UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (fee required)
For the quarterly period ended September 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (no fee required)
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.)
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P.O. Box 643, Thompson Falls, Montana 59873
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (406) 827-3523
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
At November 13, 1998, the registrant had outstanding 13,390,434 shares of par value $.01 common stock.
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements and Supplementary Data
United States Antimony Corporation and Subsidiary
Consolidated Balance Sheets
(Unaudited)
September 30, December 31,
1998 1997
ASSETS
Current assets:
Restricted cash $ 88 $ 15,280
Inventories 349,910 463,282
Prepaid expenses 7,727
------- -------
Total current assets 349,998 486,289
Properties, plants and equipment, net 550,186 637,022
Restricted cash, reclamation bonds 178,986 178,986
------- -------
Total assets $ 1,079,170 $ 1,302,297
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Checks issued and payable $ 46,604 $ 42,384
Accounts payable 240,710 125,082
Accrued payroll and
property taxes 149,174 118,801
Accrued payroll and other 73,332 43,707
Judgments payable 156,093 142,937
Accrued debenture
interest payable 340,412 320,287
Due to related parties 39,725 31,707
Notes payable to bank 144,226 177,079
Note payable to Bobby C. Hamilton,
current 29,235 27,626
Debentures payable 335,000 335,000
Accrued reclamation costs,
current 216,700 216,700
------- -------
Total current liabilities 1,771,211 1,581,310
Notes payable to bank, noncurrent 146,284 90,269
Note payable to Bobby C. Hamilton,
noncurrent 1,581,859 1,616,516
Accrued reclamation costs,
noncurrent 286,572 339,844
------- -------
Total liabilities 3,785,926 3,627,939
------- -------
Commitments and contingencies
Stockholders' deficit:
Preferred stock, $.01 par value,
10,000,000 shares authorized:
Series A: 4,500 shares
issued and outstanding
(liquidation preference $96,750) 45 45
Series B: 750,000 shares
issued and outstanding (liquidation
preference $780,000) 7,500 7,500
Series C: 2,560,762 shares issued
and outstanding(liquidation preference
$1,408,419) 25,608 25,608
Common stock, $.01 par value, 20,000,000
shares authorized; 13,390,434 and
13,065,434 shares issued and
outstanding 133,904 130,654
Additional paid-in capital 14,074,639 13,997,889
Note receivable from stockholder (5,000)
Accumulated deficit (16,943,452) (16,487,338)
---------- ----------
Total stockholders' deficit (2,706,756) (2,325,642)
---------- ----------
Total liabilities and
stockholders'deficit $ 1,079,170 $ 1,302,297
========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
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United States Antimony Corporation and Subsidiary
Consolidated Statements of Operations
for the three and nine-month periods ended September 30, 1998 and 1997
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
Revenues:
Sales of antimony products $650,011 $1,083,361 $2,456,671 $3,386,667
Cost of antimony production 708,948 801,041 2,290,921 2,737,414
------- -------- -------- --------
Gross profit (loss) (58,937) 282,320 165,750 649,253
------- -------- -------- --------
Operating expenses:
Care-and-maintenance
Yellow Jacket 46,182 48,336 174,829 157,949
Exploration and evaluation 31,108 44,961 94,542 123,253
General and administrative
expenses 68,118 77,621 224,275 223,789
-------- -------- -------- --------
145,408 170,918 493,646 504,991
-------- -------- ------- --------
Other expenses (income):
Gain from accounts payable
adjustment (37,386)
Interest expense 48,503 79,251 149,053 227,980
Interest income and other (2,505) (19,469) (20,835) (28,187)
-------- -------- -------- --------
45,998 59,782 128,218 162,407
-------- -------- -------- --------
Net income (loss) $(250,343) $ 51,620 $ (456,114) $(18,145)
======== ======== ======== ========
Basic net income (loss)
per common share $ (0.02) $ Nil $ (0.03) $ Nil
====== === ====== ===
Diluted net income (loss)
per common share $ (0.02) $ Nil $ (0.03 ) $ Nil
====== === ====== ===
Basic weighted average
shares outstanding 13,353,767 13,058,767 13,269,069 12,952,997
========== ========== ========== ==========
Diluted weighted average
shares outstanding 15,914,529 13,058,767 15,829,831 12,952,997 ========
========== ========== ========== ==========
The accompanying notes are an integral part of the consolidated financial
statements
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United States Antimony Corporation and Subsidiary Consolidated Statements of Cash Flows
for the Nine-month periods ended September 30, 1998 and 1997
(Unaudited)
September 30,
1998 1997
Cash flows from operating activities:
Net loss $ (456,114) $ (18,145)
Adjustments to reconcile net loss to net cash
used in operations:
Depreciation 118,018 122,331
Issuance of stock to directors as compensation 5,063
Reserve for production costs 43,000
Gain on adjustment to accounts payable (37,386)
Change in:
Restricted cash 15,192 (43,518)
Accounts receivable 32,837
Inventories 113,372 (8,503)
Prepaid expenses 7,727 10,148
Accounts payable 115,628 (147,221)
Accrued payroll and property taxes 30,373 (9,510)
Accrued payroll and other 29,625 (2,306)
Judgments payable 13,156 11,160
Accrued debenture interest payable 20,125 90,647
Due to related parties 8,018 (36,122)
Accrued reclamation costs (53,272) (60,901)
-------- --------
Net cash used in operating activities (38,152) (48,426)
-------- --------
Cash flows from investing activities:
Purchase of properties, plant and equipment (31,181) (92,719)
-------- --------
Net cash used in investing activities (31,181) (92,719)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of common stock and warrants 75,000 210,000
Proceeds from bank borrowings 190,050 43,814
Payments on notes payable to bank (166,889) (58,057)
Change in checks issued and payable 4,220 3,925
Payments on note payable to Bobby C. Hamilton (33,048) (58,537)
-------- --------
Net cash provided by financing activities 69,333 141,145
-------- --------
Net change in cash 0 0
Cash, beginning of period 0 0
-------- --------
Cash, end of period $ 0 $ 0
======== ========
Supplemental disclosures:
Cash paid during the period for interest $ 128,928 $ 137,333
======== ========
Noncash financing activities:
Common stock issued in exchange for note receivable $ 5,000
========
The accompanying notes are an integral part of the consolidated financial
statements
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PART I - FINANCIAL INFORMATION (Continued)
UNITED STATES ANTIMONY CORPORATION and SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Notes to December 31, 1997 consolidated financial statements:
The notes to the consolidated financial statements as of December 31, 1997, as set forth in the Company's 1997 Annual Report on Form 10-KSB, substantially apply to these interim consolidated financial statements and are not repeated here.
2. Adjustments to financial statements:
The financial statements reflect all adjustments which, in the opinion of management, are necessary to a fair statement of the results for the interim periods reported. All such adjustments are of a normal recurring nature. All financial statements presented herein are unaudited. However, the balance sheet as of December 31, 1997, was derived from the audited consolidated balance sheet referred to in Note 1 above. Certain consolidated financial statement amounts for the nine-month period ended September 30, 1997, have been reclassified to conform to the 1998 presentation. These reclassifications had no effect on the net loss or accumulated deficit as previously reported.
3. 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. 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. In 1996, the Company signed a consent decree with the Idaho Department of Environmental Quality relating to completing the reclamation and remediation at the mill site. During the third quarter of 1998 the Company disposed of a significant portion of the hazardous waste contained at the site and expects to have the remainder of the cleanup completed during 1999. The Company believes that it has accrued reclamation costs that are sufficient to cover the ultimate costs of completing the reclamation and remediation.
During the second quarter of 1998, an action was filed against the Company seeking recovery of certain debentures payable, accrued interest, and legal costs (See Part II, Item 1. Legal Proceedings). In response, the Company has filed a counterclaim and its own action, which was answered with another counterclaim and action against the Company and its president for libel and slander. The ultimate outcome of these proceedings may have an adverse impact on the financial condition of the Company.
4. Significant accounting policies:
Loss Per Common Share
In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings Per Share," which became effective for reporting periods ending
after December 15, 1997. Under the provisions of SFAS No. 128, primary and
fully-diluted earnings per share were 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; it does not include the impact of any potentially
dilutive common stock equivalents.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
4. Significant accounting policies, Continued:
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 any outstanding stock options, the conversion impact of convertible preferred stock, and shares issuable under warrants or other contracts.
During 1998 and 1997 the Company had outstanding common stock warrants that were exercisable at prices higher than the 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. In 1998, the Company had 2,560,762 shares of Series C preferred stock that were outstanding during the nine-month period. The Series C preferred stock is convertible into common stock of the Company and thus considered in the calculation of diluted weighted-average number of shares outstanding.
The following table presents a reconciliation of the numerators and denominators of the basic and diluted earnings per share ("EPS") computations for the nine-month periods ended September 30, 1998 and 1997.
Loss Shares Amounts
Basic EPS $(456,114) 13,269,069 $(0.03)
Common stock warrants (1)
Series C preferred stock(2) 2,560,762
-------- ---------- ------
Diluted EPS $(456,114) 15,829,831 $(0.03)
======== ========== ======
Loss Shares Amounts
Basic EPS $(18,145) 12,952,997 Nil
Common stock warrants (1)
Series C preferred stock(2)
-------- ---------- ------
Diluted EPS $(18,145) 12,952,997 Nil
======== ========== ======
(1) Common stock warrants outstanding during 1998 and 1997
were not included in the computation of diluted EPS at September 30,
1998 or 1997 because the various exercise prices of the warrants exceeded
the average market price of the Company's common stock, thus making them
antidilutive.
(2) Series C preferred stock, which was issued in November of 1997, 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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
4. Significant accounting policies, Continued
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130, "Reporting Comprehensive Income." This statement establishes standards for reporting the components of comprehensive income prominently within the financial statements. Comprehensive income includes net income plus certain transactions that are reported directly within stockholders' equity. The statement is effective in 1998 and its adoption will have no material impact on the financial condition or results of operations of the Company. In June 1997, the Financial Accounting Standards Board issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." This statement requires the disclosure of financial information about a company's operating segments in interim and annual financial statements. The definition of operating segments is to be based upon internal management practices of the company. The statement is effective in 1998 and its adoption will have no material impact on the financial condition or results of operations of the Company.
In February 1998, the Financial Accounting Standards Board issued SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits." This statement standardizes disclosure for retiree benefits and eliminates certain disclosures that are no longer useful. The statement is effective for fiscal years beginning after December 15, 1997, and its adoption will have no material impact on the financial condition or results of operations of the Company.
ITEM 2. Management's Discussion and Analysis of Results of Operations and Financial Condition
General
Certain matters discussed are forward-looking statements that involve risks and uncertainties, including the impact of antimony and gold prices and production volatility, changing market conditions, 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 operations resulted in a net loss of $456,114 for the nine-month period and a net loss of $250,343 for the three-month period ended September 30, 1998, compared with a net loss of $18,145 for the nine-month period and net income of $51,620 for the three-month period ended September 30, 1997. Total revenues from antimony product sales for the nine and three-month periods ended September 30, 1998, were $2,456,671 and $650,011, respectively, compared with $3,386,667 and $1,083,361 for the comparable respective periods in 1997. The decrease in revenues during 1998 was primarily due to a decrease in antimony product prices in 1998 compared to 1997. Sales of antimony products during the first nine months of 1998 consisted of 2,189,207 pounds at an average sales price of $1.12 per pound. During the first nine months of 1997 sales of antimony products consisted of 2,346,732 pounds at an average sales price of $1.44 per pound. The decrease in sales prices of antimony products from 1998 to 1997 is the result of a corresponding market decrease in antimony metal prices. Gross profit (loss) from antimony sales during the nine-month and three-month periods of 1998 was $165,750 and ($58,937), respectively, compared with gross profit of $649,253 and $282,320 for the nine-month and three-month periods of 1997.
ITEM 2.Management's Discussion and Analysis of Results of Operations and Financial Condition, Continued
The decrease in gross profit during 1998 compared to 1997, is again primarily due to decreased antimony product sales prices. The gross loss experienced during the third quarter of 1998 was primarily due to $116,000 of fines and penalties levied against the Company for various Occupational Safety and Health Administration ("OSHA") for violations in August 1998 at its antimony plant. The Company contested the fines during the third quarter of 1998 and anticipates an ultimate reduction in the fines.
The Company reports 50% of total antimony sales made by HoltraChem and the Company, pursuant to the operating agreements with HoltraChem. Total sales of antimony products by both companies amounted to $4,913,341, or 4,378,414 pounds, during the first nine months of 1998. Substantially all of the antimony products sold were produced at the Company's plant near Thompson Falls, Montana.
In September of 1998, HoltraChem sold its share of antimony inventory, and assigned its interest in the operating agreements with the Company, to another chemical distribution company, Basic Chemical Solutions ("BCS"). BCS has indicated a desire to continue to participate with the Company in the marketing and sale of antimony products according to the terms of the agreements. The Company does not anticipate that BCS's participation will adversely affect the Company's antimony business.
In August 1996, the Company discontinued mining operations at its Yellow Jacket property due to recurring operating losses, and placed the property on a care-and-maintenance basis. Concurrently, the Company began an underground exploration program in an effort to discover additional mineralized material that could be economically mined and processed.
Costs related to the care-and-maintenance of Yellow Jacket were $174,829 and $46,182 for the nine and three-month periods ended September 30, 1998, respectively, compared with $157,949 and $48,336 during the same respective periods of 1997. The increase in care-and-maintenance costs during 1998 is primarily due to increased equipment repairs and minimum royalty and accrued interest costs incurred during 1998.
Costs related to exploration and evaluation at Yellow Jacket were $94,542 and $31,108 for the nine and three-month periods ended September 30, 1998, respectively, compared with $123,253 and $44,961 during the same respective periods of 1997. The decrease in exploration and evaluation costs during 1998 reflect decreased equipment maintenance costs during 1998.
General and administrative expenses were almost identical for the comparable nine-month periods of 1998 and 1997, and decreased $9,503 during the third quarter of 1998 from the comparable quarter of 1997.
Interest expense was $149,053 and $48,503 for the nine and three-month periods ended September 30, 1998, respectively, compared with $227,980 and $79,251 during the same respective periods of 1997. The reduction in interest expense during the nine and three-month periods in 1998 compared to the same periods of 1997 was due to a decrease in outstanding debenture and director debts payable that were converted into Series C preferred stock during the fourth quarter of 1997.
Interest and other income was $20,835 and $2,505 for the nine and three-month periods ended September 30, 1998, respectively, compared with $28,187 and $19,469 during the same respective periods of 1997. The decrease in interest and other income during 1998 was primarily attributable to other income from gold sales realized during the third quarter of 1997, that were not realized during 1998.
Financial Condition and Liquidity
At September 30, 1998, the Company's assets totaled $1,079,170, and there was a stockholders' deficit of $2,706,756. The stockholders' deficit increased $381,114 from December 31, 1997, primarily due to the net loss recognized from the Company's operations during the first nine months of 1998.
Cash used by operating activities during the first nine months of 1998 was $38,152 compared with $48,426 during the first nine months of 1997. During both nine month periods of 1998 and 1997, the Company's net loss from operations contributed to cash used by operations.
Cash used in investing activities was $31,181 during the first nine months of 1998 and $92,719 during the first nine months of 1997.During both nine-month periods in 1998 and 1997, cash consumed by investing activities related to purchases of antimony plant and equipment.
Cash provided by financing activities totaled $69,333 during the nine month period ended September 30, 1998, compared to $141,145 during the comparable period of 1997. During both 1998 and 1997, proceeds from the issuance of common stock and warrants and bank borrowings contributed most of the net cash provided from financing activities.
The Company has been able to avoid bankruptcy and a termination of operations through borrowings from stockholders, directors, and a bank, common stock sales, and lack of creditor action. 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.
To continue as a going concern the company must continue to generate cash from operations and financing activities sufficient to address the following financial commitments.
. Providing $5,000 per month for a "sinking fund" to pay accrued interest related to debentures converted in 1997.
. Servicing borrowings from the bank.
. Servicing the Hamilton note payable at a minimum of $150,000 in principal and interest annually.
. Keeping current on property, payroll, and income tax liabilities and accounts payable.
. Fulfilling responsibilities with environmental, labor safety and securities regulatory agencies.
. Paying annual care-and-maintenance costs at the Yellow Jacket mine, to the extent the Company continues to retain the property.
. Funding minimum annual royalty payments to Geosearch and Yellow Jacket, Inc.
. Funding legal fees and other costs incurred relating to litigation brought against the Company in 1998 (See Part II, Item 1. Legal Proceedings).
PART II-OTHER INFORMATION
ITEM 1. Legal Proceedings
On April 8, 1998, Ronald Michael Meneo, Trustee of the Walter L. Maguire 1935-1 Trust ("The Trust"), filed an action in the Twentieth Judicial District Court of Sanders County, Montana against the Company. The action seeks to recover principal amounts totaling $335,000 due on defaulted convertible and subordinated convertible debentures held by The Trust. The action also seeks to recover accrued interest on the principal amounts of the debentures at the rate of ten percent per annum that was due on the maturity dates of the debentures, interest at ten percent on all principal and interest due on the debentures accruing from the dates of maturity to the present, and all amounts relating to The Trust's legal fees incurred in bringing the action.
On June 26, 1998, the Company filed an Answer, Counterclaim, and request for Jury Trial in the Montana Twentieth Judicial District Court, Sanders County, in response to the action filed on April 8, 1998. In the filing the Company denied the Trust's complaint and alleged a counterclaim against the Trust, citing breach of contract and breach of implied covenant of good faith and fair dealing.
On July 15, 1998, the Company filed an action in the Montana Twentieth Judicial District Court, Sanders County, against Walter L. Maguire, Sr., a director and shareholder. The complaint alleges damages suffered by the Company as a result of Mr. Maguire's actions described in three counts: 1) Breach of Director Duties, 2) Conspiracy, and 3) Constructive Fraud. The allegations set forth in the complaint describe Mr. Maguire's alleged representations that he controlled the Walter L. Maguire 1935-1 Trust, and led the Company and other shareholders to detrimentally believe that certain defaulted debentures held by the Trust would be converted to Series C Preferred Stock in accordance with an Offer to Purchase dated November 21, 1997, that was submitted to the Trust and other debt holders. The complaint seeks damages of $1,500,000 and a further amount to be proven at trial.
On October 13, 1998 Mr. Maguire responded to the action filed on July 15, 1998, by filing an Answer, Counterclaim and Third-Party complaint in the Twentieth Judicial District Court, Sanders County, Montana against the Company and John C. Lawrence, the Company's president and a director and shareholder. Mr. Maguire's counterclaim and third party complaint alleges damages described in separate counts of libel and slander suffered as a result of accusations made by the Company and Mr. Lawrence. Mr. Maguire's action requests an award for actual and punitive damages in amounts to be proven at trial.
ITEMS 2, 3, 4, and 5 are omitted from this report as inapplicable.
PART II- OTHER INFORMATION, CONTINUED
ITEM 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K
Exhibits filed with this report
Exhibit No. Item Dated
----------- ----- -----
10.30 ANSWER, COUNTERCLAIM October 13, 1998
AND THIRD-PARTY
COMPLAINT - 1
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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 Date: November 13, 1998 John C. Lawrence, Director and President (Principal Executive, Financial and Accounting Officer) |
ANSWER, COUNTERCLAIM, AND THIRD-PARTY COMPLAINT - 1
Kevin S. Jones
CHRISTIAN, SAMSON & JONES, P.C.
Attorneys at Law
P.O. Box 8479
Missoula, MT 59807
(406) 721-7772
Attorneys for Defendant/Counter-Plaintiff
MONTANA TWENTIETH JUDICIAL DISTRICT COURT, SANDERS COUNTY
<CELL>U.S. ANTIMONY CORPORATION, a Montana Corporation,
PLAINTIFF,
v.
WALTER L. MAGUIRE, SR.,
DEFENDANT.
Cause No. DV-98-60
WALTER L. MAGUIRE, SR.,
COUNTER-PLAINTIFF,
v.
U.S. ANTIMONY CORPORATION, a Montana Corporation, and JOHN LAWRENCE, individually,
COUNTER-DEFENDANTS.
ANSWER, COUNTERCLAIM, AND THIRD-PARTY COMPLAINT
COMES NOW Defendant Walter L. Maguire, Sr., by and through counsel, and
for his Answer to the Complaint filed in this action states as follows:
1. Defendant admits the allegations contained in Paragraph 1 of the
Complaint.
2. Defendant admits the allegations contained in Paragraph 2 of the
Complaint.
3. Defendant admits the allegations contained in Paragraph 3 of the
Complaint.
4. Defendant admits the allegations contained in Paragraph 4 of the
Complaint.
5. Defendant admits that he, or a Maguire-held entity, has been a
shareholder in the U.S. Antimony Corporation continuously since 1971.
6. Defendant admits the allegations contained in Paragraph 6 of the
Complaint.
7. Defendant admits the allegations contained in Paragraph 7 of the
Complaint.
8. Defendant admits the allegations contained in Paragraph 8 of the
Complaint.
9. Defendant admits the allegations contained in Paragraph 9 of the
Complaint.
10. Defendant admits the allegations contained in Paragraph 10 of the
Complaint.
11. Defendant denies the allegations contained in Paragraph 11 of the
Complaint.
12. Defendant admits the allegations contained in Paragraph 12 of the
Complaint.
13. Defendant admits the allegations contained in Paragraph 13 of the
Complaint.
14. Defendant admits the allegations contained in Paragraph 14 of the
Complaint.
15. Defendant admits the allegations contained in Paragraph 15 of the
Complaint.
16. Defendant denies the allegations contained in Paragraph 16 of the
Complaint.
17. Defendant denies the allegations contained in Paragraph 17 of the
Complaint.
18. Defendant has no independent recollection as to the truth of the
allegations contained in Paragraph 18 of the Complaint, and therefore denies
those allegations.
19. Defendant denies the allegations contained in Paragraph 19 of the
Complaint.
20. Defendant admits that he voted in favor of the proxy to
Shareholders involving the exchange of debentures for equity described in the
Complaint as a Director in the corporation. Defendant denies the allegations
contained in Paragraph 20 of the Complaint to the extent that they allege that
he acted "in his capacity as beneficial owner of shares of stock including
stock allegedly owned by the Trust."
21. Defendant denies the allegations contained in Paragraph 21 of the
Complaint.
22. Defendant denies the allegations contained in Paragraph 22 of the
Complaint.
23. Defendant denies the allegations contained in Paragraph 23 of the
Complaint.
24. Defendant denies the allegations contained in Paragraph 24 of the
Complaint.
25. Defendant denies the allegations contained in Paragraph 25 of the
Complaint.
26. Defendant denies the allegations contained in Paragraph 26 of the
Complaint.
27. Defendant denies the allegations contained in Paragraph 27 of the
Complaint.
28. Defendant denies the allegations contained in Paragraph 28 of the
Complaint.
29. Defendant answers the allegations contained in Paragraph 29 of
the Complaint in the manner set forth above.
30. Defendant admits the allegations contained in Paragraph 30 of the
Complaint.
31. Defendant denies the allegations contained in Paragraph 31 of the
Complaint.
32. Defendant denies the allegations contained in Paragraph 32 of the
Complaint.
33. Defendant answers the allegations in contained in Paragraph 33 of
the Complaint in the manner set forth above.
34. Defendant denies the allegations contained in Paragraph 34 of the
Complaint.
35. Defendant denies the allegations contained in Paragraph 35 of the
Complaint.
36. Defendant answers the allegations contained in Paragraph 36 of
the Complaint in the manner set forth above.
37. Defendant denies the allegations contained in Paragraph 37 of the
Complaint.
38. Defendant denies the allegations contained in Paragraph 38 of the
Complaint.
39. Defendant denies the allegations contained in Paragraph 39 of the
Complaint.
COUNTERCLAIM
COMES NOW Defendant/Counter-claimant, Walter L. Maguire, Sr., by and
through counsel, and for his Counterclaim against Plaintiff/Counter-defendant,
United States Antimony Corporation, states as follows:
COUNT ONE - LIBEL
1. United States Antimony Corporation (U.S.A.C.), by and through its
officers and directors, has disseminated information defaming the Defendant's
business reputation.
2. By filing the Complaint in this action, the Plaintiff, through
written materials of public record, has made untrue accusations regarding the
Defendant's actions.
3. Defendant has not breached his duties as Director of the U.S.
A.C., nor has he made the representations Plaintiff claims in the Complaint.
4. Plaintiff's untrue statements regarding Defendant has caused
serious impairment to the Defendant's business reputation in the banking
community. Plaintiff's officers' and directors' untrue statements about
Defendant are being made with actually malice.
5. Other investors/bankers are aware or being made aware of
Plaintiff's libelous statements through Plaintiff's continued efforts of these
disseminating these statements.
COUNT TWO - SLANDER
6. Defendant repleads the allegations contained in Paragraphs 1
through 5 above.
7. U.S.A.C., through its Officers and Directors, has continued to
verbally defame Defendant to business counterparts and other individuals
Defendant deals with on a professional basis.
8. Plaintiff's continued slander of Defendant is causing serious
impairment to Defendant's business reputation and relations with his
counterparts.
THIRD-PARTY COMPLAINT ADVERSE JOHN LAWRENCE
COMES NOW Defendant/Counter-Claimant Walter L. Maguire, Sr., by and
through counsel, and for his Third-Party Complaint against John Lawrence,
individually, states as follows:
1. Plaintiff repleads the allegations contained in Paragraphs 1
through 8 above.
2. Defendant John Lawrence, in his individual capacity, has continued
to disseminate information that is defamatory to the Defendant.
3. John Lawrence has exceeded the scope of his employment as an
Officer of the U.S.A.C. in that he has intentionally sought out individuals to
relay his claims of Defendant's wrongful actions in an effort to cause
Defendant additional damage.
4. John Lawrence's statements are untrue and are causing serious
impairment to the Defendant's business reputation and business relations with
his counterparts. John Lawrence's actions in disseminating untrue statements
about Defendant is being done with actual malice.
WHEREFORE, Defendant prays for relief as follows:
1. That Plaintiff U.S. Antimony Corporation be denied the relief
requested in the Complaint filed in this action;
2. That Defendant Walter L. Maguire, Sr. be awarded damages against
Plaintiff in an amount to be proven at trial;
3. That Defendant Walter L. Maguire, Sr. be awarded damages against
John Lawrence in an amount to be proven at trial;
4. That Defendant Walter L. Maguire, Sr. be awarded punitive damages
against Plaintiff and against John Lawrence, individually, for their actual
malice;
5. That Defendant Walter L. Maguire, Sr. be awarded his fees and
costs sustained in this action; and
6. For such other and further relief as the Court deems just and
proper.
DATED this day of November, 1998.
CHRISTIAN, SAMSON & JONES, P.C.
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Kevin S. Jones
CERTIFICATE OF MAILING
The undersigned does hereby certify that on the day of October, 1998, a copy of the foregoing Answer was duly mailed by First Class Mail, postage prepaid, at Missoula, Montana, to the following:
Dave Cotner
BOONE, KARLBERG & HADDON
P.O. Box 9199
Missoula, MT 59807-9199
Gary D. Babbitt
HAWLEY, TROXELL, ENNIS & HAWLEY
877 Main Street
Boise, ID 83701