UNITED STATES ANTIMONY CORP 10-Q

ITEM 1. FINANCIAL STATEMENTS UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, 2022 December 31 2021 ASSETS CURRENT ASSETS Cash and cash equivalents $ 7,658,810 $ 21,363,048 Certificates of deposit 259,210 259,210 Accounts receivable 1,450,314 891,314 Inventories (Note 6) 827,958 1,055,420 Investments (Note 14) 12,973,553 - Prepaid expenses and other current assets (Note 4) 187,937 - Total current assets 23,357,782 23,568,992 Properties, plants and equipment, net (Note 7) 11,209,160 11,133,733 Restricted cash for reclamation bonds 57,283 57,281 IVA receivable and other assets 847,768 242,721 Total assets $ 35,471,993 $ 35,002,727 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $ 462,261 $ 1,385,752 Accrued liabilities 622,403 621,873 Accrued liabilities – directors and related parties 102,248 - Long-term debt, current portion (Note 9) 92,738 13,230 Total current liabilities 1,279,650 2,020,855 Long-term debt, net of current portion (Note 9) 241,932 201,920 Stock payable to directors for services - 112,500 Asset retirement obligations and accrued reclamation costs (Note 8) 328,834 298,649 Total liabilities 1,850,416 2,633,924 COMMITMENTS AND CONTINGENCIES (Note 10 and 11) STOCKHOLDERS’ EQUITY Preferred stock, $ 0.01 par value; 10,000,000 shares authorized: Series A: 0 shares issued and outstanding - - Series B: 750,000 shares issued and outstanding (liquidation preference $ 958,125 and $ 952,500 , respectively) 7,500 7,500 Series C: 177,904 shares issued and outstanding (liquidation preference $ 97,847 both periods) 1,779 1,779 Series D: 1,692,672 shares issued and outstanding (liquidation preference $ 4,979,632 both periods) 16,926 16,926 Common stock, $ 0.001 par value; 300,000,000 shares authorized; 106,373,341 and 106,240,361 shares issued and outstanding 1,062,535 1,062,402 Additional paid-in capital 64,053,827 63,991,459 Accumulated deficit ( 31,520,990 ) ( 32,711,263 ) Total stockholders’ equity 33,621,577 32,368,803 Total liabilities and stockholders’ equity $ 35,471,993 $ 35,002,727 The accompanying notes are an integral part of these condensed consolidated unaudited financial statements. Page 2 of 33 Table of Contents UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three months ended September 30, Nine months ended September 30, 2022 2021 2022 2021 REVENUE $ 2,463,984 $ 2,051,713 $ 9,624,611 $ 5,580,562 COST OF REVENUE 2,033,066 1,950,504 7,339,499 5,070,798 GROSS PROFIT 430,918 101,209 2,285,112 509,764 OPERATING EXPENSES General and administrative 108,538 112,744 489,810 572,905 Salaries and benefits 76,811 72,200 222,858 226,137 Other operating and exploration expenses 91,405 - 109,365 184,037 Legal and professional fees 93,678 28,227 263,682 212,563 TOTAL OPERATING EXPENSES 370,432 213,171 1,085,715 1,195,642 INCOME (LOSS) FROM OPERATIONS 60,486 ( 111,962 ) 1,199,397 ( 685,878 ) OTHER INCOME (EXPENSE) Interest expense ( 4,207 ) ( 590 ) ( 10,270 ) ( 3,725 ) Interest and investment income 15,064 13,320 54,770 35,202 Change in fair value of investments ( 25,840 ) - ( 119,298 ) - Trademark and licensing income 4,899 - 65,674 - Gain on forgiveness – CARES Act debt - - - 443,400 Gain on settlement of Hillgrove advance - - - 113,422 TOTAL OTHER INCOME (EXPENSE) ( 10,084 ) 12,730 ( 9,124 ) 588,299 NET INCOME (LOSS) 50,402 ( 99,232 ) 1,190,273 ( 97,579 ) Preferred dividends ( 11,819 ) ( 12,162 ) ( 35,458 ) ( 36,487 ) Net income (loss) available to common stockholders 38,583 ( 111,394 ) 1,154,815 ( 134,066 ) Net income (loss) per share of common stock Basic and diluted $ Nil $ Nil $ 0.01 $ Nil Weighted average shares outstanding: Basic 106,293,842 106,117,844 106,258,384 101,642,048 Diluted 106,293,842 106,117,844 106,258,384 101,642,048 The accompanying notes are an integral part of these condensed consolidated unaudited financial statements. Page 3 of 33 Table of Contents UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED) For the three and nine months ended September 30, 2022 and 2021 Total Preferred Stock Common Stock Shares Amount Shares Amount Additional Paid-in Capital Accumulated Deficit Total Stockholders’ Equity BALANCE, December 31, 2020 2,678,909 $ 26,788 75,949,757 $ 759,496 $ 39,050,899 $ ( 32,650,794 ) $ 7,186,389 Common shares issued for cash - - 26,290,000 262,900 24,734,100 - 24,997,000 Common stock issuance costs - - - - ( 1,654,820 ) - ( 1,654,820 ) Common stock issued for exercise of warrants - - 3,723,810 37,238 1,726,381 - 1,763,619 Net loss - - - - - ( 335,488 ) ( 335,488 ) BALANCE, March 31, 2021 2,678,909 $ 26,788 105,963,567 $ 1,059,634 $ 63,856,560 $ ( 32,986,282 ) $ 31,956,700 Common stock issued for exercise of warrants - - 41,667 417 26,667 - 27,084 Net income - - - - - 337,141 337,141 BALANCE, June 30, 2021 2,678,909 $ 26,788 106,005,234 $ 1,060,051 $ 63,883,227 $ ( 32,649,141 ) $ 32,320,925 Issuance of common stock for directors fees (Note 13) - - 112,610 1,126 108,874 - 110,000 Net loss - - - - - ( 99,232 ) ( 99,232 ) Balances, September 30, 2021 2,678,909 $ 26,788 106,117,844 $ 1,061,177 63,992,101 ( 32,748,373 ) 32,331,693 BALANCE, December 31, 2021 2,620,576 $ 26,205 106,240,361 $ 1,062,402 $ 63,991,459 $ ( 32,711,263 ) $ 32,368,803 Net income - - - - - 786,252 786,252 BALANCE, March 31, 2022 2,620,576 $ 26,205 106,240,361 $ 1,062,402 $ 63,991,459 $ ( 31,925,011 ) $ 33,155,055 Net income - - - - - 353,619 353,619 BALANCE, June 30, 2022 2,620,576 $ 26,205 106,240,361 $ 1,062,402 $ 63,991,459 $ ( 31,571,392 ) $ 33,508,674 Issuance of common stock for directors fees (Note 13) - - 132,980 133 62,368 - 62,501 Net income - - - - - 50,402 50,402 BALANCE, September 30, 2022 2,620,576 $ 26,205 106,373,341 $ 1,062,535 $ 64,053,827 $ ( 31,520,990 ) $ 33,621,577 The accompanying notes are an integral part of these condensed consolidated unaudited financial statements. Page 4 of 33 Table of Contents UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine months ended September 30, 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 1,190,273 $ ( 97,579 ) Adjustments to reconcile net income (loss) to net cash used by operating activities: Depreciation and amortization 693,990 665,604 Accretion of asset retirement obligation 14,589 5,197 Common stock payable for directors fees - 84,375 Gain on settlement of Hillgrove advance - ( 113,422 ) Gain on forgiveness of Cares Act debt - ( 443,400 ) Write down of inventory to net realizable value 409,919 - Change in fair value of investments 119,298 - Changes in operating assets and liabilities: Accounts receivable ( 559,000 ) ( 484,093 ) Inventories ( 182,457 ) ( 83,743 ) Prepaid expenses and other current assets ( 187,937 ) - IVA receivable and other assets ( 605,047 ) ( 30,612 ) Accounts payable ( 923,490 ) ( 624,028 ) Accrued liabilities 530 ( 64,417 ) Export tax assessment payable - ( 1,120,730 ) Accrued liabilities – directors and related parties 52,248 ( 171,016 ) Net cash provided (used) by operating activities 22,916 ( 2,477,864 ) CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from redemption of certificates of deposit - 210,184 Purchase of investments ( 13,500,000 ) - Proceeds from sales of investments 407,149 Purchase of properties, plants and equipment ( 592,221 ) ( 616,479 ) Net cash used by investing activities ( 13,685,072 ) ( 406,295 ) CASH FLOWS FROM FINANCING ACTIVITIES: Change in checks issued and payable - ( 86,685 ) Payments on advances from related party - ( 56,416 ) Proceeds from issuance of common stock, net of issuance costs - 23,342,180 Proceeds from exercise of warrants - 1,790,703 Payments on Hillgrove advances payable - ( 1,020,799 ) Principal paid on notes payable to bank - ( 100,000 ) Principal payments of long-term debt ( 42,080 ) ( 86,426 ) Net cash provided (used) by financing activities ( 42,080 ) 23,782,557 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH ( 13,704,236 ) 20,898,398 CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD 21,420,329 722,377 CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD $ 7,716,093 $ 21,620,775 NON-CASH FINANCING AND INVESTING ACTIVITIES: Equipment purchased with note payable $ 161,600 $ - Issuance of common stock for directors fees 62,501 110,000 The accompanying notes are an integral part of these condensed consolidated unaudited financial statements. Page 5 of 33 Table of Contents UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) September 30, 2022 NOTE 1 - NATURE OF OPERATIONS AGAU Mines, Inc., predecessor of United States Antimony Corporation (“USAC” or “the Company”), was incorporated in June 1968 as a Delaware corporation to mine gold and silver. USAC was incorporated in Montana in January 1970 to mine and produce antimony products. In June 1973, AGAU Mines, Inc. was merged into USAC. In December 1983, the Company suspended its antimony mining operations when it became possible to purchase antimony raw materials more economically from foreign sources. The principal business of the Company has been the production and sale of antimony products. During 2000, the Company formed a 75 % owned subsidiary, Bear River Zeolite Company (“BRZ”), to mine and market zeolite and zeolite products from a mineral deposit in southeastern Idaho . In 2001, an operating plant was constructed at the zeolite site and zeolite production and sales commenced. During 2002, the Company acquired the remaining 25 % of BRZ and continued to produce and sell zeolite products. During 2005, the Company formed a 100 % owned subsidiary, Antimonio de Mexico S.A. de C.V. (“AM”), to explore and develop potential antimony properties in Mexico . During 2006, the Company acquired 100 % ownership in United States Antimony, Mexico S.A. de C.V. (“USAMSA”), which became a wholly-owned subsidiary of the Company. In 2018, the Company acquired 100 % ownership in Stibnite Holding Company US Inc. (previously Lanxess Holding Company US Inc.), Antimony Mining and Milling US LLC (previously Lanxess Laurel US LLC), a Delaware limited liability company and Lanxess Laurel de Mexico, S.A. de C.V (“Lanxess Laurel Mexico”), a Mexico corporation, both of which became a wholly-owned subsidiary of the Company. In its operations in Montana, the Company produces 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. The Company also sells antimony metal for use in bearings, storage batteries and ordnance. In its operations in Idaho, the Company produces zeolite, a group of industrial minerals used in a variety of purposes including soil amendment and fertilizer. Zeolite is also used for water filtration, sewage treatment, nuclear waste and other environmental cleanup, odor control, gas separation and other miscellaneous applications. NOTE 2 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of September 30, 2022, and its results of operations for the three and nine months ended September 30, 2022, and 2021, and cash flows for the nine months ended September 30, 2022 and 2021. The condensed consolidated balance sheet at December 31, 2021, was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. Operating results for the three and nine-month periods ended September 30, 2022, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2022. These unaudited interim financial statements have been prepared by management in accordance with generally accepted accounting principles used in the United States of America (“U.S. GAAP”). These unaudited interim financial statements should be read in conjunction with the annual audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission on March 31, 2022. This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to U.S. GAAP and have been consistently applied in the preparation of the financial statements. Page 6 of 33 Table of Contents UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) September 30, 2022 Reclassifications Certain reclassifications have been made to conform prior periods’ amounts to the current presentation. These reclassifications have no effect on the results of operations, stockholders’ equity and cash flows as previously reported. COVID -19 The Company’s operations and business have experienced disruption due to the unprecedented conditions surrounding the COVID-19 pandemic spreading throughout the United States and elsewhere, causing disruptions to the Company’s business operations and management. These disruptions are most evident in the Company’s ability to retain and house employees and properly manage them while maintaining proper social distancing and with delays in obtaining materials and supplies. The effects of the continued outbreak of COVID-19 and related government responses could also include extended disruptions to supply chains and capital markets, reduced availability of contractors and a prolonged reduction in economic activity. These effects could have a variety of adverse impacts on the Company, including its ability to conduct operations. The Company has taken steps to mitigate the potential risks to suppliers and employees posed by the spread of COVID-19, including work from home policies where appropriate. The Company will continue to monitor developments affecting both its workforce and contractors, and will take additional precautions as necessary. The ultimate impact of COVID-19 depends on factors beyond management’s knowledge or control, including its duration and third-party actions to contain its spread and mitigate its public health effects. Therefore, the Company cannot estimate the potential future impact to its financial position, results of operations and cash flows, but the impacts could be material. Investments The Company determines the appropriate classification of investments at the time of acquisition and re-evaluates such determinations at each reporting date. Equity securities that have a readily determinable fair value are carried at fair value determined using Level 1 fair value measurement inputs with the change in fair value recognized as unrealized gain (loss) in the consolidated statement of operations each reporting period. Gains and losses on the sale of securities are recognized on a specific identification basis. New Accounting Pronouncements Accounting standards that have been issued or proposed by the Financial Accounting Standards Board (“FASB”) that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. NOTE 3– EARNINGS PER SHARE Basic Earnings Per Share (“EPS”) is computed as net income (loss) available to common stockholders divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options and warrants. At September 30, 2022 and 2021, the potentially dilutive common stock equivalents not included in the calculation of diluted earnings per share as their effect would have been anti-dilutive are as follows: September 30, 2022 September 30, 2021 Warrants 12,346,215 12,489,922 Convertible preferred stock 1,692,672 1,751,005 TOTAL POSSIBLE DILUTIVE SHARES 14,038,887 14,240,927 Page 7 of 33 Table of Contents UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) September 30, 2022 NOTE 4 – PREPAID EXPENSES AND OTHER CURRENT ASSETS On August 17, 2022, the Company executed a Management and Consultancy Services Agreement (the ‘Consultancy Agreement”) whereby a contractor was engaged to render professional services consisting of management and consultancy for the acquisition of surface rights and other technical services near San Guadalupe, Mexico. The parties agreed to total consideration of $ 1,035,025 plus associated Value Added Tax (“VAT”). The Company paid $ 450,000 plus VAT upon execution of the Consultancy Agreement and will pay fifty (50) monthly installments of $ 11,700 plus VAT. The $ 450,000 initial installment will be amortized over the fifty (50) month term of the agreement and recognized as expense under “Other operating expenses and exploration”. Prepaid expenses and other current assets at September 30, 2022 and December 31, 2021 are as follows: September 30, 2022 December 31, 2021 Prepaid insurance $ 40,611 - Prepaid consulting and management fees 432,000 - Prepaid exploration expense 10,670 - Other current assets 28,656 - 511,937 - Less long-term portion ( 324,000 ) - Prepaid and other current assets $ 187,937 - The long-term portion of prepaid and other current assets of $ 324,000 is included in “IVA refund and other assets” on the condensed consolidated balance sheet. NOTE 5 – REVENUE RECOGNITION Products consist of the following: · Antimony: includes antimony oxide, sodium antimonate, antimony trisulfide and antimony metal · Zeolite: includes coarse and fine zeolite crushed in various sizes · Precious metals: includes unrefined and refined gold and silver Sales of products for the three-months ended September 30, 2022 and 2021 were as follows: For the three months ended September 30, 2022 September 30, 2021 Antimony $ 1,671,301 $ 1,284,969 Zeolite 792,683 693,008 Precious metals - 73,736 TOTAL REVENUE BY PRODUCT $ 2,463,984 $ 2,051,713 Sales of products for the nine months ended September 30, 2022 and 2021 were as follows: For the nine months ended September 30, 2022 September 30, 2021 Antimony $ 6,972,312 $ 3,371,015 Zeolite 2,487,116 1,929,383 Precious metals 165,183 280,164 TOTAL REVENUE BY PRODUCT $ 9,624,611 $ 5,580,562 Page 8 of 33 Table of Contents UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) September 30, 2022 The Company’s trade accounts receivable balance related to contracts with customers was $ 1,450,314 at September 30, 2022 and $ 891,314 at December 31, 2021. The Company’s products do not involve any warranty agreements and product returns are not typical. For the three and nine months ended September 30, 2022, the Company also received royalties related to a trademark and licensing agreement in its antimony business segment and is recognized under “Other Income”. For the three months ended September 30, 2022 and 2021, royalty income of $ 4,899 and $Nil, respectively was recognized. For the nine months ended September 30, 2022 and 2021, royalty income of $ 65,674 and $Nil, respectively was recognized NOTE 6– INVENTORIES Inventories at September 30, 2022 and December 31, 2021 consisted primarily of finished antimony products, antimony metal, antimony ore, and finished zeolite products that are stated at the lower of first-in, first-out cost or estimated net realizable value. Finished antimony products, antimony metal and finished zeolite products costs include raw materials, direct labor and processing facility overhead costs and freight. Inventories at September 30, 2022 and December 31, 2021 are as follows: September 30, 2022 December 31, 2021 Antimony Metal $ 83,031 $ 234,461 Antimony Oxide 323,483 439,086 Antimony Ore Concentrates 246,938 119,046 Total antimony 653,452 792,593 Zeolite 174,506 262,827 TOTAL INVENTORIES $ 827,958 $ 1,055,420 As of September 30, 2022 and December 31, 2021, inventories are valued at cost except for the portion related to Mexican operations which are valued at net realizable value because the production costs of the Mexican inventory were greater than the amount the Company expected to receive on the sale of the pounds of antimony contained in inventory. The adjustment to inventory for net realizable value was $ 409,919 and $Nil for the nine months ended September 30, 2022 and 2021, respectively. Antimony oxide and metal inventory consisted of finished product held at the Company’s plants in Montana and Mexico. Antimony concentrates and ore were held primarily at sites in Mexico. The Company’s zeolite inventory consists of saleable zeolite material in Idaho. Page 9 of 33 Table of Contents UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) September 30, 2022 NOTE 7 – PROPERTIES, PLANTS AND EQUIPMENT The major components of the Company’s properties, plants and equipment by segment at September 30, 2022 and December 31, 2021 are shown below: Antimony Segment Zeolite Segment Precious Metals September 30, 2022 USAC USAMSA BRZ Segment TOTAL Plant and equipment $ 1,760,926 $ 9,249,429 $ 4,051,016 $ 1,347,912 $ 16,409,283 Buildings 243,248 870,534 1,142,251 - 2,256,033 Land and other 2,431,387 2,756,037 16,753 - 5,204,177 Construction in progress - - 48,149 - 48,149 4,435,561 12,876,000 5,258,169 1,347,912 23,917,642 Accumulated depreciation ( 2,757,658 ) ( 6,058,986 ) ( 3,368,895 ) ( 522,943 ) ( 12,708,482 ) $ 1,677,903 $ 6,817,014 $ 1,889,274 $ 824,969 $ 11,209,160 Antimony Segment Zeolite Segment Precious Metals December 31, 2021 USAC USAMSA BRZ Segment TOTAL Plant and equipment $ 1,684,977 $ 8,905,899 $ 3,853,056 $ 1,330,394 $ 15,774,326 Buildings 243,248 870,534 801,764 - 1,915,546 Land and other 2,431,387 2,640,441 16,753 - 5,088,581 Construction in progress - 280,406 184,972 - 465,378 $ 4,359,612 $ 12,697,280 $ 4,856,545 $ 1,330,394 $ 23,243,831 Accumulated depreciation ( 2,732,809 ) ( 5,622,555 ) ( 3,314,658 ) ( 440,076 ) ( 12,110,098 ) $ 1,626,803 $ 7,074,725 $ 1,541,887 $ 890,318 $ 11,133,733 At September 30, 2022 and December 31, 2021, the Company had $ 328,555 and $ 665,175 , respectively, of assets that were not yet placed in service and have not yet been depreciated. NOTE 8 – ASSET RETIREMENT OBLIGATION AND ACCRUED RECLAMATION COSTS Changes in the asset retirement obligation for the three and nine months ended September 30, 2022 and 2021 are as follows: Three months ended September 30, 2022 2021 Asset retirement obligation, beginning of period $ 218,157 $ 187,683 Accretion expense 3,177 1,733 Asset retirement obligation, end of period $ 221,334 $ 189,416 Nine months ended September 30, 2022 2021 Asset retirement obligation, beginning of period $ 191,149 $ 184,219 Change in estimate of asset retirement obligation 15,596 - Accretion expense 14,589 5,197 Asset retirement obligation, end of period $ 221,334 $ 189,416 Page 10 of 33 Table of Contents UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) September 30, 2022 The Company’s total asset retirement obligation and accrued reclamation costs of $ 328,834 and $ 298,649 , at September 30, 2022 and December 31, 2021, respectively, includes reclamation obligations for the Idaho and Montana operations of $ 107,500 . NOTE 9 – DEBT Long term debt at September 30, 2022 and December 31, 2021 is as follows: September 30, 2022 December 31, 2021 Promissory note payable to First Security Bank of Missoula, earing interest at 2.25%, payable in 59 monthly installments of $1,409 with a final payment of $152,726 maturing November 9, 2026; collateralized by a lien on Certificate of Deposit $ 204,992 $ 215,150 Installment contract payable to Caterpillar Financial Services, bearing interest at 6.65%, payable in 24 monthly installments of $7,210 maturing April 28, 2024; collateralized by 2007 Caterpillar 740 articulated truck 129,678 - 334,670 215,150 Less current portion ( 92,738 ) ( 13,230 ) Long term portion $ 241,932 $ 201,920 At September 30, 2022, principal payments on debt are due as follows: Twelve months ending September 30, Principal payment 2023 $ 92,738 2024 62,065 2025 12,998 2026 13,294 2027 153,575 $ 334,670 NOTE 10 – INCOME AND OTHER TAXES Mexican Tax Assessment In 2015, the Mexican tax authority (“SAT”) initiated an audit of the USAMSA’s 2013 income tax return. In October 2016, as a result of its audit, SAT assessed the Company $13.8 million pesos, which was approximately $ 666,400 in U.S. Dollars (“USD”) as of December 31, 2016. SAT’s assessment was based on the disallowance of specific costs that the Company deducted on the 2013 USAMSA income tax return. The assessment was settled in 2018 with no assessment against the Company. In early 2019, the Company was notified that SAT re-opened its assessment of USAMSA’s 2013 income tax return and, in November 2019, SAT assessed the Company $ 16.3 million pesos, which was approximately $ 795,000 USD as of December 31, 2021. Page 11 of 33 Table of Contents UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) September 30, 2022 Management reviewed the 2019 assessment notice from SAT and, similar to the earlier assessment, believes the findings have no merit. An appeal was filed by the Company in November 2019 suspending SAT from taking immediate action regarding the assessment. The Company posted a guarantee of the amount in March 2020 as is required under the appeal process. In August 2020, the Company filed a lawsuit against SAT for resolution of the process and, in December 2020, filed closing arguments. During the three months ended September 30, 2022, the Mexican court ruled against the Company in the above matter. The Company has appealed the ruling. As of September 30, 2022, the updated SAT assessment was approximately $ 21.3 million pesos, which was approximately $1.1 million USD for $ 285,000 of unpaid income taxes and $ 815,000 of interest and penalties. As of September 30, 2022, management assessed the possible outcomes for this tax audit and believes, based on discussions with its tax attorney in Mexico, that the most likely outcome will be that the Company will be successful in its appeal resulting in no tax due. Management determined that no amount should be accrued at September 30, 2022 or December 31, 2021 relating to this potential tax liability. There can be no assurance that the Company’s ultimate liability, if any, will not have a material adverse effect on the Company’s results of operations or financial position. If an issue addressed during the SAT audit is resolved in a manner inconsistent with management expectations, the Company will record changes to tax attributes, recognize penalties in general and administrative expense, interest will be recorded as interest expense and record the tax expense associated with the assessment. NOTE 11 – COMMITMENTS AND CONTINGENCIES The Company follows U.S. GAAP guidance in determining its accrual and disclosures with respect to loss contingencies, and evaluate such accruals and contingencies for each reporting period. Accordingly, estimated losses from loss contingencies are accrued by a charge to income when information available prior to issuance of the financial statements indicates that it is probable that a liability could be incurred and the amount of the loss can be reasonably estimated. Legal expenses associated with the contingency are expensed as incurred. If a loss contingency is not probable or reasonably estimable, disclosure of the loss contingency is made in the financial statements when it is at least reasonably possible that a material loss could be incurred. From time to time, the Company is assessed fines and penalties by the Mine Safety and Health Administration (“MSHA”). Using appropriate regulatory channels, management may contest these proposed assessments. At September 30, 2022 and December 31, 2021, the Company had accrued liabilities of $Nil and $Nil, respectively, relating to such assessments. The Company pays various royalties on the sale of zeolite products. On a combined basis, royalties vary from 8 %- 13 %. During the three months ended September 30, 2022 and 2021, the Company incurred royalty expense of $ 78,140 and $ 64,212 , respectively. During the nine months ended September 30, 2022 and 2021, the Company incurred royalty expense of $ 226,040 and $ 195,779 respectively. Royalty expense is included in cost of goods sold on the condensed consolidated statement of operations. At September 30, 2022 and December 31, 2021, the Company had accrued royalties payable of $ 426,211 and $ 346,242 respectively, which is included in accrued liabilities on the condensed consolidated balance sheets. The Company is currently in negotiations with certain royalty holders to modify the terms of the agreements. On August 8, 2022, the Company executed a preliminary Purchase Option Agreement (the ‘agreement”) with SB Wadley SA de CV (“Wadley”) whereby the Company leases, with an option to acquire, mining claims located in Mexico known as the Wadley Property. Under the agreement, the Company will pay Wadley eight monthly installments of $ 11,600 for the right to mine and conduct geological and resource studies as due diligence and exploration on the Wadley Property. At the end of the eight months, should the Company choose to exercise the option following due diligence and assessment of geological and resource studies, the Company will pay Wadley $ 2,230,000 and seven annual payments of $ 1,160,000 . NOTE 12 – RELATED PARTY TRANSACTIONS The Company compensates directors for their contributions to the management of the Company. During the three months ended September 30, 2022 and September 30, 2021, the Company expensed $ 31,250 and $ 28,125 , respectively, in directors’ fees. Page 12 of 33 Table of Contents UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) September 30, 2022 During the nine months ended September 30, 2022 and September 30, 2021, the Company expensed $ 106,250 and $ 84,375 , respectively in directors’ fees. At September 30, 2022 and December 31, 2022, accrued fees due to directors was $ 93,750 and $ 112,500 , respectively, which are included in “accrued liabilities – directors and related parties” on the Company’s condensed consolidated balance sheets During the three and nine months ended September 30, 2022, the Company paid accrued directors fees of $ 62,500 in cash and $ 62,501 in common stock (Note 13). NOTE 13 – STOCKHOLDERS’ EQUITY During the nine months ended June 30, 2021, the Company sold shares of its common stock in two separate transactions: on February 3, 2021, 15,300,000 shares were sold at $ 0.70 for gross proceeds of $ 10,710,000 ; and on February 18, 2021, 10,990,000 shares were sold at $ 1.30 for gross proceeds of $ 14,287,000 . A total of $ 1,654,820 of issuance costs were incurred on these sales. During the nine months ended September 30, the Company issued 3,765,477 shares of common stock and received $ 1,790,703 in cash from the exercise of warrants. On August 24, 2022, the Company issued 132,980 shares of common stock in lieu of cash in consideration of fees for Board of Directors accrued through December 31, 2021. The number of shares issued was based on the amount of fees due of $ 62,501 divided by the market price of the Company’s common shares on the date of issuance. Common stock warrants In February 2021, concurrent with sale of common stock, the Company issued warrants to purchase 7,650,000 shares of common stock at an exercise price of $ 0.85 per share. The warrants are initially exercisable six months following issuance and expire five and one-half years from the issuance date. In connection with the February 2021 sales of common stock, the Company also issued 1,606,500 warrants with an exercise price of $ 0.85 and 804,000 warrants with an exercise price of $ 0.46 as commission to the placement agent. There were no warrants exercised during the three or nine months ended September 30, 2022. The Company issued no warrants to purchase common stock during the three or nine months ended September 30, 2022. The following is a summary of the Company’s warrants to purchase shares of common stock activity: Number of warrants Exercise prices Balance outstanding at December 31, 2020 6,194,899 $ 0.65 Issued 10,060,500 $ 0.46 - $ 0.85 Exercised ( 3,765,477 ) $ 0.46 - $ 0.65 Balance outstanding at December 31, 2021 12,489,922 $ 0.75 Expired ( 143,707 ) $ 0.65 Balance outstanding at September 30, 2022 12,346,215 $ 0.75 Page 13 of 33 Table of Contents UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) September 30, 2022 The composition of the Company’s warrants outstanding at September 30, 2022 is as follows: Number of warrants Weighted Average Exercise Price Expiration Date Weighted Average Remaining life (years) 2,285,715 $ 0.46 7/31/2025 2.84 804,000 0.46 1/27/2026 3.33 7,650,000 0.85 8/3/2026 3.84 1,606,500 0.85 2/1/2026 3.34 12,346,215 $ 0.75 $ 3.56 (a) NOTE 14 – INVESTMENTS In April 2022, the Company opened an investment account composed primarily of fixed income mutual funds and U.S. Treasury bonds which are measured using Level 1 fair value inputs that are based on quote prices in active markets. For the three months ended September 30, 2022, the Company recognized $ 25,840 in the change in fair value of investments on the condensed consolidated statement of operations. For the nine months ended September 30, 2022, the Company recognized a change in fair value of investments of $ 119,298 on the condensed consolidated statement of operations. As of September 30, 2022, the cost and fair value of the investment portion of the account was $ 13,061,469 and $ 12,973,553 , respectively. As of September 30, 2022, the cash and cash equivalent portion of the account was $ 442,097 which is included in cash and cash equivalents on the condensed consolidated balance sheet. NOTE 15 – BUSINESS SEGEMENTS The Company is currently organized and managed by four segments, which represent our operating units: United States antimony operations, Mexican antimony operations, precious metals recovery and United States zeolite operations. The Puerto Blanco mill and the Madero smelter at the Company’s Mexico operation bring antimony up to an intermediate or finished stage, which may be sold directly or shipped to the United States operation for finishing at the Thompson Falls, Montana plant. The Puerto Blanco mill in Mexico is the site of our crushing and flotation plant, and a cyanide leach plant which will recover precious metals after the ore goes through the crushing and flotation cycles. A precious metals recovery plant is operated in conjunction with the antimony processing plant at Thompson Falls, Montana, where a 99% precious metals mix will be produced. The zeolite operation produces zeolite near Preston, Idaho. Almost all of the sales of products from the United States antimony and zeolite operations are to customers in the United States, although the Company does have a sales operation in Canada. Page 14 of 33 Table of Contents UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) September 30, 2022 For the three months ended September 30, For the nine months ended September 30, Capital expenditures 2022 2021 2022 2021 Antimony United States $ 1,655 $ 4,060 $ 81,931 $ 4,060 Mexico 151,559 4,872 163,125 14,616 Subtotal antimony 153,214 8,932 245,056 18,676 Precious metals - 17,607 17,518 54,954 Zeolite 56,008 474,812 491,247 542,849 Total $ 209,222 $ 501,351 $ 753,821 $ 616,479 Total Assets: September 30, 2022 December 31, 2021 Antimony United States $ 23,737,803 $ 24,130,348 Mexico 8,147,147 7,771,515 Subtotal antimony 31,884,950 31,901,863 Precious metals United States 177,859 107,464 Mexico 647,110 782,854 Subtotal precious metals 824,969 890,318 Zeolite 2,762,074 2,210,546 TOTAL $ 35,471,993 $ 35,002,727 Page 15 of 33 Table of Contents UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) September 30, 2022 Segment operations for the three months ended September 30, 2022 Antimony - USA Antimony -Mexico Total antimony Precious Metals Zeolite Total Total revenues $ 1,671,301 $ - $ 1,671,301 $ - $ 792,683 $ 2,463,984 Depreciation and amortization $ 10,262 $ 154,238 $ 164,500 $ 27,673 $ 50,610 $ 242,783 Income (loss) from operations $ 802,817 $ ( 817,746 ) $ ( 14,929 ) $ ( 27,673 ) $ 103,088 $ 60,486 Other income (expense) ( 7,058 ) - ( 7,058 ) - ( 3,026 ) ( 10,084 ) NET INCOME (LOSS) $ 795,759 $ ( 817,746 ) $ ( 21,987 ) $ ( 27,673 ) $ 100,062 $ 50,402 Segment operations for the three months ended September 30, 2021 Antimony - USA Antimony -Mexico Total antimony Precious Metals Zeolite Total Total revenues $ 1,284,969 $ - $ 1,284,969 $ 73,736 $ 693,008 $ 2,051,713 Depreciation and amortization $ 8,032 $ 145,027 $ 153,059 $ 28,361 $ 41,776 $ 223,196 Income (loss) from operations $ 528,750 $ ( 673,739 ) $ ( 144,989 ) $ 45,375 $ ( 12,348 ) $ ( 111,962 ) Other income (expense) 13,249 - 13,249 - ( 519 ) 12,730 NET INCOME (LOSS) $ 541,999 $ ( 673,739 ) $ ( 131,740 ) $ 45,375 $ ( 12,867 ) $ ( 99,232 ) Page 16 of 33 Table of Contents UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) September 30, 2022 Segment operations for the nine months ended September 30, 2022 Antimony - USA Antimony -Mexico Total antimony Precious Metals Zeolite Total Total revenues $ 6,144,490 $ 827,822 $ 6,972,312 $ 165,183 $ 2,487,116 $ 9,624,611 Depreciation and amortization $ 30,832 $ 436,431 $ 467,263 $ 82,867 $ 143,860 $ 693,990 Income (loss) from operations $ 2,314,965 $ ( 1,477,387 ) $ 837,578 $ 82,316 $ 279,503 $ 1,199,397 Other income (expense) ( 3,723 ) - ( 3,723 ) - ( 5,401 ) ( 9,124 ) NET INCOME (LOSS) $ 2,311,242 $ ( 1,477,387 ) $ 833,855 $ 82,316 $ 274,102 $ 1,190,273 Segment operations for the nine months ended September 30, 2021 Antimony - USA Antimony -Mexico Total antimony Precious Metals Zeolite Total Total revenues $ 3,371,015 $ - $ 3,371,015 $ 280,164 $ 1,929,383 $ 5,580,562 Depreciation and amortization $ 23,816 $ 434,978 $ 458,794 $ 84,191 $ 122,619 $ 665,604 Income (loss) from operations $ 409,723 $ ( 1,487,670 ) $ ( 1,077,947 ) $ 195,973 $ 196,096 $ ( 685,878 ) Other income (expense) 476,609 113,422 590,031 - ( 1,732 ) 588,299 NET INCOME (LOSS) $ 886,332 $ ( 1,374,248 ) $ ( 487,916 ) $ 195,973 $ 194,364 $ ( 97,579 ) Page 17 of 33 Table of Contents