UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (fee required)
For the quarterly period ended March 31, 1999
[ ] 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.)
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
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 May 20, 1999, the registrant had outstanding 13,450,725 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)
March 31, December 31,
1999 1998
ASSETS
Current assets:
Restricted cash $ 222 $ 221
Inventories 363,113 365,398
------- -------
Total current assets 363,335 365,619
Properties, plants and equipment, net 477,809 515,392
Restricted cash for reclamation bonds 178,986 178,986
------- -------
Total assets $1,020,130 $1,059,997
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Checks issued and payable $ 46,324 $ 31,089
Accounts payable 311,763 256,373
Accrued payroll and property taxes 159,677 168,482
Accrued payroll and other 71,085 61,999
Judgments payable 164,660 164,084
Accrued debenture interest payable 354,662 348,787
Due to related parties 33,955 37,635
Notes payable to bank, current 171,330 160,017
Note payable to Bobby C. Hamilton, current 84,726 83,157
Debentures payable 335,000 335,000
Accrued reclamation costs, current 222,453 222,453
------- -------
Total current liabilities 1,955,635 1,869,076
Notes payable to bank, noncurrent 87,472 106,793
Note payable to Bobby C. Hamilton, noncurrent 1,496,732 1,512,402
Accrued reclamation costs, noncurrent 280,819 280,819
------- -------
Total liabilities 3,820,658 3,769,090
--------- ---------
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 $101,250,
at December 31, 1998) 45 45
Series B: 750,000 shares issued and outstanding
(liquidation preference $787,500,
at December 31, 1998) 7,500 7,500
Series C: 2,560,762 shares issued and outstanding
(liquidation preference $1,408,419,
at December 31, 1998) 25,608 25,608
Common stock, $.01 par value,
20,000,000 shares authorized;
13,450,725 and 13,425,925 shares
issued and outstanding 134,507 134,259
Additional paid-in capital 14,081,262 14,079,260
Accumulated deficit (17,049,450) (16,955,765)
---------- ----------
Total stockholders' deficit (2,800,528) (2,709,093)
---------- ----------
Total liabilities and stockholders'deficit $ 1,020,130 $ 1,059,997
========== ==========
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 Operations
for the three-month periods ended March 31, 1999 and 1998 (Unaudited)
March 31, March 31,
1999 1998
Revenues:
Sales of antimony products and other $ 690,302 $ 919,724
Cost of antimony production and other 617,375 829,896
------- -------
Gross profit 72,927 89,828
Other operating expenses:
Exploration and evaluations 33,272 30,108
Care-and-maintenance - Yellow Jacket 38,864 74,302
General and administrative 62,120 58,019
------- -------
134,256 162,429
------- -------
Other (income) expense:
Interest expense 51,142 48,287
Interest income and other (2,346) (2,523)
Gain on accounts payable write off (16,440)
------- -------
32,356 45,764
------- -------
Net loss $ 93,685 $ 118,365
======= =======
Basic net loss per share of common stock $ .01 $ .01
======= =======
Diluted net loss per share of common stock $ .01 $ .01
======= =======
Basic weighted average shares outstanding 13,439,427 13,159,865
========== ==========
Diluted weighted average shares outstanding 16,034,252 15,720,627
========== ==========
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 three-month periods ended March 31, 1999 and 1998 (Unaudited)
March 31, March 31,
1999 1998
Cash flows from operating activities:
Net loss $ (93,685) $ (118,365)
Adjustments to reconcile net loss
to net cash provided by
(used in) operations:
Depreciation 37,583 39,113
Issuance of stock to employees
as compensation 1,050
Gain on accounts payable write off (16,440)
Change in:
Restricted cash (1) 15,065
Inventories 2,285 (12,267)
Prepaid expenses (3,753)
Accounts payable 71,830 1,993
Accrued payroll and property taxes (7,605) 8,512
Accrued payroll and other 9,086 27,420
Judgments payable 576 115
Accrued debenture interest payable 5,875 8,375
Payable to related parties (3,680) 4,070
------- -------
Net cash provided by (used in) operations: 6,874 (29,722)
------- -------
Cash flows from investing activities:
Purchase of properties, plant and equipment 0 (19,983)
------- -------
Net cash used in investing activities 0 (19,983)
------- -------
Cash flows from financing activities:
Proceeds from issuance of common
stock and warrants 50,000
Proceeds from notes payable to bank 4,845
Payments on notes payable to bank (8,008)
Increase in checks issued and payable 15,235 1,754
Payments on note payable to Bobby C. Hamilton (14,101) (6,894)
------- -------
Net cash provided by (used in)
financing activities (6,874) 49,705
------- -------
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 $38,548 $38,912
======= =======
Noncash financing activities:
Common stock issued in exchange for note receivable $ 5,000
=======
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The accompanying notes are an integral part of the consolidated financial statements.
PART I - FINANCIAL INFORMATION, CONTINUED:
UNITED STATES ANTIMONY CORPORATION and SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Notes to December 31, 1998 consolidated financial statements:
The notes to the consolidated financial statements as of December 31, 1998, as set forth in the Company's 1998 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 are, in the opinion of management, 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, 1998, was derived from the audited consolidated balance sheet referred to in Note 1 above. Certain consolidated financial statement amounts for the three-month period ended March 31, 1998, have been reclassified to conform to the 1999 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 at the Preachers Cove mill, which is located nine 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. In 1996, the Company signed a consent decree with the Idaho Department of Environmental Quality relating to completing the reclamation and remediation at the Preachers Cove mill. The Company believes the cleanup will be complete sometime by 2000.
On August 21, 1998, citations and a Notice of Failure to Correct Alleged Violations were issued by the U.S. Department of Labor's Occupational Safety and Health Administration ("OSHA") to the Company for violations occurring at the Company's antimony plant near Thompson Falls, Montana. The citations, with fines totaling $115,800, were contested by the Company on September 11, 1998. On November 18, 1998, the U.S. Department of Labor filed a complaint with the Occupational Safety and Health Review Commission (Docket No. 98-1595) requesting that the Commission not vacate the citations and Notice of Failure to Correct Alleged Violations. The case went to hearing in March, 1999, the Company anticipates a substantial reduction in the fines levied.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED:
4. 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 three-month periods ended March 31, 1999 and 1998.
March 31, 1999
Per share
Loss Shares Amounts
Basic EPS:
Loss $93,685 13,439,427 $0.01
Common stock warrants (1)
Series C preferred stock(2) 2,594,825
Diluted EPS: ------- ---------- ------
Loss $93,685 16,034,252 $0.01
======= ========== ======
March 31, 1998
Per share
Loss Shares Amounts
Basic EPS:
Loss $118,365 13,159,865 $0.01
Common stock warrants (1)
Series C preferred stock(2) 2,560,762
Diluted EPS: -------- ---------- ------
Loss $118,365 15,720,627 $0.01
======== ========== ======
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(1) Common stock warrants totaling 1,344,356 and 994,356 outstanding during 1999 and 1998, respectively, were not included in the computation of diluted EPS at March 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 antidilutive provisions of the Series C shares.
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 gold and 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.
ITEM 2. Management's Discussion and Analysis of Results of Operations and Financial Condition, Continued:
Results of Operations
The Company's operations resulted in a net loss of $93,685 for the three-month period ended March 31, 1999 compared with a net loss of $118,365 for the three-month period ended March 31, 1998.
Total revenues from antimony product sales for the first three months of 1999 were $690,302 compared with $919,724 for the comparable period in 1998, a decrease of $229,422. The decrease in revenues during 1999 was due to a decrease in antimony product sales and sales prices in the first quarter of 1999 compared to the first quarter of 1998. Sales of antimony products during the first three months of 1999 consisted of 684,322 pounds at an average sale price of $1.01 per pound. During the first quarter of 1998 sales of antimony products consisted of 781,793 pounds at an average sale price of $1.18 per pound. The decrease in sale prices of antimony products from the first quarter of 1998 to the first quarter of 1999 is the result of a corresponding decrease in antimony metal prices. Gross profit from antimony sales during the first three months of 1999 was $72,927, compared with gross profit of $89,828 during the first three months of 1998. The decrease in gross profit during the first quarter of 1999 compared to the comparable quarter of 1998, is primarily due to a credit issued to a customer of approximately $63,000 included in cost of sales during the first quarter of 1999.
During the first quarter of 1999 the Company reported 50% of total antimony sales made by BCS, its sales affiliate, and the Company. Total sales of antimony products by both companies was $1,380,603 or 1,368,644 pounds during the first three months of 1999. Substantially all of the antimony products sold were produced at the Company's plant near Thompson Falls, Montana. In March of 1999, the Company notified BCS that it was canceling certain operating agreements relating to the sales of antimony products and sharing of profits. In connection with the cancellation, the Company agreed to purchase BCS's share of antimony products inventory and operate the production and sales of antimony products independently. On March 31, 1999, the Company consummated the transaction and began operating the antimony business on its own.
In August 1996, the Company discontinued gold mining operations at Yellow Jacket due to recurring operating losses, and placed the property on a care-and-maintenance status. Concurrently, the Company began an underground exploration program. During 1998, the Company notified certain Yellow Jacket royalty holders that its exploration efforts to date, have been unsuccessful and that if positive results did not occur from exploration drilling at Yellow Jacket during 1999 it would terminate its exploration program and pursue reclamation of the property. As a result, one royalty holder agreed to suspend royalty payments until such time an economically viable mineralized body is encountered and production resumes. Another royalty holder is expected to suspend payments similarly. Accordingly, the company did not accrue any minimum royalty payments due these royalty holders during the first quarter of 1999.
Costs related to the care-and-maintenance of Yellow Jacket were $38,864 for
the three-month
period ended March 31, 1999, compared with costs of $74,302 during the
three-month period ended March 31, 1998. The decrease was primarily due to
the non-accrual of minimum royalty payments during the first quarter of 1999,
as discussed above. Costs related to exploration and evaluation at Yellow
Jacket were $33,272 for the three-month period ended March 31, 1999, compared
with comparable costs of $30,108 during the three-month period ended March 31,
1998.
General and administrative expenses increased $4,101 during the first three months of 1999 as compared to the first three months of 1998. The increase was principally due to increased legal and professional fees incurred during the first quarter of 1999 related to the Maguire litigation, compared to the first quarter of 1998.
ITEM 2. Management's Discussion and Analysis of Results of Operations and Financial Condition, Continued:
Interest expense was $51,142 during three-month period ended March 31,1999, compared to $48,287 for the first quarter of 1998. The increase in interest expense is primarily due to interest costs accrued on delinquent payroll taxes in the first quarter of 1999 compared to that of 1998.
Interest income was $2,346 during the three-month period ended March 31, 1999, compared to $2,523 for the same period in 1998.
During the first quarter of 1999 a gain of $16,440, resulting from the write off of certain accounts payable was recognized, no such gain was recognized for the comparable quarter of 1998.
Financial Condition and Liquidity
At March 31, 1999, Company assets totaled $1,020,130, and there was a stockholders' deficit of $2,800,528. The stockholders' deficit increased $91,435 from December 31, 1998, primarily due to the net loss incurred during the first quarter of 1999. In order to continue as a going concern, the Company is dependent upon (1) profitable operations from the antimony division, (2) short and long-term debt financing, and (3) continued availability of equity 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 operating activities during the first three months of 1999 was $6,874 compared with cash used of $29,722 during the first three months of 1998. The change in cash from operations from the first quarter of 1999 compared to the same period in 1998 was primarily due to a decrease in net loss and increase in accounts payable during the first quarter of 1999 as compared to the first quarter of 1998. No cash was used in investing activities during the first quarter of 1999 compared to $19,982 used in investing activities related to investment in antimony plant and equipment during the first quarter of 1998.
Cash provided by financing activities was $49,705 during the first quarter of
1998 compared to $6,874 of cash used by financing activities during the
comparable period of 1999. The change in cash from financing activities is
principally due to the absence of stock and warrant sales and increased
principal payments to Bobby C. Hamilton and notes payable to bank during the
first quarter of 1999 as compared to the first quarter of 1998.
In 1997, the Company exchanged a convertible debenture for Series C preferred
stock. In connection with the exchange, the Company was required to establish
a "sinking fund" to pay a percentage of accrued interest due on the
debenture. To date, the sinking fund has not been formally established, but
payments of $7,500 have been made on the original balance due of $23,140. The
Company believes that funding will continue to be available to fully retire
the obligation in the months ahead.
Other significant financial commitments for future periods will include:
Servicing notes payable to bank.
Servicing the Bobby C. Hamilton note payable.
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 independent of any affiliated sales company. Since 1991 the Company had shared its profits on a 50/50 basis with sales affiliates, HoltraChem, and later BCS. The Company anticipates an increase in its overall profitability in the antimony business as a result of the change. This increase in profitability will assist the Company in meeting its obligations. There can be no assurances, however, the Company will be successful in operating the antimony business independent of a sales company, although the first few months of operating independently have been successful.
In connection with terminating its relationship with BCS, the Company negotiated an accounts receivable factoring arrangement to assist it in meeting its financial and operational cash needs.
In 1996, the Yellow Jacket operation was put on a care-and-maintenance basis after a long history of operating losses. To date, no mineralized material in quantities significant enough to warrant resuming production at the property has been encountered. If the Yellow Jacket property is abandoned, care-and-maintenance and exploration costs will cease and economic resources may be generated from the sale of equipment.
Year 2000
The Company has performed an evaluation of its computer hardware and determined that with only a few minor exceptions, it is Y2K compliant at this time. Minor upgrades will be completed on accounting software in 1999 to make it Y2K compliant at no material cost to the Company.
The Company's customers are predominantly large manufacturers. If any of these customers were not Y2K compliant by the end of 1999 and could not buy the Company's antimony products, it could have a material impact on the Company's operations. The Company's operations could also be impacted if the antimony metal vendors the Company acquires raw materials from were not Y2K compliant and could not provide antimony metal. However, management anticipates that these companies will be ready and, therefore, the Company's operations will not be materially impacted when the year 2000 arrives. If any of the Company's other business associates are not Y2K compliant by the year 2000, management does not believe it will have a material impact on the Company's operations.
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.
PART II-OTHER INFORMATION
ITEM 1. Legal Proceedings, Continued:
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. Discovery proceeded during the first quarter of 1999, and the Company is vigorously defending against the original complaint, as well as prosecuting the counterclaim against the Trust and action against Mr. Maguire.
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 Montana Twentieth Judicial District Court, Sanders County against the Company and (third party) John C. Lawrence, the Company's president and a director and shareholder. Mr. Maguire's counterclaim and third party complaint alleged damages described in separate counts of libel and slander suffered as a result of accusations made by the Company and Mr. Lawrence. On May 14, 1999, Mr. Maguire motioned the court for an order to dismiss his Counterclaim and Third-party complaint stating that he did not have sufficient facts upon which to rely in continuing with his Counterclaim and Third-party complaint. The court subsequently granted the motion and the Counterclaim and Third-party complaint were dropped.
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
The Company reported Item 4., "Changes in Registrant's Certifying Accountants" on a Current Report Form 8-K filed February 11, 1999.
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: May 20, 1999
John C. Lawrence, Director and President
(Principal Executive, Financial and Accounting
Officer)
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| ARTICLE 5 |
| PERIOD TYPE | 3 MOS |
| FISCAL YEAR END | DEC 31 1999 |
| PERIOD END | MAR 31 1999 |
| CASH | 222 |
| SECURITIES | 0 |
| RECEIVABLES | 0 |
| ALLOWANCES | 0 |
| INVENTORY | 363113 |
| CURRENT ASSETS | 363335 |
| PP&E | 3218692 |
| DEPRECIATION | (2740883) |
| TOTAL ASSETS | 1020130 |
| CURRENT LIABILITIES | 1955635 |
| BONDS | 0 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 33153 |
| COMMON | 134507 |
| OTHER SE | (2965188) |
| TOTAL LIABILITY AND EQUITY | 1020130 |
| SALES | 690302 |
| TOTAL REVENUES | 690302 |
| CGS | 617375 |
| TOTAL COSTS | 617375 |
| OTHER EXPENSES | 166612 |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | 51142 |
| INCOME PRETAX | (93685) |
| INCOME TAX | (93685) |
| INCOME CONTINUING | (93685) |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | (93685) |
| EPS BASIC | (.01) |
| EPS DILUTED | (.01) |
Warrant No. Series 99-01Warrant to Purchase 250,000 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)
This is to certify that, for the value received, John C. Lawrence, PO Box 643, Thompson Falls, Montana 59873, 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: 29 March 1999
UNITED STATES ANTIMONY CORPORATION
By
John C. Lawrence, President
ATTEST:
Lee Martin
TERMINATION AGREEMENT
AGREEMENT made as of 31 March 1999 by and between United States Antimony Corporation, a corporation organized under the laws of the State of Montana, with its principal office at 1250 Prospect Creek Road, PO Box 643, Thompson Falls, Montana 59873 (hereinafter referred to as USAC) and Pressure Vessel Services, Inc., a corporation organized under the laws of the State of California with its an office at 12522 Los Nietos Road, Sante Fe Springs, California 90670 and Basic Chemical Solutions, L.L.C., a limited liability company organized under the laws of the State of New Jersey, with an office at 5 Steel Road East, Morrisville, PA 19067 (hereinafter collectively referred to as PVS).
WHEREAS, PVS purchased a PROCESSING AGREEMENT (Schedule 1) and a INVENTORY AND SALES AGREEMENT (Schedule 2), hereinafter referred to collectively as the Agreements, from HoltraChem, Inc., a Massachusetts Corporation (hereinafter referred to as HC) on or about 28 September 1998.
WHEREAS, USAC and PVS under the Agreements were tenants in common relating to any "Inventory" as defined herein;
WHEREAS, USAC by its rights in paragraph 8 of the PROCESSING AGREEMENT and paragraph 13 of the INVENTORY AND SALES AGREEMENT has exercised its right to terminate the Agreements effective midnight 31 March 1999.
NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, the parties hereby agree as follows:
1 Audit
1.1-9 Inventory - The inventory of antimony raw materials, antimony finished products, and antimony work in progress at Thompson Falls, hereinafter, "Inventory", will be audited by Steve Hamstrom a representative of PVS and Mike Floersch, John C. Lawrence, and Sherry Stewart of USAC on 31 March 1999. There will be a written inventory of all the outside warehouses (Schedule 3) at the close of business on 31 March 1999.
1.2 Accounting - An accounting of all settlement costs, sales, purchases,processing costs, inventory values, sales commissions, trucking costs, and other items regarding the business will be prepared by PVS as of 31 March 1999 and finalized by 05 April 1999. USAC will review the PVS accounting by 07 April 1999.
2 Costs
2.1 PVS will be responsible and pay for all costs including inventory purchases described on Schedule 4 together with all wages, trucking costs, sales commissions, warehouse costs, fees, toll fee processing costs due USAC, interest, plasticizers, and other costs that PVS customarily pays on an accrued basis until midnight on 31 March 1999 but excluding an amount estimated at $50,000 to be verified subsequent to this AGREEMENT due the Dexter Corporation, 211 Franklin Street, Olean, New York 14760-1297 for off grade material and an amount estimated at $2,815.06 to be verified subsequent to this AGREEMENT due Plastatech Engineering, LTD. of 725 Morley Drive, Saginaw, MI 48601
2.2 USAC agrees to hold PVS harmless from any liabilities resulting from any quality control issues for shipments made prior to 31 March 1999.
3 Inventory
3.1 PVS does hereby certify that their interest in all the inventory wherever situated as of midnight 31 March 1999 will be free and clear of all liens and encumbrances.
3.2 USAC does hereby certify that their interest in all the inventory wherever situated as of midnight 31 March 1999 will be free and clear of all liens and encumbrances.
3.3 USAC accepts the inventory on 31 March 1999 in an "as is" condition.
4 Sale of Inventory - USAC and PVS agree that USAC may sell all inventory beginning on 01 April 1999 and thereafter for its sole benefit and use.
5 Receivables
5.1 PVS will own all the receivables on products from inventory sold prior to 1 April 1999. Sale date will be determined by invoice date.
5.2 USAC will own all the receivables for products sold after 31 March 1999. PVS will have a security interest in one half of the receivables from sales of products from inventory until USAC has paid PVS for 100% of the PVS interest in the inventory at cost as of 31 March 1999.
5.3 PVS agrees to subordinate their security interest in the Accounts Receivable to Systran Financial Services, Corp. in consideration of a Division Order Agreement (schedule #6). All the receivables will be collected by Systran,10220 Southwest Greenburg Rd, Suite 551, Portland, Oregon 97223, and USAC will remit one half of all the receivables to PVS until they have been fully paid for their one half share of the inventory at cost as of 31 March 1999 plus interest on the unpaid portion of 8% per annum. USAC will pay PVS the entire amount of their one half interest in the inventory at cost as of 31 March 1999 plus interest on the unpaid portion by no later than 31 July 1999. Systran shall not be liable to USAC, PVS, or any other party in any manner for its obligation relating to this agreement. USAC will be entitled to the sole benefit and ownership of all the receivables from sales of inventory accruing or payable on or after 1 April 1999 after PVS' one half interest in the inventory at cost as of 31 March 1999 has been paid.
6 Profits - PVS will agree to remit all profits due USAC by 08 April 1999 computed under the terms defined in the contracts listed in Schedules 1 & 2..
7 Sales Agreements, Distributor Contracts, Agency Agreements, Sales Contracts, and Purchasing Agreements - PVS agrees to assign to USAC all the sales agreements, distributor contracts, agency agreements, sales contracts, and purchasing agreements pursuant to Schedule 5.
8 Sales Information - PVS has not previously divulged any sales information, customer lists, nor antimony user lists and further agrees to not divulge such information to any other party for any reason. The customer lists are confidential and deemed to be proprietary and trade secrets of USAC.
9 Indemnification
9.1 PVS agrees to hold USAC harmless from any liabilities resulting from acts or omission of PVS relating to the contracts listed in Schedules 1 & 2 prior to 31 March 1999.
9.2 USAC agrees to hold PVS harmless from any liabilities resulting from acts or omission of USAC relating to the contracts listed in Schedules 1 & 2 prior to 31 March 1999.
9.3 USAC and PVS agree to indemnify Systran Financial Services, Corp. and hold Systran Financial Services, Corp. harmless against any and all claims, demands, actions, and causes of action arising from or relating to this Agreement.
10 Entire Agreement; Amendments - This agreement constitutes the entire agreement between the parties. Any agreement hereafter shall be ineffective to change, modify or discharge the Agreement in whole or in part, unless such agreement is agreed to in writing and signed by all the parties hereto. There is no agreement or promise by or on behalf of the parties to do or admit to do any act or thing not herein expressly and specifically mentioned, and the parties acknowledge that the above consideration is in full and final settlement of all matters mentioned herein.
11 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 or proceeding, in addition to any other relief to which they may be entitled, including any appeal thereof.
12 Governing Law - This Agreement shall be interpreted, applied and enforced in accordance with the laws of the State of Idaho.
13 Headings and Titles - It is understood and agreed that all of the headings and titles, subheadings and subtitles herein are inserted as a matter of convenience and reference only. They in no way define, limit, extent or describe the scope or intent of this Agreement, and in no way affect this Agreement.
14 Severability - The provisions of this Agreement are severable, and if any part of it is found to be unenforceable, the other provisions shall remain fully valid and enforceable.