Item 2. Management’s Discussion and Analysis
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This quarterly report and the exhibits attached hereto contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements concern the Company’s anticipated results and developments in the Company’s operations in future periods, planned exploration and development of its properties, plans related to its business and other matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.
Any statement that expresses or involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always using words or phrases such as “expects” or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “estimates”, or “intends”, or states that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:
·
Risks related to the Company’s properties being in the exploration stage;
·
Risks related to the mineral operations being subject to government regulation;
·
Risks related to environmental concerns;
·
Risks related to the Company’s ability to obtain additional capital to develop the Company’s resources, if any;
·
Risks related to mineral exploration and development activities;
·
Risks related to mineral estimates;
·
Risks related to the Company’s insurance coverage for operating risks;
·
Risks related to the fluctuation of prices for precious and base metals, such as gold, silver and copper;
·
Risks related to the competitive industry of mineral exploration;
·
Risks related to the title and rights in the Company’s mineral properties;
·
Risks related to the possible dilution of the Company’s common stock from additional financing activities;
·
Risks related to potential conflicts of interest with the Company’s management;
·
Risks related to the Company’s shares of common stock;
This list is not exhaustive of the factors that may affect the Company’s forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further under the sections titled “Risk Factors”, “Description of Business” and “Management’s Discussion and Analysis and Plan of Operation” of this Quarterly Report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. United States Antimony Corporation disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as required by law. The Company advises readers to carefully review the reports and documents filed from time to time with the Securities and Exchange Commission (the “SEC”), particularly the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
United States Antimony Corporation qualifies all forward-looking statements contained in this Quarterly Report by the foregoing cautionary statement.
Certain statements contained in this Quarterly Report on Form 10-Q constitute “forward-looking statements.” These statements, identified by words such as “plan,” “anticipate,” “believe,” “estimate,” “should,” “expect,” and similar expressions include the Company’s expectations and objectives regarding its future financial position, operating results and business strategy. These statements reflect the current views of management with respect to future events and are subject to risks, uncertainties and other factors that may cause actual results, performance or achievements, or industry results, to be materially different from those described in the forward-looking statements. Such risks and uncertainties include those set forth under the caption “Management’s Discussion and Analysis or Plan of Operation” and elsewhere in this Quarterly Report.
As used in this Quarterly Report, the terms “we,” “us,” “our,” “United State Antimony Corporation,”, “US Antinomy “and the “Company”, mean United States Antimony Corporation, unless otherwise indicated. All dollar amounts in this Quarterly Report are expressed in U.S. dollars, unless otherwise indicated.
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Management’s Discussion and Analysis is intended to be read in conjunction with the Company’s condensed consolidated financial statements and the integral notes (“Notes”) thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. The following statements may be forward-looking in nature and actual results may differ materially.
Reports to Security Holders
The Registrant does not issue annual or quarterly reports to security holders other than the annual Form 10-K and quarterly Forms 10-Q as electronically filed with the SEC. Electronically filed reports may be accessed at www.sec.gov
DESCRIPTION OF BUSINESS
History
United States Antimony Corporation, or USAC, was incorporated in Montana in January 1970 to mine and produce antimony products. In December 1983, we suspended antimony mining operations but continued to produce antimony products from domestic and foreign sources. In April 1998, we formed United States Antimony SA de CV or USAMSA, to mine and smelt antimony in Mexico. Bear River Zeolite Company, or BRZ, was incorporated in 2000, and it is mining and producing zeolite in southeastern Idaho. On August 19, 2005, USAC formed Antimonio de Mexico, S. A. de C. V. to explore and develop antimony and silver deposits in Mexico. Our principal business is the production and sale of antimony, silver, gold, and zeolite products. On May 16, 2012, we started trading on the NYSE MKT (now NYSE AMERICAN) under the symbol UAMY.
Antimony Division
Our antimony smelter and precious metals plant is located in the Burns Mining District of Sanders County, Montana, approximately 15 miles west of Thompson Falls, MT. We hold 2 patented mill sites where the plant is located. We have no “proven reserves” or “probable reserves” of antimony. Environmental restrictions preclude mining at this site.
Mining was suspended in December 1983, because antimony could be purchased more economically from foreign sources.
For 2021, and since 1983, we relied on foreign sources for raw materials, and there are risks of interruption in procurement from these sources and/or volatile changes in world market prices for these materials that are not controllable by us. We have sources of antimony in Mexico but we are still depending on foreign companies for raw material in the future. We expect to receive raw materials from our owned and leased properties for 2022 and later years. We continue working with suppliers in North America, Central America, and South America.
We currently own 100% of the common stock, equipment, and the leases on real property of United States Antimony, Mexico S.A. de C.V. or “USAMSA”, which was formed in April 1998. We currently own 100% of the stock in Antimony de Mexico SA de CV (ADM) which owns the San Miguel concession of the Los Juarez property. USAMSA has two divisions, (1) the Madero smelter in Coahuila, (2) the Puerto Blanco flotation mill and oxide circuit in Guanajuato. ADM possesses the Los Juarez mineral deposit.
In our existing operations in Montana, we produce antimony oxide, antimony metal, and precious metals. 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. Antimony oxide is also used as a color fastener in paint, as a catalyst for production of polyester resins for fibers and film, as a catalyst for production of polyethylene pthalate in plastic bottles, as a phosphorescent agent in fluorescent light bulbs, and as an opacifier for porcelains. We also sell antimony metal for use in bearings, storage batteries and ordnance.
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We estimate (but have not independently confirmed) that our present share of the domestic market and international market for antimony oxide products is approximately 4% and less than 1%, respectively. We are the only significant U.S. producer of antimony products, while China supplies 92% of the world antimony demand. We believe we are competitive both domestically and world-wide due to the following:
·
We have a reputation for quality products delivered on a timely basis.
·
We have the only two operating, permitted, antimony smelters in North and Central America.
·
We are the only domestic producer of antimony products.
·
We can ship on short notice to domestic customers.
·
We are vertically integrated, with raw materials from our own mines, mills, and smelter in Mexico, along with the raw materials from exclusive supply agreements we have with numerous ore and raw material suppliers.
·
Our smelter in Coahuila is the largest operating antimony smelter in Mexico or the United States with a current maximum capacity of about 32,600 pounds of feed per day and permitting for 50% to 70% expansion.
Zeolite Division
We own 100% of Bear River Zeolite Company, (BRZ, an Idaho corporation) that was incorporated on June 1, 2000. BRZ has a lease with Webster Farm, L.L.C. that entitles BRZ to surface mine and process zeolite on property located near Preston, Idaho, in exchange for a royalty payment. In 2010 the royalty payment was adjusted to $10 per ton sold. The current minimum annual royalty is $60,000. In addition, BRZ has more zeolite on U.S. Bureau of Land Management land. The Company pays various royalties on the sale of zeolite products. William Raymond and Nancy Couse are paid a royalty that varies from $1 to $5 per ton. On a combined basis, royalties vary from 8%-13% of sales. Shortly after inception BRZ constructed a processing plant on the property which improved its productive capacity. Ground-breaking for an additional warehouse to store additional inventory and a shop to service equipment started in 2021 and the warehouse and shop are expected to be completed by mid-2022. A vertical-shaft-impactor crusher was replaced by a hammer mill for crushing line number 1 in 2021 for increased production rate. A replacement jaw crusher was installed and put into service in 2021. The new jaw crusher was further improved with a variable-speed apron feeder in late 2021 and subsequent and substantial improvements have been made to the jaw crusher in 2022. In 2021, the Company purchased a house in Preston Idaho for the express purpose of housing workers for its zeolite operation.
We have no reserves nor resources of zeolite.
“Zeolite” refers to a group of industrial minerals that consist of hydrated aluminosilicates that hold cations such as calcium, sodium, ammonium, various heavy metals, and potassium in their crystal lattice. Water is loosely held in cavities in the lattice. BRZ zeolite is regarded as one of the best zeolites in the world due to its high CEC of approximately 180-220 meq/100 gr., its hardness and high clinoptilolite content, its absence of clay minerals, and its low sodium content. BRZ’s zeolite deposits’ characteristics which make the mineral useful for a variety of purposes including:
☐
Soil Amendment and Fertilizer . Zeolite has been successfully used to fertilize golf courses, sports fields, parks and common areas, and high value agricultural crops
☐
Water Filtration . Zeolite is used for particulate, heavy metal and ammonium removal in swimming pools, municipal water systems, fisheries, fish farms, and aquariums.
☐
Sewage Treatment . Zeolite is used in sewage treatment plants to remove nitrogen and as a carrier for microorganisms.
☐
Nuclear Waste and Other Environmental Cleanup . Zeolite has shown a strong ability to selectively remove strontium, cesium, radium, uranium, and various other radioactive isotopes from solution. Zeolite can also be used for the cleanup of soluble metals such as mercury, chromium, copper, lead, zinc, arsenic, molybdenum, nickel, cobalt, antimony, calcium, silver and uranium.
☐
Odor Control . A major cause of odor around cattle, hog, and poultry feed lots is the generation of the ammonium in urea and manure. The ability of zeolite to absorb ammonium prevents the formation of ammonia gas, which disperses the odor.
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☐
Gas Separation . Zeolite has been used for some time to separate gases, to re-oxygenate downstream water from sewage plants, smelters, pulp and paper plants, and fish ponds and tanks, and to remove carbon dioxide, sulfur dioxide and hydrogen sulfide from methane generators as organic waste, sanitary landfills, municipal sewage systems, animal waste treatment facilities, and is excellent in pressure swing apparatuses.
☐
Animal Nutrition . According to other research, feeding up to 2% zeolite increases growth rates, decreases conversion rates, and prevents scours. BRZ does not make these claims.
☐
Miscellaneous Uses . Other uses include catalysts, petroleum refining, concrete, solar energy and heat exchange, desiccants, pellet binding, horse and kitty litter, floor cleaner and carriers for insecticides, pesticides and herbicides .
SELECTED FINANCIAL DATA.
Statement of Operations Information:
For the three months ended June 30,
For the six months ended June 30,
2022
2021
2022
2021
Revenues
$ 3,587,925
$ 2,275,562
$ 7,168,231
$ 3,528,849
Costs of revenues
2,865,515
2,079,164
5,306,433
3,120,294
Gross profit
722,410
196,398
1,861,798
408,555
Total operating expenses
355,475
428,588
715,283
982,471
Income (loss) from operations
366,935
(232,190 )
1,146,515
(573,916 )
Other income (expense)
(5,712 )
569,331
960
575,569
NET INCOME
$ 361,223
$ 337,141
$ 1,147,475
$ 1,653
Weighted average shares of common stock (basic)
106,240,361
106,315,419
106,240,361
99,513,378
Weighted average shares of common stock (diluted)
106,240,361
108,696,704
106,240,361
99,513,378
Balance Sheet Information:
June 30,
2022
December 31,
2021
Working capital
$ 22,665,906
$ 21,548,137
Total assets
35,756,017
35,002,727
Accumulated deficit
(31,563,788 )
(32,711,263 )
Stockholders’ equity
33,516,278
32,368,803
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Operational and financial performance
Antimony
Financial and operational metrics of antimony for the three months ended June 30, 2022 and 2021 are as follows:
Three months ended June 30,
Pct. Increase
Antimony - Combined USA and Mexico
2022
2021
$ Change
(Decrease)
Total revenue -antimony
$ 2,472,081
$ 1,428,939
$ 1,043,142
73.0 %
Gross profit - antimony
490,559
(62,222 )
552,781
(888.4 )%
Total lbs of antimony metal sold
363,128
339,117
24,011
7.1 %
Average sales price/lb metal
6.81
4.21
2.59
61.6 %
Average cost/lb metal
5.46
4.40
1.06
24.1 %
Average gross profit/lb metal
1.35
(0.18 )
1.53
(836.3 )%
Financial and operational metrics of antimony for the six months ended June 30, 2022 and 2021 was as follows:
Six months ended June 30,
Pct Increase
Antimony - Combined USA and Mexico
2022
2021
$ Change
(Decrease)
Total revenue -antimony
$ 5,301,011
$ 2,086,046
$ 3,214,965
154.1 %
Gross profit - antimony
1,546,336
25,245
1,521,091
6,025.3 %
Total lbs of antimony metal sold
796,478
521,086
275,392
52.8 %
Average sales price/lb metal
6.66
4.00
2.65
66.3 %
Average cost/lb metal
4.71
3.95
0.76
19.2 %
Average gross profit/lb metal
1.94
0.05
1.89
3,907.4 %
During the three months ended June 30, 2022, the average sales price for antimony increased $2.60 per pound compared to the three months ended June 30, 2021. Gross profit per pound increased $1.53 per pound over the three months ended June 30, 2021.
During the six months ended June 30, 2022, the average sales price for antimony increased $2.66 per pound compared to the six months ended June 30, 2021. Gross profit per pound increased $1.89 per pound over the three months ended June 30, 2021.
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Zeolite
Financial and operational performance of zeolite for the three months ended June 30, 2022 and 2021 was as follows:
Three months ended June 30,
Pct Increase
Zeolite
2022
2021
$ Change
(Decrease)
Total revenue - zeolite
$ 1,020,391
$ 716,428
303,963
42.4 %
Gross profit - zeolite
164,072
156,651
7,421
4.7 %
Tons of zeolite sold
4,046
3,035
1,011
33.3 %
Average sales price/ton
252.20
236.06
16.14
6.8 %
Average cost/ton
211.65
184.44
27.21
14.8 %
Average gross profit/ton
40.55
51.61
(11.06 )
(21.4
%)
Financial and operational performance of zeolite for the six months ended June 30, 2022 and 2021 was as follows:
Six months ended June 30,
Pct. Increase
Zeolite
2022
2021
$ Change
(Decrease)
Total revenue - zeolite
$ 1,694,433
$ 1,236,375
458,058
37.0 %
Gross profit - zeolite
197,869
232,712
(34,843 )
(15.0
%)
Tons of zeolite sold
7,072
5,778
1,294
22.4 %
Average sales price/ton
239.60
213.98
25.62
12.0 %
Average cost/ton
211.62
173.70
37.92
21.8 %
Average gross profit/ton
27.98
40.28
(12.30 )
(30.5
%)
Sales volume of zeolite for the three months ended June 30, 2022 increased 1,011 tons over the three months ended June 30, 2021. Average sales price per ton increased $16.14 for the same comparable period. Sales volume of zeolite for the six months ended June 30, 2022 increased 1,294 tons over the six months ended June 30, 2021. Average sales price per ton increased $25.62 for the six months ended June 30, 2022 over the comparable six month period ending June 30, 2021.
Construction of the new 50’x100’ warehouse (for additional storage of product) and the 40’x60’ shop (for servicing equipment) continued. The structures are substantially complete as of the date of this report and will be put into service in the third quarter of 2022.
During the three and six months ended June 30, 2022, the Company purchased a Cat 740 haul truck to replace aging equipment. The Company also took delivery on a Cat 992 during the same period.
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Precious Metals
Financial and operational performance of precious metals for the three months ended June 30, 2022 and 2021 was as follows:
Three months ended June 30,
Precious metals
2022
2021
$ Change
Pct Change
Total revenue - precious metals
$ 95,453
$ 130,195
$ (34,742 )
(26.7 )%
Gross profit precious metals
67,779
101,969
(34,190 )
(33.5 )%
Ounces sold - gold
11.06
14.74
(3.68 )
(24.9 )%
Ounces sold - silver
3,319
6,254
(2,935
)
(46.9 )%
Financial and operational performance of precious metals for the three months ended June 30, 2022 and 2021 was as follows:
Six months ended June 30,
Precious metals
2022
2021
$ Change
Pct Change
Total revenue - precious metals
172,787
206,428
(33,641 )
(16.3 )%
Gross profit precious metals
117,593
150,598
(33,005 )
(21.9 )%
Ounces sold-gold
21.35
22.00
(0.65 )
(3.0 )%
Ounces sold-silver
8,175
9,608
(1,433 )
(14.9 )%
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EARNINGS BEFORE INTEREST TAX DEPRECIATION AND AMORTIZATION
The Company utilizes Earnings Before Interest Taxes Depreciation and Amortization (“EBITDA”), a non-GAAP financial measurement which approximates free cash flow.
Our company-wide Earnings Before Interest Taxes Depreciation Amortization (“EBITDA”) was $595,360 for the three months ended June 30, 2022, compared to EBITDA of $557,965 for the three months ended June 30, 2021. The primary driver of the June 30, 2021 EBITDA was a one-time non-recurring gain on forgiveness of CARES Act funds on a loan received in 2020 during the global pandemic and subsequent federal government economic stimulus program.
Income from operations improved from a company-wide loss of $232,190 for the three months ended June 30, 2021 to income from operations of $366,935 for the three months ended June 30, 2022. As a percentage of sales, income from operations improve from a negative 10.2% in 2021 to 11.7% in 2022 for the three-month period. Primary drivers include continued strong market prices for antimony and zeolite combined with relatively stable prices for cost of goods sold during the period.
EBIDTA schedules by business segment for the three months ended June 30, 2022 and June 30, 2021 is presented as follows.
Antimony - Combined USA and Mexico
Three months ended June 30, 2022
Three months ended June 30, 2021
$ Change
Change as a %
of Revenue
Gross antimony revenue
$ 2,472,081
100.0 %
$ 1,428,939
100.0 %
$ 1,043,142
0.0 %
Cost of sales
(1,981,522 )
(80.2 )%
(1,491,161 )
(104.4 )%
(490,361 )
24.2 %
Gross profit
490,559
19.8 %
(62,222 )
(4.4 )%
552,781
24.2 %
Operating expenses
(345,527 )
(14.0 )%
(413,499 )
(28.9 )%
67,972
15.0 %
Income (loss) from operations
145,032
5.9 %
(475,721 )
(33.3 )%
620,753
39.2 %
Non-operating income (expense)
(3,975 )
(2.6 )%
570,147
39.9 %
(574,122 )
(40.1 )%
Net income - antimony
141,057
5.7 %
94,426
6.6 %
46,631
(0.9 )%
Interest expense
1,343
0.1 %
38
0.0 %
1,305
0.1 %
Depreciation and amortization
154,837
6.3 %
152,892
10.7 %
1,945
(4.4 )%
EBITDA - antimony
$ 297,237
12.0 %
$ 247,356
17.3 %
$ 49,881
(5.3 )%
Zeolite
Three months ended June 30, 2022
Three months ended June 30, 2021
$ Change
Change as a %
of Revenue
Gross zeolite revenue
$ 1,020,391
100.0 %
$ 716,428
100.0 %
$ 303,963
0.0 %
Cost of sales
(856,319 )
(83.9 )%
(559,777 )
(78.1 )%
(296,542 )
(5.8 )%
Gross profit - zeolite
164,072
16.1 %
156,651
21.9 %
7,421
(5.8 )%
Operating expenses
(9,948 )
(1.0 )%
(15,089 )
(2.1 )%
5,141
1.1 %
Income (loss) from operations
154,124
15.1 %
141,562
19.8 %
12,562
(4.7 )%
Non-operating expenses
(1,737 )
(0.2 )%
(816 )
(0.1 )%
(921 )
(0.1 )%
Net income - zeolite
152,387
14.9 %
140,746
19.6 %
11,641
(4.7 )%
Interest expense
1,738
0.2 %
842
0.1 %
896
0.1 %
Depreciation and amortization
48,546
4.8 %
38,826
5.4 %
9,720
(0.7 )%
EBITDA - zeolite
$ 202,671
19.9 %
$ 180,414
25.2 %
$ 22,257
(5.3 )%
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Precious Metals
Three months ended June 30, 2022
Three months ended June 30, 2021
$ Change
Change as a %
of Revenue
Gross precious metals revenue
95,453
100.0 %
130,195
100.0 %
(34,742 )
0.0 %
Production costs
(27,674 )
(29.0 )%
(28,226 )
(21.7 )%
552
(7.3 )%
Gross profit
67,779
71.0 %
101,969
78.3 %
(34,190 )
(7.3 )%
Operating expenses
-
0.0 %
-
0.0 %
-
0.0 %
Income from operations
67,779
71.0 %
101,969
78.3 %
(34,190 )
(7.3 )%
Non-operating income
-
0.0 %
-
0.0 %
-
0.0 %
Net income - antimony
67,779
71.0 %
101,969
78.3 %
(34,190 )
(7.3 )%
Interest expense
-
0.0 %
-
0.0 %
-
0.0 %
Depreciation and amortization
27,674
29.0 %
28,226
21.7 %
(552 )
7.3 %
EBITDA - precious metals
95,453
100.0 %
130,195
100.0 %
(34,742 )
0.0 %
Company-wide
Three months ended June 30, 2022
Three months ended June 30, 2021
Change
Change as a % of Revenue
Gross revenue
3,587,925
100.0 %
2,275,562
100.0 %
1,312,363
0.0 %
Cost of sales
(2,865,515 )
(79.9 )%
(2,079,164 )
(91.4 )%
(786,351 )
11.5 %
Gross profit
722,410
20.1 %
196,398
8.6 %
526,012
11.5 %
Operating expenses
(355,475 )
(9.7 )%
(428,588 )
(18.8 )%
73,113
8.9 %
Income (loss) from operations
366,935
10.2 %
(232,190 )
(10.2 )%
599,125
18.6
Non-operating income (expense)
(5,712 )
(0.2 )%
569,331
25.0 %
(575,043
(25.2 )%
Net income (loss)
361,223
10.1 %
337,141
14.8 %
24,082
(4.7 )%
Interest expense
3,081
0.1 %
880
0.0 %
2,201
0.0 %
Depreciation and amortization
231,057
6.4 %
219,944
9.7 %
11,113
(3.2 )%
EBITDA
595,360
16.6 %
557,965
24.5 %
37,395
(7.9 )%
Page 25 of 32
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EBIDTA schedules by business segment for the six months ended June 30, 2022 and June 30, 2021 is presented as follows.
Antimony - Combined USA and Mexico
Six months ended June 30, 2022
Six months ended June 30, 2021
$ Change
Change as a %
of Revenue
Gross antimony revenue
$ 5,301,011
100.0 %
$ 2,086,046
100.0 %
$ 3,214,965
0.0 %
Cost of sales
(3,754,675 )
(70.8 )%
(2,060,801 )
(98.8 )%
(1,693,874 )
28.0 %
Gross profit
1,546,336
29.2 %
25,245
1.2 %
1,521,091
28.0 %
Operating expenses
(693,829 )
(13.1 )%
(958,203 )
(45.9 )%
264,374
32.8 %
Income (loss) from operations
852,507
16.1 %
(932,958 )
(44.7 )%
1,785,465
60.8 %
Non-operating income (expense)
3,335 )
(0.1 )%
576,782
27.6 %
(573,447 )
(27.6 )%
Net income (loss) - antimony
855,843
16.1 %
(356,176 )
(17.1 )%
1,212,018
33.2 %
Interest expense
3,688
0.1 %
1,565
0.1 %
2,123
(0.0 )%
Depreciation and amortization
302,763
5.7 %
305,735
14.7 %
(2,972 )
(8.9 )%
EBITDA - antimony
$ 1,162,294
21.9 %
$ (48,876 )
(2.3 )%
$ 1,211,169
24.3 %
Zeolite
Six months ended June 30, 2022
Six months ended June 30, 2021
$ Change
Change as a %
of Revenue
Gross zeolite revenue
$ 1,694,433
100.0 %
$ 1,236,375
100.0 %
$ 458,058
0.0 %
Cost of sales
(1,496,564 )
(88.3 )%
(1,003,663 )
(81.2 )%
(492,901 )
(7.1 )%
Gross profit - zeolite
197,869
11.7 %
232,712
18.8 %
(34,843 )
(7.1 )%
Operating expenses
(21,454 )
(1.3 )%
(24,268 )
(2.0 )%
2,814
0.7 %
Income from operations
176,415
10.4 %
208,444
16.9 %
(32,029 )
(6.4 )%
Non-operating expenses
(2,375 )
(0.1 )%
(1,213 )
(0.1 )%
(1,162 )
(0.0 )%
Net income - zeolite
174,040
10.3 %
207,231
16.8 %
(33,191 )
(6.5 )%
Interest expense
2,375
0.1 %
1,570
0.1 %
805
0.0 %
Depreciation and amortization
93,250
5.5 %
80,843
6.5 %
12,407
(1.0 )%
EBITDA - zeolite
$ 269,665
15.9 %
$ 289,644
23.4 %
$ (19,979 )
(7.5 )%
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Precious Metals
Six months ended June 30, 2022
Six months ended June 30, 2021
$ Change
Change as a %
of Revenue
Gross precious metals revenue
$ 172,787
100.0 %
$ 206,428
100.0 %
$ (33,641 )
0.0 %
Cost of sales
(55,194 )
(31.9 )%
(55,830 )
(27.0 )%
636
(4.9 )%
Gross profit - precious metals
117,593
68.1 %
150,598
73.0 %
(33,005 )
(4.9 )%
Operating expenses
-
0.0 %
-
0.0 %
-
0.0 %
Income from operations
117,593
68.1 %
150,598
73.0 %
(33,005 )
(4.9 )%
Non-operating expenses
-
0.0 %
-
0.0 %
-
0.0 %
Net income - precious metals
117,593
68.1 %
150,598
73.0 %
(33,005 )
(4.9 )%
Interest expense
-
0.0 %
-
0.0 %
-
0.0 %
Depreciation and amortization
55,194
31.9 %
55,830
27.0 %
(636 )
4.9 %
EBITDA - precious metals
$ 172,787
100.0 %
$ 206,428
100.0 %
$ (33,641 )
0.0 %
Company-wide
Six months ended June 30, 2022
Six months ended June 30, 2021
Change
Change as a %
of Revenue
Gross revenue
$ 7,168,231
100.0 %
$ 3,528,849
100.0 %
$ 3,639,382
0.0 %
Cost of sales
(5,306,433 )
(74.0 )%
(3,120,294 )
(88.4 )%
(2,186,139
14.4 %
Gross profit
1,861,798
26.0 %
408,555
11.6 %
1,453,243
14.4 %
Operating expenses
(715,283 )
(10.0 )%
(982,471 )
(27.8 )%
267,188
17.9 %
Income (loss) from operations
1,146,515
16.0 %
(573,916 )
(16.3 )%
1,720,431
32.3 %
Non-operating income (expense)
960
(0.0 )%
575,569
16.3 %
(574,609 )
(16.3 )%
Net income
1,147,475
16.0 %
1,653
0.0 %
1,145,822
16.0 %
Interest expense
6,063
0.1 %
3,135
0.1 %
2,928
(0.0 )%
Depreciation and amortization
451,207
6.3 %
442,408
12.5 %
8,799
(6.2 )%
EBITDA
$ 1,604,745
22.4 %
$ 447,196
12.7 %
$ 1,157,549
9.7 %
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LIQUIDITY AND FINANCIAL CONDITION
WORKING CAPITAL
June 30,
2022
December 31,
2021
Current assets
$ 24,126,852
$ 23,568,992
Current liabilities
(1,460,946 )
(2,020,855 )
Working capital
$ 22,665,906
$ 21,548,137
For the six months ended
CASH FLOWS
June 30,
2022
June 30,
2021
Cash flow provided (used) by operating activities
$ 745,038
$ (2,236,609 )
Cash flow used by investing activities
(13,775,850 )
95,057
Cash flow provided (used) by financing activities
(19,767 )
23,841,057
Net change in cash during period
$ (13,050,579
)
$ 21,699,505
As of June 30, 2022, the Company had cash and cash equivalents of hand of $8,369,750 which consisted of $8,312,469 in money market funds and deposit accounts along with $57,281 of restricted cash.
Net cash provided by operating activities was $745,038 for the six-month period ending June 30, 2022, compared with cash used by operating activities of $2,236,609 during the six-month period ended June 20, 2021. The $2,981,647 change in cash from operating activities is attributable to a decrease in existing inventories coupled with continuing strong revenue from antinomy sales which have more than doubled in the current year.
Net cash used by investing activities of $13,775,850 included the purchase of a caterpillar for the Bear River Zeolite operation and ongoing construction of a new warehouse in Preston, ID. The Company also invested $13,500,000 in a managed investment account, seeking to improve its return on investment versus maintaining deposits in a low-interest bearing money market account. The managed investment account invests in primarily US Treasury Bonds and other fixed income funds.
Cash flow used by financing activities for the six months ended June 30, 2022 was $19,767 compared to a cash flow provided by financing activities of $23,841,057 for the six months ended June 30, 2021. In 2021, the Company raised $25,132,883 from the issuance of common stock and warrants and the exercise of warrants by existing shareholders. This capital raise was not recurring during the six months ended June 30, 2022.
For the year ending December 31, 2022, we are planning to use funds acquired from the two stock offerings raised in 2021 to make significant improvements to our operations at Madero, Puerto Blanco, Bear River Zeolite, and Thompson Falls facilities with the goal of increasing production and decreasing costs.
In the past, the Company has been successful in raising required capital from sale of common stock. As a result of planned operations and potential equity sales and potential debt borrowings, management believes cash flows from operations and existing cash and investments are sufficient to conduct planned operations and meet contractual obligations for the next 12 months.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to its stockholders.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not hold any derivative instruments and does not engage in any hedging activities.
Page 28 of 32
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.