_____________ ____________
Total current assets 337,031 365,619
Properties, plants and equipment, net 452,505 515,392
Restricted cash for reclamation bonds 178,986 178,986
Total assets ------------- ------------
$ 968,522 $ 1,059,997
============= ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Checks issued and payable $ 45,544 $ 31,089
Accounts payable 467,596 256,373
Accrued payroll and property taxes 263,667 168,482
Accrued payroll and other 97,751 61,999
Judgments payable 40,645 164,084
Accrued interest payable 14,640 348,787
Due to related parties 42,841 37,635
Notes payable to bank, current 160,395 160,017
Note payable to Bobby C. Hamilton, current 87,596 31,398
Debentures payable 335,000
Accrued reclamation costs, current 256,000 222,453
___________ ____________
Total current liabilities 1,476,675 1,817,317
Notes payable to bank, noncurrent 165,570 106,793
Note payable to Bobby C. Hamilton, noncurrent 1,450,785 1,564,161
Accrued reclamation costs, noncurrent 58,687 280,819
___________ ____________
Total liabilities 3,151,717 3,769,090
___________ ____________
Commitments and contingencies (Notes 1 and 14)
Stockholders' deficit:
Preferred stock, $.01 par value, 10,000,000 shares authorized:
Series A: 4,500 shares issued and outstanding
(liquidation preference $105,750) 45 45
Series B: 750,000 shares issued and outstanding
(liquidation preference $795,000) 7,500 7,500
Series C: 205,996 and 2,560,762 shares issued and outstanding
(liquidation preference $113,281) 2,060 25,608
Common stock, $.01 par value, 20,000,000 shares authorized;
16,900,252 and 13,425,925 shares issued and outstanding 169,003 134,259
Additional paid-in capital 14,289,947 14,079,260
Accumulated deficit (16,651,750) (16,955,765)
____________ ____________
Total stockholders' deficit (2,183,195) (2,709,093)
------------ -------------
Total liabilities and stockholders' deficit $ 968,522 $ 1,059,997
============ =============
|
The accompanying notes are an integral part of the consolidated financial statements.
United States Antimony Corporation and Subsidiary
Consolidated Statements of Operations
for the years ended December 31, 1999 and 1998
1999 1998
Revenues:
Sales of antimony products and other $ 4,710,278 $ 3,142,776
Cost of antimony production 4,329,301 2,747,880
____________ ____________
Gross profit 380,977 394,896
____________ ____________
Other operating expenses:
Exploration and evaluations 53,985 164,871
Care and maintenance - Yellow Jacket property 146,882 197,851
General and administrative 400,432 307,554
____________ ____________
601,299 670,276
____________ ____________
Other (income) expense:
Gain from accrued reclamation costs adjustment (70,000)
Gain from accounts payable adjustment (16,440)
Interest expense 185,985 216,317
Interest income and other (12,190) (23,270)
____________ ____________
87,355 193,047
____________ ____________
Loss before extraordinary item (307,677) (468,427)
Extraordinary gain on conversion of debts to common
stock 611,692
____________ ____________
Net income (loss) $ 304,015 $ (468,427)
============= ============
Basic net income (loss) per share of common stock
Before extraordinary item $ (0.02)
Extraordinary item 0.04
____________ ____________
Net income (loss) $ 0.02 $ (0.04)
============ ============
Diluted net income (loss) per share of common stock
Before extraordinary item $ (0.02)
Extraordinary item 0.04
____________ ____________
Net income (loss) $ 0.02 $ (0.03)
============ ============
Basic weighted average shares outstanding 14,597,917 13,309,379
============ ============
Diluted weighted average shares outstanding 14,837,976 15,904,204
============ ============
|
The accompanying notes are an integral part of the consolidated financial statements
United States Antimony Corporation and Subsidiary
Consolidated Statements of Cash Flows
for the years ended December 31, 1999 and 1998
1999 1998
Cash flows from operating activities:
Net income (loss) $ 304,015 $ (468,427)
Adjustments to reconcile net income (loss) to
net cash provided by operations:
Depreciation 130,714 157,812
Write off of capitalized start-up costs 8,590
Extraordinary gain on conversion of debts to common stock (611,692)
Gain from accrued reclamation costs adjustment (70,000)
Gain from accounts payable adjustment (16,440)
Provision for doubtful accounts 50,000
Issuance of common stock to directors as compensation 2,160 1,687
Issuance of common stock to employees as compensation 2,600 3,289
Issuance of common stock for services 10,000
Restricted cash (6) 15,059
Accounts receivable (110,205)
Inventories 88,799 97,884
Prepaid expenses 7,727
Accounts payable 228,863 131,291
Accrued payroll and property taxes 95,185 49,681
Accrued payroll and other 35,752 18,292
Judgments payable 11,780 21,147
Accrued interest payable 13,250 28,500
Payable to related parties 5,206 5,928
Accrued reclamation costs (118,585) (53,272)
___________ ___________
Net cash provided by operating activities 59,986 16,598
___________ ___________
Cash flows from investing activities:
Purchase of properties, plants and equipment (76,417) (31,182)
___________ ___________
Net cash used in investing activities (76,417) (31,182)
___________ ___________
Cash flows from financing activities:
Proceeds from issuance of common stock and warrants 75,000
Proceeds from new borrowings 259,484 190,050
Payments on notes payable to bank (200,330) (190,588)
Change in checks issued and payable 14,455 (11,295)
Payments on note payable to Bobby C. Hamilton (57,178) (48,583)
___________ ___________
Net cash provided by financing activities 16,431 14,584
___________ ___________
Net decrease in cash 0 0
Cash, beginning of year 0 0
___________ ___________
Cash, end of year $ 0 $ 0
___________ ___________
|
The accompanying notes are an integral part of the consolidated financial statements.
United States Antimony Corporation and Subsidiary
Consolidated Statements of Cash Flows, Continued:
for the years ended December 31, 1999 and 1998
1999 1998
Supplemental disclosures:
Cash paid during the year for interest $ 157,239 $ 187,818
__________ __________
Noncash financing activities:
Common stock issued in exchange for note receivable $ 5,000
Judgment payable converted to common stock $ 144,339
Debentures payable converted to common stock 335,000
Accrued debenture interest payable converted to common stock 347,397
Series C preferred stock converted to common stock 23,548
|
The accompanying notes are an integral part of the consolidated financial statements.
United States Antimony Corporation and Subsidiary Consolidated Statements of Changes in Stockholders' Deficit for the years ended December 31, 1999 and 1998
Preferred Stock
Series A Series B Series C Common Stock
Additional Paid Accumulated
Shares Amount Shares Amount Shares Amount Shares Amount in Capital Deficit Total
Balances,
December 31, 1997 4,500 $45 750,000 $7,500 2,560,762 $25,608 13,065,434 $130,654 $13,997,889 $(16,487,338) $(2,325,642)
Issuance of stock
for cash 300,000 3,000 58,500 61,500
Value attributed to issuance
of warrants 13,500 13,500
Issuance of stock in
exchange for services 23,491 235 3,054 3,289
Issuance of stock for note
receivable 25,000 250 4,750 5,000
Issuance of stock to
directors for compensation 12,000 120 1,567 1,687
Net loss (468,427) (468,427)
______ __ _______ _______ ________ _______ _________ _______ _________ __________ __________
Balances,
December 31, 1998 4,500 45 750,000 7,500 2,560,762 25,608 13,425,925 134,259 14,079,260 16,955,765 (2,709,093)
Issuance of stock for cash
purchased by employees 4,800 48 1,152 1,200
Issuance of stock in
exchange for services 40,000 400 9,600 10,000
Issuance of common stock
for conversion of debts 1,036,761 10,368 195,555 205,923
Issuance of stock to employee
for compensation 20,000 200 2,400 2,600
Issuance of stock to
directors for compensation 18,000 180 1,980 2,160
Conversion of series C
stock preferred stock to common (2,354,766)(23,548) 2,354,766 23,548
Net Income 304,015 304,015
______ ___ _______ _____ __________ ______ _________ _______ __________ _________ ________
Balances,
December 31, 1999 4,500 $45 750,000 $7,500 205,996 $ 2,060 16,900,252 $169,003 $14,289,947 $(16,651,750) $(2,183,195)
====== === ======= ===== ========== ====== ========= ======= ========== =========
|
The accompanying notes are an integral part of the consolidated financial statements.
United States Antimony Corporation and Subsidiary
Notes to Consolidated Financial Statements
1. Background of Company and Basis of Presentation:
AGAU Mines, Inc., predecessor of United States Antimony Corporation ("USAC" or "the Company"), was incorporated in June 1968 as a Delaware Corporation to mine gold and silver. USAC was incorporated in Montana in January 1970 to mine and produce antimony products. In June 1973, AGAU Mines, Inc. was merged into USAC. In December 1983, the Company suspended its antimony mining operations when it became possible to purchase antimony raw materials more economically from foreign sources.
The principal business of the Company has been the production and sale of antimony products. Up until the first quarter of 1999 the Company sold its products pursuant to a profit sharing agreement with affiliated chemical sales companies. On March 31, 1999, the company terminated the agreement and started selling its products independently .
The Company has aquired a 50% interest in United States Antimony, Mexico S.A. de C.V. ("USAMSA") to mine, mill and produce antimony metal and other related products from certain states in Mexico. At December 31, 1999, the Company had invested $111,088 in plant and equipment in Mexico.
The financial statements have been prepared on a going concern basis which assumes realization of assets and liquidation of liabilities in the normal course of business. At December 31, 1999, the Company has negative working capital of approximately $1.14 million, an accumulated deficit of approximately $16.7 million and a total stockholders' deficit of approximately $2.2 million. These factors, among others, indicate that there is substantial doubt that the Company will be able to meet its obligations and continue in existence as a going concern. The financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern.
To improve the Company's financial condition, the following actions have been initiated or taken by management:
-In March 1999, the Company notified its sales affiliate, Basic Chemical Systems ("BCS"), that it was terminating certain operating agreements with BCS relating to the marketing and sales of antimony products. In connection with the cancellation, the Company began acting independently in the production and sale of antimony products.
-During 1999 the Company procured financing from an accounts receivable factoring institution to supplement operating capital and fund its antimony product sales efforts.
-In 1999 and 1998 the Company deveoted substantial efforts to the research and development of new antimony products and applications. These efforts have resulted in advances in the Company's preparation, packaging, and quality of the antimony products it delivers to customers. The Company believes that it will be able to stay competitive in the antimony business and generate increasing profits because of these advances. -In 1999, the Company converted debts totaling $826,736 in principal and accrued interest into common stock of the company.
1. Background of Company and Basis of Presentation, Continued:
-In 1998, the Company generated $75,000 through sales of 300,000 shares of unregistered common stock and warrants to existing shareholders. The Company plans to raise additional equity funding through additional stock sales in 2000. However, there can be no assurance that the Company will be able to successfully raise additional capital through the sale of its stock.
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
2. Concentration of Risk:
The Company purchases the majority of its raw antimony used in the production of finished antimony products from Chinese producers through metal brokers. If the supply of antimony from China is reduced, it is possible that the Company's antimony product operations could be adversely affected. During the years ended December 31, 1999 and 1998, 20% and 19%, respectively, of the Company's revenues from antimony products were from sales to one customer.
Many of the Company's competitors in the antimony industry have substantially more capital resources and market share than the Company. Therefore, the Company's ability to maintain its market share can be significantly affected by factors outside of the Company's control.
The Company's revenues from antimony sales are strongly influenced by world prices for such commodities, which fluctuate and are affected by numerous factors beyond the Company's control, including inflation and worldwide forces of supply and demand. The aggregate effect of these factors is not possible to accurately predict.
3. Summary of Significant Accounting Policies:
Principles of Consolidation
The Company's consolidated financial statements also include the accounts of United States Antimony Montana ("USAM") a wholly owned subsidiary. Intercompany balances and transactions are eliminated in consolidation.The Company accounts for its investment interest in its 50% foreign-owned entity USAMSA by the equity method.
Restricted Cash
Restricted cash consists of cash held for investment in USAMSA and reclamation performance bonds.
Inventories
Inventories at December 31, 1999 and 1998, consisted of ownership in antimony metal, metal in process and finished goods that are stated at the lower of first-in, first-out cost or estimated net realizable value. Since the Company's inventory is a commodity with a sales value that is subject to world prices for antimony that are beyond the Company's control, a significant change in the world market price of antimony could have a significant effect on the net realizable value of inventories.
3. Summary of Significant Accounting Policies, Continued:
Properties, Plants and Equipment
Production facilities and equipment are stated at the lower of cost or estimated net realizable value and are depreciated using the straight-line method over their estimated useful lives (five to fifteen years). Vehicles and office equipment are stated at cost and are depreciated using the straight-line method over estimated useful lives of three to five years. Maintenance and repairs are charged to operations as incurred. Betterments of a major nature are capitalized. When assets are retired or sold, the costs and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is reflected in operations.
Management of the Company periodically reviews the net carrying value of all of its properties on a property-by-property basis. These reviews consider the net realizable value of each property to determine whether a permanent impairment in value has occurred and the need for any asset write-down. The Company considers current metal prices, cost of production, proven and probable reserves and salvage value of the property and equipment in its valuation.
Management's estimates of metal prices, operating capital requirements and reclamation costs are subject to risks and uncertainties of change affecting the recoverability of the Company's investment in its properties, plants and equipment. Although management has made its best estimate of these factors based on current conditions, it is reasonably possible that changes could occur in the near term which could adversely affect management's estimate of net cash flows expected to be generated from its properties, and necessitate asset impairment write-downs.
The Company has adopted the provisions of Statement of Financial Accounting Standards No. 121 ("SFAS No. 121"), "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." SFAS No. 121 requires that an impairment loss be recognized when the estimated future cash flows (undiscounted and without interest) expected to result from the use of an asset are less than the carrying amount of the asset. Measurement of an impairment loss is based on the estimated fair value of the asset if the asset is expected to be held and used.
Reclamation and Remediation
All of the Company's operations are subject to reclamation and closure requirements. Minimum standards for mine reclamation have been established by various governmental agencies. Costs are estimated based primarily upon environmental and regulatory requirements and are accrued and charged to expense over the expected economic life of the operation using the units-of-production method. The liability for reclamation is classified as current or noncurrent based on the expected timing of expenditures.
The Company accrues costs associated with environmental remediation obligations when it is probable that such costs will be incurred and they are reasonably estimable. Costs of future expenditures for environmental remediation are not discounted to their present value. Such costs are based on management's current estimate of amounts that are expected to be incurred when the remediation work is performed within current laws and regulations. The Company has restricted cash balances that have been provided to ensure performance of its reclamation obligations.
3. Summary of Significant Accounting Policies, Continued:
Reclamation and Remediation, Continued:
It is reasonably possible that, due to uncertainties associated with defining the nature and extent of environmental contamination, application of laws and regulations by regulatory authorities, and changes in remediation technology, the ultimate cost of remediation and reclamation could change in the future. The Company continually reviews its accrued liabilities for such remediation and reclamation costs as evidence becomes available indicating that its remediation and reclamation liability has changed.
Income Taxes
The Company records deferred income tax liabilities and assets for the expected future income tax consequences of events that have been recognized in its financial statements. Deferred income tax liabilities and assets are determined based on the temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities using enacted tax rates in effect in the years in which the temporary differences are expected to reverse.
Revenue Recognition
Sales of antimony products are recorded upon shipment to the customer.
Income (Loss) Per Common Share
The Company accounts for its income (loss) per common share according to the Statement of Financial Accounting Standards No. 128 ("SFAS No. 128,") "Earnings Per Share". Under the provisions of SFAS No. 128, primary and fully diluted earnings per share are replaced with basic and diluted earnings per share. Basic earnings per share is arrived at by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding, and does not include the impact of any potentially dilutive common stock equivalents. The diluted earnings per share calculation is arrived at by dividing net income (loss) by the weighted average number of shares outstanding, adjusted for the dilutive effect of outstanding stock options, the conversion impact of convertible preferred stock, and shares issuable under warrants and other contracts.
During 1999 and 1998, the Company had outstanding common stock warrants that were exercisable at prices higher than the average trading value of the Company's stock and, therefore, antidilutive. Accordingly, the warrants have no effect on the calculation of basic or diluted weighted average number of shares. At December 31, 1999 and 1998, the Company had 205,996 and 2,560,762, shares respectively, of Series C preferred stock that were outstanding. The Series C preferred stock is convertible into common stock of the Company and considered in the calculation of diluted weighted average number of shares outstanding during 1999 and 1998.
Stock-Based Compensation
The Company recognizes compensation expense for employees and directors awarded stock as compensation based upon the market value of stock awarded at the time of the award.
3. Summary of Significant Accounting Policies, Continued:
Recent Accounting Pronouncements
In June 1998, Statement of Financial Accounting Standards No. 133 ("SFAS No. 133"), "Accounting for Derivative Instruments and Hedging Activities" was issued. SFAS No. 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts(collectively referred to as derivatives), and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. SFAS No. 133 is effective for all fiscal quarters of fiscal years beginning after June 15, 1999, however, earlier application of all of the provisions of this statement is encouraged as of the beginning on any fiscal quarter. The Company believes the adoption of this standard will not have a material impact its financial position or results of operations.
In April 1998, Statement of Position 98-5 ("SOP 98-5"), "Reporting on the Costs of Start-up Activities" was issued. SOP 98-5 provides guidance on the financial reporting of start-up costs and organizational costs. It requires costs of start-up activities and organizational costs to be expensed as incurred. During 1999, the Company expensed $8,590 of organizational costs that had previously been capitalized relating to its investment in USAMSA. No cumulative effect of a change in accounting principle was recognized, however, due to the immateriality of the amount. If a cumulative effect had been recognized, accumulated deficit at December 31, 1998 would have been increased by $8,590.
4. Sales of Accounts Receivable:
The Company sells the majority of its accounts receivables to a company pursuant to the terms of a factoring agreement entered into on March 30, 1999. According to the terms of the agreement the receivables are sold with full recourse and the Company assumes all risks of collectibility. The performance of all obligations and payments to the factoring company is personally guaranteed by John C. Lawrence, the Company's president and director. As consideration for Mr. Lawrence's guarantee, the Company granted a mortgaged security interest to Mr. Lawrence collateralized by the Company's real and personal property. In addition, Mr. Lawrence was granted 250,000 warrants to purchase common stock of the Company exercisable at $0.25 per share (See Note 10).
The Company maintains an allowance for doubtful accounts receivable based upon the expected collectibility of all trade receivables. The allowance for doubtful accounts was $50,000 at December 31, 1999. The factoring agreement requires that the Company pay 4% of the face amount of the receivables sold up to $1,200,000, and 2% of the face amount of receivables sold thereafter as a financing fee. Financing fees paid by the Company during the year ended December 31, 1999 totaled $106,742 and were recorded in the cost of antimony production. At December 31, 1999, net accounts receivable of $3,909,774 had been sold under the agreement, and were reflected as reductions of accounts receivable. Proceeds from the sales were used to fund inventory purchases and operating expenses. The agreement is for a term of one year with automatic renewal for additional one-year terms. The Company's sales of accounts receivable qualify as sales under the provisions of Statement of Financial Standards No. 125 "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities."
5. Properties, Plants and Equipment:
The major components of the Company's properties, plants and equipment at December 31, 1999 and 1998 were as follows:
1999 1998
Gold mill and equipment(1) $ 37,890 $ 37,890
Gold mining equipment(1) 1,265,392 1,265,392
Antimony mining buildings and equipment(2) 168,746 168,746
Antimony mill and equipment(2) 518,190 518,190
Chemical processing and office buildings 255,447 225,313
Chemical processing equipment 852,811 837,256
USAMSA(3) plant and equipment 111,088 99,098
Other 76,955 66,807
____________ _____________
3,286,519 3,218,692
Less accumulated depreciation and depletion 2,834,014 (2,703,300)
____________ _____________
$ 452,505 $ 515,392
============ =============
(1)The Company has removed the mill at Yankee Fork and some of the
mining and milling equipment as part of the reclamation process. Substantially
all of the remaining assets are fully depreciated.
(2)At December 31, 1999 and 1998, substantially all of these assets
are fully depreciated and the antimony milling buildings and equipment are
idle.
(3)Amount represents the Company's expenditures for USAMSA plant and
equipment located in Mexico (see Note 1).
|
6. Judgments Payable:
At December 31, 1999 and 1998, the Company owed the following judgments
payable:
1999 1998
Internal Revenue Service in collection of former
legal counsel's Bankruptcy estate $40,645(1) $37,986
Geosearch, Inc. (see Note 10) 126,098
__________ _________
$40,645 $164,084
========== =========
|
(1)Includes interest at the Federal Judgment Rate, which approximated 6% -7% during 1999 and 1998. The amount is collateralized by certain equipment.
7. Due to Related Parties:
Amounts due to related parties at December 31, 1999 and 1998 were as follows (see Note 13).
1999 1998
Entity owned by John C. Lawrence,
president and director $ 788 $ 2,227
John C. Lawrence, president and
director 7,340 2,485
Walter L. Maguire, Jr., a former
director (1) 34,713 32,923
_________ __________
$ 42,841 $ 37,635
========= ==========
|
(1)Interest accrues on the original principal balance advanced at 10% per annum.
Transactions affecting the payable to Mr. Lawrence during 1999 and 1998 were as follows:
1999 1998
Balance, beginning of year $ 2,485 $ -0-
Equipment rental charges 30,616 38,865
Payments (25,761) (36,380)
_________ _________
Balance, end of year $ 7,340 $ 2,485
========= =========
|
8. Notes Payable to Bank:
Notes payable to First State Bank of Thompson Falls, Montana ("First State Bank") at December 31, 1999 were as follows:
Five-year term note bearing interest at 10.5%; payable monthly equal to 1.5% of receipts from all Company sales, up to $5,375 per month; due in full April 2, 2004; collateralized by certain equipment and patented and unpatented mining claims in Sanders County, Montana; personally guaranteed by John C. Lawrence, (president and director). $210,116
Note payable under a $50,500 revolving line-of-credit agreement bearing interest at 10.5%; collateralized by certain equipment
and patented and unpatented mining claims in Sanders County,
Montana; principal and accrued interest due at maturity
on April 2, 2000; personally guaranteed by John C. Lawrence. 34,259
Note payable under a $85,050 revolving line-of-credit agreement
bearing interest at 11%; collateralized by certain equipment
and patented and unpatented mining claims in Sanders County,
Montana; principal and accrued interest due at maturity on
February 15, 2000; personally guaranteed by John C. Lawrence. 71,342
Note payable under a revolving line-of-credit agreement
bearing interest at 11%; collateralized by certain equipment
and patented and unpatented mining claims in Sanders County,
Montana; principal and interest due at maturity on
January 2, 2000; personally guaranteed by John C. Lawrence. $ 10,248
_________
Total 325,965
Less current portion 160,395
_________
Noncurrent portion $ 165,570
=========
|
Based on the interest rates in effect at December 31, 1999, principal payments on the notes payable to bank are due as follows:
Year Ending
December 31,
2000 $ 160,395
2001 49,455
2002 54,905
2003 61,210
_________
$ 325,965
=========
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9. Note Payable to Bobby C. Hamilton:
The Company owed Bobby C. Hamilton ("Hamilton"), a stockholder, an unsecured note payable of $1,538,381 and $1,595,559 at December 31, 1999 and 1998, respectively. The obligation arose from the settlement of litigation brought against Hamilton by the Company in 1995. The original terms for repayment of the note included the payment of principal and interest at 7.5% per annum equal to 10% of the gross sales of the Company's operations, with a minimum total annual payment of principal and interest of $150,000.
In April 1999, the Company renegotiated the repayment terms such that the note is payable equal to 4% of the gross sales of the Company's operations with a minimum total annual payment of principal and interest of $200,000. Based on the minimum annual payment requirement, principal payments on the Hamilton note payable are due as follows:
Year Ending
December 31,
2000 $ 87,596
2001 94,396
2002 101,724
2003 109,622
2004 118,132
Thereafter 1,026,911
___________
$ 1,538,381
===========
|
Interest expense paid to Hamilton, a stockholder, during the years ended December 31, 1999 and 1998 was $117,755 and $127,957 respectively.
10. Stockholders' Deficit:
Stock Warrants
The Company's Board of Directors has the authority to issue incentive stock warrants for the purchase of common stock to directors and employees of the Company. The Company has also issued warrants in exchange for services rendered the Company and in settlement of certain litigation.
Transactions in stock warrants are as follows:
Number of Expiration
Warrants Excercise Prices Date
Balance, December 31, 1997 894,356 $0.50-$0.80
Warrants issued in connection with
stock sale 100,000 $0.50 (A)
Warrants issued in connection with
stock sale 100,000 $0.25 (B)
Balance, December 31, 1998 1,094,356 $0.25-$0.80
Warrants issued to John C.
Lawrence, president and director,
in connection with his personal
guarantee of a financing
arrangement 250,000 $0.25 (C)
Warrants issued to a consultant as
compensation for services 100,000 $0.55 (D)
Warrants expired (225,000) $0.50-$0.70
_________ ___________
Balance, December 31, 1999 1,219,356 $0.25-$0.80
========= ===========
|
(A) Of total warrants issued in these stock sales, 60,000 are
exercisable on or before February 17, 2001, and 40,000 are exercisable
on or before January 12, 2001.
(B) Warrants are exercisable on or before July 28, 2001.
(C) Warrants are exercisable for as long as Mr. Lawrence personally
guarantees certain company financing arrangements.
(D) Warrants are exercisable on or before August 30, 2002.
Issuance of Common Stock to Employees
Duurng 1999, the Company issued 20,000 shares of its unregistered common stock to employees in recognition of their service to the Company. The Company accounts for stock issued to employees as compensation in accordance with Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," and accordingly recognized compensation expense of $2,600 based on upon the fair value of the unregistered shares issued.
10. Stockholders' Deficit, Continued:
Issuance of Common Stock in Connection with Conversion of Debts
In November 1999, the Company entered into a Settlement Agreement and Release of all Claims ("the Agreement") with Ronald Michael Meneo, Trustee of the Walter L. Maguire 1935-1 Trust ("the Trust") and Walter L. Maguire Sr., beneficiary of the Trust and stockholder and former director of the Company. The Agreement settled litigations brought by the Trust against the Company for default on certain of the Company's debentures held by the Trust and the resulting counterclaim against the Trust and Mr. Maguire by the Company. The Agreement called for the issuance of 790,909 shares of the Company's unregistered common stock to the Trust in exchange for the extinguishment of all indebtedness claimed owing to the Trust or Mr. Maguire.
In connection with the issuance, the Company extinguished $335,000 of debenture principal and $347,397 of related accrued interest thereon. The Company recorded an extraordinary gain of $534,101 on the extinguishment based upon the value of the restricted shares issued at the time.
In October 1999, the Company extinguished a debt due Geosearch, Inc., a former lessor of a mining interest to the Company, by issuing 245,852 shares of its unregistered common stock. The debt extinguished totaled $144,339 of principal and accrued interest. The Company recorded an extraordinary gain of $77,591 on the extinguishment based upon the value of the restricted shares issued at the time.
Issuance of Common Stock for Cash
During 1998, the Company sold 300,000 shares of its unregistered common stock and warrants for $75,000. Of total stock sales made during the year ended December 31, 1998, the Company sold 200,000 shares of its unregistered common stock and warrants to Walter L. Maguire Sr. and parties related to him for $50,000. Mr. Maguire is a stockholder and was a director of the Company until December 31, 1998.
Issuance of Common Stock in Exchange for Services
During 1999, the Company issued 40,000 shares of its unregistered common stock and 100,000 warrants to purchase shares of common stock at $0.55 per share until August 3, 2000, to a consultant in exchange for professional services rendered to the Company. These shares were valued at 75% of the market value of the stock at the time they were issued.
During 1999, the Company issued 23,491 shares of its unregistered common stock to the grandson of Robert L. Rice, a director and stockholder, in exchange for services rendered to the Company. The shares were valued at 75% of the market value of the stock at the time they were issued, which approximated the value of the services rendered. The Company recognized the issuance during the year ended December 31, 1998, since the services were provided to the Company prior to that date.
Issuance of Common Stock for Note Receivable
During 1998, the Company issued Robert L. Rice, a director and stockholder, 25,000 shares of its unregistered common stock in exchange for a $5,000 note receivable. The note was satisfied in 1998 when Mr. Rice transferred certain equipment to the company as payment (See Note 13).
10. Stockholders' Deficit, Continued:
Preferred Stock
The Company's Articles of Incorporation authorize 10,000,000 shares of $.01 par value preferred stock. Subject to amounts of outstanding preferred stock, additional shares of preferred stock can be issued with such rights and preferences, including voting rights, as the Board of Directors shall determine.
During 1986, Series A restricted preferred stock was established by the Board of Directors. These shares are nonconvertible, nonredeemable and are entitled to a $1.00 per share per year cumulative dividend. Series A preferred stockholders have voting rights for directors only and a total liquidation preference equal to $45,000 plus dividends in arrears. At December 31, 1999, cumulative dividends in arrears amounted to $60,750, or $13.50 per share.
During 1993, Series B restricted preferred stock was established by the Board of Directors and 1,666,667 shares were issued in connection with the final settlement of litigation related to the nonpayment of royalties under a sublease contract. The Series B preferred stock has preference over the Company's common stock and Series A preferred stock, has no voting rights and is entitled to cumulative dividends of $.01 per share per year. In the event of dissolution or liquidation of the Company, the preferential amount payable to Series B restricted preferred stockholders is $1.00 per share plus dividends in arrears. No dividends have been declared or paid with respect to the Series B preferred stock. In 1995, 916,667 shares of Series B preferred stock were surrendered to the Company in connection with the settlement of litigation against Bobby C. Hamilton. At December 31, 1999, cumulative dividends in arrears were $45,000, or $0.06 per share.
During 1997, the Company issued 2,560,762 shares of Series C preferred stock in connection with the conversion of certain debts owed by the Company. The rights, preferences, privileges and limitations of the Series C preferred shares issued upon conversion of debt are set forth below:
Designation. The class of Convertible Preferred Stock, Series C, $0.01 par value per share, shall consist of up to 3.8 million shares of the Company.
Optional Conversion. A holder of Series C preferred shares shall have the right to convert the Series C shares, at the option of the holder, at any time within 18 months following issuance, into shares of common stock at the ratio of 1:1, subject to adjustment as provided below.
Voting Rights. The holders of Series C preferred shares shall have the right to that number of votes equal to the number of shares of common stock issuable upon conversion of such Series C preferred shares.
Liquidation Preference. In the event of any liquidation or winding up of the Company, the holders of Series C preferred shares shall be entitled to receive as a preference over the holders of common stock an amount per share equal to $0.55, subject to the preferences of the holders of the Company's outstanding Series A and Series B preferred stock.
10. Stockholders' Deficit, Continued:
Preferred Stock, Continued:
Registration Rights. Twenty percent (20%) of the underlying common stock issuable upon conversion of the Series C preferred shares shall be entitled to "piggyback" registration rights when, and if, the Company files a registration statement for its securities or the securities of any other stockholder.
Redemption. The Series C preferred shares are not redeemable by the Company.
Antidilution Provisions. The conversion price of the Series C shares shall be subject to adjustments to prevent dilution in the event that the Company issues additional shares at a purchase price less than the applicable conversion price (other than shares issued to employees, consultants and directors pursuant to plans and arrangements approved by the Board of Directors, and securities issued to lending or leasing institutions approved by the Board of Directors). In such event, the conversion price shall be adjusted according to a weighted-average formula, provided that a holder of Series C shares purchases his pro rata share of the securities being sold in the dilutive financing. The initial conversion price for the Series C shares is $0.55.
Protective Provisions. The consent of a majority interest of the holders of Series C preferred shares shall be required for any action which (i) alters or changes the rights, preferences or privileges of the Series C shares materially and adversely; or (ii) creates any new class of shares having preference over or being on a parity with the Series C shares.
During 1999, holders of 2,354,766 shares of Series C shares converted their shares into common stock of Company. At December 31, 1999, 205,996 shares of Series C preferred stock remained outstanding.
11. Income Taxes:
The components of the deferred tax assets and liabilities at December 31, 1999 and 1998 are as follows:
1999 1998
Net operating losses $2,560,645 $2,646,065
Properties, plants and equipment 32,996 19,979
Reclamation costs 106,993 171,112
Allowance for doubtful accounts 17,000
__________ __________
deferred tax assets 2,717,634 2,837,156
Less valuation allowance (2,717,634) (2,837,156)
__________ __________
$ 0 $ 0
========== ==========
|
Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," requires that a valuation allowance be provided if it is more likely than not that some portion or all of a deferred tax asset will not be realized. Although the Company has significant deferred tax assets, principally in the form of net operating loss carryforwards, its ability to generate future taxable income to realize the benefit of these assets will depend primarily the attainment of a consistent level of overall profitability from operations.
The market, capital and environmental factors associated with realizing this goal are considerable and uncertain. Therefore, management believes that a full valuation allowance of the net deferred tax assets is appropriate at December 31, 1999 and 1998. However, if estimates of future taxable income change, the valuation allowance could change in the future.
The change in the valuation allowance for the years ended December 31, 1999 and 1998 is as follows:
Balance, December 31, 1997 $2,597,891
Increase due to non-utilization of net operating loss
carry forward 239,265
__________
Balance, December 31, 1998 2,837,156
Decrease due to utilization of net operating loss
carry forward (119,522)
__________
Balance, December 31, 1999 $2,717,634
==========
|
During the year ended December 31, 1999, the Company utilized approximately $251,000 of net operating losses for federal income tax purposes.
At December 31, 1999, the Company had the following regular tax basis net operating loss carryforward.
Expiring in
2000 $2,220,180
2001 916,998
2002 715,731
2003 866,362
2004 568,416
2005 715,049
2006 512,877
2007 154,235
2011 394,788
2018 466,672
__________
$7,531,308
==========
|
At December 31, 1999, the Company had net operating loss carryforward for alternative minimum tax purposes of approximately $7.1 million.
12. Loss Per Common Share:
The following table presents a reconciliation of the numerators and denominators of the basic and diluted earnings per share ("EPS') computations for the years ended December 31, 1999 and 1998:
1999
Loss Shares Amounts
Basic EPS:
Net loss before extraordinary item $(307,677) 14,597,917 $(0.02)
Effect of Dilutive Securities
Common stock warrants (1)
Series C preferred stock(2) 240,059 Nil
__________ __________ _______
Diluted EPS:
Net loss before extraordinary item $(307,677) 14,837,976 $(0.02)
========== ========== =======
1998
Per Share
Loss Shares Amounts
Basic EPS:
Net loss $(468,427) 13,309,379 $ (0.04)
Effect of Dilutive Securities
Common stock warrants (1)
Series C preferred stock (2) 2,594,825 0.01
__________ __________ ________
Diluted EPS:
Net loss $(468,427) 15,904,204 $ (0.03)
========== ========== ========
(1) Common stock warrants totaling 1,219,356 and 1,094,356 outstanding
during 1999 and 1998, respectively, were not included in the
computation of diluted EPS at December 31, 1999 or 1998 because
the various exercise prices of the warrants were greater than the
average market price of the Company's common stock.
(2) Series C preferred stock is convertible into common stock of the company
on a share-for-share basis. The effect on the computation of diluted
weighted average shares outstanding is based upon the potential
conversion of the shares into common stock for the period of time the
preferred shares were outstanding and the effect of Series C preferred
stock anti-dilution provisions.
|
13. Related-Party Transactions:
In addition to transactions described in Notes 4, 7, 9, and 10 during 1999 and 1998, the Company had the following transactions with related parties:
-During 1999 and 1998, the Company issued 18,000 shares of its unregistered common stock to certain members of the Board of Directors for their duties as directors. The issuance represented an award of 6,000 shares per year per director eligible to receive the award. The issuances have been recorded in the consolidated financial statements as if they were issued in the year they were earned. The stock awards were recorded as compensation expense (director's fees) based upon the estimated value of the stock at the date of issuance.
-At December 31, 1999, the Company owed Walter L. Maguire, Jr., a stockholder and former director, $34,713 for amounts advanced to the Company by Mr. Maguire. Annual interest expense related to these notes was $1,790 for both 1999 and 1998. In 1996, a company controlled by Mr. Maguire sold the Company packaging materials at a cost of $32,066. At December 31, 1999, the Company owed Mr. Maguire's company $5,497 (included in accounts payable), representing the unpaid balance on this purchase.
-During 1998, Robert L. Rice, a director and stockholder, exchanged certain equipment for a $5,000 note receivable due the Company.
-In February 1999, the Board of Directors nominated Leo Jackson to serve as a director in the place of Walter L. Maguire, Sr., who had resigned from the Board on December 31, 1998. Mr. Jackson is a stockholder of the Company and owns 31.4% of Production Minerals Inc., a company that has an indirect interest of 25% in the stock of USAMSA. (See Note 1)
14. Commitments and Contingencies:
Until 1989, the Company mined, milled and leached gold and silver in the Yankee Fork Mining District in Custer County, Idaho. The metals were recovered by a 150-ton per day gravity and flotation mill, and the concentrates were leached with cyanide to produce a bullion product at the Preachers Cove mill, which was located six miles north of Sunbeam, Idaho on the Yankee Fork of the Salmon River. In 1994, the U.S. Forest Service, under the provisions of the Comprehensive Environmental Response Liability Act of 1980 (CERCLA), designated the cyanide leach plant as a contaminated site requiring cleanup of the cyanide solution. The Company has been reclaiming the property and as of December 31, 1999, the cyanide solution discharge was complete, the mill removed, and a majority of the cyanide leach residue disposed of. In 1996, the Idaho Department of Environmental Quality requested that the Company sign a consent decree related to completing the reclamation and remediation at the Preachers Cove mill, which the Company signed in December 1996. The Company anticipates having reclamation at the property completed in 2000.
The Company has accrued amounts on its balance sheet that it believes to be representative of future costs required to fully reclaim the property.
The Company also has environmental remediation obligations at its antimony production facility near Thompson Falls, Montana and its abandoned gold mining property (Yellow Jacket) in Lemhi County, Idaho. The Company has accrued amounts on its balance sheet that it estimates will be adequate to fulfill these obligations at December 31, 1999. During 1999 substantial reclamation work was performed at both of these sites.
15. Fair Value of Financial Instruments:
The following disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of Statement of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments." The estimated fair value amounts have been determined using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data and to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange.
The carrying amounts for cash, restricted cash, accounts receivable, accounts payable and accrued expenses are a reasonable estimate of their fair values. The fair value of amounts due to related parties and judgments payable approximate their carrying values of $42,841 and $40,645, respectively, at December 31, 1999, and $37,635 and $164,084, respectively, at December 31, 1998, based upon the contractual cash flow requirements.
It is not practicable to estimate the fair value of the $1,538,381 note payable to Bobby C. Hamilton. The payments are based upon future revenues, which are uncertain. There are no similar financial instruments in the market to which the value can be compared and the note is not secured with any collateral.
| ARTICLE 5 |
| PERIOD TYPE | YEAR |
| FISCAL YEAR END | DEC 31 1999 |
| PERIOD END | DEC 31 1999 |
| CASH | 227 |
| SECURITIES | 0 |
| RECEIVABLES | 110205 |
| ALLOWANCES | (50000) |
| INVENTORY | 276599 |
| CURRENT ASSETS | 337031 |
| PP&E | 3286519 |
| DEPRECIATION | (2834014) |
| TOTAL ASSETS | 968522 |
| CURRENT LIABILITIES | 1476675 |
| BONDS | 0 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 9605 |
| COMMON | 169003 |
| OTHER SE | (2361803) |
| TOTAL LIABILITY AND EQUITY | 968522 |
| SALES | 4710278 |
| TOTAL REVENUES | 4710278 |
| CGS | 4329301 |
| TOTAL COSTS | 4329301 |
| OTHER EXPENSES | 601299 |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | 185985 |
| INCOME PRETAX | (307677) |
| INCOME TAX | 0 |
| INCOME CONTINUING | (307677) |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 611692 |
| CHANGES | 0 |
| NET INCOME | 304015 |
| EPS BASIC | .02 |
| EPS DILUTED | .02 |
SETTLEMENT AGREEMENT AND
RELEASE OF ALL CLAIMS - 1
SETTLEMENT AGREEMENT AND RELEASE OF ALL CLAIMS
This Settlement Agreement and Release of All Claims ( "Agreement"), is
entered into by, between, and among Ronald Michael Meneo, Trustee of the
Walter L. Maguire 1935-1 Trust (hereinafter the "Trust") and Walter L. Maguire
(hereinafter "Maguire"), and United States Antimony, a Montana corporation
(hereinafter "USAC"), parties in certain litigation captioned Ronald Michael
Meneo, Trustee of the Walter L. Maguire 1935-1 Trust v. United States Antimony
Corporation, Montana Twentieth Judicial District Court, Sanders County, Cause
No. DV.98-28 and U.S. Antimony Corporation, a Montana corporation vs. Walter
L. Maguire, Montana Twentieth Judicial District Court, Sanders County, Cause
No. DV.98-60 (hereinafter collectively referred to as the "Litigation").
AGREEMENT
In consideration of the mutual covenants, conditions, promises, and other
matters contained in this Agreement, the sufficiency of which as consideration
is acknowledged , the parties agree as follows:
1. Payment.
a. The Trust holds and claims as Owner four (4) USAC debentures totalling the principal amount $335,000 ($200,000 Debenture dated April 15, 1985; $30,000 Debenture dated May 2, 1998; $20,000 Debenture dated July 12, 1988; and $85,000 Debenture dated November 2, 1988)(hereinafter collectively referred to as "Debentures"). The Trust also claims interest due and owing on the Debentures. USAC disputes the amount of either principal or interest, if any, as being due and payable.
b. The Trust and Maguire agree to surrender and deliver the Debentures to USAC. USAC, upon delivery of the Debentures, will issue to the Trust 790,909 shares of USAC common stock which shall extinguish all indebtedness claimed owing by the Trust or Maguire. USAC shall then mark the Debentures as paid in full, and any rights and interest of the Trust and/or Maguire in the Debentures shall be extinguished.
2. No Admission of Liability. All the parties hereto have denied and continue to deny the allegations of the Actions against the respective parties and enter into this settlement solely for the purpose of avoiding litigation costs and as a compromise of disputed claims. Nothing contained in this Agreement, nor the fact of this settlement, constitutes an admission of liability by any party hereto.
3. Mutual Release Of All Claims
a. In consideration of the payment enumerated in paragraph 1 , together with other valuable consideration the adequacy of which is acknowledged and received, The Trust and USAC, on their behalf, and on behalf of all their insurers, agents, assigns, contractors, and successors in interest, do hereby release and forever discharge each other, their predecessors, subsidiaries, successors, affiliates, shareholders, officers, directors, and their respective employees, agents, brokers, contractors, attorneys, insurers, reinsurers, administrators, assigns, and all other persons, firms, corporations, and any other entity who may be deemed to act, who have acted, or who may be deemed to act in the future, on behalf of them, from any and all claims, demands, actions, causes of action, or suits of every nature whatsoever, and whether on account of past or present liability, potential future liability arising from either past or present acts or omissions, whether actual or alleged, for personal injury, property damage, economic loss and/or impairment or diminution of or other interference with any other right or amenity protected by law, statute, regulation or in equity, which liability relates to or arises from any injuries, damages or losses arising, accruing, or relating to any act, omission, or occurrence of any kind prior to the date of this Agreement.
b. In consideration of the payment enumerated in paragraph 1 , together with other valuable consideration the adequacy of which is acknowledged and received, Maguire and USAC, on their behalf, and on behalf of all their insurers, agents, assigns, contractors, personal representatives, executors and successors in interest, do hereby release and forever discharge each other, their predecessors, subsidiaries, successors, affiliates, shareholders, officers, directors, and their respective employees, agents, brokers, contractors, attorneys, insurers, reinsurers, administrators, assigns, and all other persons, firms, corporations, and any other entity who may be deemed to act, who have acted, or who may be deemed to act in the future, on behalf of them, from any and all claims, demands, actions, causes of action, or suits of every nature whatsoever, and whether on account of past or present liability, potential future liability arising from either past or present acts or omissions, whether actual or alleged, for personal injury, property damage, economic loss and/or impairment or diminution of or other interference with any other right or amenity protected by law, statute, regulation or in equity, which liability relates to or arises from any injuries, damages or losses arising, accruing, or relating to any act, omission, or occurrence of any kind prior to the date of this Agreement.
c. This release includes without limitation all past or present liability or potential future liability arising or accruing out of any acts or omissions occurring prior to the date of this Agreement, whether known or unknown and whether contingent or liquidated.
4. Incorporation of Prior Agreements.
a. Each of the parties hereto have participated in the negotiation and preparation of this Agreement after consulting with counsel of its choice. Accordingly, the language of this Agreement shall not be presumptively construed against any of the parties hereto.
b. This Agreement supersedes all prior agreements, understandings and discussions among the parties hereto concerning any of the matters contained herein.
c. No promise, inducement or agreement not herein expressed has been made to either party by any other party.
d. The parties hereto have read this Agreement in its entirety, have reviewed it with their counsel, fully understand and acknowledge all of its terms, and enter into this Agreement voluntarily and with authority to do so.
5. Entire Agreement; Controlling Law. This Agreement contains the entire agreement between the parties and the terms contained herein are contractual and not a mere recital. To the extent construction or interpretation becomes necessary, the Agreement shall be construed in accordance with Montana law. To the extent that this Agreement, or any part thereof, may be inconsistent with Montana law currently existing or that in the future, that the parties nonetheless intend to confirm their agreement notwithstanding any contrary existing Montana law, contrary law of any other jurisdiction, or any subsequent changes in applicable or potentially applicable law.
6. Successors in Interest. This Agreement shall inure to the benefit of and shall be binding upon the parties' respective successors, heirs and assigns.
7. Directorship. For five years from the date hereof, the Trust and Maguire covenant not to nominate any person to serve on the board of directors of USAC, and Maguire and the Trustee agree not to serve on the Board of Directors.
8. Option to Purchase USAC Common Stock.
a. The Trust grants USAC an irrevocable option to purchase all USAC, but not less than all, common stock now owned or hereafter acquired by the Trust. The option shall commence upon the issuance of the stock referred to in Section 1 and terminate five (5) years from the issue date or fifteen (15) days after the tender of the debentures to USAC.
b. Maguire grants USAC an irrevocable option to purchase all, but not
less than all, USAC common stock now owned or hereafter acquired by Maguire.
The option shall commence upon the issuance of the stock referred to in
Section 1 and terminate five (5) years from the issue date or fifteen (15)
days after the tender of debentures to USAC.
c. The purchase price for the option common stock shall be the greater of the highest daily closing bid in sixty (60) days preceding written notice of the exercise of the option by USAC or $.0.55 per share of common stock--(Option Price).
d. In the event either Maguire or the Trust elect to sell any USAC common stock during the option period, Maguire or the Trust shall provide not less than thirty (30) days prior written notice, certified mail, to USAC before any such sale. USAC shall have the right in the event of such a sale by either Maguire or the Trust to exercise its option pursuant to Section 8 as to such stock offered by either Maguire or the Trust for sale. USAC shall have elected to exercise its option pursuant to paragraph 8 as to such stock offered by either the Trust or Maguire for sale if written notice, by certified mail, of such election is provided by USAC within twenty (20) days after notice is sent by certified mail of Maguire's or the Trust's notice to sell USAC stock. Notice shall be deemed to be given by USAC on the date such notice is sent by certified mail to Trust or Maguire, return receipt requested. Such notice shall be provided to the party identified in paragraph 13.
e. In the event USAC exercises its option pursuant to this Section 8, USAC will provide an opinion letter by counsel relating to compliance with SEC Rule 144 at USAC's expense opining that the sale of USAC securities by Trust or Maguire complies with all requirements of SEC Rule 144 and is exempt from registration under federal and state securities laws.
9. Return of Depositions
a. USAC and its counsel will return depositions, deposition exhibits, and deposition video tapes in their possession to Kevin Jones, Esq.
b. USAC represents that it has not copied the deposition video tapes.
10. Approval and Acceptance of Terms by Parties.
a. This Agreement is hereby approved by both parties as to form and content, and both parties agree to be bound by all of the terms hereof.
b. The Trust represents that its Trustee, Ronald Meneo, is empowered pursuant to the statutes of the State of Connecticut to execute and bind the Trust in the performance of this Agreement.
c. USAC represents that its board of directors has authorized its president to execute and bind USAC in the performance of this Agreement.
d. Maguire and the Trust represent that each has been independently advised by counsel of their own choice concerning the nature and content of this Agreement and the legal consequences of executing this Agreement. After being advised by counsel of their choice, Maguire and the Trust have voluntarily, without duress of any kind, executed this Agreement knowing that it is a legally enforceable contract.
11. Additional Documents. The parties agree to execute such additional documentation as is or may become necessary to fully effectuate the terms, conditions, and provisions of this Agreement including a stipulation for and an order dismissing the Trust and Maguire with prejudice.
12. No Modification. No change, amendment, or modification of this Agreement is valid unless it is made in writing and signed by the parties.
13. Notices. Unless other persons are designated in writing for receipt of notices hereunder, notices to the respective parties shall be in writing and shall be sent to the following persons:
Trust and Maguire: Ronald Michael Meneo
Meneo & Goldfield
234 Church St. #1001
New Haven, CT 06510-1804
Telephone: (203) 787-9222
FAX: (203) 772-0645
USAC: Gary D. Babbitt
Hawley Troxell Ennis & Hawley LLP
P.O. Box 1617
Boise, Idaho 83701
Telephone: (208) 344-6000
FAX: (208) 342-3829
|
14. Attorney Fees. In the event any suit, action or other proceeding arises under the terms of this Agreement, or in connection with this or any of the provisions of this Agreement, the prevailing party shall be entitled to recover reasonable attorney fees and other costs incurred in that action.
15. Facsimile and Counterparts. This Agreement will be initially executed respectively by the parties by a facsimile document and exchanged between them for signature. Three (3) original counterpart agreements will then be circulated among the parties for execution with each party to retain one (1) fully executed original counterpart. The parties agree that execution of the facsimile documents by the respective parties shall make this Agreement fully enforceable and effective. The original counterpart documents when fully executed shall be the controlling documents as to this settlement between the parties.
DATED this ____ day of __________________, 1999.
UNITED STATES ANTIMONY CORPORATION
/s/ John C. Lawrence President |
W. L. MAGUIRE 1935-1 TRUST
By _/s/ Ronald Michael Meneo Ronald Michael Meneo, Trustee /s/Walter L. Maguire |
Walter L. Maguire
(STATE OF MONTANA )
County of Sanders )
On this _____ day of __________, 1999, before me,
________________________, a Notary Public in and for said State, personally
appeared _______________, known or identified to me to be the
__________________ of United States Antimony Corporation, the corporation that
executed the within instrument or the person who executed the instrument on
behalf of said corporation, and acknowledged to me that such corporation
executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written.
STATE OF CONNECTICUT )
) ss.
County of ______________ )
On this ______ day of ______________, 1999, before me, _____________________, a Notary Public in and for the State of Connecticut, personally appeared ________________ and _________________________, known or identified to me to be the persons whose names are subscribed to the within instrument as trustees of W.L. Maguire 1935-1 Trust dated ______________, and acknowledged to me that they executed the same as such trustees of The ________________ Trust dated ________________.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written.
___________________________________________________
Notary Public for Connecticut
Residing at
_________________________________________
My commission expires on
____________________________
STATE OF VIRGINIA )
) ss.
County of __________ )
|
On this _____ day of __________, 1999, before me, _________________________, a Notary Public in and for said State, personally appeared Walter L. Maguire, known or identified to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written.
Warrant No. Series 99-02 Warrant to Purchase 100,000 Common Shares
STOCK PURCHASE WARRANT
(For the Purchase of Shares of a Par Value of $.01 Per Share)
UNITED STATES ANTIMONY CORPORATION
(Incorporated under the laws of the State of Montana)
Void After 9:00 on 30 August 2002
This is to certify that, for the value received, CARLOS TEJADA, is entitled, subject to the terms and conditions hereinafter set forth, to purchase the number of Unregistered Common Shares as set forth above, with a par value of $.01 per share, hereinafter called Unregistered Common Shares, of United States Antimony Corporation, hereinafter called the Company, at an exercise price of $.55 per share, and to receive a certificate or certificates for the Unregistered Common Shares so purchased, upon presentation and surrender to the Company, with the form of subscription duly executed, and accompanied by the payment of the purchase price of each share purchased either in cash or by certified or bank cashier's check payable to the order of the Company.
The Company covenants and agrees that all shares which may be delivered upon the exercise of this Warrant will, upon delivery, be free from all taxes, liens and charges, will be fully paid and non- assessable, and the Company further covenants and agrees that it will from time-to-time take all such action as may be requisite to assure that the par value per share of the Common Shares is at all time equal to or less than the current Warrant purchase price per share of the Unregistered Common Shares issuable pursuant to this Warrant.
The purchase rights represented by this Warrant are exercisable at the option of the registered owner hereof in whole at any time, or in part from time-to-time, within the period above stated, provided, however, that such purchase rights shall not be exercisable with respect to a fraction of a share of Common Shares.
In case of the purchase of less than all shares purchasable under
this warrant, the Company shall cancel this Warrant upon the surrender
hereof and shall execute and deliver a new Warrant of like tenor and
date for the balance of the shares purchasable hereunder.
The Company agrees at all times to reserve and hold available a
sufficient number of Unregistered Common Shares to cover the number of
shares issuable upon the exercise of this and all other similar Warrants
then outstanding.
This Warrant shall not entitle the holder hereof to any voting rights or other rights as a shareholder of the Corporation, or any other rights whatsoever, except the rights herein expressed and such as are set forth, and no dividends shall be payable or accrue in respect of the Warrant or the interest represented hereby or the shares purchasable hereunder until or unless, and except to the extent that, this Warrant shall be exercised.
This warrant and the rights represented hereby may not be transferred except by way of gift to family members and family entities, such as trusts or foundations.
In any of the following events, occurring hereafter and until the expiration of the Warrant by the passage of time or the full exercise hereof, appropriate adjustments shall be made in the number of shares deliverable upon the exercise of this Warrant or the price per share to be paid so as to maintain the proportion of interest of each Warrant holder. If the Company at any time prior to the expiration of the Warrants and prior to the exercise thereof declares a dividend on the Common Stock of the Company, payable in Common Stock or securities convertible into Common Stock, or divides, consolidates or reclassifies the Common Stock, whether upon a recapitalization or otherwise, or merges or consolidates with or into another Corporation (unless the Company is the continuing Corporation and there is no reclassification or change of outstanding shares of Common Stock) the number of Common Shares issuable upon exercise of this Warrant shall thereafter (until further adjusted), consist of the kind and amount of securities or property which would have been issuable had the Warrants been exercised immediately prior to the record date for the event in question. The Company shall not affect any such merger or consolidation unless, at or prior to the consumption thereof, the surviving Corporation shall assume by written agreement the obligation to deliver these securities which, and accordance with the foregoing, the Warrant holder is entitled to purchase. The above provisions relative to dilution shall not apply to any issuance or sale by the Company of any of its securities, or any securities convertible into Common Stock, which issuance and sale was for valid consideration as determined by the Board of Directors of the Company and the Company shall be free to offer and sell during the term of this Warrant such of its securities as it may deem advisable and appropriate.
Upon receipt by the Company of evidence satisfactory to it (in the exercise of its reasonable discretion) of the ownership of and the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft, or destruction) of indemnity satisfactory to it, and (in the case of mutilation) upon surrendering this Warrant for cancellation, the Company will execute and deliver, in lieu thereof, a new Warrant for like tenor.
The Warrants represented by this certificate and the shares underlying issuable upon exercise hereof, have not been registered under the Securities Act of 1933. The Warrants have been purchased for investment and not with a view to distribution or resale, they may not be made subject to security interest, pledged, hypothecated. The warrant may not be transferred except by way of gift to family members and family entities, such as trusts or foundations. Shares issuable upon exercise of this warrant will have been purchased by the holder thereof for investment and not with a view to distribution or resale, or otherwise transferred without an effective registration statement pursuant to the Securities Act of 1933, or an opinion of counsel acceptable to counsel for the Company that registration is not required under such Act. Any shares issued upon the exercise of this Warrant shall bear a restrictive legend in substantially the following form:
"No sale offer to sell or transfer of the shares represented by this certificate shall be made unless a registration statement under the Securities Act of 1933, as amends, with respect to such shares is then in effect or an exemption from the registration requirements of such Act is then in fact applicable to such shares."
All notices and other communications from the Company to the holder of this Warrant shall be mailed by first class mail, postage prepaid, to the address furnished to the Company in writing by the holder of this Warrant.
Dated: 30 August 1999
UNITED STATES ANTIMONY CORPORATION
By
John C. Lawrence, President
ATTEST:
Lee Martin
Warrant No. Series 2000-01 Warrant to Purchase 300,000 Common Shares
STOCK PURCHASE WARRANT
(For the Purchase of Shares of a Par Value of $.01 Per Share)
UNITED STATES ANTIMONY CORPORATION
(Incorporated under the laws of the State of Montana)
Void After 9:00 AM on 25 January 2003
This is to certify that, for the value received, AL W. DUGAN,1415 LOUISIANA, SUITE 3100, HOUSTON, TEXAS 77002 is entitled, subject to the terms and conditions hereinafter set forth, to purchase the number of Unregistered Common Shares as set forth above, with a par value of $.01 per share, hereinafter called Unregistered Common Shares, of United States Antimony Corporation, hereinafter called the Company, at an exercise price of $.25 per share, and to receive a certificate or certificates for the Unregistered Common Shares so purchased, upon presentation and surrender to the Company, with the form of subscription duly executed, and accompanied by the payment of the purchase price of each share purchased either in cash or by certified or bank cashier's check payable to the order of the Company.
The Company covenants and agrees that all shares which may be delivered upon the exercise of this Warrant will, upon delivery, be free from all taxes, liens and charges, will be fully paid and non- assessable, and the Company further covenants and agrees that it will from time-to-time take all such action as may be requisite to assure that the par value per share of the Common Shares is at all time equal to or less than the current Warrant purchase price per share of the Unregistered Common Shares issuable pursuant to this Warrant.
The purchase rights represented by this Warrant are exercisable at the option of the registered owner hereof in whole at any time, or in part from time-to-time, within the period above stated, provided, however, that such purchase rights shall not be exercisable with respect to a fraction of a share of Common Shares.
In case of the purchase of less than all shares purchasable under
this warrant, the Company shall cancel this Warrant upon the surrender
hereof and shall execute and deliver a new Warrant of like tenor and
date for the balance of the shares purchasable hereunder.
The Company agrees at all times to reserve and hold available a
sufficient number of Unregistered Common Shares to cover the number of
shares issuable upon the exercise of this and all other similar Warrants
then outstanding.
This Warrant shall not entitle the holder hereof to any voting rights or other rights as a shareholder of the Corporation, or any other rights whatsoever, except the rights herein expressed and such as are set forth, and no dividends shall be payable or accrue in respect of the Warrant or the interest represented hereby or the shares purchasable hereunder until or unless, and except to the extent that, this Warrant shall be exercised.
This warrant and the rights represented hereby may not be transferred except by way of gift to family members and family entities, such as trusts or foundations.
In any of the following events, occurring hereafter and until the expiration of the Warrant by the passage of time or the full exercise hereof, appropriate adjustments shall be made in the number of shares deliverable upon the exercise of this Warrant or the price per share to be paid so as to maintain the proportion of interest of each Warrant holder. If the Company at any time prior to the expiration of the Warrants and prior to the exercise thereof declares a dividend on the Common Stock of the Company, payable in Common Stock or securities convertible into Common Stock, or divides, consolidates or reclassifies the Common Stock, whether upon a recapitalization or otherwise, or merges or consolidates with or into another Corporation (unless the Company is the continuing Corporation and there is no reclassification or change of outstanding shares of Common Stock) the number of Common Shares issuable upon exercise of this Warrant shall thereafter (until further adjusted), consist of the kind and amount of securities or property which would have been issuable had the Warrants been exercised immediately prior to the record date for the event in question. The Company shall not affect any such merger or consolidation unless, at or prior to the consumption thereof, the surviving Corporation shall assume by written agreement the obligation to deliver these securities which, and accordance with the foregoing, the Warrant holder is entitled to purchase. The above provisions relative to dilution shall not apply to any issuance or sale by the Company of any of its securities, or any securities convertible into Common Stock, which issuance and sale was for valid consideration as determined by the Board of Directors of the Company and the Company shall be free to offer and sell during the term of this Warrant such of its securities as it may deem advisable and appropriate.
Upon receipt by the Company of evidence satisfactory to it (in the exercise of its reasonable discretion) of the ownership of and the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft, or destruction) of indemnity satisfactory to it, and (in the case of mutilation) upon surrendering this Warrant for cancellation, the Company will execute and deliver, in lieu thereof, a new Warrant for like tenor.
The Warrants represented by this certificate and the shares underlying issuable upon exercise hereof, have not been registered under the Securities Act of 1933. The Warrants have been purchased for investment and not with a view to distribution or resale, they may not be made subject to security interest, pledged, hypothecated. The warrant may not be transferred except by way of gift to family members and family entities, such as trusts or foundations. Shares issuable upon exercise of this warrant will have been purchased by the holder thereof for investment and not with a view to distribution or resale, or otherwise transferred without an effective registration statement pursuant to the Securities Act of 1933, or an opinion of counsel acceptable to counsel for the Company that registration is not required under such Act. Any shares issued upon the exercise of this Warrant shall bear a restrictive legend in substantially the following form:
"No sale offer to sell or transfer of the shares represented by this certificate shall be made unless a registration statement under the Securities Act of 1933, as amends, with respect to such shares is then in effect or an exemption from the registration requirements of such Act is then in fact applicable to such shares."
All notices and other communications from the Company to the holder of this Warrant shall be mailed by first class mail, postage prepaid, to the address furnished to the Company in writing by the holder of this Warrant.
Dated: 25 January 2000
UNITED STATES ANTIMONY CORPORATION
By
John C. Lawrence, President
ATTEST:
Lee Martin
MEMORANDUM OF UNDERSTANDING
PARTIES:
Geosearch Inc. (hereinafter "Geosearch") Tim Gillespie, President, PO Box 5988, Missoula, Mt. 59806 William C. Crockett, 2292 Courville Trail, Polson, Mt. 59860
United States Antimony Corporation (hereinafter "USAC")
PO Box 643
Thompson Falls, Mt. 59873
RECITALS
1. On 8 July 1987, Geosearch entered into a Lease Agreement with Yellow Jacket Mines, Inc. of 631 St. Claire Drive, Palo Alto, CA.
2. On 19 February 1988, Geosearch entered into an Assignment of the Lease Agreement by and between Geosearch and Yellow Jacket Mines, Inc to USAC.
3. On 9 September 1994, Geosearch and USAC entered into a Security Agreement regarding a lawsuit filed by Geosearch against USAC, No. CV94-28.
4. On 9 September 1994. Geosearch and USAC agreed to a Division Order with the First State Bank of Thompson Falls, Mt.
AGREEMENT
Now, therefore, it is agreed that USAC will issue 122,926 shares of USAC
common stock
to Tim Gillespie and 122,926 share of USAC common stock to William C. Crockett
for the full
and complete satisfaction of all covenants, royalties, and interest due
Geosearch, Tim Gillespie
and William C. Crockett under the 4 Agreements abovementioned under Recitals:
Dated this _______day of ___________, 1999
Geosearch, Inc United States Antimony Corporation ______________________________ /s/ John C. Lawrence Tim Gillespie John C. Lawrence /s/ William C. Crokett William C. Crockett |
SYSTRAN Financial Services Corporation
FACTORING AGREEMENT
This Factoring Agreement (the "Agreement") is between SYSTRAN Financial Services Corporation ("SYSTRAN") and United States Antimony Corporation (the"Seller"), whose address is set forth on the last page hereof. In consideration of mutual covenants herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS: A "Debtor" means a person or entity obligated to pay a Bill. A "Bill" means any right to payment for services rendered or goods sold by Seller to a Debtor evidenced by a writing which complies with the general requirements of SYSTRAN as those may be set forth in the Seller Information Manual, as described in Paragraph 2.8. A "Chargeback" means a return of a Bill to Seller and a debit of Seller's account. "Recourse" means the right to Chargeback a Bill to Seller.
2. PURCHASE OF BILLS
2.1 Seller agrees to present for purchase such Bills as it desires SYSTRAN to purchase arising from the services of Seller and goods sold by Seller. SYSTRAN, at its sole discretion, may purchase such Bills as SYSTRAN determines meet the standards set by SYSTRAN from time to time. Seller shall submit to SYSTRAN an original and two (2) copies of each Bill which shall be attached to a schedule form provided by SYSTRAN. Should the Debtor require any additional documentation as a prerequisite to payment, Seller will also provide such documentation with each Bill.
2.2 SYSTRAN will settle with the Seller by mailing or sending via facsimile to the Seller a settlement statement setting forth the Bills purchased, the amount paid, and any deductions made for fees, charges or security deposit and depositing funds as follows: [ ] Mail funds due Seller. [ ] U.P.S. funds due Seller. [ √ ] Wire funds due Seller into bank account specified by Seller on wire authorization form. [ ] Deposit funds due Seller.
2.3 Any payment to Seller may be reduced by SYSTRAN by any amount due from Seller to SYSTRAN, including but not limited to the Security deposit, Chargebacks, fees and costs.
2.4 SYSTRAN will give notice to the Debtors of the assignment of any Bills purchased by placing a legend on the Bills stating the Bills have been sold and assigned to SYSTRAN and are payable to SYSTRAN at an address designated by SYSTRAN. Seller agrees that all Debtors can be notified of an address specified by SYSTRAN, and Seller will not attempt to direct payment other than to that address. Seller agrees to pay all costs and expenses incurred by SYSTRAN in giving such notice or notices as SYSTRAN deems necessary by whatever means SYSTRAN deems necessary. All remittances received by Seller for payment of Bills previously sold to SYSTRAN are the property of SYSTRAN and shall be held in trust by Seller for SYSTRAN and shall be delivered immediately to SYSTRAN in the identical form of payment received by Seller. Should Seller receive a check comprising payment both to Seller and SYSTRAN, Seller will turn over the check to SYSTRAN, and SYSTRAN will refund Seller's portion to Seller, less any amounts outstanding and due from Seller to SYSTRAN. In the event that Seller collects directly from the Debtor a Bill which has been sold to SYSTRAN and Seller does not deliver immediately to SYSTRAN the identical form of payment received by Seller, Seller will be charged an administrative fee. The amount of the fee shall be determined by SYSTRAN at its sole discretion, but shall not exceed three times the normal fee, pursuant to paragraph three below. Seller agrees that any collection by or directly from the Debtor by Seller of a Bill which has been sold to SYSTRAN is a default under the terms of this Agreement.
2.5 Any Bills in a special purchase shall be subject to all provisions of this Agreement. A special purchase is the purchase at the beginning of the factoring relationship of Seller's Bills that are either billed by Seller, previously financed by lender, or previously sold and assigned to another factor.
2.6 SYSTRAN has provided to Seller a Seller Information Manual, which is a guide to policy and procedures concerning daily submission of Bills, collection efforts, and other matters. The Seller Information Manual is not part of this Agreement. Seller hereby acknowledges receipt of the Seller Information Manual. These procedures are only guidelines to ensure the efficient operation of the factoring process. SYSTRAN may change any procedure at any time, and may choose not to follow procedures at its discretion
3. SERVICE FEES. SYSTRAN shall charge and Seller shall pay a fee of four point zero percent (4.0%) of the face amount of all Bills purchased for the first $ 1,200,000.00 in total purchases and two point zero percent (2.0%) of the face amount of all Bills purchased thereafter, and an additional service fee as follows: $ 1.00 per bill . The service fee shall be payable upon the purchase of any Bill by SYSTRAN, and SYSTRAN may choose to collect service fees wither from payments due Seller or may bill the Seller periodically, SYSTRAN may, upon prior notice to Seller, change any fee and such change shall be effective upon receipt of the notice; provided, that SYSTRAN may change the amount of any fee caused by a change in SYSTRAN's cost of funds without prior notice to Seller, but must notify Seller of such change on the next settlement statement sent to the Seller. A fee change due to a change in cost of funds will be effective upon the date of the change which will be indicated on the settlement statement.
3.1 MINIMUM VOLUME AND FEE. Seller agrees to sell to SYSTRAN a minimum of $15,000.00 in Bills per month. In the event that Seller fails to sell $15,000.00 in Bills per month for each of two consecutive months, Seller's fee will automatically be increased at the beginning of the third month. The minimum fee after the increase will be 4.5% or the current fee, whichever is higher. SYSTRAN may increase the fee beyond these levels as its discretion. The fee will be automatically lowered to the last fee in effect should Seller's monthly purchase volume exceed $15,000.00 per month for each of two consecutive months.
4. DEPOSIT. In order (a) to secure Seller's performance of its obligations arising hereunder, (b) to provide security for payment
FA1198 Seller Approval \s\ JCL |
SYSTRAN Financial Corporation
FACTORING AGREEMENT Continued . . .
of Seller's liabilities or deficiencies arising hereunder, and (c) to provide security to SYSTRAN's borrowing sources, Seller shall deliver to SYSTRAN the deposit described below. Seller acknowledges that SYSTRAN has given its lender a security interest in all of its customer deposits to secure payment of certain credit lines to finance SYSTRAN's Seller's accounts receivable. Seller hereby transfers and assigns to SYSTRAN all of Seller's rights in and to such deposit on the conditions set forth below and subordinates all of its right, title and interest in and to such deposit to the right, title and interest of SYSTRAN's lender to such deposit. The foregoing transfer and subordination are absolute and unconditional. Subject to the subordination, the terms of the deposit are as follows.
4.1 AMOUNT OF DEPOSIT. Seller's deposit shall be equal to fifteen
percent (15 % ) of Seller's Bills that are ninety
(90) days old or less computed from date of purchase.
4.2 ADJUSTMENT OF DEPOSIT. The amount of Seller's deposit will be reviewed and, if necessary, adjusted each day. Increases in the amount of Seller's deposit will be withheld by SYSTRAN from payments to Seller to the extent necessary pursuant to this Agreement. If sufficient bills are not purchased to fund the increase, Seller will pay the amount of the increase upon demand. Decreases will be repaid to Seller's deposit amount.
4.3 REPAYMENT OF DEPOSIT. Effective upon termination of this Agreement, no Deposit will be released to Seller except at SYSTRAN's sole discretion. Effective upon termination, all other sums that may become due to Seller by SYSTRAN will be included in the Deposit. The effective Deposit percentage may be greater than the Deposit percentage set forth in paragraph 4.1. The balance of the Deposit will be repaid to Seller at such time as all Bills are paid in full. In the event that Chargebacks to Seller exceed the amount of Seller's Deposit, none of Seller's Deposit will be repaid and Seller will pay SYSTRAN an amount equal to such excess. Such excess amount shall bear interest at four percent (4%) over prime as announced by SYSTRAN's lender from the date notice of the excess liability is rendered to Seller until payment is received.
5. SECURITY INTEREST. The purchase of the Bills of Seller by SYSTRAN
is absolute subject to the right to Chargeback. In addition to the outright
ownership of those Bills purchased by SYSTRAN, to secure the payment and
performance of indebtedness and obligations of Seller to SYSTRAN now existing
and hereafter arising, SYSTRAN shall have and is hereby granted a present
continuing security interest in all Bills, accounts and accounts receivable of
Seller, whether now existing or hereafter created, together with all
guaranties, security, books and records, accounts, correspondence, and
documents with respect to such Bills, and, in addition, Seller
hereby grants SYSTRAN a security interest in the deposit provided for in
Section 4 above, all of Seller's inventory, contract rights,
general intangibles, money, instruments, documents, chattel paper, securities,
credits, claims and demands against SYSTRAN or others, and all other goods and
personal property of all kinds belonging to the Seller, whether presently
existing or hereafter acquired, together
with any proceeds, products.
5.1 FINANCING STATEMENTS. Seller shall not execute or file any financing statement, supplements or amendments thereto, or any other instruments or security agreement covering the collateral described above in favor of anyone other the SYSTRAN. Seller shall execute and deliver to SYSTRAN any financing statements, title documents, supplements or amendments thereto and any other instruments which SYSTRAN from time to time may reasonably require to perfect, preserve, protect or enforce the security interest of SYSTRAN hereunder or the priority of such security interest. Seller shall pay all costs of filing such statements or instruments with appropriate governmental authorities together with the costs of all lien searches. Seller agrees that either a carbon, photocopy, or other reproduction of this Agreement is sufficient as a financing statement under this Agreement.
5.2 SYSTRAN may, in its sole discretion, elect to discharge any security interest, lien or other encumbrance upon any bill for service or bill for goods sold purchased by SYSTRAN. Any such payments and all expenses incurred in connection therewith shall be treated as a Chargeback. SYSTRAN shall have no obligation to discharge any such security interest, lien or encumbrance.
6. RECOURSE, DISPUTES AND CHARGEBACKS.
6.1 All Bills are purchased by SYSTRAN from Seller with full
recourse. All Bills may be Chargedback to Seller at any
time after ninety (90) days after the purchase date if not collected from
Debtor within such period or at any time, if SYSTRAN
determines, in its sole discretion, that the Bill is not collectable.
SYSTRAN shall not deem a disputed Bill uncollectible without allowing Seller a
reasonable time to settle the dispute not to exceed fourteen (14) days from
notice of dispute. It is within SYSTRAN's discretion as to when a Bill over
such time periods may be Chargedback to Seller. Regardless of Bill type: 1)
All Bills in a special purchase by SYSTRAN, as defined in paragraph 2.5, are
subject to Chargeback ninety (90) days from the date of special purchase by
SYSTRAN:
2) All Bills owing by Canadian Debtors and logistics companies are subject to
Chargeback ninety (90) days from the date of purchase
by SYSTRAN.
6.2 In addition, SYSTRAN reserves the right, however, from time to
time and at its absolute discretion, to Chargeback
to Seller any Bill which does not conform to the representations and
warranties set forth in the Agreement or is discovered not to
conform with the reasonable standards which SYSTRAN may set for Bills.
SYSTRAN shall have a continuing security interest in any Bill which is
Chargedback to the Seller, but Seller shall immediately upon receiving notice
of a Chargeback pay to SYSTRAN the Chargeback amount and does hereby
authorize SYSTRAN to deduct any Chargeback from the daily settlements
described in Section 2. Interest on any unsatisfied Chargeback shall bear
interest at the rate of four percent (4%) over prime as announced by
SYSTRAN's
lender. Chargeback of any Bill does not authorize Seller to collect any
outstanding sum owing on that Bill from a Debtor. All amounts owing on from
the Debtor on a Chargeback Bill remain payable to SYSTRAN.
6.3 COLLECTION OF BILLS. SYSTRAN may, but is not required to,
commence any action, including legal action, to
collect a Bill. All costs of collection, including attorney fees, court
fees, and costs of investigation, will be the responsibility of the Seller.
Prior to any act of default, SYSTRAN will commence litigation only with
Seller's authorization. Subsequent to an act of default, SYSTRAN may file
suit as it decides necessary without Seller's authorization. In the event of
default, Seller hereby grants authorization to SYSTRAN to settle or compromise
any bill dispute, including litigation, with any uncollected amount being
subject to Chargeback, together with all other amounts for which Seller is
obligated to SYSTRAN.
7. WARRANTIES AND REPRESENTATIONS.
7.1 Seller warrants and represents with respect to all Bills sold to
SYSTRAN that (a) the bill is genuine and in all respects
what it purports to be; (b) Seller has good title to the Bill and the Bill is
free and clear of all encumbrances, liens and prior claims, and
that the Seller has the legal right to sell the Bill; (c) Seller has no
knowledge of any fact which may impair the validity of the Bill or make it
uncollectible in accordance with its terms and face amount; (d) the Bill made
according to lawful and valid contracts which Seller has executed; (e) there
are no counter claims or setoff or defenses existing in favor of the Debtor,
whether arising from the services or products which are the subject of the
Bill or otherwise there has ben no agreement as to the issuance or granting of
any discount
on the Bill; (f) if the Bill is not a duplicate of and does not cover the same
services or charges or purchase price as a Bill previously purchased by
SYSTRAN from the Seller or bill directly by the Seller to the Debtor; (g)
Seller does not own, control, or exercise dominion over the business of any
Debtor whose Bills are factored by Seller to SYSTRAN. Seller is not a subsidiar
y of any Debtor and
no Debtors control or exercise dominion over the business of Seller; (h)
Seller will not under any circumstances or in any manner
whatsoever interfere with any of SYSTRAN's rights under the Factoring
Agreement in connection with SYSTRAN's factoring of Seller's Bills; (i)
immediately upon sale of Bills to SYSTRAN, Seller will make proper entries on
its books and records, disclosing the absolute sale of such Bills to SYSTRAN;
(j) Seller has not and will not pledge the credit of SYSTRAN to any person or
business for any purpose
whatsoever; (k) until the sale by Seller to Debtor of the inventory described
in the Bill, Seller had good title to that inventory, that
inventory was free of all encumbrances, liens and prior claims, and Seller had
the legal right to sell that inventory.
7.2 If the Seller is a corporation, it is duly organized, existing, and in good standing under the laws of Montana. If Seller represents him or herself to be a sole proprietorship or a partnership, such representation shall be deemed conclusive and binding upon Seller. Seller is duly qualified to do business and is in good standing in every other state in which such qualification is required. If Seller is a corporation, execution, delivery and performance hereof are within its corporate powers, have ben duly authorized, and are not in contradiction of law or the terms of its charter, by-laws or other incorporation papers, or any indenture, agreement or undertaking to which it is a party or by which it is bond. In addition, the Seller has all licenses and certificates necessary for the operation of its business and the issuance of Bills.
8. POWER OF ATTORNEY. In order to carry out the Factoring Agreement, and to avoid unnecessary notification of Debtors, Seller irrevocably appoints SYSTRAN or any per designated by SYSTRAN, its special attorney-in-fact or agent with power to: Bill, receive and collect all amounts which may be due or become due to Seller from Debtors and to use Seller's name for purposes of billing and collection of amounts due; Delete Seller's address on all Bills mailed to Debtor and substitute SYSTRAN's address; Receive, open and dispose of all mail addressed to Seller or Seller's trade name at SYSTRAN's address; Negotiate checks received in payment whether payable to Seller or to SYSTRAN; endorse the name of Seller or Seller's trade name on any checks or other evidences of payment that may come into the possession of SYSTRAN on Bills purchased by SYSTRAN and on any invoices or other document relating to any of the Bills ; In Seller's name, or otherwise, demand, sue for, collect and get or give releases or any and all monies due or to become due on Bills; Compromise, prosecute, or defend any action, claim or proceeding as to Bills purchased by SYSTRAN. Nothing herein shall require SYSTRAN to instigate or become a party to any litigation as more fully set forth in Paragraph 6.3; Notify Debtors of assignment of accounts to SYSTRAN; and notify, direct, and instruct Debtors in Seller's name or Seller's trade name of the remit-to address and procedures for making payment on any Bills that are sold to SYSTRAN; Take all steps necessary to ensure payment of such amounts due; and do any and all things in Seller's name necessary and proper to carry out the purpose intended by the Factoring Agreement.
9. ADDITIONAL DOCUMENTS. The Seller shall at all times, do, make, execute and deliver all such additional and further instruments as may be reasonably requested by SYSTRAN in order to more completely vest in and assure to SYSTRAN and make available to it, the property and rights herewith or hereafter granted or assigned and transferred to SYSTRAN as collateral and to evidence the sale of the Bills to SYSTRAN and to carry into effect the provisions and intent of this Agreement.
10. LOCATION OF BOOKS AND RECORD, PLACE OF BUSINESS. It is understood that Seller's place of business is the one set forth in this Agreement and that all of its books, accounts, correspondence, papers and records pertaining to the services or sales of products are located there, and all such books, accounts, correspondence, papers and records will be opened for SYSTRAN's inspection at all reasonable times.
11. INDEMNIFICATION OF SYSTRAN; SALES AND EXCISE TAXES. Seller will indemnify and hold SYSTRAN harmless against any and all liability, loss or expense, including attorney's fees, caused by or arising out o any alleged claims, defenses, setoff or counterclaims asserted by any party and relating in any manner to the Bills purchased by SYSTRAN hereunder. In the event any sales or excise taxes are imposed by any state, federal or local authorities with respect to any of the Bills sold and assigned hereunder, where such taxes are required to be withheld or paid by SYSTRAN, Seller shall also indemnify SYSTRAN and hold it harmless with respect to all such taxes and hereby authorize SYSTRAN to charge to Seller's account any such tax that is paid or withheld by SYSTRAN. SYSTRAN may charge the deposit for any amount due under this paragraph.
12. FINANCIAL INFORMATION. So long as Seller factors or has any absolute or contingent obligation of any kind owing to SYSTRAN, the Seller will provide information regarding the business, affairs and financial condition of the Seller and its subsidiaries as SYSTRAN may reasonably request, including financial statements.
13. REORGANIZATION, ACQUISITIONS, CHANGE OF NAME OR LOCATION. Seller will not, and will not permit any subsidiary to merge or consolidate with or into any corporation, or sell, lease, transfer, or otherwise dispose of all or any substantial part of its assets, whether now owned or hereafter acquired. Seller shall notify SYSTRAN in writing not less than thirty (30) days prior to (a) any change of its name or use of any trade names or (b) any change in the address of the chief executive office and/or chief place of business of Seller or the location of any records pertaining to the Bills.
14. BANKRUPTCY. Seller agrees to notify SYSTRAN of any voluntary or involuntary bankruptcy petition filed by or against it or any guarantor within twenty-four (24) hours of such filing.
15. LITIGATION. Except as disclosed in writing, Seller represents and warrants to SYSTRAN as follows; There are no suits or proceedings pending or to the knowledge of Seller, threatened against or affecting Seller or any of its subsidiaries which, if adversely determined, would have a material adverse effect of the financial condition or business of Seller and its subsidiaries and there are no proceedings by or before any governmental commission, board, bureau, or other administrative agency pending or, to the knowledge of Seller, threatened, against Seller or any of its subsidiaries. Further, Seller represents and warrants there is no claim, loss contingency, or proceeding, whether or not pending, threatened or imminent, against or otherwise affecting Seller that involves the possibility of any judgment or liability not fully covered by insurance or that may result in a material adverse change in the business, properties, or condition, financial or otherwise, of Seller.
16. TRADE NAMES. Seller represents and warrants to SYSTRAN that it utilizes no trade names in the conduct of its business except United States Antimony Corporation.
17. TAXES. Seller represents and warrants to SYSTRAN that: Seller has filed all federal, state, and local tax returns and other reports it is required to file and has paid or made adequate provision for payments of all such taxes, assessments, and other governmental charges.
18. NO CONSENT OR APPROVAL NEEDED. Seller represents and warrants to SYSTRAN as follows: No consent or approval of any person, no waiver of any lien or other similar right, and no consent, license, approval, authorization, or declaration of any governmental authority, bureau, or agency is or will be required in connection with the execution, delivery, performance, or enforcement, validity or priority of this Agreement or any other agreement, instrument, or document to be executed or delivered in connection herewith.
19. Terms and Termination
This Agreement is for a term of one (1) year from the date that a duly
authorized representative of SYSTRAN executes this Agreement. The term of this
Agreement shall renew automatically for additional one (1) year terms unless
sooner terminated in accordance with the terms hereof. Seller may terminate
this Agreement effective at the end of any term by giving thirty (30) days
prior written notice to SYSTRAN at the address set forth in this Agreement.
Seller may continue to offer any of its Bills to SYSTRAN during such thirty
(30) day period. SYSTRAN may terminate this Agreement at any time and for any
reason by notifying Seller in writing of such termination.
All of Seller's representations, warranties, and other provisions of this
Agreement shall survive such termination until SYSTRAN has
been paid in full and Seller has fully performed all of its obligations. In
addition, should any transfer of money or property to SYSTRAN hereunder be
avoided in a bankruptcy proceeding involving Seller, any Account Debtor of
Seller, or otherwise, then Seller's obligations hereunder shall be reinstated
and/or supplemented to the extent of the avoided transfer, whether or not this
Agreement has otherwise
been terminate.
Notwithstanding the foregoing, Seller has the option to terminate this
Agreement prior to the end of any term by giving SYSTRAN
thirty (30) days prior written notice. Seller may continue to offer any of
its Bills to SYSTRAN during such thirty (30) day period.
Seller shall be deemed to have terminated this Agreement prior to the end of
any term on the date that Seller shall have ceased
presenting Bills to SYSTRAN in the normal course for an uninterrupted period
of thirty (30) days ("Deemed Termination"). Upon notice of early termination,
or the date of a Deemed Termination by Seller, prior to the end of any term,
whether or not Seller continues to
offer its Bills to SYSTRAN during the thirty (30) day notice period applicable
to Seller, Seller shall be obligated to pay to SYSTRAN,
and Seller's deposit may be charged, an early termination premium ("Early
Termination Premium") in an amount equal to ______
percent ( 2.0% ) times the dollar volume of Bills purchased by SYSTRAN during
the month in which Seller's dollar volume of Bills purchased by SYSTRAN was
the greatest multiplied by the number of months remaining in the then current
term, or eleven (11)
months, whichever is lower. Any partial month remaining in the current term
shall constitute a full month for the purpose of calculating the Early
Termination Premium. In addition, if SYSTRAN buys Bills from Seller as part
of a special purchase, and should Seller
terminate this Agreement within the first four (4) months of the term of this
Agreement, Seller's Deposit shall be charged an Early Termination Premium in
the amount of the balance of the Deposit on the termination date. The
termination date shall be thirty (30) days
after SYSTRAN's receipt of the termination notice or on the Deemed Termination
date, unless a termination notice specifies a date that
is more than thirty (30) days but less than sixty (60) days after SYSTRAN's
receipt of the termination notice.
If SYSTRAN terminates this Agreement prior to the end of any term upon any
default in the performance of Seller under this
Agreement, in view of the ascertaining actual damages and by mutual agreement of the parties as to the reasonable calculation of SYSTRAN's lost profits as a result thereof, Seller shall be obligated to pay SYSTRAN upon the effective date of such termination, and Seller's deposit may be charged, a premium in an amount equal to the Early Termination Premium as set forth above.
20. EVENTS OF DEFAULT. The following shall be events of default under the terms of this Agreement: (a) default by Seller in the performance or payment, when due or payable, of any obligation under this Agreement or any other obligation of the Seller to SYSTRAN or any other financial institution or bank; (b) Seller agrees to the appointment of a receiver for its assets, makes general assignment for the benefit of creditors or declares that it is unable to pay its debts as they mature; (c) Seller files a proceeding under any law for the relief of Debtors, including but not limited to, Title 11 of the United States Code, the so-called Bankruptcy Code or any other similar law which may exist; (d) any involuntary petition under the Bankruptcy Code or similar statue has been filed against the Seller and not dismissed within sixty (60) days after filing without the entry of an order for relief; (e) the issuance of an attachment, execution, tax assessment or similar process against the Seller or its property which is not released within ten (10) days of its attachment; (f) any change in the conditions, financial or otherwise, of the Seller which reasonably causes SYSTRAN to deem itself insecure; (g) any of the representations and warranties in Section 7.1 of this Agreement were not true with respect to any Bill at the time the Bill was sold to SYSTRAN or any other representation or warranty in this Agreement was not true when made.
20.1 In addition to all other remedies provided by law, upon the occurrence of an event of default, SYSTRAN may upon notice to the Seller immediately increase the amount of the deposit required under Section 4 of this Agreement to one-hundred percent (100%) of the outstanding amount of Bills purchased from the Seller, and the Seller shall immediately deliver to SYSTRAN funds sufficient to create this one-hundred percent (100%) deposit. If Seller shall fail to make any such payment, SYSTRAN may immediately Chargeback to the Seller any or all of the Bills which SYSTRAN has purchased from Seller, and Seller shall immediately pay to SYSTRAN the amount of such Chargeback. Should Seller fail to make such payment, SYSTRAN may seek payment of the deficiency from Seller and simultaneously collect all Chargeback Bills until the deficiency is satisfied. The deficiency will bear interest at the rate of prime plus four percent (4%) from the date it is incurred. Prime shall be that rate announced by SYSTRAN's lender on the date of the deficiency and may be adjusted with any change in the prime rate.
20.2 In addition to all other remedies provided by law, upon the occurrence of an Event of Default, SYSTRAN, upon application to a court of competent jurisdiction and without the necessity of posting a bond or undertaking, shall be entitled as a matter of strict right, without notice and without regard to the value of any Bills or the solvency of any party bound for payment of the Bills, to injunctive relief to enforce the terms of this Agreement and to the appointment of a Receiver to (a) take possession of, collect and apply the proceeds of Bills, and take any and all actions deemed appropriate by such Receiver to enforce such Bills, and/or enter upon the business premises of, take possession, of and operate the Seller and all of its assets including, without limitation, taking any and all actions deemed appropriate, for the protection, possession, control, managem ent and operation of the Seller's business, its assets and the Bills. Seller hereby acknowledges and agrees that if an Event of Default occurs and continues for a period of more than Five (5) days after the Seller's receipt of written notice of such default, (a) the Bills and the proceeds of the same are then in danger of being lost, removed or materially injured; and (b) the Seller is insolvent, or in imminent danger of insolvency. Seller unconditionally consents to the appointment of a receiver as provided herein. The receiver shall have all of the rights and powers permitted under the laws of any state wherein any asset of the Seller is situated. Seller will pay SYSTRAN upon demand all expenses, including receiver's fees, attorney's fees, costs and agent's compensation, incurred pursuant to this paragraph, and any such amounts paid by SYSTRAN shall be secured by the security interest granted herein. Further, Seller expressly consents that the receiver appointed under this paragraph may be SYSTRAN or one of SYSTRAN's employees, representatives or attorneys. Nothing herein requires SYSTRAN to seek the appointment of a receiver or injunctive relief, nor does this paragraph in any way diminish SYSTRAN's right under paragraph 8 or any other provision of this Agreement or under applicable law.
21. EXPENSES OF ENFORCEMENT. With respect to any default under this Agreement, Seller shall reimburse SYSTRAN for all costs and expense, including reasonable attorneys', paralegal', accountants', and other experts and professional fees and all other fees and costs reasonably and actually incurred in connection with the default, or in the event that a suit, action arbitration, or other proceeding of any nature, including, without limitation, any proceeding under the United States Bankruptcy Code, any action seeking a declaration of rights or an action for recission is instituted to interpret or enforce this Agreement, including, but not limited to such fees an costs associated with trial and appeals.
22. JURISDICTION AND VENUE. This Agreement shall be deemed to be a contract under the laws of the State of Oregon and for all purposes shall be governed and construed in accordance with the laws of that state. Seller irrevocably agrees that any legal action or proceeding brought by or against Seller with respect to the Agreement will be brought in the Courts of the State of Oregon or in the U.S. District Court for the District of Oregon. Seller consents to the jurisdiction of such courts. This provision shall not limit the right of SYSTRAN to bring such actions or proceedings against Seller in the court of such other states or jurisdictions where Seller may be subject to jurisdiction. Seller expressly authorizes service or process in any such suit or action on its behalf upon Registered Agent: John C. Lawrence , at (address) 4946 Rt 200, Thompson Falls, Mt. 59873 or upon such other agent as SYSTRAN may approve in writing, as its agent for such purposes.
23. WAIVER, NOTICE. The waiver by SYSTRAN of the breach of any term of this Agreement or of the compliance therewith shall not be construed as a waiver of any other breach or compliance. Notices from either party to the other shall be given in writing and mailed postage prepaid, registered or certified mail, or placed in the hands of a national overnight delivery service, addressed to the addresses set forth opposite each party's name below, or at such other address as either party may hereafter advise the other in
writing.
24. ASSIGNMENT. Seller may not assign any of its rights or obligations hereunder. SYSTRAN may assign or grant a security interest in this Agreement or in any Bills purchased by SYSTRAN without Seller's consent. SYSTRAN may assign any of its rights and remedies with respect to such Bills including the right to notify Debtors to make payments to SYSTRAN's assignee.
25. SEVERABILITY. The provisions of this Agreement are severable and if any of these provisions shall be held by any court of competent jurisdiction to be unenforceable such holding shall not affect or impair any other provisions hereof.
26. COMPLETE UNDERSTANDING. This Agreement comprises the complete understanding among the parties and may only be varied by a writing executed by the parties hereto. Paragraph headings are for convenience only.
27. NO OFFER/COMMITMENT. The presentation of this Agreement to Seller does not constitute either an offer or commitment to purchase Bills or to extend to Seller credit of any kind.
Executed this 30 Day of
March, 1999
United States Antimony Corporation
By: \s\ John C. Lawrence
Title:
President
|
Address: 1250 Prospect Creek Rd.
Thompson, Mt 59873
This Instrument shall be effective as a
UNIFORM COMMERCIAL CODE FINANCING STATEMENT FILED AS A
FIXTURE FILING
By Debtor: United States Antimony Corporation
1250 Prospect Creek Road
P.O. Box 643
Thompson Falls, Montana 59873-0643
Sanders County
EIN: 81-0305822
To Secured Party: John C. Lawrence
1250 Prospect Creek Road
P.O. Box 643
Thompson Falls, Montana 59873-0643
This "Financing Statement" covers goods described herein by item or type some or all of which are affixed or are to be affixed to the interest in real property described in Schedule A attached hereto.
MORTGAGE - 2
AFTER RECORDING RETURN TO:
Attention: John C. Lawrence
P.O. Box 643
Thompson Falls, MT 59873-0643
MORTGAGE AND FIXTURE FILING
THIS MORTGAGE, Made this day of , 1999, between UNITED STATES ANTIMONY CORPORATION ("Mortgagor"), a Montana corporation, with a mailing address of 1250 Prospect Creek Road, P.O. Box 643, Thompson Falls, Montana 59873, to JOHN C. LAWRENCE ("Mortgagee"), with a mailing address of P.O. Box 643, Thompson Falls, Montana 59873,
WITNESSETH THAT:
The Mortgagor mortgages to Mortgagee and his heirs, successors and
assigns, as security for and in consideration of Mortgagee entering into a
Commercial Guaranty dated the 30th day of July, 1996, between Mortgagee and
First State Bank of Thompson Falls ("First State Bank"), and in consideration
of Mortgagee executing a Personal Guaranty dated March 31, 1999 (collectively
the Commercial Guaranty and the Personal Guaranty are referred to herein as
the "Guaranties") in favor of Systran Financial Corporation ("Systran") for
the full performance and payment of the Factoring Agreement between Mortgagor
and Systran (collectively First Bank and Systran are referred to as the
"Lender"), whereby Mortgagee has agreed to guarantee on behalf of Mortgagor,
all indebtedness established by the loan documents ("Loan Documents") executed
between Mortgagor and Lender as set forth in the Guaranties, the following
described property, to wit:
Mortgagor irrevocably grants, bargains, mortgages, sells and conveys to
Mortgagee and his successors and assigns, with power of sale and with right of
entry and possession as provided herein, all Mortgagor's estate, right, title,
interest, claim and demand, now owned or hereafter acquired, in and to the
following (hereinafter collectively referred to as the "Property"):
All that certain interest in real property situated in the County of
Sanders, State of Montana ("Real Property"), to wit:
Exhibit B attached hereto and incorporated herein.
Together with all and singular the structures, fences, equipment and all
other improvements and fixtures now or hereafter on or in said property, and
any and all water and water rights (including those water rights appurtenant
or to become appurtenant to, or pertaining to said lands, or any of them,
covered or evidenced by, but not limited to, ditches and ditch rights, flumes,
aqueducts, canals, appropriations) franchises, permits and stock, oil and gas
rights, royalties, minerals and mineral rights, all development rights and
credits, air rights, and all other rights and privileges owned by the
Mortgagor, or belonging to, or with, leading to, connected with, or usually
had or enjoyed in connection with the Property, or any part thereof, whether
or not hereinabove expressly mentioned or described, and all and singular the
tenements, hereditaments and appurtenances thereunto belonging or in anywise
appertaining, and the rents, issues and profits thereof.
TO HAVE AND TO HOLD said real and personal property and all of the same,
unto the Mortgagee, his successors and assigns.
This Mortgage is given to secure all obligations of the Mortgagee under
the Guaranties given to secure all certain Loan Documents entered into between
Mortgagor and Lender, together with all renewals of extensions of,
modifications of, refinancings of, consolidations of, and all such
substitutions for the Loan Documents.
NOW, THEREFORE, if the Mortgagor shall pay all and every sum of money
specified under said Loan Documents, and shall in all other respects fully
carry out and comply with the covenants set forth and enumerated herein and in
said Loan Documents given by the Mortgagor in connection herewith such that
Mortgagee does not become obligated to make payments under the Guaranties this
conveyance shall be void. But if the Mortgagor does any act or causes
Mortgagee to become obligated under the Guaranties or Mortgagor fails to pay
any taxes, assessments or other charges of any nature whatsoever, due or to
become due upon the property hereby conveyed or upon the water rights hereby
mortgaged, or in any other respect shall fail to comply with any of the
covenants and agreements herein, any other Mortgage entered into between
Mortgagor and Mortgagee or in said Loan Documents or Security Agreement set
forth, then, as often as such failure of payment or breach of covenant shall
occur, or in the event of the actual or impending bankruptcy or of the
insolvency of the Mortgagor, or any of the persons included in the term
"Mortgagor," the Mortgagee may proceed to foreclose this Mortgage and to
compel payment to be made of the full amount due and payable under said Loan
Documents.
This Mortgage shall also constitute a financing statement filed for
record in the real estate records as a fixture filing pursuant to the Uniform
Commercial Code. This Mortgage may be given to secure an obligation incurred
for the construction of improvements on the Property, including the
acquisition of the Property, or to secure an obligation incurred to refinance
an obligation incurred for the construction of improvements on the Property,
including the acquisition of the Property.
The Mortgagor has covenanted, agreed and represented, and does hereby
covenant, agree and represent to and with the Mortgagee, as follows:
1. That Mortgagor has a valid title in fee simple to all of the
interest in the Real Property above described and all improvements thereon and
is the lawful owner and in possession of personal property on said Real
Property, and that it has the right to convey or mortgage all of said
Property, real and personal; that Mortgagor will not suffer or permit said
Property to become subject to any lien or encumbrance that shall have
precedence over this Mortgage except for such encumbrances currently of
record; that Mortgagor will render such further assurance of said title as may
be requested by the Mortgagee; that Mortgagor does warrant and will defend
said title unto the Mortgagee against claims and demands of all persons
whomsoever; and that Mortgagor will pay all of said sums of money specified in
said Loan Documents, promptly as they become due, and all taxes, assessments
and other charges that may be levied or assessed on said property and all
taxes that may be levied or assessed upon this Mortgage or upon any Security
Agreement given by the Mortgagor in connection herewith, when and as the same
shall become due and payable.
2. To keep said premises and personal property thereon in good
condition and repair and not to commit or suffer any waste thereof. Mortgagee
shall have the right to inspect the Property at such reasonable times and
intervals as Mortgagee may desire.
3. In the event suit is instituted to foreclose this Mortgage, the
Mortgagee may recover therein as attorneys' fees such sum as the court may
adjudge reasonable in addition to the costs and disbursements allowed by law
or by court rule, together with the cost of any abstract of title or evidence
of title procured and used in such proceeding and covering said property.
4. In the event suit is instituted to effect such foreclosure, the
Mortgagee shall, as a matter of right and without regard to the sufficiency of
the security or of waste or danger of misapplication of any of the properties
of the Mortgagor, be entitled forthwith to have a receiver appointed of all of
the Property, and the Mortgagor hereby expressly consents to the appointment
of a receiver by any court of competent jurisdiction and expressly stipulates,
covenants and agrees that such receiver may remain in possession and control
of the Property until the final determination of such suit or proceeding.
5. In the event Mortgagee becomes a party plaintiff or defendant in
any suit or legal proceeding in relation to the Property or the lien or
security interest created in or by this Mortgage or any Security Agreement
given by Mortgagor in connection herewith, Mortgagor agrees to pay on demand
all attorneys' fees paid or incurred by Mortgagee in connection with such suit
or proceedings, including any expenses paid or incurred in procuring or
continuing abstracts of title, title reports or title policies and searching
the records for the purpose of such litigation, and all such sums paid shall
bear interest at the highest rate for which it is now lawful to contract and
shall constitute a lien upon the Property and be secured hereby and in default
of immediate repayment thereof by Mortgagor after demand.
6. As additional and collateral security for the payment of the Loan
Documents hereinabove described and of all sums to become due under this
Mortgage, Mortgagor does hereby assign to Mortgagee all rents, revenues,
royalties, rights and benefits accruing to Mortgagor under all present and
future oil, gas, geothermal and mining leases and under all present and future
grazing, agricultural and other leases on said premises, or any part thereof,
with the right to receive the same and apply them to said indebtedness under
the Loan Documents or other indebtedness secured hereby, after default in the
conditions hereof, anything herein to the contrary notwithstanding. Mortgagee
is further authorized, at its option, to execute and deliver to the holders of
any such oil, gas and mining leases, and any such grazing, agricultural and
other leases upon said premises, binding receipts for any payments made under
the terms of any such leases, and to demand, sue for and recover any such
payments when due. Mortgagor shall perform every obligation of the lessor and
shall enforce every obligation of the lessee in every lease that is assigned
to the Mortgagee and shall not modify, alter, waive or cancel any such lease
or any part thereof, nor anticipate for more than one month any rents that may
be collectible under such lease or that may have been assigned to Mortgagee
and shall not assign any such lease or any such rents. This assignment shall
terminate and become null and void upon release of this Mortgage. The
Mortgagee shall not be bound hereby to demand, receive or collect any of such
rents, royalties, bonuses or benefits, and shall not be responsible for
failure to exercise the rights hereby granted. Failure of the Mortgagee to
exercise such rights after the happening of a default shall not be construed
as a waiver of such rights in the event of a subsequent default.
7. The Mortgagor, after default, hereby further agrees, upon request
by the Mortgagee, to assign to the Mortgagee, as additional and collateral
security for the payment of the indebtedness hereby secured, any and all
leases of the Property, or any part thereof, hereafter made, and that no such
lease shall be assigned to any party other than the Mortgagee without first
obtaining the written consent of the Mortgagee to any such assignment.
8. That if taxes, assessments, or other charges, are not paid by
Mortgagor all as herein provided, Mortgagee may at its option and without
waiver of any rights arising out of any breach of any of the covenants, pay
such insurance premiums, taxes, assessments, and other charges and also may
redeem the Property from tax sale without obligation to inquire into the
validity of such taxes, assessments, charges and tax sales, the receipts of
the proper officers being conclusive evidence of the validity and amount
thereof.
9. That Mortgagor, upon default, will assign and transfer to
Mortgagee any and all monies, payments, and proceeds and benefits due or to
become due the Mortgagor from or in connection with any governmental program
or obligation; Mortgagee is hereby authorized and empowered, at Mortgagee's
option and discretion, to apply for, receive, collect and sue for the same or
any part thereof, and to execute and deliver such proofs, receipts,
acquittances and other instruments, and to do and perform all acts and things
which may be necessary or proper for such purposes or in connection therewith,
either in the Mortgagor's name or the Mortgagee's name with the same force and
effect as if performed by Mortgagor; and in the event Mortgagor fails and
refuses to make such assignment or transfer to Mortgagee promptly upon such
demand, or in the event Mortgagor is without the State, or avoids service of
such demand on him, or if for any other reason service of such demand cannot
be made on Mortgagor, then Mortgagee may serve such demands, together with a
copy of this Mortgage, on the person, firm, corporation or governmental agency
from whom such monies, payments, proceeds or benefits are due or to become
due, and the provisions hereof, together with such demand, shall be considered
and constituted an assignment and transfer thereof to Mortgagee as of the date
so served.
10. The Mortgagor hereby further mortgages, assigns and transfers to
the Mortgagee all of its right, title and interest in and under all leases,
permits and allotments now or hereafter acquired or used in connection with
the Real Property above described together with all renewals thereof and
together with all structures, fences, and other improvements of every nature
and description, now or hereafter located on the lands covered by said leases,
permits or allotments, or any part thereof, and all water and water rights
located thereon or appurtenant thereto. The Mortgagor covenants that it is
the lawful owner and holder of said leases, permits and allotments and that
the same are free from encumbrance and have not been assigned; that it will
procure renewals thereof upon or prior to the expiration date thereof and
execute any instrument deemed by the Mortgagee necessary to effect an
assignment or waiver of such renewals to the Mortgagee; that it will pay all
rents and other charges and perform all acts and things necessary to preserve
and keep in good standing all of said leases and permits and any renewals
thereof; that it will take no action which would adversely affect any of its
rights or preference status thereunder and that in the event of the
foreclosure of this Mortgage, it will waive all claims for preference in any
such rights upon demand from the purchaser of the Property at foreclosure sale
or any successor to such purchaser; that the lands covered by said leases,
permits and allotments and renewals thereof shall at all times be operated in
conjunction with the Property and that neither shall be transferred to any
other person separately from the other.
11. The Mortgagor further covenants and agrees that in the event
title in fee simple to any of the lands covered by the aforesaid leases,
permits or allotments shall hereafter be acquired by the Mortgagor, it is
understood and agreed that such lands shall, upon such acquisition, become
subject to the lien of this Mortgage to the same extent as though such lands
had originally been included herein as part of the fee owned lands hereby
mortgaged and, further, that all of the terms, covenants, conditions, and
stipulations of this Mortgage applicable to the interest in Real Property
hereby mortgaged shall extend and be applicable to any such lands hereafter so
acquired.
12. That Mortgagee shall be subrogated for further security to the
lien, though released of record, of any and all encumbrances now or hereafter
existing against said premises, paid out of the proceeds of said Loan
Documents or otherwise paid or advanced by Mortgagee.
13. That nothing herein contained shall be construed or shall so
operate as to require Mortgagor to pay interest at a rate greater than the
highest rate for which it is now lawful to contract; that if any clauses or
provisions herein contained operate, or would prospectively operate to
invalidate this Mortgage, then, such clauses and provisions only shall be held
for naught as though not herein contained and the remainder of this instrument
shall remain operative and in full force and effect.
14. In the event any part of the Property is condemned or taken by
any governmental entity, any award made therein to any person or persons shall
be paid to Mortgagee and Mortgagee shall have the option of applying such
award or any part of it to any obligations secured hereby and releasing any
balance not so applied to the person or persons to whom such award was made.
15. Mortgagor further covenants and agrees not to remove any gravel
from the Property for any purpose other than for Mortgagor's own use on the
roads located on the Property. In the event Mortgagor does remove any gravel
from the Property and does not use the gravel on the roads located on the
Property, the Mortgagee, at its option, may, without notice, declare the
entire debt secured hereby to be immediately due and payable, and this
Mortgage may be foreclosed if payment is not immediately made.
16. Mortgagor covenants and agrees that each and every term,
condition and covenant of any and all leases or other instruments or
agreements (oral or written) between the Mortgagors, or any of them, relating
to or affecting in any way the Property or any part thereof, shall be and are
hereby made subject and subordinate to all of the terms, conditions and
covenants of this Mortgage and of the Security Agreement mentioned herein.
17. It is mutually understood and agreed that Mortgagee, in agreeing
to take this Mortgage as security for the indebtedness owed Lender by
Mortgagor, that the Mortgagee has investigated and is relying upon Mortgagor's
credit and Mortgagor's interest in said Real Property and accordingly the
taking of this Mortgage as security for the Guaranties is personal to the
Mortgagor and is not assignable. Accordingly, Mortgagor covenants and agrees
that in the event of the sale or other disposition, (including but not limited
to entering into a contract or agreement to sell or to transfer possession),
of all or any part of the Property, Mortgagee shall have the right, at its
option, immediately and without further notice, to foreclose on this
Mortgage. Failure of the Mortgagee to exercise this option shall not be
deemed a waiver of this option as to any subsequent sale or other disposition
of the Property hereinabove described or referred to.
18. Words used herein shall include the singular or plural, and
feminine, masculine or neuter, as the context may require, and if this
instrument is executed by two or more persons or parties the obligations and
liabilities hereunder of such Mortgagors shall be JOINT AND SEVERAL. The
rights and obligations herein shall inure to and be binding upon the
successors, heirs, executors, administrators and assigns of the respective
parties.
19. This Mortgage shall be governed by and construed according to the
laws of the State of Montana.
IN WITNESS WHEREOF, Mortgagors have
hereunto affixed their hands and
seals as of the day and year in this instrument hereinbefore first set forth.
UNITED STATES ANTIMONY CORPORATION
By: /s/ John C. Lawrence Its: President |
STATE OF MONTANA )
) ss.
County of Sanders )
|
On this ____ day of _________________, 1999, before me, the undersigned, a Notary Public in and for said County and State, personally appeared _____________________________, ______________ of United States Antimony Corporation, known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year last above written.