United States Antimony Corp 10-Q for FY2024 Q3
United States Antimony Corp (UAMY)
About this 10-Q
United States Antimony Corp filed this 10-Q on November 12, 2024, covering the quarter ended September 30, 2024 (FY2024 Q3).
Headline figures
Quarter ended September 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $2.42M
- up 17.3% from $2.06M a year earlier
- Net loss
- $727.51K
- compared with a net loss of $1.64M a year earlier
- Diluted EPS
- $108,438,984.00
- up 0.7% from $107,647,317.00 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
Quarterly Report Pursuant to Section 13 Or 15(d) Of The Securities Exchange Act of 1934 |
For the quarterly period ended
Transition Report Under Section 13 Or 15(d) Of The Securities Exchange Act of 1934 |
For the transition period ________ to ________
COMMISSION FILE NUMBER
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(Exact name of registrant as specified in its charter) |
| ||
(State or other jurisdiction of incorporation or organization) |
| (IRS Employer Identification No.) |
| | |
(Address of principal executive office) |
| (Postal Code) |
(
(Registrant’s telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
| Trading Symbol | Name of Each Exchange on Which Registered | |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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.
Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post filed).
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “Accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):
Large Accelerated Filer | ☐ | Accelerated Filer | ☐ |
☒ | Smaller Reporting Company | ||
Emerging Growth Company |
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|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of November 6, 2024, there were
Table of Contents
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
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| September 30, 2024 |
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| December 31, 2023 |
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ASSETS |
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CURRENT ASSETS |
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Cash and cash equivalents |
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Certificates of deposit |
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Accounts receivable, net |
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Inventories, net |
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Prepaid expenses and other current assets |
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Current assets held for sale (Note 12) |
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Total current assets |
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Properties, plants and equipment, net |
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Operating lease right-of-use asset |
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Restricted cash for reclamation bonds |
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Other assets |
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Noncurrent assets held for sale (Note 12) |
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Total assets |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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CURRENT LIABILITIES |
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Accounts payable |
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Accrued liabilities |
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Accrued liabilities - directors |
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Royalties payable |
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Current portion of operating lease liability |
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Long-term debt, current portion |
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Current liabilities held for sale (Note 12) |
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Total current liabilities |
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Noncurrent liabilities: |
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Noncurrent operating lease liability |
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Long-term debt, net of current portion |
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Stock payable to directors |
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Asset retirement obligations |
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Noncurrent liabilities held for sale (Note 12) |
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Total liabilities |
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COMMITMENTS AND CONTINGENCIES (Note 9 and 12) |
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STOCKHOLDERS' EQUITY |
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Preferred stock $ |
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Series A: |
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Series B: |
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Series C: |
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Series D: |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
| $ |
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| $ |
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The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.
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UNITED STATES ANTIMONY CORPORATION AND SUBSDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
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| For the three months ended |
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| For the nine months ended |
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| September 30, 2024 |
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| September 30, 2023 |
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| September 30, 2024 |
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| September 30, 2023 |
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REVENUES |
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COST OF REVENUES |
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GROSS PROFIT |
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OPERATING EXPENSES: |
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General and administrative |
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Salaries and benefits |
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Professional fees |
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(Gain) loss on sale or disposal of property, plant and equipment, net |
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Other operating expenses |
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TOTAL OPERATING EXPENSES |
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LOSS FROM OPERATIONS |
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OTHER INCOME (EXPENSE): |
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Interest and investment income |
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Trademark and licensing income |
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Other miscellaneous income (expense) |
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TOTAL OTHER INCOME |
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INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
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Income tax expense |
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INCOME (LOSS) FROM CONTINUING OPERATIONS |
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Discontinued operations: |
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Loss from discontinued operations before income taxes |
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Income tax expense |
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Loss from discontinued operations (Note 12) |
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Net loss |
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Preferred dividends |
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Net loss available to common stockholders |
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Basic and diluted earnings per common share: |
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Income (loss) from continuing operations |
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| $nil |
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| $nil |
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Income (loss) from discontinued operations |
| $nil |
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| $nil |
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Net income (loss) |
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Weighted average shares outstanding: |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.
| 4 |
| 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, 2024 and 2023
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| Total Preferred Stock |
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| Common stock |
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| Additional Paid In |
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| Shares to be returned |
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| Accumulated |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Capital |
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| to treasury |
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| Deficit |
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| Total |
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Balances, December 31, 2022 |
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Conversion of Preferred Series D to common stock |
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Common stock buyback and retirement |
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Net loss |
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Balances, March 31, 2023 |
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Net loss |
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Balances, June 30, 2023 |
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Net loss |
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Balances, September 30, 2023 |
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Balances, December 31, 2023 |
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| $ |
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| 107,647,317 |
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| $ |
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| ($ |
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Share-based compensation |
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Net loss |
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Balances, March 31, 2024 |
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| $ |
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Share-based compensation |
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Net loss |
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Balances, June 30, 2024 |
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Share-based compensation |
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Net loss |
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Balances, September 30, 2024 |
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The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.
| 5 |
| Table of Contents |
UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
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| For the nine months ended |
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| September 30, 2024 |
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| September 30, 2023 |
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CASH FLOWS FROM OPERATING ACTIVITIES OF CONTINUING OPERATIONS: |
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Net income (loss) from continuing operations |
| ($ |
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Adjustments to reconcile net income (loss) from continuing operations to |
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net cash provided (used) by operating activities of continuing operations: |
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Depreciation and amortization |
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Accretion of asset retirement obligation |
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Noncash operating lease expense |
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(Gain) loss on sale or disposal of property, plant and equipment, net |
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Write-down of inventory to net realizable value |
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Share-based compensation |
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Allowance for doubtful accounts on accounts receivable |
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Other noncash items |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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Inventories, net |
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Prepaid expenses and other current assets |
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Other assets |
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Accounts payable |
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Accrued liabilities |
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Accrued liabilities – directors |
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Stock payable to directors |
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Change in operating lease liability |
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Royalties payable |
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Net cash provided (used) by operating activities of continuing operations |
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CASH FLOWS FROM INVESTING ACTIVITIES OF CONTINUING OPERATIONS: |
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Proceeds from redemption of certificates of deposit |
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Proceeds from sale of properties, plants and equipment |
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Purchases of properties, plant, and equipment |
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Net cash provided (used) by investing activities of continuing operations |
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CASH FLOWS FROM FINANCING ACTIVITIES OF CONTINUING OPERATIONS: |
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Payments on dividends payable |
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Principal payments on long-term debt |
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Net cash used by financing activities of continuing operations |
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Net cash flows provided (used) by continuing operations |
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CASH FLOWS FROM DISCONTINUED OPERATIONS: |
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Net cash provided (used) by operating activities |
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Net cash used by investing activities |
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Net cash flows provided (used) by discontinued operations |
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH |
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CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD |
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CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD |
| $ |
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| $ |
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NON-CASH FINANCING AND INVESTING ACTIVITIES: |
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Common stock buyback and retirement |
| $ |
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| $ |
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Conversion of Preferred Series D to Common Stock |
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| $ |
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Equipment purchased with note payable |
| $ |
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| $ |
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Noncash recognition of new leases |
| $ |
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| $ |
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The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.
| 6 |
| Table of Contents |
UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2024
NOTE 1 - NATURE OF OPERATIONS
United States Antimony Corporation and its subsidiaries in the U.S. and Mexico (“USAC”, the “Company”, “Our”, “Us”, or “We”) sell processed antimony, zeolite, and precious metals products primarily in the U.S. and Canada. The Company processes antimony ore primarily into antimony oxide, antimony metal, and antimony trisulfide. Our antimony oxide is used to form a flame-retardant system for plastics, rubber, fiberglass, textile goods, paints, coatings, and paper, as a color fastener in paint, and as a phosphorescent agent in fluorescent light bulbs. Our antimony metal is used in bearings, storage batteries, and ordnance. Our antimony trisulfide is used as a primer in ammunition. In its operations in Idaho, the Company mines and processes zeolite, a group of industrial minerals used in soil amendment and fertilizer, water filtration, sewage treatment, nuclear waste and other environmental cleanup, odor control, gas separation, animal nutrition, and other miscellaneous applications. We recover certain amounts of precious metals, primarily gold and silver, at our plant in Montana from antimony concentrates.
Recent Development
The Company has two subsidiaries in Mexico, US Antimony de Mexico, S.A. de C.V. (“USAMSA”) and Antimonio de Mexico, S.A. de C.V. (“ADM”). The USAMSA subsidiary primarily includes the Company’s Madero antimony and precious metals plant in Parras de la Fuente Coahuila, Mexico and its Puerto Blanco antimony and precious metals plant in San Luis de la Paz Guanajuato, Mexico. On March 11, 2024, the Company shut down the operations of USAMSA and announced its intent to sell its USAMSA subsidiary. Since this announcement, the Company initiated an active search for buyers of USAMSA’s operations and/or assets. The accounting requirements for reporting USAMSA as a discontinued operation were met in the first quarter of 2024. See Note 12 for further information. The Company will maintain its existing Los Juarez mining claims and concessions in Mexico, which are included in our ADM subsidiary. However, currently, the Company has no active operations in Los Juarez.
NOTE 2 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
In the opinion of management, 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, 2024, and its results of operations and cash flows for the three and nine months ended September 30, 2024 and 2023. The Condensed Consolidated Balance Sheet as of December 31, 2023, was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements.
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, 2023, filed with the Securities and Exchange Commission on April 12, 2024.
This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. These accounting policies conform to U.S. GAAP and have been consistently applied in the preparation of the financial statements.
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UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2024
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company's consolidated financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions, which could have a material effect on the reported amounts of the Company's consolidated financial position and results of operations. Operating results for the three and nine-month periods ended September 30, 2024, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2024.
Reclassifications
Certain reclassifications have been made to conform prior period amounts to the current presentation. These reclassifications have no effect on the results of operations, stockholders’ equity and cash flows as previously reported.
Assets Held for Sale and Discontinued Operations
The Company classifies assets and liabilities to be sold ("Disposal Group") as held for sale in the period when all of the applicable criteria are met, including: (i) management commits to a plan to sell, (ii) the Disposal Group is available to sell in its present condition, (iii) there is an active program to locate a buyer, (iv) the Disposal Group is being actively marketed at a reasonable price in relation to its fair value, (v) significant changes to the plan to sell are unlikely, and (vi) the sale of the Disposal Group is generally probable of being completed within one year. Management performs an assessment at least quarterly or when events or changes in business circumstances indicate that a change in classification may be necessary.
Assets and liabilities held for sale are presented separately within the Condensed Consolidated Balance Sheets with any adjustments necessary to measure the Disposal Group at the lower of its carrying value or fair value less costs to sell. Depreciation of property and equipment are not recorded while these assets are classified as held for sale. For each period the Disposal Group remains classified as held for sale, its recoverability is reassessed and any necessary adjustments are made to its carrying value.
The Company categorizes the assets and liabilities of a Disposal Group, or business component, as discontinued operations once management commits to a plan to sell, the business segment is available for immediate sale, management has initiated a plan to sell at a price that is reasonable in relation to its fair value, management anticipates the sale will occur within one year, and it is unlikely that significant changes will be made to the plan to sell. In addition, the business component must be comprised of operations and cash flows that are clearly distinguished from the rest of the entity. The results of discontinued operations are aggregated and presented separately in the Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operations, and Condensed Consolidated Statements of Cash Flows.
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UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2024
Share-Based Compensation
The Company’s share-based awards consist of restricted stock units (“RSUs”) and stock options granted to employees, consultants, and directors of the Company.
RSUs are stock awards entitling the award recipient to a specified number of shares of the Company’s common stock as the award vests. Each RSU granted includes a service-based vesting condition. The Company calculates the fair value of RSUs on the grant date using the closing market price of the Company’s common stock on the grant date. The Company recognizes the grant date fair value of RSUs as share-based compensation expense ratably over the requisite service period, other than RSUs or portions of RSUs that vest on the grant date, in which case the grant date fair value of that RSU or portion of RSU is recognized as share-based compensation expense on the grant date. The Company recognizes forfeitures as they occur.
Stock options grant award recipients the option to purchase a specified number of shares of the Company’s common stock at an exercise price per share specified in the grant agreement as the stock options vest. Stock option grants include either a service-based vesting condition or performance-based vesting conditions with a specified contractual term. The Company calculates the fair value of stock options on the grant date using the Black-Scholes option-pricing model, which requires the Company to make estimates and assumptions, such as expected volatility, expected term, and risk-free interest rate. Service and performance conditions are not considered in determining the award’s fair value on the grant date. The Company recognizes share-based compensation expense related to stock option awards from the grant date through the vesting date. For service-based vesting stock option grants, the Company expenses the grant date fair value of the award ratably over the requisite service period. For performance-based vesting stock option grants, the Company expenses the grant date fair value of the award ratably from the grant date through the vesting date based on the probability and timing of achieving the performance conditions. The Company recognizes forfeitures as they occur.
The expense related to employee and consultant share-based awards is recorded in “Salaries and benefits” and the expense related to director share-based awards is recorded in “General and administrative” in the Condensed Consolidated Statements of Operations.
Leases
The Company determines if an arrangement contains a lease at inception. An arrangement contains a lease if it implicitly or explicitly identifies an asset to be used and conveys the right to control the use of the identified asset in exchange for consideration. As a lessee, the Company includes operating leases in "Operating lease right-of-use assets" and "Current and noncurrent operating lease liabilities" in its Condensed Consolidated Balance sheet. Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized upon commencement of the lease based on the present value of the lease payments over the lease term. Incremental costs of a lease that would not have been incurred if the lease had not been obtained are capitalized as initial direct costs (“IDC”). The Company amortizes the undiscounted fixed lease cost and the IDC on a straight-line basis over the lease term. If a lease does not provide an implicit interest rate, the Company uses its incremental borrowing rate based on the information available at commencement date to determine the present value of lease payments.
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UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2024
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, amending reportable segment disclosure requirements to include disclosure of incremental segment information on an annual and interim basis. Among the disclosure enhancements are new disclosures regarding significant segment expenses that are regularly provided to the chief operating decision-maker and included within each reported measure of segment profit or loss, as well as other segment items bridging segment revenue to each reported measure of segment profit or loss. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and for interim periods beginning January 1, 2025, and are applied retrospectively. Early adoption is permitted. We are currently evaluating the effect the updated standard will have on our consolidated financial statements and disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures, amending income tax disclosure requirements for the effective tax rate reconciliation and income taxes paid. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024 and are applied prospectively. Early adoption and retrospective application of the amendments are permitted. We are currently evaluating the effect the updated standard will have on our consolidated financial statements and disclosures.
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, RSUs, warrants, and convertible preferred stock.
At September 30, 2024 and 2023, the potentially dilutive common stock equivalents not included in the calculation of diluted earnings per share as their effect would have been anti-dilutive were as follows:
|
| September 30, 2024 |
|
| September 30, 2023 |
| ||
Warrants |
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|
|
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|
| ||
Stock options and RSU awards |
|
|
|
|
| - |
| |
Total possible dilution |
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UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2024
NOTE 4 – REVENUE RECOGNITION
Products consist of the following:
| · | Antimony: includes antimony oxide, antimony metal, antimony trisulfide. |
| · | 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, 2024 and 2023 were as follows:
|
| For the three months ended |
| |||||
|
| September 30, 2024 |
|
| September 30, 2023 |
| ||
Antimony product revenue |
| $ |
|
| $ |
| ||
Zeolite product revenue |
|
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|
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|
| ||
Precious metals product revenue |
|
|
|
|
|
| ||
TOTAL REVENUES |
| $ |
|
| $ |
| ||
Sales of products for the nine months ended September 30, 2024 and 2023 were as follows:
|
| For the nine months ended |
| |||||
|
| September 30, 2024 |
|
| September 30, 2023 |
| ||
Antimony product revenue |
| $ |
|
| $ |
| ||
Zeolite product revenue |
|
|
|
|
|
| ||
Precious metals product revenue |
|
|
|
|
|
| ||
TOTAL REVENUES |
| $ |
|
| $ |
| ||
Domestic and foreign revenues for the three months ended September 30, 2024 and 2023 were as follows:
|
| For the three months ended |
| |||||
|
| September 30, 2024 |
|
| September 30, 2023 |
| ||
Domestic revenues |
| $ |
|
| $ |
| ||
Foreign revenues |
|
|
|
|
|
| ||
TOTAL REVENUES |
| $ |
|
| $ |
| ||
Domestic and foreign revenues for the nine months ended September 30, 2024 and 2023 were as follows:
|
| For the nine months ended |
| |||||
|
| September 30, 2024 |
|
| September 30, 2023 |
| ||
Domestic revenues |
| $ |
|
| $ |
| ||
Foreign revenues |
|
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|
|
|
| ||
TOTAL REVENUES |
| $ |
|
| $ |
| ||
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UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2024
The Company’s trade accounts receivable balance related to contracts with customers was $
NOTE 5– INVENTORIES
Inventories at September 30, 2024 and December 31, 2023 consisted primarily of finished antimony metal and antimony oxide products, antimony ore and concentrates, and finished zeolite products. Inventories are stated at the lower of first-in, first-out cost or estimated net realizable value. Finished antimony products and finished zeolite products costs primarily include direct materials, direct labor, overhead, depreciation, and freight. Inventories at September 30, 2024 and December 31, 2023 were as follows:
|
| September 30, 2024 |
|
| December 31, 2023 |
| ||
Antimony oxide inventory |
| $ |
|
| $ |
| ||
Antimony metal inventory |
|
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| ||
Antimony ore and concentrates inventory |
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| ||
Total antimony inventory |
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| ||
Zeolite inventory |
|
|
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|
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| ||
TOTAL INVENTORIES |
| $ |
|
| $ |
| ||
At September 30, 2024 and December 31, 2023, inventories were valued at cost, except for the portion of inventory related to zeolite at September 30, 2024, which was valued at net realizable value because costs were greater than the amount the Company expected to receive on the sale of zeolite inventory. The adjustment to value inventory at net realizable value was $
Antimony oxide and metal inventory consisted of finished products held by the Company’s plant in Montana. Antimony ore and concentrates were held primarily at its plants in Montana and Mexico. The Company’s zeolite inventory consisted primarily of saleable zeolite material at the Company’s plant located in Idaho.
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UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2024
NOTE 6 – PROPERTIES, PLANTS AND EQUIPMENT
The major components of the Company’s properties, plants and equipment (“PP&E”) by segment at September 30, 2024 and December 31, 2023 were as follows:
September 30, 2024 |
| Antimony Segment |
|
| Zeolite Segment |
|
| Precious Metals |
|
|
|
| ||||||||
|
| USAC |
|
| Mexico |
|
| BRZ |
|
| Segment |
|
| TOTAL |
| |||||
Plant and equipment |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| |||||
Buildings |
|
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| |||||
Mineral rights and interests |
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|
|
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|
|
|
|
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| |||||
Land |
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| |||||
Construction in progress |
|
|
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|
|
|
|
|
|
|
|
|
| |||||
PP&E, cost |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| |||||
Accumulated depreciation |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
PP&E, net |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| |||||
December 31, 2023 |
| Antimony Segment |
|
| Zeolite Segment |
|
| Precious Metals |
|
|
|
| ||||||||
|
| USAC |
|
| Mexico |
|
| BRZ |
|
| Segment |
|
| TOTAL |
| |||||
Plant and equipment |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| |||||
Buildings |
|
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|
|
|
|
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|
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|
|
| |||||
Mineral rights and interests |
|
|
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|
|
|
|
|
|
|
|
|
|
|
| |||||
Land |
|
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| |||||
Construction in progress |
|
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|
|
|
|
|
|
| |||||
PP&E, cost |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| |||||
Accumulated depreciation |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
PP&E, net |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| |||||
In May 2024, the Company made the decision to sell a non-core asset of its zeolite segment, which was a personal residence (“BRZ Home”) located near the operations of its wholly owned subsidiary, Bear River Zeolite Company (“BRZ”). In September 2024, the Company sold its BRZ Home and recorded a gain on this sale as follows:
Proceeds from the sale |
| $ |
| |
Net book value of the BRZ Home |
|
|
| |
Gain on sale |
| $ |
|
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UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2024
Mineral rights and interests
In August 2024, the Company acquired the ownership rights to ninety-seven mining claims and three mining leases located in the Sudbury District of Ontario, Canada (“Sudbury Agreement”). Payments are to be made by the Company by the following dates for the Company to acquire these claims and leases, of which the Company has made the first payment of $10,000:
Payment Date |
| Payment Amount |
| |
August 2024 |
| $ |
| |
November 2024 |
|
|
| |
February 2025 |
|
|
| |
August 2025 |
|
|
| |
August 2026 |
|
|
| |
August 2027 |
|
|
| |
August 2028 |
|
|
| |
Total |
| $ |
| |
These payments to acquire the mining claims and leases are capitalized when paid in the “Mineral rights and interests” component of “Properties, plants and equipment, net” in the Condensed Consolidated Balance Sheets, which amounted to $
NOTE 7 – LEASES
In September 2024, the Company executed a contract to lease a metals concentration facility located in Phillipsburg, Montana, which was accounted for as an operating lease. The lease has a term of
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UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2024
The lease liability related to this operating lease, which represents the present value of the lease payments, was $
The following table summarizes expense and cash payments for operating leases during the periods noted:
|
| For the three and nine months ended |
| |||||
|
| September 30, 2024 |
|
| September 30, 2023 |
| ||
Operating lease expense |
| $ |
|
| $ |
| ||
Cash paid for operating lease liability |
| $ |
|
| $ |
| ||
Cash paid for initial direct cost |
| $ |
|
| $ |
| ||
The following table contains the remaining lease term and discount rate as of the end of the period:
|
| September 30, 2024 |
| |
Remaining lease term - operating lease |
| |
| |
Discount rate - operating lease |
|
| % | |
The table below is a maturity analysis of the future minimum lease payments as of September 30, 2024.
Twelve months ending September 30, |
|
|
| |
2025 |
| $ |
| |
2026 |
|
|
| |
Total undiscounted future minimum lease payments |
|
|
| |
Less: discount on lease liability |
|
| ( | ) |
Total discounted operating lease liability at September 30, 2024 |
|
|
| |
Less: current portion of operating lease liability |
|
| ( | ) |
Noncurrent operating lease liability |
| $ |
| |
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UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2024
NOTE 8 – LONG-TERM DEBT
Long-term debt at September 30, 2024 and December 31, 2023 was as follows:
|
| September 30, 2024 |
|
| December 31, 2023 |
| ||
Installment contract payable to Komatsu, bearing interest at 3.49%, payable in 36 monthly installments of $11,799 maturing May 2027; collateralized by the Wheel Loader |
| $ |
|
| $ |
| ||
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 |
|
|
|
|
|
| ||
Total debt |
|
|
|
|
|
| ||
Less current portion of debt |
|
| ( | ) |
|
| ( | ) |
Long term portion of debt |
| $ |
|
| $ |
| ||
At September 30, 2024, principal payments on debt were due as follows:
Twelve months ending September 30, |
| Principal Payment |
| |
2025 |
| $ |
| |
2026 |
|
|
| |
2027 |
|
|
| |
|
| $ |
| |
NOTE 9 – COMMITMENTS AND CONTINGENCIES
The Company follows U.S. GAAP guidance in determining its accruals and disclosures with respect to loss contingencies and evaluates 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 the issuance of the financial statements indicates that it is probable that a loss 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.
Historically, from time to time, BRZ is assessed fines and penalties by the Mine Safety and Health Administration (“MSHA”). At September 30, 2024 and December 31, 2023, BRZ had no accrued liabilities relating to such assessments. However, during the nine months ended September 30, 2024, BRZ received four significant and substantial citations from MSHA, all of which have been resolved by BRZ.
On a combined basis, BRZ pays royalties ranging from
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UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2024
NOTE 10 – STOCKHOLDERS’ EQUITY
On January 25, 2023, the holders of
On January 26, 2023, in conjunction with its share repurchase plan, the
Share-based compensation
The Company had no equity awards outstanding during fiscal year 2023. During the nine months ended September 30, 2024, stock option and RSU awards were granted in accordance with our 2023 Equity Incentive Plan, which was approved by the Company’s shareholders. The Company recognized $
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2024 |
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| 2023 |
|
| 2024 |
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| 2023 |
| ||||
Share-based compensation expense: |
|
|
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|
|
|
|
|
|
|
| ||||
Stock options |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
RSUs |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Total share-based compensation expense |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Stock options:
Stock options granted have either a
|
| Nine Months Ended |
| |
Grant-Date Weighted-Average Assumptions |
| September 30, 2024 |
| |
Expected term (in years) |
|
|
| |
Risk-free interest rate |
|
| % | |
Expected dividend yield |
|
| % | |
Expected volatility |
|
| % | |
Fair value per share of options granted |
| $ |
| |
Expected term – The expected term represents the period of time that options are expected to be outstanding. As the Company does not have sufficient historical exercise behavior, it uses the contractual term of the option for the expected term assumption.
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UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2024
Risk-free interest rate – The risk-free interest rate is based on the U.S. Treasury rate in effect at the time of the grant with an equivalent term approximating the expected term of the options.
Expected dividend yield—The Company bases the expected dividend yield assumption on the fact that it has never paid cash dividends and has no present intention to pay cash dividends.
Expected volatility – The expected volatility is based on the historical volatility of our stock price over the expected term of the stock option.
Activity with respect to stock options is summarized as follows:
|
|
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|
|
|
|
| Weighted-Average |
|
|
|
| ||||
|
|
|
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| Weighted-Average |
|
| Remaining |
|
| Aggregate |
| ||||
|
|
|
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| Exercise Price |
|
| Contractual |
|
| Intrinsic |
| ||||
|
| Shares |
|
| Per Share |
|
| Term (in years) |
|
| Value |
| ||||
Options outstanding, December 31, 2023 |
|
| - |
|
|
| n/a |
|
|
| n/a |
|
|
| n/a |
|
Granted |
|
|
|
| $ |
|
|
| n/a |
|
|
| n/a |
| ||
Exercised |
|
| - |
|
|
| n/a |
|
|
| n/a |
|
|
| n/a |
|
Forfeited |
|
| - |
|
|
| n/a |
|
|
| n/a |
|
|
| n/a |
|
Expired |
|
| - |
|
|
| n/a |
|
|
| n/a |
|
|
| n/a |
|
Options outstanding, September 30, 2024 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
Nonvested options, September 30, 2024 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
Vested and exercisable options, September 30, 2024 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
At September 30, 2024, total unrecognized share-based compensation expense related to stock options was $
| 18 |
| Table of Contents |
UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2024
Restricted stock units:
Activity with respect to RSUs is summarized as follows:
|
|
|
|
| Weighted-Average |
| ||
|
|
|
|
| Grant-Date |
| ||
|
|
|
|
| Fair Value |
| ||
|
| Shares |
|
| Per Share |
| ||
Nonvested shares at December 31, 2023 |
|
| - |
|
|
| n/a |
|
Granted |
|
|
|
| $ |
| ||
Vested |
|
| ( | ) |
| $ |
| |
Forfeited |
|
| - |
|
|
| n/a |
|
Nonvested shares at September 30, 2024 |
|
|
|
| $ |
| ||
At September 30, 2024, total unrecognized share-based compensation expense related to RSUs was $
Common stock warrants
No warrants were issued, expired, or exercised during the nine months ended September 30, 2024 and 2023.
The composition of the Company’s warrants outstanding at September 30, 2024 and 2023 was as follows:
Number of warrants |
|
| Exercise Price |
|
| Expiration Date |
| Remaining life (years) |
| |||
|
|
| $ |
|
|
|
|
| ||||
|
|
| $ |
|
|
|
|
| ||||
|
|
| $ |
|
|
|
|
| ||||
|
|
| $ |
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
| |
| 19 |
| Table of Contents |
UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2024
NOTE 11 – BUSINESS SEGMENTS
The Company is organized and managed with four business segments, which represent our operating units: United States antimony operations, Mexico antimony operations, precious metals recovery and United States zeolite operations. See Note 12 for the Mexico discontinued operations that are excluded from business segments.
Total assets by segment at September 30, 2024 and December 31, 2023 were as follows:
Total Assets, Excluding Discontinued Operations |
| September 30, 2024 |
|
| December 31, 2023 |
| ||
Antimony segment: |
|
|
|
|
|
| ||
United States |
| $ |
|
| $ |
| ||
Mexico |
|
|
|
|
|
| ||
Subtotal antimony segment |
| $ |
|
| $ |
| ||
Precious metals segment: |
|
|
|
|
|
|
|
|
United States |
| $ |
|
| $ |
| ||
Mexico |
|
|
|
|
|
| ||
Subtotal precious metals segment |
| $ |
|
| $ |
| ||
Zeolite segment |
|
|
|
|
|
| ||
Total assets, excluding discontinued operations |
| $ |
|
| $ |
| ||
Total capital expenditures by segment for the three and nine months ended September 30, 2024 and 2023 were as follows:
Capital expenditures, Excluding Discontinued Operations |
| For the three months ended |
|
| For the nine months ended |
| ||||||||||
|
| September 30, 2024 |
|
| September 30, 2023 |
|
| September 30, 2024 |
|
| September 30, 2023 |
| ||||
Antimony segment: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
United States capital expenditures |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Mexico capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Subtotal antimony segment |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Precious metals segment |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Zeolite segment |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total capital expenditures, excluding discontinued operations |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
The zeolite segment’s capital expenditures for the nine months ended September 30, 2024 excludes $
| 20 |
| Table of Contents |
UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2024
Selected segment operational information excluding discontinued operations for the three and nine months ended September 30, 2024 and 2023 were as follows:
For the three months ended September 30, 2024 |
| Antimony USA |
|
| Antimony Mexico |
|
| Total Antimony |
|
| Precious Metals |
|
| Zeolite |
|
| Total |
| ||||||
Total revenues |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Income (loss) from operations |
| $ | ( |
|
| $ | ( |
|
| $ | ( |
|
| $ |
|
| $ | ( |
|
| $ | ( |
| |
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Loss from continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | ( |
|
For the three months ended September 30, 2023 |
| Antimony USA |
|
| Antimony Mexico |
|
| Total Antimony |
|
| Precious Metals |
|
| Zeolite |
|
| Total |
| ||||||
Total revenues |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Income (loss) from operations |
| $ |
|
| $ | ( |
|
| $ |
|
| $ | ( |
|
| $ | ( |
|
| $ | ( |
| ||
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Loss from continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | ( |
|
For the nine months ended September 30, 2024 |
| Antimony USA |
|
| Antimony Mexico |
|
| Total Antimony |
|
| Precious Metals |
|
| Zeolite |
|
| Total |
| ||||||
Total revenues |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Income (loss) from operations |
| $ | ( |
|
| $ | ( |
|
| $ | ( |
|
| $ |
|
| $ | ( |
|
| $ | ( |
| |
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ |
| |
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Loss from continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | ( |
|
For the nine months ended September 30, 2023 |
| Antimony USA |
|
| Antimony Mexico |
|
| Total Antimony |
|
| Precious Metals |
|
| Zeolite |
|
| Total |
| ||||||
Total revenues |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Income (loss) from operations |
| $ | ( |
|
| $ | ( |
|
| $ | ( |
|
| $ |
|
| $ | ( |
|
| $ | ( |
| |
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Income from continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ |
| |
| 21 |
| Table of Contents |
UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2024
NOTE 12 – DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE
As described in Note 1, on March 11, 2024, the Company shut down the operations of USAMSA, which was part of the antimony segment, and announced its intent to sell its USAMSA subsidiary. The accounting requirements for reporting USAMSA as a discontinued operation were met in the first quarter of 2024. Accordingly, our Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operations, and Condensed Consolidated Statements of Cash Flows report discontinued operations separate from continuing operations for all periods presented. Our Condensed Consolidated Statements of Equity combine the results of continuing and discontinued operations. In addition, the Notes to Condensed Consolidated Financial Statements exclude discontinued operation for all periods presented.
The key components of the income (loss) from discontinued operations for the three and nine months ended September 30, 2024 and 2023 were as follows:
|
| For the three months ended |
|
| For the nine months ended |
| ||||||||||
|
| September 30, 2024 |
|
| September 30, 2023 |
|
| September 30, 2024 |
|
| September 30, 2023 |
| ||||
REVENUES |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
COST OF REVENUES |
|
|
|
|
|
|
|
|
|
|
|
| ||||
GROSS PROFIT (LOSS) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
| ( | ) | |
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Professional fees |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other operating expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
TOTAL OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
| ||||
LOSS FROM OPERATIONS |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
OTHER INCOME (EXPENSE): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other miscellaneous income (expense) |
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||
TOTAL OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||
LOSS FROM DISCONTINUED OPERATIONS, BEFORE TAX |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
| ||||
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX |
| $ | ( |
|
| $ | ( |
|
| $ | ( |
|
| $ | ( |
|
Depreciation and amortization expense of USAMSA totaled $nil for the three and nine months ended September 30, 2024, and $
Capital expenditures of USAMSA were $nil for the three and nine months ended September 30, 2024, and $
| 22 |
| Table of Contents |
UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2024
The carrying amounts of major classes of assets and liabilities of USAMSA included in assets and liabilities of discontinued operations were as follows:
|
| September 30, 2024 |
|
| December 31, 2023 |
| ||
ASSETS |
|
|
|
|
|
| ||
CURRENT ASSETS |
|
|
|
|
|
| ||
Accounts receivable |
| $ |
|
| $ |
| ||
Inventories, net |
|
|
|
|
|
| ||
Prepaid expenses and other current assets |
|
|
|
|
|
| ||
Total current assets, discontinued operations |
|
|
|
|
|
| ||
Properties, plants and equipment, net |
|
|
|
|
|
| ||
IVA receivable and other assets, net |
|
|
|
|
|
| ||
Total assets, discontinued operations |
| $ |
|
| $ |
| ||
LIABILITIES |
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Accounts payable |
|
|
|
|
|
| ||
Accrued liabilities |
|
|
|
|
|
| ||
Total current liabilities, discontinued operations |
|
|
|
|
|
| ||
Asset retirement obligations |
|
|
|
|
|
| ||
Total liabilities, discontinued operations |
| $ |
|
| $ |
| ||
Mexico 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 $
In 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 $
| 23 |
| Table of Contents |
UNITED STATES ANTIMONY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2024
As of December 31, 2023, the updated SAT assessment was approximately $
In March 2024, Mexico’s appellate court ruled in favor of the Company with no assessment due related to this audit of USAMSA’s 2013 income tax return by SAT and instructed the lower court to issue a new ruling. In May 2024, Mexico’s lower court issued a final ruling on this matter in favor of the Company but left open the possibility for the SAT to re-open their audit. Subsequent to this judgment, the Company requested a final ruling on whether SAT can re-open this matter, on which the appellate court has not ruled. These rulings support the Company’s position on this tax matter and have had no impact on the Company’s financial statements.
Mexico Value Added Tax
USAMSA records a receivable for the Value Added Tax (“VAT” or “IVA”) it pays on certain goods and services representing amounts to be reimbursed from the Mexican government. This receivable balance of $
Note 13 - SUBSEQUENT EVENTS
On November 12, 2024, the Company entered into a Sales Agreement (“Sales Agreement’) with A.G.P./Alliance Global Partners (“A.G.P.”) to sell shares of the Company’s common stock, with aggregate gross proceeds of up to $
Under the Sales Agreement, the Company will set the parameters for the sale of shares, including the number of shares to be issued, the time period during which sales are requested to be made, limitations on the number of shares that may be sold in any one trading day and any minimum price below which sales may not be made. The Sales Agreement provides that A.G.P. will be entitled to
| 24 |
| Table of Contents |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Readers should note that, in addition to the historical information contained herein, this Quarterly Report and the exhibits attached hereto contain “forward-looking statements” within the meaning of, and intended to be covered by, the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based upon current expectations and beliefs concerning future developments and their potential effects on the Company including matters related to the Company's operations, pending contracts and future revenues, financial performance, profitability, ability to execute on its increased production and installation schedules for planned capital expenditures, and the size of forecasted deposits. Although the Company believes that the expectations reflected in the forward-looking statements and the assumptions upon which they are based are reasonable, it can give no assurance that such expectations and assumptions will prove to have been correct. The reader is cautioned not to put undue reliance on these forward-looking statements, as these statements are subject to numerous factors and uncertainties. In addition, other factors that could cause actual results to differ materially are described in the Company's most recent filings, including Form 10-K, Form 10-Q, and Form 8-K with the Securities and Exchange Commission.
Any statement that expresses or involves discussions or descriptions 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 “believes”, “expects” or “does not expect”, “is expected”, “outlook”, “anticipates” or “does not anticipate”, “plans”, “estimates”, “forecast”, “project”, “pro forma”, or “intends”, or stating 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 numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak or describe only as of the date they are made and are subject to assumptions and uncertainties. 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; |
| · | Macroeconomic factors; |
| · | Continued operational losses; |
| · | The mineral operations being subject to government regulation; |
| · | The Company’s ability to obtain additional capital to develop the Company’s resources, if any; |
| · | Concentration of customers; |
| · | Increase in energy costs; |
| · | Mineral exploration and development activities; |
| · | Mineral estimates; |
| · | The Company’s insurance coverage for operating risks; |
| · | The fluctuation of prices for antimony, precious metals, such as gold and silver, and minerals in general; |
| · | The competitive industry of mineral exploration; |
| · | The title and rights in the Company’s mineral properties; |
| · | Environmental hazards; |
| · | The possible dilution of the Company’s common stock from additional financing activities; |
| · | Metallurgical and other processing problems; |
| · | Unexpected geological formations; |
| · | Global economic and political conditions; |
| · | Staffing in remote locations; |
| · | Changes in product costing; |
| · | Inflation on operational costs and profitability; |
| 25 |
| Table of Contents |
| · | Competitive technology positions and operating interruptions (including, but not limited to, labor disputes, leaks, fires, flooding, landslides, power outages, explosions, unscheduled downtime, transportation interruptions, war and terrorist activities); |
| · | Global pandemics or civil unrest; |
| · | Mexican labor and cartel issues regarding safety and organized control over our properties; |
| · | The positions and associated outcomes of Mexican and other taxing authorities; |
| · | The possible dilution of the Company’s common stock from additional financing activities; |
| · | Use of cash and cash equivalents ineffectively; |
| · | Cybersecurity and business disruptions; |
| · | Potential conflicts of interest with the Company’s management; |
| · | Not realizing the value of its USAMSA assets in Mexico upon sale or disposal; and, |
| · | The Company’s 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 and in the Company’s filings, including Form 10-K, Form 10-Q, and Form 8-K, with the Securities and Exchange Commission. If 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.
You should read this report with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect and from our historical results.
This report contains estimates, projections and other information concerning our industry, our business and the markets for our products. We obtained the industry, market and similar data set forth in this report from our own internal estimates and research and from industry research, publications, surveys and studies conducted by third parties, including governmental agencies. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. While we believe that the data we use from third parties is reliable, we have not separately verified this data. You are cautioned not to give undue weight to any such information, projections and estimates.
As used in this Quarterly Report, the terms “we,” “us,” “our,” “United State Antimony Corporation,”, “US Antimony,” “USAC,” 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.
Management’s Discussion and Analysis is intended to be read in conjunction with the Company’s consolidated financial statements and the integral notes (“Notes”) thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2023. The following statements may be forward-looking in nature and actual results may differ materially.
| 26 |
| Table of Contents |
DESCRIPTION OF BUSINESS
History
United States Antimony Corporation was incorporated in Montana in January 1970 to mine and produce antimony products. In December 1983, the Company suspended its antimony mining operations in the U.S. but continued to produce antimony products using foreign sources of antimony ore. In April 1998, the Company formed US Antimony de Mexico, S.A. de C.V. (“USAMSA”) to smelt antimony in Mexico, and, in August 2005, the Company formed Antimonio de Mexico, S.A. de C.V. (“ADM”) to explore and develop antimony and precious metal deposits in Mexico. The Company formed Bear River Zeolite Company (“BRZ”) in 2000 for the purpose of mining and producing zeolite in Idaho. Our principal business is the production and sale of antimony, precious metals, and zeolite products. In May 2012, our shares of common stock started trading on the NYSE MKT (now NYSE AMERICAN) under the symbol UAMY.
On March 11, 2024, the Company shut down the operations of USAMSA, which was part of the antimony segment, and announced its intent to sell its USAMSA subsidiary. See Note 1 and Note 12 of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report for further information. The accounting requirements for reporting USAMSA as a discontinued operation were met in the first quarter of 2024. Accordingly, the condensed consolidated financial statements, Notes to Condensed Consolidated Financial Statements, and Management’s Discussion & Analysis and Plan of Operation reflect the results of USAMSA as a discontinued operation and are excluded from continuing operations and segment results for all periods presented.
Although we extract minerals from the Bear River Zeolite property located in Idaho that we later process and sell, we have not yet prepared a technical report summary for the Bear River Zeolite property making a determination on the property’s mineral resources or mineral reserves. However, the Company has completed test hole drilling and has retained a qualified third-party expert who is in the process of preparing a technical reserve report for the Bear River Zeolite property. We strive to achieve excellence in mine safety and health performance and work with government agencies to ensure compliance with environmental regulations and health and safety standards.
The Company is organized and managed by the following four segments, which represent our operating units: United States antimony segment, Mexico antimony segment, zeolite segment, and precious metals segment. See Note 12 of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report for the Mexico discontinued operations that are excluded from continuing operations and segment results for all periods presented.
United States Antimony Segment
Our United States antimony segment consists of an antimony plant in the Burns Mining District of Sanders County in Montana, which processes antimony ore primarily into antimony oxide, antimony metal, antimony trisulfide, and precious metals. Antimony oxide is a fine, white powder. Our antimony oxide is used in conjunction with a halogen to form a synergistic flame-retardant system for plastics, rubber, fiberglass, textile goods, paints, coatings, and paper. Our antimony oxide is also used as a color fastener in paint and as a phosphorescent agent in fluorescent light bulbs. Our antimony metal is used in bearings, storage batteries and ordnance. Our antimony trisulfide is used as a primer in ammunition. The precious metals processed at this plant in Montana are included in our precious metals segment.
We closed our antimony mine and mill in Montana in December 1983 because antimony ore could be purchased more economically from foreign sources. Our mine and mill are less than one mile from our current antimony smelter plant in Montana. We hold one patented claim at this mine. We also own mining claims in Alaska and Ontario, Canada. However, currently, the Company has no active operations in Alaska or Ontario, Canada.
As a result of the mine and mill closure in Montana, we have relied on sources outside the U.S. for antimony ore since 1983, and there are risks of interruption in procurement from these sources and volatile changes in world market prices for these materials that are not controllable by us. We anticipate continuing to receive antimony ore primarily from an existing supplier in Canada. In addition, we continue to actively research other domestic and non-domestic sources for antimony ore that are economically profitable. The acquisition of antimony ore is technically complex and a function of the country’s laws and regulations. Our purchasing consequently requires flexibility regarding supply agreements, credit support, etc. and is tailored accordingly to specific suppliers.
| 27 |
| Table of Contents |
We estimate (but have not independently confirmed) that our present share of the domestic and international markets for antimony oxide products is approximately 4% and less than 1%, respectively. We are the only significant U.S. producer of antimony products. We believe we are competitive both domestically and world-wide due to the following:
| · | We are the only U.S. domestic processor of antimony products. |
|
|
|
| · | We can process ore quickly and have minimal shipping time to domestic customers. |
|
|
|
| · | We have a reputation for quality products delivered on a timely basis. |
|
|
|
| · | We have the only operating, permitted antimony smelter located in the U.S. |
Mexico Antimony Segment
The Company has two subsidiaries in Mexico, USAMSA and ADM. On March 11, 2024, we shut down the operational activities of USAMSA, which primarily includes the following two antimony and precious metals processing plants in Mexico: (1) the Madero smelter in Coahuila, and (2) the Puerto Blanco flotation mill, oxide circuit, and cyanide leach circuit in Guanajuato. The Company intends to sell its USAMSA subsidiary over the next year and has initiated an active search for buyers of its operations and/or assets. See Note 1 and Note 12 of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report for further information.
We will maintain our existing Los Juarez mining claims and concessions in Cadereyta de Montes Queretaro, Mexico, which are included in our ADM subsidiary. There are presently no active operations at Los Juarez.
Zeolite Segment
Our zeolite segment consists of a mine and processing plant located in Preston, Idaho, Bear River Zeolite, Inc. (“BRZ”), which produces zeolite. Our zeolite is used for various purposes including soil amendment and fertilizer, water filtration, sewage treatment, nuclear waste and other environmental cleanup, odor control, gas separation, animal nutrition, and other miscellaneous applications.
BRZ has a lease with Zeolite, LLC that entitles BRZ to surface mine and process zeolite on property in Preston, Idaho, in exchange for a royalty payment. The annual royalty payment is the greater of: (1) the minimum annual royalty of $60,000, adjusted annually for the Consumer Price Index for all Urban Consumers, or (2) $11.00 per ton for the first ten thousand tons, $9.90 per ton for tons in excess of ten thousand up to twenty thousand, and $8.80 per ton for tons in excess of twenty thousand. This Zeolite LLC lease also requires BRZ to pay $10,000 to the lessor on March 1 of each year during the term of the lease, which ends March 1, 2025. BRZ also pays two other royalties on the sale of zeolite products. On a combined basis, BRZ pays royalties ranging from 8% to 13% on the sale of zeolite products. In addition, BRZ can surface mine and process zeolite on property owned by the U.S. Bureau of Land Management that is located adjacent to the Company’s Preston, Idaho property after obtaining required permits.
| 28 |
| Table of Contents |
“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 cation exchange capacity (CEC) of approximately 180-220 meq/100 gr. (which predicts plant nutrient availability and retention in soil), its hardness and high clinoptilolite content (which is an effective barrier to prevent problematic radionuclide movement), its absence of clay minerals, and its low sodium content. Our zeolite has been used in:
| ☐ | 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, industrial water discharge streams, 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. |
| ☐ | 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 fishponds 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 third-party research, feeding up to 2% zeolite increases growth rates, decreases conversion rates, and prevents scours. |
|
|
|
| ☐ | Miscellaneous Uses. Other uses include catalysts, petroleum refining, concrete, solar energy and heat exchange, desiccants, pellet binding, horse and kitty litter, floor cleaner, traction control, ammonia removal from mining waste, and carriers for insecticides, pesticides and herbicides. |
Precious Metals Segment
Our precious metals segment consists of a precious metals recovery plant that is operated in conjunction with the antimony processing plant in Montana. Precious metals are recovered in the leach circuit and settling pond after the ore goes through the crushing and flotation cycles. When precious metals are contained in antimony source, the metallurgical techniques employed for the recovery of antimony are altered to also recover the precious metals. The principal source of antimony concentrates bearing precious metals comes from our Canadian supplier, who also purchases these precious metals back from the Company. The sales of this product are intermittent throughout the year.
SELECTED FINANCIAL DATA.
Consolidated Statements of Operations Information:
|
| For the three months ended |
|
| For the nine months ended |
| ||||||||||
|
| September 30, 2024 |
|
| September 30, 2023 |
|
| September 30, 2024 |
|
| September 30, 2023 |
| ||||
Revenues |
| $ | 2,421,020 |
|
| $ | 2,063,558 |
|
| $ | 8,066,190 |
|
| $ | 6,539,519 |
|
Costs of revenues |
|
| 1,995,252 |
|
|
| 1,805,150 |
|
|
| 5,908,877 |
|
|
| 5,499,709 |
|
Gross profit |
|
| 425,768 |
|
|
| 258,408 |
|
|
| 2,157,313 |
|
|
| 1,039,810 |
|
Total operating expenses |
|
| 1,270,811 |
|
|
| 622,139 |
|
|
| 3,284,706 |
|
|
| 1,521,000 |
|
Loss from continuing operations |
|
| (845,043 | ) |
|
| (363,731 | ) |
|
| (1,127,393 | ) |
|
| (481,190 | ) |
Total other income |
|
| 161,946 |
|
|
| 178,946 |
|
|
| 474,693 |
|
|
| 566,754 |
|
Income tax expense |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Income (loss) from continuing operations |
| $ | (683,097) |
|
| $ | (184,785) |
|
| $ | (652,700) |
|
| $ | 85,564 |
|
| 29 |
| Table of Contents |
Consolidated Balance Sheet Information:
|
| September 30, 2024 |
|
| December 31, 2023 |
| ||
Working capital |
| $ | 12,671,074 |
|
| $ | 12,963,081 |
|
Total assets |
| $ | 23,560,877 |
|
| $ | 21,547,455 |
|
Accumulated deficit |
| $ | (40,266,104) |
|
| $ | (39,418,619) |
|
Total stockholders’ equity |
| $ | 25,127,049 |
|
| $ | 25,520,968 |
|
Operational and Financial Performance of Continuing Operations by Segment:
Antimony
Financial and operational performance of antimony for the three months ended September 30, 2024 and 2023 was as follows:
|
| For the three months ended |
|
|
|
|
|
|
| |||||||
Antimony - Continuing Operations |
| September 30, 2024 |
|
| September 30, 2023 |
|
| $ Change |
|
| % Change |
| ||||
Revenue |
| $ | 1,338,640 |
|
| $ | 1,391,733 |
|
| $ | (53,093) |
|
|
| -3.8 | % |
Gross profit |
| $ | 240,581 |
|
| $ | 614,632 |
|
| $ | (374,051) |
|
|
| -60.9 | % |
Pounds of antimony sold |
|
| 269,001 |
|
|
| 288,485 |
|
|
| (19,484 | ) |
|
| -6.8 | % |
Average sales price per pound |
| $ | 4.98 |
|
| $ | 4.82 |
|
| $ | 0.16 |
|
|
| 3.2 | % |
Average cost per pound |
| $ | 4.08 |
|
| $ | 2.69 |
|
| $ | 1.39 |
|
|
| 51.5 | % |
Average gross profit per pound |
| $ | 0.89 |
|
| $ | 2.13 |
|
| $ | (1.24) |
|
|
| -58.0 | % |
Financial and operational performance of antimony for the nine months ended September 30, 2024 and 2023 was as follows:
|
| For the nine months ended |
|
|
|
|
|
|
| |||||||
Antimony - Continuing Operations |
| September 30, 2024 |
|
| September 30, 2023 |
|
| $ Change |
|
| % Change |
| ||||
Revenue |
| $ | 5,381,803 |
|
| $ | 4,356,077 |
|
| $ | 1,025,726 |
|
|
| 23.5 | % |
Gross profit |
| $ | 2,221,383 |
|
| $ | 1,010,404 |
|
| $ | 1,210,979 |
|
|
| 119.9 | % |
Pounds of antimony sold |
|
| 1,138,554 |
|
|
| 910,413 |
|
|
| 228,141 |
|
|
| 25.1 | % |
Average sales price per pound |
| $ | 4.73 |
|
| $ | 4.78 |
|
| $ | (0.05) |
|
|
| -1.2 | % |
Average cost per pound |
| $ | 2.78 |
|
| $ | 3.67 |
|
| $ | (0.89) |
|
|
| -24.5 | % |
Average gross profit per pound |
| $ | 1.95 |
|
| $ | 1.11 |
|
| $ | 0.84 |
|
|
| 75.8 | % |
Antimony revenue increased $1,025,726, or 23.5%, for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, primarily due to higher volume from increased demand for antimony oxide and metal. A portion of this increased demand for antimony metal was related to the processing of customer-owned antimony ore. The sales price per pound related to the processing of customer-owned antimony ore was lower than the sales price per pound for our other antimony products, which was the primary reason for the decrease in our average sales price per pound during the nine months ended September 30, 2024, as compared to the prior year.
Gross profit increased $1,210,979 for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, primarily due to improved cost efficiencies with higher volume and the prior year sale of purchased finished antimony trioxide at a lower gross margin. Also, the improved results related to average gross profit per pound in both nine-month periods presented were due to discontinuing our Mexico antimony operations, the results of which are not included in the continuing operations information presented in Management’s Discussion and Analysis and Plan of Operation, but rather in discontinued operations, which is presented in Note 12 of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report.
| 30 |
| Table of Contents |
Zeolite
Financial and operational performance of zeolite for the three months ended September 30, 2024 and 2023 was as follows:
|
| For the three months ended |
|
|
|
|
| |||||||||
Zeolite |
| September 30, 2024 |
|
| September 30, 2023 |
|
| $ Change |
|
| % Change |
| ||||
Revenue |
| $ | 682,947 |
|
| $ | 671,825 |
|
| $ | 11,122 |
|
|
| 1.7 | % |
Gross profit (loss) |
| $ | (208,392 | ) |
| $ | (350,370 | ) |
| $ | 141,978 |
|
|
| -40.5 | % |
Tons of zeolite sold |
|
| 2,603 |
|
|
| 2,254 |
|
|
| 349 |
|
|
| 15.5 | % |
Average sales price per ton |
| $ | 262 |
|
| $ | 298 |
|
| $ | (36 | ) |
|
| -12.0 | % |
Average cost per ton |
| $ | 342 |
|
| $ | 454 |
|
| $ | (112 | ) |
|
| -24.5 | % |
Average gross profit (loss) per ton |
| $ | (80 | ) |
| $ | (155 | ) |
| $ | 75 |
|
|
| -48.5 | % |
Financial and operational performance of zeolite for the nine months ended September 30, 2024 and 2023 was as follows:
|
| For the nine months ended |
|
|
|
|
|
|
| |||||||
Zeolite |
| September 30, 2024 |
|
| September 30, 2023 |
|
| $ Change |
|
| % Change |
| ||||
Revenue |
| $ | 2,280,338 |
|
| $ | 1,941,009 |
|
| $ | 339,329 |
|
|
| 17.5 | % |
Gross profit (loss) |
| $ | (450,556) |
|
| $ | (195,464) |
|
| $ | (255,092) |
|
|
| 130.5 | % |
Tons of zeolite sold |
|
| 8,611 |
|
|
| 8,007 |
|
|
| 604 |
|
|
| 7.5 | % |
Average sales price per ton |
| $ | 265 |
|
| $ | 242 |
|
| $ | 23 |
|
|
| 9.2 | % |
Average cost per ton |
| $ | 317 |
|
| $ | 267 |
|
| $ | 50 |
|
|
| 18.9 | % |
Average gross profit (loss) per ton |
| $ | (52) |
|
| $ | (24) |
|
| $ | (28) |
|
|
| 114.3 | % |
Zeolite revenue increased $339,329, or 17.5%, for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, primarily due to:
| · | The increased average sales price per ton, which was mainly related to a price increase that was effective towards the end of 2023, and |
| · | The increased tons of zeolite sold, which was mainly related to increased demand and our ability to meet customer orders in a more timely fashion. |
Gross profit decreased by $255,092 for the nine months end September 30, 2024, as compared to the nine months ended September 30, 2023, primarily due to increased costs for maintenance, backup equipment leases, and related expenses in repairing older machinery and equipment, especially during production downtime.
Precious Metals
Financial and operational performance of precious metals for the three months ended September 30, 2024 and 2023 was as follows:
|
| For the three months ended |
|
|
|
|
| |||||||||
Precious metals |
| September 30, 2024 |
|
| September 30, 2023 |
|
| $ Change |
|
| % Change |
| ||||
Revenue |
| $ | 399,433 |
|
|
| - |
|
| $ | 399,433 |
|
|
| n/a |
|
Gross profit (loss) |
| $ | 393,579 |
|
| ($5,854) |
|
| $ | 399,433 |
|
|
| -6823.2 | % | |
Ounces sold - gold |
|
| 27.98 |
|
|
| - |
|
|
| 27.98 |
|
|
| n/a |
|
Ounces sold - silver |
|
| 11,631 |
|
|
| - |
|
|
| 11,631 |
|
|
| n/a |
|
| 31 |
| Table of Contents |
Financial and operational performance of precious metals for the nine months ended September 30, 2024 and 2023 was as follows:
|
| For the nine months ended |
|
|
|
|
|
|
| |||||||
Precious metals |
| September 30, 2024 |
|
| September 30, 2023 |
|
| $ Change |
|
| % Change |
| ||||
Revenue |
| $ | 404,049 |
|
| $ | 242,433 |
|
| $ | 161,616 |
|
|
| 66.7 | % |
Gross profit |
| $ | 386,486 |
|
| $ | 224,870 |
|
| $ | 161,616 |
|
|
| 71.9 | % |
Ounces sold - gold |
|
| 28.21 |
|
|
| 24.30 |
|
|
| 3.91 |
|
|
| 16.1 | % |
Ounces sold - silver |
|
| 11,269 |
|
|
| 15,074 |
|
|
| (3,805 | ) |
|
| -25.2 | % |
Earnings before Interest, Tax, Depreciation and Amortization (“EBITDA”)
In addition to our results determined in accordance with GAAP, we believe Earnings Before Interest, Tax, Depreciation and Amortization (“EBITDA”), a non-GAAP financial measure, is a useful measure of our operating performance because it eliminates non-cash expenses that do not reflect our underlying business performance. We use this measure to facilitate a comparison of our operating performance on a consistent basis from period to period and to analyze the factors and trends affecting our business.
EBITDA is intended as a supplemental measure of our performance that is neither required by, nor presented in accordance with, GAAP. We believe that the use of EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial measures with those of comparable companies, which may present similar non-GAAP financial measures to investors. EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP.
Our EBITDA from continuing operations was a loss of ($306,853) for the nine months ended September 30, 2024, as compared to $342,071 for the nine months ended September 30, 2023.
EBIDTA from continuing operations by segment for the three months ended September 30, 2024 and 2023 was as follows:
|
| For the three months ended |
|
|
|
|
|
|
| |||||||
Antimony |
| September 30, 2024 |
|
| September 30, 2023 |
|
| $ Change |
|
| % Change |
| ||||
Revenue |
| $ | 1,338,640 |
|
| $ | 1,391,733 |
|
| $ | (53,093) |
|
|
| -3.8 | % |
Cost of sales |
|
| (1,098,059 | ) |
|
| (777,101 | ) |
|
| (320,958 | ) |
|
| 41.3 | % |
Gross profit |
|
| 240,581 |
|
|
| 614,632 |
|
|
| (374,051 | ) |
|
| -60.9 | % |
Total operating expenses |
|
| (1,076,532 | ) |
|
| (593,088 | ) |
|
| (483,444 | ) |
|
| 81.5 | % |
Income (loss) from operations |
|
| (835,951 | ) |
|
| 21,544 |
|
|
| (857,495 | ) |
|
| -3980.2 | % |
Total other income (expense) |
|
| 164,268 |
|
|
| 181,647 |
|
|
| (17,379 | ) |
|
| -9.6 | % |
Income tax expense |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Income (loss) - antimony |
|
| (671,683 | ) |
|
| 203,191 |
|
|
| (874,874 | ) |
|
| -430.6 | % |
Interest expense |
|
| - |
|
|
| 1,126 |
|
|
| (1,126 | ) |
|
| -100.0 | % |
Income tax expense |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Depreciation and amortization |
|
| 18,071 |
|
|
| 14,376 |
|
|
| 3,695 |
|
|
| 25.7 | % |
EBITDA - antimony |
| $ | (653,612) |
|
| $ | 218,693 |
|
| $ | (872,305) |
|
|
| -398.9 | % |
| 32 |
| Table of Contents |
|
| For the three months ended |
|
|
|
|
|
|
| |||||||
Zeolite |
| September 30, 2024 |
|
| September 30, 2023 |
|
| $ Change |
|
| % Change |
| ||||
Revenue |
| $ | 682,947 |
|
| $ | 671,825 |
|
| $ | 11,122 |
|
|
| 1.7 | % |
Cost of sales |
|
| (891,339 | ) |
|
| (1,022,195 | ) |
|
| 130,856 |
|
|
| -12.8 | % |
Gross profit (loss) |
|
| (208,392 | ) |
|
| (350,370 | ) |
|
| 141,978 |
|
|
| -40.5 | % |
Total operating expenses |
|
| (194,279 | ) |
|
| (29,051 | ) |
|
| (165,228 | ) |
|
| 568.7 | % |
Income (loss) from operations |
|
| (402,671 | ) |
|
| (379,421 | ) |
|
| (23,250 | ) |
|
| 6.1 | % |
Total other income (expense) |
|
| (2,322 | ) |
|
| (2,701 | ) |
|
| 379 |
|
|
| -14.0 | % |
Income tax expense |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Income (loss) - zeolite |
|
| (404,993 | ) |
|
| (382,122 | ) |
|
| (22,871 | ) |
|
| 6.0 | % |
Interest expense |
|
| 3,538 |
|
|
| 1,049 |
|
|
| 2,489 |
|
|
| 237.3 | % |
Income tax expense |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Depreciation and amortization |
|
| 95,659 |
|
|
| 73,194 |
|
|
| 22,465 |
|
|
| 30.7 | % |
EBITDA - zeolite |
| $ | (305,796) |
|
| $ | (307,879) |
|
| $ | 2,083 |
|
|
| -0.7 | % |
|
| For the three months ended |
|
|
|
|
|
|
| |||||||
Precious Metals |
| September 30, 2024 |
|
| September 30, 2023 |
|
| $ Change |
|
| % Change |
| ||||
Revenue |
| $ | 399,433 |
|
| $ | - |
|
| $ | 399,433 |
|
|
| n/a |
|
Cost of sales |
|
| (5,854 | ) |
|
| (5,854 | ) |
|
| - |
|
|
| - |
|
Gross profit (loss) |
|
| 393,579 |
|
|
| (5,854 | ) |
|
| 399,433 |
|
|
| -6823.2 | % |
Total operating expenses |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Income (loss) from operations |
|
| 393,579 |
|
|
| (5,854 | ) |
|
| 399,433 |
|
|
| -6823.2 | % |
Total other income (expense) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Income (loss) - precious metals |
|
| 393,579 |
|
|
| (5,854 | ) |
|
| 399,433 |
|
|
| -6823.2 | % |
Interest expense |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Depreciation and amortization |
|
| 5,854 |
|
|
| 5,854 |
|
|
| - |
|
|
| - |
|
EBITDA - precious metals |
| $ | 399,433 |
|
| $ | - |
|
| $ | 399,433 |
|
|
| n/a |
|
| 33 |
| Table of Contents |
|
| For the three months ended |
|
|
|
|
| |||||||||
Consolidated |
| September 30, 2024 |
|
| September 30, 2023 |
|
| $ Change |
|
| % Change |
| ||||
Revenue |
| $ | 2,421,020 |
|
| $ | 2,063,558 |
|
| $ | 357,462 |
|
|
| 17.3 | % |
Cost of sales |
|
| (1,995,252 | ) |
|
| (1,805,150 | ) |
|
| (190,102 | ) |
|
| 10.5 | % |
Gross profit |
|
| 425,768 |
|
|
| 258,408 |
|
|
| 167,360 |
|
|
| 64.8 | % |
Total operating expenses |
|
| (1,270,811 | ) |
|
| (622,139 | ) |
|
| (648,672 | ) |
|
| 104.3 | % |
Income (loss) from operations |
|
| (845,043 | ) |
|
| (363,731 | ) |
|
| (481,312 | ) |
|
| 132.3 | % |
Total other income (expense) |
|
| 161,946 |
|
|
| 178,946 |
|
|
| (17,000 | ) |
|
| -9.5 | % |
Income tax expense |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Income (loss) - consolidated |
|
| (683,097 | ) |
|
| (184,785 | ) |
|
| (498,312 | ) |
|
| 269.7 | % |
Interest expense |
|
| 3,538 |
|
|
| 2,175 |
|
|
| 1,363 |
|
|
| 62.7 | % |
Income tax expense |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Depreciation and amortization |
|
| 119,584 |
|
|
| 93,424 |
|
|
| 26,160 |
|
|
| 28.0 | % |
EBITDA - consolidated |
| $ | (559,975) |
|
| $ | (89,186) |
|
| $ | (470,789) |
|
|
| 527.9 | % |
EBIDTA from continuing operations by segment for the nine months ended September 30, 2024 and 2023 was as follows:
|
| For the nine months ended |
|
|
|
|
|
|
| |||||||
Antimony |
| September 30, 2024 |
|
| September 30, 2023 |
|
| $ Change |
|
| % Change |
| ||||
Revenue |
| $ | 5,381,803 |
|
| $ | 4,356,077 |
|
| $ | 1,025,726 |
|
|
| 23.5 | % |
Cost of sales |
|
| (3,160,420 | ) |
|
| (3,345,673 | ) |
|
| 185,253 |
|
|
| -5.5 | % |
Gross profit |
|
| 2,221,383 |
|
|
| 1,010,404 |
|
|
| 1,210,979 |
|
|
| 119.9 | % |
Total operating expenses |
|
| (2,752,830 | ) |
|
| (1,296,290 | ) |
|
| (1,456,540 | ) |
|
| 112.4 | % |
Income (loss) from operations |
|
| (531,447 | ) |
|
| (285,886 | ) |
|
| (245,561 | ) |
|
| 85.9 | % |
Total other income (expense) |
|
| 481,713 |
|
|
| 573,077 |
|
|
| (91,364 | ) |
|
| -15.9 | % |
Income tax expense |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Income (loss) - antimony |
|
| (49,734 | ) |
|
| 287,191 |
|
|
| (336,925 | ) |
|
| -117.3 | % |
Interest expense |
|
| - |
|
|
| 3,843 |
|
|
| (3,843 | ) |
|
| -100.0 | % |
Income tax expense |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Depreciation and amortization |
|
| 54,107 |
|
|
| 41,056 |
|
|
| 13,051 |
|
|
| 31.8 | % |
EBITDA - antimony |
| $ | 4,373 |
|
| $ | 332,090 |
|
| $ | (327,717) |
|
|
| -98.7 | % |
| 34 |
| Table of Contents |
|
| For the nine months ended |
|
|
|
|
|
|
| |||||||
Zeolite |
| September 30, 2024 |
|
| September 30, 2023 |
|
| $ Change |
|
| % Change |
| ||||
Revenue |
| $ | 2,280,338 |
|
| $ | 1,941,009 |
|
| $ | 339,329 |
|
|
| 17.5 | % |
Cost of sales |
|
| (2,730,894 | ) |
|
| (2,136,473 | ) |
|
| (594,421 | ) |
|
| 27.8 | % |
Gross profit (loss) |
|
| (450,556 | ) |
|
| (195,464 | ) |
|
| (255,092 | ) |
|
| 130.5 | % |
Total operating expenses |
|
| (531,876 | ) |
|
| (224,710 | ) |
|
| (307,166 | ) |
|
| 136.7 | % |
Income (loss) from operations |
|
| (982,432 | ) |
|
| (420,174 | ) |
|
| (562,258 | ) |
|
| 133.8 | % |
Total other income (expense) |
|
| (7,020 | ) |
|
| (6,323 | ) |
|
| (697 | ) |
|
| 11.0 | % |
Income tax expense |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Income (loss) - zeolite |
|
| (989,452 | ) |
|
| (426,497 | ) |
|
| (562,955 | ) |
|
| 132.0 | % |
Interest expense |
|
| 5,630 |
|
|
| 4,782 |
|
|
| 848 |
|
|
| 17.7 | % |
Income tax expense |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Depreciation and amortization |
|
| 268,547 |
|
|
| 189,263 |
|
|
| 79,284 |
|
|
| 41.9 | % |
EBITDA - zeolite |
| $ | (715,275) |
|
| $ | (232,452) |
|
| $ | (482,823) |
|
|
| 207.7 | % |
|
| For the nine months ended |
|
|
|
|
|
|
| |||||||
Precious Metals |
| September 30, 2024 |
|
| September 30, 2023 |
|
| $ Change |
|
| % Change |
| ||||
Revenue |
| $ | 404,049 |
|
| $ | 242,433 |
|
| $ | 161,616 |
|
|
| 66.7 | % |
Cost of sales |
|
| (17,563 | ) |
|
| (17,563 | ) |
|
| - |
|
|
| - |
|
Gross profit |
|
| 386,486 |
|
|
| 224,870 |
|
|
| 161,616 |
|
|
| 71.9 | % |
Total operating expenses |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Income (loss) from operations |
|
| 386,486 |
|
|
| 224,870 |
|
|
| 161,616 |
|
|
| 71.9 | % |
Total other income (expense) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Income (loss) - precious metals |
|
| 386,486 |
|
|
| 224,870 |
|
|
| 161,616 |
|
|
| 71.9 | % |
Interest expense |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Depreciation and amortization |
|
| 17,563 |
|
|
| 17,563 |
|
|
| - |
|
|
| - |
|
EBITDA - precious metals |
| $ | 404,049 |
|
| $ | 242,433 |
|
| $ | 161,616 |
|
|
| 66.7 | % |
| 35 |
| Table of Contents |
|
| For the nine months ended |
|
|
|
|
|
|
| |||||||
Consolidated |
| September 30, 2024 |
|
| September 30, 2023 |
|
| $ Change |
|
| % Change |
| ||||
Revenue |
| $ | 8,066,190 |
|
| $ | 6,539,519 |
|
| $ | 1,526,671 |
|
|
| 23.3 | % |
Cost of sales |
|
| (5,908,877 | ) |
|
| (5,499,709 | ) |
|
| (409,168 | ) |
|
| 7.4 | % |
Gross profit |
|
| 2,157,313 |
|
|
| 1,039,810 |
|
|
| 1,117,503 |
|
|
| 107.5 | % |
Total operating expenses |
|
| (3,284,706 | ) |
|
| (1,521,000 | ) |
|
| (1,763,706 | ) |
|
| 116.0 | % |
Income (loss) from operations |
|
| (1,127,393 | ) |
|
| (481,190 | ) |
|
| (646,203 | ) |
|
| 134.3 | % |
Total other income (expense) |
|
| 474,693 |
|
|
| 566,754 |
|
|
| (92,061 | ) |
|
| -16.2 | % |
Income tax expense |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Income (loss) - consolidated |
|
| (652,700 | ) |
|
| 85,564 |
|
|
| (738,264 | ) |
|
| -862.8 | % |
Interest expense |
|
| 5,630 |
|
|
| 8,625 |
|
|
| (2,995 | ) |
|
| -34.7 | % |
Income tax expense |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Depreciation and amortization |
|
| 340,217 |
|
|
| 247,882 |
|
|
| 92,335 |
|
|
| 37.2 | % |
EBITDA - consolidated |
| ($306,853) |
|
| $ | 342,071 |
|
| ($648,924) |
|
|
| -189.7 | % | ||
Capital Resources and Liquidity:
Working Capital of Continuing Operations: |
| September 30, 2024 |
|
| December 31, 2023 |
| ||
Current assets |
| $ | 14,927,043 |
|
| $ | 13,709,251 |
|
Current liabilities |
|
| (2,255,969 | ) |
|
| (746,170 | ) |
Working capital |
| $ | 12,671,074 |
|
| $ | 12,963,081 |
|
|
| For the nine months ended |
| |||||
CASH FLOWS OF CONTINUING OPERATIONS |
| September 30, 2024 |
|
| September 30, 2023 |
| ||
Net cash provided (used) by operating activities |
| $ | 884,032 |
|
| ($695,732) |
| |
Net cash provided (used) by investing activities |
|
| 141,708 |
|
|
| (1,337,398 | ) |
Net cash used by financing activities |
|
| (71,139 | ) |
|
| (857,779 | ) |
Net cash provided (used) by continuing operations |
| $ | 954,601 |
|
| $ | (2,890,909) |
|
Cash flow provided by operating activities improved by $1,579,764 for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, primarily due to good working capital management, which includes improved collections on receivables, better management of vendor payments, increased payments of compensation in stock, and maintaining a lower amount due on royalties. The increased vendor payables balance at September 30, 2024 as compared to December 31, 2023 was mainly due to a vendor that had extensive deliveries later in the third quarter of 2024.
Cash flow used by investing activities improved by $1,479,106 for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, primarily due to less fixed asset purchases and the sale of our personal residence. See Note 6 of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report for further information.
| 36 |
| Table of Contents |
Cash flow used by financing activities improved by $786,640 for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, primarily due to the payment of a dividend of $787,730 on January 25, 2023 to the holders of 1,692,672 shares of Series D Preferred stock.
Our mission is to service our employees, customers, and vendors well and grow our business profitably both organically and through strategic acquisitions and partnerships to increase shareholder value. The Company is focused on generating positive cash flow to fund its mission. One method of improving positive cash flow has been through our review of each segment’s operations and financial results to make informed decisions that benefit the Company overall. An example of the results of our review relates to USAMSA. Our USAMSA subsidiary has generated cumulative losses since inception. Therefore, we shut down the operations of USAMSA on March 11, 2024.
Another method of generating cash is through the sale or issuance of common stock, warrants, debt, and other investment vehicles, which the Company has been successful at executing in the past. However, our ability to access capital or raise funds when needed is not assured and, if capital is not available when, and in the amounts and terms needed, or if capital is not available at all, the Company could be required to significantly curtail its operations, modify existing strategic plans, and/or dispose of certain operations or assets, which could materially harm our business, prospects, financial condition, and operating results.
The Company could also receive funds from the U.S. Government for initiatives related to antimony, zeolite, and other minerals. However, there is no assurance that U.S. Government funding will be able accessible to the Company.
We may use cash to acquire businesses. The nature of these investments and transactions, however, makes it difficult to predict the amount and timing of such cash requirements.
As of September 30, 2024, the Company had cash and cash equivalents of $12,969,132. We intend to fund our cash requirements with our cash and cash equivalents, cash generated from our operations, and capital raised from various investment vehicles and believe cash from these sources are sufficient to cover our requirements for the next 12 months.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
Conclusions of Management Regarding Effectiveness of Disclosure Controls and Procedures
At the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out under the supervision and with the participation of the Company’s management, including the Co-Principal Executive Officers (“PEO”) and Principal Financial Officer (“PFO”), of the effectiveness of the design and operations of the Company’s disclosure controls and procedures (as defined in Rule 13a – 15(e) and Rule 15d – 15(e) under the Exchange Act). Based on that evaluation, the PEO and the PFO have concluded that our disclosure controls and procedures were not effective in ensuring that: (i) information required to be disclosed by the Company in reports that it files or submits to the SEC under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in applicable rules and forms, and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow for accurate and timely decisions regarding required disclosure.
Management of the Company believes that these material weaknesses are due to the small size of the Company’s accounting staff. The small size of the Company’s accounting staff may prevent adequate controls in the future, such as segregation of duties, due to the cost/benefit of such remediation. To mitigate the current limited resources and limited employees, we rely heavily on direct management oversight of transactions, along with the use of external accounting and legal professionals. The Company is reviewing various plans to strengthen its internal controls. These plans are ongoing and include: (i) reviewing various software packages to determine if it can reduce hours spent by personnel in the accounting department by automating manual processes, (ii) determining whether controls can be implemented to mitigate segregation of duties issues, (iii) hiring additional accountants to improve our segregation of duties controls, (iv) designing controls to formalize roles and responsibilities, and (v) designing certain entity-level controls to support the control environment.
Changes in Internal Control over Financial Reporting
There have been no changes during the quarter ended September 30, 2024 in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, internal controls over financial reporting.
| 37 |
| Table of Contents |
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
United States Antimony Corporation is not a party to any material legal proceedings. No director, officer or affiliate of United States Antimony Corporation and no owner of record or beneficial owner of more than 5% of the Company’s securities or any associate of any such director, officer or security holder is a party adverse to United States Antimony Corporation or has a material interest adverse to United States Antimony Corporation in reference to pending litigation.
ITEM 1A. RISK FACTORS.
There have been no material changes from the risk factors previously disclosed in the Company’s Form 10-K for the year ended December 31, 2023, which was filed with the SEC on April 12, 2024.
ITEM 2. RECENT SALES OF UNREGISTERED SECURITIES.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCOSURES.
The information concerning mine safety violations or other regulatory matters required by Section 1503 (a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this report.
ITEM 5. OTHER INFORMATION.
The information set forth below is included herein for the purpose of providing disclosure under Item 1.01 (Entry into a Material Definitive Agreement) of Form 8-K.
On November 12, 2024, the Company entered into a Sales Agreement with A.G.P./Alliance Global Partners to sell shares of our common stock, par value $0.01 per share, from time-to-time through an “at the market offering” program under which A.G.P./Alliance Global Partners will act as our sales agent (“Sales Agent”).
Under the Sales Agreement, we will set the parameters for the sale of shares of our common stock, including (i) the maximum number or amount of shares to be sold, (ii) the time period during which sales may be made, (iii) any limitation on the number or amount of shares that may be sold in any one trading day and (iv) any minimum price below which sales may not be made. Subject to the terms and conditions of the Sales Agreement, the Sales Agent may sell shares of our common stock by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended (the “Securities Act”). The Sales Agent will use commercially reasonable efforts in conducting such sales activities consistent with its normal trading and sales practices and applicable state and federal laws, rules and regulations and the rules of the NYSE American. We made certain customary representations, warranties and covenants to the Sales Agent in the Sales Agreement, and we agreed to customary indemnification and contribution obligations, including with respect to liabilities under the Securities Act and the Securities Exchange Act of 1934, as amended. The Sales Agreement may be terminated by us or the Sales Agent for any or no reason upon five days’ prior notice.
| 38 |
| Table of Contents |
Under the Sales Agreement and in our sole discretion, we may issue and sell from time-to-time shares of our common stock. We have no obligation to sell any shares under the Sales Agreement, and we may suspend solicitation and offers under the Sales Agreement for any reason in our sole discretion. We agreed to pay the Sales Agent a commission equal to up to 3.0% of the gross proceeds from the sales of shares pursuant to the Sales Agreement.
Any shares of our common stock sold under the Sales Agreement will be issued pursuant to our shelf registration statement on Form S-3, as amended (File No. 333-262206) (“Registration Statement”), and the base prospectus included therein, originally filed with the U.S. Securities and Exchange Commission (“SEC”) on January 14, 2022 and declared effective by the SEC on January 31, 2022. A prospectus supplement relating to the offering of shares of our common stock under the Sales Agreement will be filed with the SEC on November 12, 2024.
The foregoing description of terms and conditions of the Sales Agreement is not complete and is qualified in its entirety by reference to the full text of such agreement, a copy of which is attached as Exhibit 1.1 to this Quarterly Report on Form 10-Q and incorporated by reference into this Item 5. The provisions of the Sales Agreement, including the representations and warranties contained therein, are not for the benefit of any party other than the parties to the agreement and are not intended as documents for investors and the public to obtain factual information about our current state of affairs. For such information, investors and the public should look to the disclosures contained in our reports to and other filings with the SEC.
The legal opinion of Hall Booth Smith, P.C. relating to the shares of our common stock that may be offered and sold pursuant to the Registration Statement and the Sales Agreement is filed as Exhibit 5.1 to this Quarterly Report on Form 10-Q.
| 39 |
| Table of Contents |
ITEM 6. EXHIBITS.
Exhibit No. |
| Description |
| ||
| ||
| ||
| ||
| ||
| Consent of Hall Booth Smith, P.C. (included in Exhibit 5.1). | |
| Rule 15d-14(a) Certification by Co-Principal Executive Officer. | |
| Rule 15d-14(a) Certification by Co-Principal Executive Officer. | |
| Rule 15d-14(a) Certification by Principal Financial Officer. | |
| Section 1350 Certification of Co-Principal Executive Officers and Principal Financial Officer. | |
| ||
101.INS |
| Inline XBRL Instance Document. |
101.SCH |
| Inline XBRL Taxonomy Extension Schema Document. |
101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document. |
101.LAB |
| Inline XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
104 |
| Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
_____________________
* Filed herewith.
| 40 |
| Table of Contents |
SIGNATURES
Pursuant to the requirements 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 |
| |
|
|
|
|
Date: November 12, 2024 | By: | /s/ Gary C. Evans |
|
|
| Gary C. Evans |
|
|
| Co-CEO and Chairman of the Board (co-principal executive officer) |
|
|
|
|
|
Date: November 12, 2024 | By: | /s/ Lloyd Joseph Bardswich |
|
|
| Lloyd Joseph Bardswich |
|
|
| Co-CEO and Director (co-principal executive officer) |
|
|
|
|
|
Date: November 12, 2024 | By: | /s/ Richard R. Isaak |
|
|
| Richard R. Isaak |
|
|
| SVP, Chief Financial Officer (principal financial officer) |
|
| 41 |
EXHIBIT 1.1
UNITED STATES ANTIMONY CORPORATION
COMMON STOCK
SALES AGREEMENT
November 12, 2024
A.G.P./Alliance Global Partners
590 Madison Avenue
New York, NY 10022
Ladies and Gentlemen:
United States Antimony Corporation, a Montana corporation (the “Company”), confirms its agreement (this “Agreement”) with A.G.P./Alliance Global Partners (the “Sales Agent”), as follows:
1. Issuance and Sale of Shares. The Company agrees that, from time to time during the term of this Agreement, on the terms and subject to the conditions set forth herein, it may issue and sell to or through the Sales Agent, acting as agent or principal, shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), subject to the limitations set forth in Section 3(b) hereof. The issuance and sale of shares of Common Stock to or through the Sales Agent will be effected pursuant to the Registration Statement (as defined below) filed by the Company, which has been declared effective under the Securities Act (as defined below) by the U.S. Securities and Exchange Commission (the “Commission”).
The Company has filed in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations thereunder (collectively, the “Securities Act”), with the Commission, a shelf registration statement on Form S-3 (File No. 333-262206), including a base prospectus, relating to certain securities, including the shares of Common Stock, to be issued from time to time by the Company, and which incorporates by reference documents that the Company has filed or will file in accordance with the provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (collectively, the “Exchange Act”). The Company has prepared a prospectus supplement to the base prospectus included as part of such registration statement, specifically relating to the offering of Common Stock pursuant to this Agreement (the “ATM Prospectus”). The Company will furnish to the Sales Agent, for use by the Sales Agent, copies of the ATM Prospectus relating to the Placement Shares (as defined below). Except where the context otherwise requires, such registration statement, as amended at the time of such registration statement’s effectiveness for purposes of Section 11 of the Securities Act, and any post-effective amendment thereto, including all documents filed as part thereof or incorporated by reference therein, and including any information contained in a Prospectus (as defined below) subsequently filed with the Commission pursuant to Rule 424(b) under the Securities Act or deemed to be a part of such registration statement pursuant to Rule 430B or 462(b) of the Securities Act, or any subsequent registration statement on Form S-3 filed pursuant to Rule 415 under the Securities Act by the Company to cover any Placement Shares, is herein called the “Registration Statement.” The base prospectus, including all documents incorporated therein by reference (to the extent such information has not been superseded or modified in accordance with Rule 412 under the Securities Act (as qualified by Rule 430B(g) of the Securities Act), and the ATM Prospectus, including all documents incorporated therein by reference (to the extent such information has not been superseded or modified in accordance with Rule 412 under the Securities Act (as qualified by Rule 430B(g) of the Securities Act), each of which is included in the Registration Statement, as it or they may be supplemented by any additional prospectus supplement, in the form in which such prospectus and/or ATM Prospectus have most recently been filed by the Company with the Commission pursuant to Rule 424(b) under the Securities Act, together with any “issuer free writing prospectus” (“Issuer Free Writing Prospectus”), as defined in Rule 433 of the Securities Act (“Rule 433”), relating to the Placement Shares that (i) is required to be filed with the Commission by the Company or (ii) is exempt from filing pursuant to Rule 433(d)(5)(i), in each case in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g), is herein called the “Prospectus.” Any reference herein to the Registration Statement, the Prospectus or any amendment or supplement thereto shall be deemed to refer to and include the documents incorporated by reference therein, and any reference herein to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement or the Prospectus shall be deemed to refer to and include the filing after the execution hereof of any document with the Commission deemed to be incorporated by reference therein. For purposes of this Agreement, all references to the Registration Statement, the Prospectus or to any amendment or supplement thereto shall be deemed to include any copy filed with the Commission pursuant to either the Electronic Data Gathering Analysis and Retrieval System, or if applicable, the Interactive Data Electronic Applications (collectively “EDGAR”).
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2. Placements. Each time that the Company wishes to issue and sell the Common Stock through the Sales Agent, as agent, hereunder (each, a “Placement”), it will notify the Sales Agent by email notice (or other method mutually agreed to in writing by the parties) (a “Placement Notice”) containing the parameters in accordance with which it desires the Common Stock to be sold, which shall at a minimum include the number of shares of Common Stock to be issued (the “Placement Shares”), the time period during which sales are requested to be made, any limitation on the number of shares of Common Stock that may be sold in any one Trading Day (as defined in Section 3) and any minimum price below which sales may not be made, a form of which containing such minimum sales parameters necessary is attached hereto as Schedule 1. The Placement Notice shall originate from any of the individuals from the Company set forth on Schedule 2 (with a copy to each of the other individuals from the Company listed on such schedule), and shall be addressed to each of the individuals from the Sales Agent set forth on Schedule 2, as such Schedule 2 may be amended from time to time. The Placement Notice shall be effective upon receipt by the Sales Agent unless and until (i) in accordance with the notice requirements set forth in Section 4, the Sales Agent declines to accept the terms contained therein for any reason, in its sole discretion, (ii) the entire amount of the Placement Shares have been sold, (iii) in accordance with the notice requirements set forth in Section 4, the Company suspends or terminates the Placement Notice, (iv) the Company issues a subsequent Placement Notice with parameters superseding those on the earlier dated Placement Notice, or (v) the Agreement has been terminated under the provisions of Section 11. The amount of any discount, commission or other compensation to be paid by the Company to the Sales Agent in connection with the sale of the Placement Shares through the Sales Agent, as agent, shall be as set forth in Schedule 3. It is expressly acknowledged and agreed that neither the Company nor the Sales Agent will have any obligation whatsoever with respect to a Placement or any Placement Shares unless and until the Company delivers a Placement Notice to the Sales Agent and the Sales Agent does not decline such Placement Notice pursuant to the terms set forth above, and then only upon the terms specified therein and herein. In the event of a conflict between the terms of this Agreement and the terms of a Placement Notice, the terms of the Placement Notice will control.
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3. Sale of Placement Shares by the Sales Agent.
(a) Subject to the terms and conditions herein set forth, upon the Company’s issuance of a Placement Notice, and unless the sale of the Placement Shares described therein has been declined, suspended, or otherwise terminated in accordance with the terms of this Agreement, the Sales Agent, as agent for the Company, will use its commercially reasonable efforts consistent with its normal trading and sales practices and applicable state and federal laws, rules and regulations and the rules of the NYSE American, LLC (the “Exchange”), for the period specified in the Placement Notice, to sell such Placement Shares up to the amount specified by the Company in, and otherwise in accordance with the terms of such Placement Notice. If acting as agent hereunder, the Sales Agent will provide written confirmation to the Company (including by email correspondence to each of the individuals of the Company set forth on Schedule 2, if receipt of such correspondence is actually acknowledged by any of the individuals to whom the notice is sent, other than via auto-reply) no later than the opening of the Trading Day (as defined below) immediately following the Trading Day on which it has made sales of Placement Shares hereunder setting forth the number of Placement Shares sold on such day, the volume-weighted average price of the Placement Shares, the compensation payable by the Company to the Sales Agent pursuant to Section 2 with respect to such sales, and the Net Proceeds (as defined below) payable to the Company, with an itemization of the deductions made by the Sales Agent (as set forth in Section 5(a)) from the gross proceeds that it receives from such sales. Subject to the terms of the Placement Notice, the Sales Agent may sell Placement Shares by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 under the Securities Act. The Company acknowledges and agrees that (i) there can be no assurance that the Sales Agent will be successful in selling Placement Shares, (ii) the Sales Agent will incur no liability or obligation to the Company or any other person or entity if it does not sell Placement Shares for any reason other than a failure by the Sales Agent to use its commercially reasonable efforts consistent with its normal trading and sales practices and applicable law and regulations to sell such Placement Shares as required under this Agreement and (iii) the Sales Agent shall be under no obligation to purchase Placement Shares on a principal basis pursuant to this Agreement, except as otherwise agreed by the Sales Agent and the Company in writing and expressly set forth in a Placement Notice. For the purposes hereof, “Trading Day” means any day on which the Company’s Common Stock is purchased and sold on the principal market on which the Common Stock is listed or quoted.
(b) Under no circumstances shall the Company cause or request the offer or sale of any Placement Shares if, after giving effect to the sale of such Placement Shares, the aggregate number or gross sales proceeds of Placement Shares sold pursuant to this Agreement would exceed the lesser of: (i) the number or dollar amount of shares of Common Stock registered pursuant to the Registration Statement pursuant to which the offering hereunder is being made, (ii) the number of authorized but unissued and unreserved shares of Common Stock, (iii) the number or dollar amount of shares of Common Stock permitted to be offered and sold by the Company under Form S-3 (including General Instruction I.B.6. of Form S-3, if and for so long as applicable), (iv) the number or dollar amount of shares of Common Stock authorized from time to time to be issued and sold under this Agreement by the Company’s board of directors, a duly authorized committee thereof or a duly authorized executive committee, and notified to the Sales Agent in writing, or (v) the number or dollar amount of shares of Common Stock for which the Company has filed the ATM Prospectus or other prospectus supplement specifically relating to the offering of the Placement Shares pursuant to this Agreement. Under no circumstances shall the Company cause or request the offer or sale of any Placement Shares pursuant to this Agreement at a price lower than the minimum price authorized from time to time by the Company’s board of directors, a duly authorized committee thereof or a duly authorized executive committee, and notified to the Sales Agent in writing. Notwithstanding anything to the contrary contained herein, the parties hereto acknowledge and agree that compliance with the limitations set forth in this Section 3(b) on the number or dollar amount of Placement Shares that may be issued and sold under this Agreement from time to time shall be the sole responsibility of the Company, and that the Sales Agent shall have no obligation in connection with such compliance.
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(c) During the term of this Agreement, neither the Sales Agent nor any of its affiliates or subsidiaries shall engage in (i) any short sale of any security of the Company or (ii) any sale of any security of the Company that the Sales Agent does not own or any sale which is consummated by the delivery of a security of the Company borrowed by, or for the account of, the Sales Agent. During the term of this Agreement and notwithstanding anything to the contrary herein, the Sales Agent agrees that in no event will the Sales Agent or its affiliates engage in any market making, bidding, stabilization or other trading activity with regard to the Common Stock or related derivative securities if such activity would be prohibited under Regulation M or other anti-manipulation rules under the Exchange Act.
4. Suspension of Sales.
(a) The Company or the Sales Agent may, upon notice to the other party in writing (including by email correspondence to each of the individuals of the other party set forth on Schedule 2, if receipt of such correspondence is actually acknowledged by any of the individuals to whom the notice is sent, other than via auto-reply) or by telephone (confirmed immediately by verifiable facsimile transmission or email correspondence to each of the individuals of the other party set forth on Schedule 2), suspend any sale of Placement Shares for a period of time (a “Suspension Period”); provided, however, that such suspension shall not affect or impair either party’s obligations with respect to any Placement Shares sold hereunder prior to the receipt of such notice. Each of the parties agrees that no such notice under this Section 4 shall be effective against the other unless it is made to one of the individuals named on Schedule 2 hereto, as such schedule may be amended from time to time. During a Suspension Period, the Company shall not issue any Placement Notices and the Sales Agent shall not sell any Placement Shares hereunder. The party that issued a suspension notice shall notify the other party in writing of the Trading Day on which the Suspension Period shall expire not later than twenty-four (24) hours prior to such Trading Day.
(b) Notwithstanding any other provision of this Agreement, during any period in which the Company is in possession of material non-public information, the Company and the Sales Agent agree that (i) no sale of Placement Shares will take place, (ii) the Company shall not request the sale of any Placement Shares, and (iii) the Sales Agent shall not be obligated to sell or offer to sell any Placement Shares.
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5. Settlement.
(a) Settlement of Placement Shares. Unless otherwise specified in the applicable Placement Notice, settlement for sales of Placement Shares will occur on the first (1st) Trading Day (or such day as is industry practice or required by law for regular-way trading) following the date on which such sales are made (a “Settlement Date”). The amount of proceeds to be delivered to the Company on a Settlement Date against receipt of the Placement Shares sold (the “Net Proceeds”) will be equal to the aggregate sales price received by the Sales Agent at which such Placement Shares were sold, after deduction for (i) the Sales Agent’s discount, commission or other compensation for such sales payable by the Company pursuant to Section 2 hereof, (ii) any other amounts due and payable by the Company to the Sales Agent hereunder pursuant to Section 7(g) (Expenses) hereof, and (iii) any transaction fees, trading expenses or execution fees imposed by any clearing organization or any governmental or self-regulatory organization and any other fees or expenses incurred by the Sales Agent in respect of such sales.
(b) Delivery of Placement Shares. On or before each Settlement Date, the Company will, or will cause its transfer agent to, electronically transfer the Placement Shares being sold by crediting the Sales Agent’s or its designee’s account (provided the Sales Agent shall have given the Company written notice of such designee prior to the Settlement Date) at The Depository Trust Company through its Deposit and Withdrawal at Custodian System or by such other means of delivery as may be mutually agreed upon by the parties hereto which in all cases shall be freely tradable, transferable, registered shares in good deliverable form. On each Settlement Date, the Sales Agent will deliver the related Net Proceeds in same day funds to an account designated by the Company on, or prior to, the Settlement Date. The Company agrees that if the Company, or its transfer agent (if applicable), defaults in its obligation to deliver duly authorized Placement Shares on a Settlement Date, through no fault of the Sales Agent, the Company agrees that in addition to and in no way limiting the rights and obligations set forth in Section 9(a) (Indemnification and Contribution) hereto, the Company will (i) hold the Sales Agent, its directors, officers, members, partners, employees and agents of the Sales Agent, each broker dealer affiliate of the Sales Agent, and each person, if any, who (A) controls the Sales Agent within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act or (B) is controlled by or is under common control with the Sales Agent (each, a “Sales Agent Affiliate”), and the Sales Agent’s clearing organization, harmless against any loss, claim, damage, or reasonable and documented expense (including reasonable legal fees and expenses), as incurred, arising out of or in connection with such default by the Company or its transfer agent (if applicable) and (ii) pay to the Sales Agent any commission, discount, or other compensation to which it would otherwise have been entitled absent such default.
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6. Representations and Warranties of the Company. The Company represents and warrants to, and agrees with, the Sales Agent that as of each Applicable Time (as defined in Section 22(a)), unless such representation, warranty or agreement specifies a different time or times:
(a) Compliance with Registration Requirements. The Registration Statement and any post-effective amendment to the Registration Statement filed pursuant to Rule 462(b) (a “Rule 462(b) Registration Statement”) have been declared effective by the Commission under the Securities Act and the Company is and continues to be eligible to use such Form S-3. The Company has complied to the Commission’s satisfaction with all requests of the Commission for additional or supplemental information related to the Registration Statement and the Prospectus. No stop order suspending the effectiveness of the Registration Statement or any Rule 462(b) Registration Statement is in effect and no proceedings for such purpose have been instituted or are pending or, to the knowledge of the Company, are contemplated or threatened by the Commission. The Registration Statement and, assuming no act or omission on the part of the Sales Agent that would make such statements untrue, the offer and sale of the Placement Shares as contemplated hereby meet the requirements of Rule 415 under the Securities Act and comply in all material respects with said Rule. In the section entitled “Plan of Distribution” in the ATM Prospectus, the Company has named A.G.P./Alliance Global Partners as an agent that the Company has engaged in connection with the transactions contemplated by this Agreement. The Company was not and is not an “ineligible issuer” as defined in Rule 405 under the Securities Act.
(b) No Misstatement or Omission. The Registration Statement and any post-effective amendment thereto, at the time it became or becomes effective, complied or will comply in all material respects with the Securities Act. The Prospectus, and any amendment or supplement thereto, on the date of such Prospectus or amendment or supplement, complied or will comply in all material respects with the Securities Act. The Registration Statement and any post-effective amendment thereto, at the time it became or becomes effective, did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Prospectus, as amended or supplemented, as of its date, did not and, as of each Point of Sale and each Settlement Date, will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The representations and warranties set forth in the two immediately preceding sentences do not apply to statements in or omissions from the Registration Statement or any post-effective amendment thereto, or the Prospectus, or any amendments or supplements thereto, made in reliance upon and in conformity with information relating to the Sales Agent furnished to the Company in writing by the Sales Agent expressly for use therein. “Point of Sale” means, for a Placement, the time at which an acquiror of Placement Shares entered into a contract, binding upon such acquiror, to acquire such Placement Shares.
(c) Offering Materials Furnished to the Sales Agent. Copies of the Registration Statement, the Prospectus, and all amendments or supplements thereto and all documents incorporated by reference therein that were filed with the Commission on or prior to the date of this Agreement, have been delivered, or are publicly available through EDGAR, to the Sales Agent. Each Prospectus delivered to the Sales Agent for use in connection with the sale of the Placement Shares pursuant to this Agreement will be identical to the version of such Prospectus filed with the Commission via EDGAR, except to the extent permitted by Regulation S-T.
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(d) Distribution of Offering Material By the Company. The Company has not distributed and will not distribute, prior to the completion of the Sales Agent’s distribution of the Placement Shares, any offering material in connection with the offering and sale of the Placement Shares other than the Prospectus or the Registration Statement.
(e) The Sales Agreement. This Agreement has been duly authorized, executed and delivered by the Company, and constitutes a valid, legal, and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as rights to indemnity hereunder may be limited by federal or state securities laws and except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally, and subject to general principles of equity. The Company has full corporate power and authority to enter into this Agreement and to authorize, issue and sell the Placement Shares as contemplated by this Agreement. This Agreement conforms in all material respects to the descriptions thereof in the Registration Statement and the Prospectus.
(f) Authorization of the Placement Shares. The Placement Shares, when issued and paid for as contemplated herein, will be validly issued, fully paid and nonassessable, will be issued in compliance with all applicable securities laws, and will be free of preemptive, registration or similar rights, and will conform to the description of the Common Stock contained in the Registration Statement and the Prospectus.
(g) No Applicable Registration or Other Similar Rights. Except for certain warrants to purchase shares of common stock at an exercise price of $0.46 expiring on January 27, 2026, warrants to purchase shares of common stock at an exercise price of $0.85 expiring on August 3, 2026 and warrants to purchase shares of common stock at an exercise price of $0.85 expiring on February 1, 2026, to the Company’s knowledge, there are no persons with registration or other similar rights to have any equity or debt securities registered for sale under the Registration Statement or included in the offering contemplated by this Agreement, except for such rights as have been duly waived.
(h) No Material Adverse Change. Except as otherwise disclosed in the Prospectus, subsequent to the respective dates as of which information is given in the Prospectus: (i) there has been no material adverse change in the business, properties, prospects, operations, condition (financial or otherwise) or results of operations of the Company (any such change is called a “Material Adverse Change”), which, individually or in the aggregate, has had or would reasonably be expected to result in a Material Adverse Change; (ii) the Company has not incurred any material liability or obligation, indirect, direct or contingent, not in the ordinary course of business nor entered into any material transaction or agreement not in the ordinary course of business; (iii) there has been no dividend or distribution of any kind declared, paid or made by the Company; (iv) no officer or director of the Company has resigned from any position with the Company; and (v) there has not been any Material Adverse Change in the Company’s long-term debt.
(i) Independent Accountants. To the knowledge of the Company, Assure CPA, LLC, whose report is filed with the Commission and included or incorporated by reference in the Registration Statement and the Prospectus, is an independent registered public accounting firm as required by the Securities Act and the Public Company Accounting Oversight Board.
(j) Financial Statements. The financial statements filed with the Commission as a part of the Registration Statement and included in the Prospectus, together with the related notes and schedules, present fairly, in all material respects, the consolidated financial position of the Company and its subsidiaries as of and at the dates indicated and the results of their operations and cash flows for the periods specified. Such financial statements and supporting schedules have been prepared in conformity, in all material respects, with U.S. generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods involved, except as may be expressly stated in the related notes thereto. No other financial statements or supporting schedules are required to be included in or incorporated by reference in the Registration Statement or the Prospectus.
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(k) Forward-Looking Statements. No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) contained in the Registration Statement or the Prospectus has been made or reaffirmed by the Company without a reasonable basis or has been disclosed by the Company other than in good faith.
(l) Statistical and Marketing-Related Data. The statistical and market-related data included or incorporated by reference in each of the Registration Statement and the Prospectus are based on or derived from sources that the Company reasonably and in good faith believes are reliable and accurate or represent the Company’s good faith estimates that are made on the basis of data derived from such sources.
(m) XBRL. The interactive data in eXtensible Business Reporting Language included or incorporated by reference in the Registration Statement fairly presents the information called for in all material respects and has been prepared in accordance with the Commission’s rules and guidelines applicable thereto.
(n) Incorporation and Good Standing of the Company. The Company is a corporation duly incorporated and validly existing under the laws of the State of Montana. The Company has requisite corporate power to carry on its business as described in the Prospectus. The Company is duly qualified to transact business and is in good standing in all jurisdictions in which the conduct of its business requires such qualification; except where the failure to be so qualified or to be in good standing would not result in a Material Adverse Change. The Company does not own or control, directly or indirectly, any corporation, association or other entity other than the subsidiaries listed in Exhibit 21.1 to the Company’s Annual Report on Form 10-K for the most recently ended fiscal year and other than (i) those subsidiaries not required to be listed on Exhibit 21.1 by Item 601 of Regulation S-K under the Exchange Act and (ii) those subsidiaries formed since the last day of the most recently ended fiscal year.
(o) Capital Stock Matters. All issued and outstanding securities of the Company issued prior to the transactions contemplated by this Agreement have been duly authorized and validly issued and are fully paid and non-assessable; the holders thereof have no rights of rescission with respect thereto, and are not subject to personal liability by reason of being such holders; and none of such securities were issued in violation of the preemptive rights of any holders of any security of the Company or similar contractual rights granted by the Company. The authorized shares of Common Stock conform in all material respects to all statements relating thereto contained in the Registration Statement and the Prospectus. The offers and sales of the outstanding shares of Common Stock were at all relevant times either registered under the Securities Act and the applicable state securities or “blue sky” laws or, based in part on the representations and warranties of the purchasers of such shares, exempt from such registration requirements. The description of the Company’s stock option, stock bonus and other stock plans or arrangements, and the options or other rights granted thereunder, as described in the Registration Statement and the Prospectus, accurately and fairly present, in all material respects, the information required to be shown with respect to such plans, arrangements, options and rights.
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(p) Non-Contravention of Existing Instruments; No Further Authorizations or Approvals Required. The Company’s execution, delivery and performance of this Agreement and consummation of the transactions contemplated hereby or by the Registration Statement and the Prospectus (including the issuance and sale of the Placement Shares and the use of the proceeds from the sale of the Placement Shares as described in the Prospectus under the caption “Use of Proceeds”) will not (A) result in a material violation of any existing applicable law, rule, regulation, judgment, order or decree of any Governmental Entity as of the date hereof, (B) conflict with, result in any violation or breach of, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any right of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) (a “Default Acceleration Event”) of, any agreement, lease, credit facility, debt, note, bond, mortgage, indenture or other instrument (“Contract”) or obligation or other understanding to which the Company or any subsidiary is a party or by which any property or asset of the Company or any subsidiary is bound or affected, except to the extent that such conflict, default, or Default Acceleration Event is not reasonably likely to result in a Material Adverse Change, or (C) result in a breach or violation of any of the terms and provisions of, or constitute a default under, the Company’s articles of incorporation (as the same may be amended or restated from time to time) or bylaws (as the same may be amended or restated from time to time). Neither the Company nor any of its subsidiaries is in violation, breach or default under its articles of incorporation (as the same may be amended or restated from time to time) or bylaws (as the same may be amended or restated from time to time). Except as otherwise disclosed in the Prospectus, neither the Company nor any of its subsidiaries nor, to its knowledge, any other party is in violation, breach or default of any Contract that has resulted in or could reasonably be expected to result in a Material Adverse Change. Each approval, consent, order, authorization, designation, declaration or filing by or with any regulatory, administrative or other governmental body necessary in connection with the execution and delivery by the Company of this Agreement and the performance of the Company of the transactions herein contemplated has been obtained or made and is in full force and effect, except (i) with respect to any Applicable Time at which the Sales Agent would not be able to rely on Rule 5110(h)(1)(C) of the Financial Industry Regulatory Authority, Inc. (“FINRA”), such additional steps as may be required by FINRA, (ii) filings with the Commission required under the Securities Act or the Exchange Act, or filings with the Exchange pursuant to the rules and regulations of the Exchange, in each case that are contemplated by this Agreement to be made after the date of this Agreement, and (iii) such additional steps as may be necessary to qualify the Common Stock for sale by the Sales Agent under state securities or Blue Sky laws.
(q) No Material Actions or Proceedings. There is no action, suit, proceeding, inquiry, arbitration, investigation, litigation or governmental proceeding pending or, to the Company’s knowledge, threatened against, or involving the Company or, to the Company’s knowledge, any executive officer or director, which has not been disclosed in the Registration Statement and the Prospectus which is required to be disclosed, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Change.
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(r) Labor Disputes. No labor dispute with the employees of the Company exists or, to the knowledge of the Company, is imminent. The Company is not aware that any key employee or significant group of employees of the Company plans to terminate employment with the Company.
(s) Compliance with Certain Applicable Laws. The Company: (A) is and at all times has been in compliance with all statutes, rules, or regulations applicable to the mining, ownership, testing, development, manufacture, packaging, processing, use, distribution, marketing, labeling, promotion, sale, offer for sale, storage, import, export or disposal of any product manufactured or distributed by the Company (“Applicable Laws”), except as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Change; (B) has not received any warning letter, untitled letter or other correspondence or notice from any governmental authority alleging or asserting noncompliance with any Applicable Laws or any licenses, certificates, approvals, clearances, authorizations, permits and supplements or amendments thereto required by any such Applicable Laws (“Authorizations”); (C) possesses all material Authorizations and such Authorizations are valid and in full force and effect and are not in material violation of any term of any such Authorizations; (D) has not received notice of any claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from any governmental authority or third party alleging that any product operation or activity is in violation of any Applicable Laws or Authorizations and has no knowledge that any such governmental authority or third party is considering any such claim, litigation, arbitration, action, suit, investigation or proceeding; (E) has not received notice that any governmental authority has taken, is taking or intends to take action to limit, suspend, modify or revoke any Authorizations and has no knowledge that any such governmental authority is considering such action; and (F) has filed, obtained, maintained or submitted all material reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments as required by any Applicable Laws or Authorizations and that all such reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments were complete and correct on the date filed (or were corrected or supplemented by a subsequent submission).
(t) Tax Law Compliance. The Company and its subsidiaries have filed all returns (as hereinafter defined) required to be filed with taxing authorities prior to the date hereof or has duly obtained extensions of time for the filing thereof. The Company has paid all taxes (as hereinafter defined) shown as due on such returns that were filed and has paid all taxes imposed on or assessed against the Company. The provisions for taxes payable, if any, shown on the financial statements filed with or as part of or incorporated by reference in the Registration Statement are sufficient for all accrued and unpaid taxes, whether or not disputed, and for all periods to and including the dates of such consolidated financial statements. Other than as disclosed in the Registration Statement and the Prospectus, (i) no issues have been raised (and are currently pending) by any taxing authority in connection with any of the returns or taxes asserted as due from the Company or its subsidiaries, and (ii) no waivers of statutes of limitation with respect to the returns or collection of taxes have been given by or requested from the Company or its subsidiaries. There are no tax liens against the assets, properties or business of the Company or its subsidiaries. The term “taxes” means all federal, state, local, foreign and other net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatever, together with any interest and any penalties, additions to tax or additional amounts with respect thereto. The term “returns” means all returns, declarations, reports, statements and other documents required to be filed in respect to taxes.
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(u) Company Not an “Investment Company”. The Company is not, and will not be, either after receipt of payment for the Placement Shares or after the application of the proceeds therefrom as described under “Use of Proceeds” in the Registration Statement or the Prospectus, required to register as an “investment company” under the Investment Company Act of 1940, as amended (the “Investment Company Act”).
(v) Insurance. The Company and each of its subsidiaries carries, or is entitled to the benefits of insurance in such amounts and covering such risks, which the Company believes are adequate for the conduct of its business and the value of its properties and as is customary for companies engaged in similar businesses in similar industries, and all such insurance is in full force and effect. Neither the Company nor any of its subsidiaries has reason to believe that it will not be able (i) to renew its existing insurance coverage as and when such policies expire or (ii) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not result in a Material Adverse Change.
(w) No Price Stabilization or Manipulation. The Company has not taken, directly or indirectly (without giving any effect to the activities of the Sales Agent), any action designed to or that might cause or result in stabilization or manipulation of the price of the Common Stock or of any “reference security” (as defined in Rule 100 of Regulation M under the Exchange Act (“Regulation M”)) with respect to the Common Stock, whether to facilitate the sale or resale of the Placement Shares or otherwise, and has taken no action which would directly or indirectly violate Regulation M.
(x) Related Party Transactions. There are no business relationships or related party transactions involving the Company or any other person required to be described in the Registration Statement and the Prospectus that have not been described as required pursuant to the Securities Act.
(y) Exchange Act Compliance. The documents incorporated or deemed to be incorporated by reference in the Registration Statement, the Prospectus or any amendment or supplement thereto, at the time they were or hereafter are filed with the Commission under the Exchange Act, complied and will comply in all material respects with the requirements of the Exchange Act, and, when read together with the other information in the Prospectus, at each Point of Sale and each Settlement Date, will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
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(z) Conformity of Issuer Free Writing Prospectus. Each Issuer Free Writing Prospectus conformed or will conform in all material respects to the requirements of the Securities Act on the date of first use, and the Company has complied or will comply with any filing requirements applicable to such Issuer Free Writing Prospectus pursuant to the Securities Act. Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times through the completion of the public offer and sale of the Placement Shares, did not, does not and will not include any information that conflicted, conflicts or will conflict with the information contained in the Registration Statement or the Prospectus, including any document incorporated by reference therein that has not been superseded or modified. The Company has not made any offer relating to the Placement Shares that would constitute an Issuer Free Writing Prospectus without the prior written consent of the Sales Agent. The Company has retained in accordance with the Securities Act all Issuer Free Writing Prospectuses that were not required to be filed pursuant to the Securities Act.
(aa) Title to Personal Property. To the Company’s knowledge and except as set forth in the Registration Statement or the Prospectus, the Company and its subsidiaries have good and valid title to all personal property described in the Registration Statement or Prospectus as being owned by them, in each case free and clear of all liens, encumbrances and claims, except those matters that would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Change. Any personal property described in the Registration Statement or Prospectus as being leased by the Company and any of its subsidiaries is held by them under valid, existing and enforceable leases, except those that would not be reasonably expected, individually or in the aggregate, to have a Material Adverse Change.
(bb) Title to Real Property Other than Mining Claims. To the Company’s knowledge and except as set forth in the Registration Statement or the Prospectus or such as in the aggregate does not currently result in, and is not reasonably expected in the future to result in, a Material Adverse Change, the Company and each of its subsidiaries have good and marketable title to their respective owned interests in real property (“Owned Property”) other than Mining Rights (as defined in Section 22(c)), free and clear of all liens, security interests, pledges, charges, encumbrances, mortgages and restrictions (collectively, “Liens”), other than (i) Permitted Liens (as defined in Section 22(d)) and (ii) any Liens described in the Registration Statement or the Prospectus. No real property owned, leased, licensed, or used by the Company or any Subsidiary lies in an area which is, or to the knowledge of the Company will be, subject to restrictions which would prohibit, and no statements of facts relating to the actions or inaction of another person or entity or his or its ownership, leasing, licensing, or use of any real or personal property exists or will exist which would prevent, the continued effective ownership, leasing, licensing, exploration, development or production or use of such real property in the business of the Company or any such Subsidiary as presently conducted, except as may be described in the Registration Statement and the Prospectus or such as in the aggregate does not currently result in, and is not reasonably expected in the future to result in, a Material Adverse Change. The Company and each of its subsidiaries have such consents, easements, rights of way or licenses from any person (“rights-of-way”) as are necessary to enable the Company and each of its subsidiaries to conduct its business as currently conducted, in the manner described in the Registration Statement and the Prospectus, subject to such qualifications as may be set forth in the Registration Statement and the Prospectus, and except for such rights-of-way the lack of which would not have, individually or in the aggregate, a Material Adverse Change.
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(cc) Material Properties. The Material Properties (as defined in Section 22(b)) are the only material properties in which the Company or any of the subsidiaries has an interest; the Company and each of the subsidiaries holds Mining Rights in respect of the minerals located on the Material Properties in which the Company or any of the subsidiaries has an interest under valid, subsisting and enforceable title documents or other recognized and enforceable agreements or instruments, sufficient to permit the Company or any of the subsidiaries to explore for and exploit the minerals relating thereto; the Company and each of the subsidiaries has all necessary surface rights, access rights and other necessary rights and interests relating to the Material Properties in which the Company or any of the subsidiaries has an interest granting the Company or any of the subsidiaries the right and ability to explore for and exploit minerals and metals for development purposes as are appropriate in view of the rights and interest therein of the Company and the subsidiaries, as applicable, with only such exceptions as do not materially interfere with the use made by the Company or any of the subsidiaries of the rights or interest so held, and each of the proprietary interests or rights and each of the documents, agreements and instruments and obligations relating thereto referred to above is currently in good standing in all material respects in the name of the Company or a Subsidiary, except where the invalidity of any of the applicable property interests would not have a Material Adverse Change (and provided that nothing in this Agreement shall be deemed a representation (a) that any of the Material Properties contains a discovery of valuable minerals, (b) as to the validity of any of the Material Properties comprising mill sites, or (c) that the Company or any Subsidiary has established or is maintaining pedis possessio rights with respect to any of their mining claims).
(dd) Mining Rights. The Mining Rights of the Company in respect of the Material Properties are in good standing, are valid, subsisting and enforceable, other than as set out in the Registration Statement and Prospectus and except where the invalidity of any of the applicable Mining Rights would not have a Material Adverse Change (and provided that nothing in this Agreement shall be deemed a representation (a) that any of the Mining Rights contains a discovery of valuable minerals, (b) as to the validity of any of Mining Rights comprising mill sites, or (c) that the Company or any subsidiary has established or is maintaining pedis possessio rights with respect to any of the Mining Rights), and, other than as set forth in the Registration Statement and Prospectus, are free and clear of any material Liens (other than Permitted Liens) or charges. Other than as set out in the Registration Statement and Prospectus, no material commission, royalty, license fee or similar payment is payable in respect of any of them. To the Company’s knowledge, no other material property rights are necessary for the conduct of the Company’s business as currently carried on as of the date hereof; and there are no material restrictions on the ability of the Company to use, transfer or otherwise exploit any such property rights. The Company is the holder of Mining Rights necessary to carry on the activities of the Company as currently conducted. Mining Rights held by the Company cover the areas required by the Company for such purposes.
(ee) Mining Agreements. Any and all of the agreements and other documents and instruments pursuant to which the Company holds the Material Properties are valid and subsisting agreements, documents or instruments in full force and effect, enforceable in accordance with the terms thereof, the Company is not in default of any of the material provisions of any such agreements, documents or instruments, nor to the knowledge of the Company has any such default been alleged, except in each case as would not reasonably be expected to have a Material Adverse Change on the Company, and the Material Properties are not subject to any right of first refusal or similar purchase or acquisition rights.
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(ff) Assessments on Mining Claims. All claim maintenance fees required to be paid in relation to the material mining claims and mill sites of the Company and the subsidiaries in order to maintain their respective interests therein, if any, have been paid to date and the Company and each of the subsidiaries has complied in all material respects with all applicable governmental laws, regulations and policies in this regard as well as with regard to legal, contractual obligations to third parties in this regard, except in respect of mining claims and mill sites that the Company or any of the subsidiaries intends to abandon or relinquish and except for any non-compliance which would not either individually or in the aggregate have a Material Adverse Change.
(gg) Mining Operations. To the Company’s knowledge, all mining operations on the Material Properties of the Company and the subsidiaries have been conducted in all material respects in accordance with good mining and engineering practices and all applicable workers’ compensation and health and safety and workplace laws, regulations and policies have been duly complied with in all material respects.
(hh) Compliance with Environmental Laws. To the Company’s knowledge, the Company and its subsidiaries are in compliance with all foreign, federal, state and local rules, laws and regulations relating to the use, treatment, storage and disposal of hazardous or toxic substances or waste and protection of health and safety or the environment which are applicable to their businesses (“Environmental Laws”), except where the failure to comply would not, singularly or in the aggregate, result in a Material Adverse Change. There has been no storage, generation, transportation, handling, treatment, disposal, discharge, emission, or other release of any kind of toxic or other wastes or other hazardous substances by, due to, or caused by the Company or any of its subsidiaries (or, to the Company’s knowledge, any other entity for whose acts or omissions the Company or any of its subsidiaries is or may otherwise be liable) upon any of the property now or previously owned or leased by the Company or any of its subsidiaries, or upon any other property, in violation of any law, statute, ordinance, rule, regulation, order, judgment, decree or permit or which would, under any law, statute, ordinance, rule (including rule of common law), regulation, order, judgment, decree or permit, give rise to any liability, except for any violation or liability which would not have, singularly or in the aggregate with all such violations and liabilities, a Material Adverse Change; and there has been no disposal, discharge, emission or other release of any kind onto such property or into the environment surrounding such property of any toxic or other wastes or other hazardous substances with respect to which the Company or any of its subsidiaries has knowledge, except for any such disposal, discharge, emission, or other release of any kind which would not have, singularly or in the aggregate with all such discharges and other releases, a Material Adverse Change. In the ordinary course of business, the Company conducts periodic reviews of the effect of Environmental Laws on its business and assets, in the course of which it identifies and evaluates associated costs and liabilities (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or governmental permits issued thereunder, any related constraints on operating activities and any potential liabilities to third parties). On the basis of such reviews, the Company has reasonably concluded that such associated costs and liabilities would not have, singularly or in the aggregate, a Material Adverse Change.
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(ii) Intellectual Property. The Company and each of its subsidiaries owns or possesses or has valid rights to use all patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights, licenses, inventions, trade secrets and similar rights (“Intellectual Property Rights”) necessary for the conduct of the business of the Company and its subsidiaries as currently carried on and as described in the Registration Statement and the Prospectus, except as disclosed in the Prospectus or except as would not be reasonably likely to result in a Material Adverse Change. To the knowledge of the Company, no action or use by the Company or any of its subsidiaries necessary for the conduct of its business as currently carried on and as described in the Registration Statement and the Prospectus will involve or give rise to any infringement of, or license or similar fees for, any Intellectual Property Rights of others, except where such action, use, license or fee is not reasonably likely to result in a Material Adverse Change. Neither the Company nor any of its subsidiaries have received any notice alleging any such infringement, fee or conflict with asserted Intellectual Property Rights of others. Except as would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Change (A) to the knowledge of the Company, there is no infringement, misappropriation or violation by third parties of any of the Intellectual Property Rights owned by the Company or any of its subsidiaries; (B) except as disclosed in the Prospectus, there is no pending or, to the knowledge of the Company, threatened action, suit, proceeding or claim by others challenging the rights of the Company or any of its subsidiaries in or to any such Intellectual Property Rights, and the Company is unaware of any facts which would form a reasonable basis for any such claim, that would, individually or in the aggregate, together with any other claims in this Section 6(ii), reasonably be expected to result in a Material Adverse Change; (C) the Intellectual Property Rights owned by the Company and any of its subsidiaries and, to the knowledge of the Company, the Intellectual Property Rights licensed to the Company have not been adjudged by a court of competent jurisdiction invalid or unenforceable, in whole or in part, and there is no pending or, to the Company’s knowledge, except as disclosed in the Prospectus, threatened action, suit, proceeding or claim by others challenging the validity or scope of any such Intellectual Property Rights, and the Company is unaware of any facts which would form a reasonable basis for any such claim that would, individually or in the aggregate, together with any other claims in this Section 6(ii), reasonably be expected to result in a Material Adverse Change; (D) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others that the Company or any of its subsidiaries infringes, misappropriates or otherwise violates any Intellectual Property Rights or other proprietary rights of others, neither the Company nor any of its subsidiaries have received any written notice of such claim and the Company is unaware of any other facts which would form a reasonable basis for any such claim that would, individually or in the aggregate, together with any other claims in this Section 6(ii), reasonably be expected to result in a Material Adverse Change; and (E) to the Company’s knowledge, no employee of the Company or any of its subsidiaries is in or has ever been in violation in any material respect of any term of any employment contract, patent disclosure agreement, invention assignment agreement, non-competition agreement, non-solicitation agreement, nondisclosure agreement or any restrictive covenant to or with a former employer where the basis of such violation relates to such employee’s employment with the Company or any of its subsidiaries, or actions undertaken by the employee while employed with the Company or any of its subsidiaries and could reasonably be expected to result, individually or in the aggregate, in a Material Adverse Change. To the Company’s knowledge, all material technical information developed by and belonging to the Company or any of its subsidiaries which has not been patented has been kept confidential. Neither the Company nor any of its subsidiaries is a party to or bound by any options, licenses or agreements with respect to the Intellectual Property Rights of any other person or entity that are required to be set forth in the Registration Statement and the Prospectus and are not described therein. The Registration Statement and the Prospectus contain in all material respects the same description of the matters set forth in the preceding sentence. None of the technology employed by the Company or its subsidiaries has been obtained or is being used by the Company or any of its subsidiaries in violation of any contractual obligation binding on the Company or any such subsidiary or, to the Company’s knowledge, any of its or its subsidiaries’ officers, directors or employees, or otherwise in violation of the rights of any persons, except for violations that would not result in a Material Adverse Change.
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(jj) Brokers. Neither the Company nor any of its subsidiaries is a party to any contract, agreement or understanding with any person (other than as contemplated by this Agreement) that would give rise to a valid claim against the Company or any of its subsidiaries or the Sales Agent for a brokerage commission, finder’s fee or like payment in connection with the offering and sale of the Placement Shares by the Sales Agent under this Agreement.
(kk) No Outstanding Loans or Other Indebtedness. There are no outstanding loans, advances (except normal advances for business expenses in the ordinary course of business) or guarantees or indebtedness by the Company or any of its subsidiaries to or for the benefit of any of the officers or directors of the Company or executive officers of any of its subsidiaries to the extent such executive officers may be deemed executive officers of the Company, or any of their respective family members, except as disclosed in the Registration Statement and the Prospectus. The Company has not directly or indirectly extended or maintained credit, arranged for the extension of credit, or renewed an extension of credit, in the form of a personal loan to or for any director or executive officer of the Company.
(ll) No Reliance. The Company has not relied upon the Sales Agent or legal counsel for the Sales Agent for any legal, tax or accounting advice in connection with the offering and sale of the Placement Shares.
(mm) Broker-Dealer Status. Neither the Company nor any of its related entities (i) is required to register as a “broker” or “dealer” in accordance with the provisions of the Exchange Act or (ii) directly or indirectly through one or more intermediaries, controls or is a “person associated with a member” or “associated person of a member” (within the meaning of Article I of the NASD Manual administered by FINRA). To the Company’s knowledge, there are no affiliations or associations between any member of FINRA and any of the Company’s officers, directors or 5% or greater security holders, except as set forth in the Registration Statement.
(nn) Public Float Calculation. At the time the Registration Statement and any Rule 462(b) Registration Statement was or will be filed with the Commission, at the time the Registration Statement and any Rule 462(b) Registration Statement was or will be declared effective by the Commission, and at the time the Company’s most recent Annual Report on Form 10-K was filed with the Commission, beginning with the fiscal year ended December 31, 2024, the Company met or will meet the then applicable requirements for the use of Form S-3 under the Securities Act. The Company is not a shell company (as defined in Rule 405) and has not been a shell company for at least 12 calendar months previously and if it has been a shell company at any time previously, has filed current Form 10 information (as defined in Instruction I.B.6. of Form S-3) with the Commission at least 12 calendar months previously reflecting its status as an entity that is not a shell company.
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(oo) FINRA Matters. To the Company’s knowledge, all of the information provided to the Sales Agent or to counsel for the Sales Agent by the Company, its counsel, its officers and directors and, to the Company’s knowledge, the holders of any securities (debt or equity) or options to acquire any securities of the Company in connection with the offering of the Placement Shares is true, complete, correct and compliant with FINRA’s rules in all material respects and any letters, filings or other supplemental information provided to FINRA pursuant to FINRA Rules or NASD Conduct Rules is true, complete and correct in all material respects. Except as disclosed in the Registration Statement and the Prospectus, to the Company’s knowledge, there is no (i) officer or director of the Company, (ii) beneficial owner of 5% or more of any class of the Company’s securities or (iii) beneficial owner of the Company’s unregistered equity securities that were acquired during the 180-day period immediately preceding the date of this Agreement that is an affiliate or associated person of a FINRA member participating in the offer, issuance and sale of the Placement Shares as contemplated by this Agreement and the Registration Statement and the Prospectus (as determined in accordance with the rules and regulations of FINRA).
(pp) Compliance with Orders. Neither the Company nor any of its subsidiaries is in violation of any material judgment, decree, or order of any court, arbitrator or other governmental authority.
(qq) Sarbanes–Oxley Act. Except as disclosed in the Registration Statement and the Prospectus, the Company is in material compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith (the “Sarbanes-Oxley Act”) that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as of the date hereof.
(rr) Disclosure Controls and Procedures. Except as set forth in the Registration Statement and the Prospectus, the Company maintains systems of “internal control over financial reporting” (as defined under Rules 13a-15 and 15d-15 under the Exchange Act) that comply with the requirements of the Exchange Act and have been designed by, or under the supervision of, their respective principal executive and principal financial officers, or persons performing similar functions, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including, but not limited to, internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences; and (v) the interactive data in eXtensible Business Reporting Language included or incorporated by reference in the Registration Statement and the Prospectus fairly present the information called for in all material respects and are prepared in accordance with the Commission’s rules and guidelines applicable thereto. Since the date of the latest audited financial statements included in the Registration Statement and the Prospectus, there has been no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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(ss) ERISA. The Company, its subsidiaries and any “employee benefit plan” (as defined under the Employee Retirement Income Security Act of 1974, as amended, and the regulations and published interpretations thereunder (collectively, “ERISA”)) established or maintained by the Company, its subsidiaries or any of their “ERISA Affiliates” (as defined below) are in compliance in all material respects with ERISA. No “reportable event” (as defined under ERISA) has occurred or is reasonably expected to occur with respect to any “employee benefit plan” established or maintained by the Company, or any of its subsidiaries or any of their ERISA Affiliates. No “employee benefit plan” established or maintained by the Company, any of its subsidiaries or any of their ERISA Affiliates, if such “employee benefit plan” were terminated, would have any “amount of unfunded benefit liabilities” (as defined under ERISA). Neither the Company nor any of its subsidiaries nor any of their ERISA Affiliates has incurred or reasonably expects to incur any material liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any “employee benefit plan” or (ii) Sections 412, 4971, 4975 or 4980B of the Code. Each “employee benefit plan” established or maintained by the Company, any of its subsidiaries or any of their ERISA Affiliates that is intended to be qualified under Section 401(a) of the Code is so qualified and, to the knowledge of the Company, nothing has occurred, whether by action or failure to act, which would cause the loss of such qualification. “ERISA Affiliate” means, with respect to the Company and each of its subsidiaries, any member of any group of organizations described in Sections 414(b),(c),(m) or (o) of the Internal Revenue Code of 1986, as amended, and the regulations and published interpretations thereunder (the “Code”) of which the Company or any of its subsidiaries is a member.
(tt) Contracts and Agreements. The agreements and documents described in the Registration Statement and the Prospectus conform in all material respects to the descriptions thereof contained therein and there are no agreements or other documents required by the Securities Act to be described in the Registration Statement and the Prospectus or to be filed with the Commission as exhibits to the Registration Statement, that have not been so described or filed. Each agreement or other instrument (however characterized or described) to which the Company or any of its subsidiaries is a party or by which it is or may be bound or affected and (i) that is referred to in the Registration Statement and the Prospectus, or (ii) is material to the Company’s or its subsidiaries’ business, has been duly authorized and validly executed by the Company, is in full force and effect in all material respects and is enforceable against the Company or any of its subsidiaries and, to the Company’s knowledge, the other parties thereto, in accordance with its terms, except as disclosed in the Prospectus or (x) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally, (y) as enforceability of any indemnification or contribution provision may be limited under the federal and state securities laws, and (z) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. None of such agreements or instruments has been assigned by the Company or its subsidiaries, and neither the Company, its subsidiaries nor, to the Company’s knowledge, any other party is in default thereunder and, to the Company’s knowledge, no event has occurred that, with the lapse of time or the giving of notice, or both, would constitute a default thereunder. To the best of the Company’s knowledge, performance by the Company or any of its subsidiaries of the material provisions of such agreements or instruments will not result in a violation of any existing applicable law, rule, regulation, judgment, order or decree of any governmental agency or court, domestic or foreign, having jurisdiction over the Company, its subsidiaries or any of their assets or businesses (each, a “Governmental Entity”), including, without limitation, those relating to environmental laws and regulations.
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(uu) No Unlawful Contributions or Other Payments. No payments or inducements have been made or given, directly or indirectly, to any federal or local official or candidate for, any federal or state office in the United States or foreign offices by the Company, any of its subsidiaries or any of their officers or directors, or, to the knowledge of the Company, by any of its employees or agents or any other person in connection with any opportunity, contract, permit, certificate, consent, order, approval, waiver or other authorization relating to the business of the Company or any of its subsidiaries, except for such payments or inducements as were lawful under applicable laws, rules and regulations. Neither the Company, any of its subsidiaries, nor, to the knowledge of the Company, any director, officer, agent, employee or other person associated with or acting on behalf of the Company or any of its subsidiaries, (i) has used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any government official or employee from corporate funds; or (iii) made any bribe, unlawful rebate, payoff, influence payment, kickback or other unlawful payment in connection with the business of the Company.
(vv) Foreign Corrupt Practices Act. None of the Company, any of its subsidiaries or, to the knowledge of the Company, any director, officer, agent, employee, affiliate or other person acting on behalf of the Company or any of its subsidiaries, is aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (collectively, the “FCPA”), including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA. The Company and its subsidiaries have conducted their respective businesses in compliance with the FCPA and have instituted and maintains policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.
(ww) Money Laundering Laws. The operations of the Company and its subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
(xx) OFAC. None of the Company, any of its subsidiaries or, to the knowledge of the Company, any director, officer, agent, employee, affiliate or person acting on behalf of the Company or any of its subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.
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(yy) Exchange Listing. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act and is currently listed on the Exchange under the trading symbol “UAMY”. Except as disclosed in the Registration Statement and the Prospectus, there is no action pending by the Company or, to the Company’s knowledge, the Exchange to delist the Common Stock from the Exchange. The Company has no intention to delist the Common Stock from the Exchange or to deregister the Common Stock under the Exchange Act, in either case, at any time during the period commencing on the date of this Agreement through and including the 90th calendar day after the termination of this Agreement. As of each Applicable Time, other than as of the date hereof, the Placement Shares have been approved for listing on the Exchange. The issuance and sale of the Placement Shares under this Agreement does not contravene the rules and regulations of the Exchange.
(zz) Margin Rules. Other than as disclosed in the Registration Statement or the Prospectus, the Company owns no “margin securities” as that term is defined in Regulation U of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), and none of the proceeds from the issuance, sale and delivery of the Placement Shares as contemplated by this Agreement and as described in the Registration Statement and the Prospectus will be used, directly or indirectly, for the purpose of purchasing or carrying any margin security, for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry any margin security or for any other purpose which might cause any of the shares of Common Stock to be considered a “purpose credit” within the meanings of Regulation T, U or X of the Federal Reserve Board.
(aaa) Underwriter Agreements. The Company is not a party to any agreement with an agent or underwriter for any other “at the market” or continuous equity transaction.
(bbb) Board of Directors. The qualifications of the persons serving as board members of the Company and the overall composition of the Company’s Board of Directors comply with the applicable requirements of the Exchange Act and the Sarbanes-Oxley Act and the listing rules of the Exchange applicable to the Company. At least one member of the Audit Committee of the Board of Directors of the Company qualifies as an “audit committee financial expert,” as such term is defined under Regulation S-K and the listing rules of the Exchange. In addition, at least a majority of the persons serving on the Board of Directors of the Company qualify as “independent,” as defined under the listing rules of the Exchange.
(ccc) No Integration. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause the offer and sale of the Placement Shares hereunder to be integrated with prior offerings by the Company for purposes of the Securities Act that would require the registration of any such securities under the Securities Act.
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(ddd) No Material Defaults. The Company has not defaulted on any installment on indebtedness for borrowed money or on any rental on one or more long-term leases, which defaults, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Change. The Company has not filed a report pursuant to Section 13(a) or 15(d) of the Exchange Act since the filing of its last Annual Report on Form 10-K, indicating that it (i) has failed to pay any dividend or sinking fund installment on preferred stock or (ii) has defaulted on any installment on indebtedness for borrowed money or on any rental on one or more long-term leases, which defaults, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Change.
(eee) Books and Records. The minute books of the Company have been made available to the Sales Agent and counsel for the Sales Agent, to the extent requested by the Sales Agent and counsel for the Sales Agent, and such books (i) contain a substantially complete summary of all meetings and material actions of the board of directors (including each board committee) and stockholders of the Company (or analogous governing bodies and interest holders, as applicable) since January 1, 2023 through the date of the latest meeting and action, and (ii) accurately in all material respects reflect all transactions referred to in such minutes.
(fff) Regulations. The disclosures in the Registration Statement and the Prospectus concerning the effects of federal, state, local and all foreign regulation on the Company’s business in the past and as currently contemplated are correct in all material respects and no other such regulations are required to be disclosed in the Registration Statement and the Prospectus which are not so disclosed.
(ggg) Confidentiality and Non-Competitions. To the Company’s knowledge, no director, officer, key employee or consultant of the Company is subject to any confidentiality, non-disclosure, non-competition agreement or non-solicitation agreement with any employer or prior employer that could reasonably be expected to materially affect his ability to be and act in his respective capacity of the Company or be expected to result in a Material Adverse Change.
(hhh) Cybersecurity. (i)(x) To the Company’s knowledge, there has been no security breach or other compromise of or relating to any of the Company’s information technology and computer systems, networks, hardware, software, data (including the data of its respective customers, employees, suppliers, vendors and any third party data maintained by or on behalf of it), equipment or technology (collectively, “IT Systems and Data”) and (y) the Company has not been notified of, and has no knowledge of any event or condition that would reasonably be expected to result in, any security breach or other compromise to its IT Systems and Data; (ii) to the Company’s knowledge, the Company is presently in compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy and security of IT Systems and Data and to the protection of such IT Systems and Data from unauthorized use, access, misappropriation or modification, except as would not, individually or in the aggregate, have a Material Adverse Change; (iii) the Company has implemented and maintained commercially reasonable safeguards to maintain and protect its material confidential information and the integrity, continuous operation, redundancy and security of all IT Systems and Data; and (iv) the Company has implemented backup and disaster recovery technology consistent with commercially reasonable industry standards and practices.
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Any certificate signed by an officer of the Company and delivered to the Sales Agent or to counsel for the Sales Agent pursuant to or in connection with this Agreement shall be deemed to be a representation and warranty by the Company to the Sales Agent as to the matters set forth therein.
The Company acknowledges that the Sales Agent and, for purposes of the opinions to be delivered pursuant to Section 7 hereof, counsel to the Company and counsel to the Sales Agent, will rely upon the accuracy and truthfulness of the foregoing representations and hereby consents to such reliance.
7. Covenants of the Company. The Company covenants and agrees with the Sales Agent that:
(a) Registration Statement Amendments. After the date of this Agreement and during any period in which a Prospectus relating to any Placement Shares is required to be delivered by the Sales Agent under the Securities Act (including in circumstances where such requirement may be satisfied pursuant to Rule 153 or Rule 172 under the Securities Act), (i) the Company will notify the Sales Agent promptly of the time when any subsequent amendment to the Registration Statement, other than documents incorporated by reference, has been filed with the Commission and/or has become effective or any subsequent supplement to the Prospectus has been filed and of any request by the Commission for any amendment or supplement to the Registration Statement or Prospectus or for additional information; (ii) the Company will prepare and file with the Commission, promptly upon the Sales Agent’s reasonable request, any amendments or supplements to the Registration Statement or Prospectus that, in the Sales Agent’s reasonable opinion, may be necessary or advisable in connection with the distribution of the Placement Shares by the Sales Agent (provided, however, that the failure of the Sales Agent to make such request shall not relieve the Company of any obligation or liability hereunder, or affect the Sales Agent’s right to rely on the representations and warranties made by the Company in this Agreement, and provided, further, that the only remedy the Sales Agent shall have with respect to the failure to make such filing shall be to cease making sales under this Agreement until such amendment or supplement is filed); (iii) the Company will not file any amendment or supplement to the Registration Statement or Prospectus, other than documents incorporated by reference, relating to the Placement Shares or a security convertible into the Placement Shares unless a copy thereof has been submitted to the Sales Agent within a reasonable period of time before the filing and the Sales Agent has not reasonably objected thereto (provided, however, that the failure of the Sales Agent to make such objection shall not relieve the Company of any obligation or liability hereunder, or affect the Sales Agent’s right to rely on the representations and warranties made by the Company in this Agreement, and provided, further, that the only remedy the Sales Agent shall have with respect to the failure by the Company to obtain such consent shall be to cease making sales under this Agreement); (iv) the Company will furnish to the Sales Agent at the time of filing thereof a copy of any document that upon filing is deemed to be incorporated by reference into the Registration Statement or Prospectus, except for those documents available via EDGAR; and (v) the Company will cause each amendment or supplement to the Prospectus, other than documents incorporated by reference, to be filed with the Commission as required pursuant to the applicable paragraph of Rule 424(b) of the Securities Act (without reliance on Rule 424(b)(8) of the Securities Act) or, in the case of any documents incorporated by reference, to be filed with the Commission as required pursuant to the Exchange Act, within the time period prescribed.
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(b) Notice of Commission Stop Orders. The Company will advise the Sales Agent, promptly after it receives notice or obtains knowledge thereof, of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any notice objecting to, or other order preventing or suspending the use of, the Prospectus, of the suspension of the qualification of the Placement Shares for offering or sale in any jurisdiction, or of the initiation of any proceeding for any such purpose or any examination pursuant to Section 8(e) of the Securities Act, or if the Company becomes the subject of a proceeding under Section 8A of the Securities Act in connection with the offering of the Placement Shares; and it will promptly use its commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal if such a stop order should be issued. Until such time as any stop order is lifted, the Sales Agent shall cease making offers and sales under this Agreement.
(c) Delivery of Prospectus; Subsequent Changes. During any period in which a Prospectus relating to the Placement Shares is required to be delivered by the Sales Agent under the Securities Act with respect to a pending sale of the Placement Shares (including in circumstances where such requirement may be satisfied pursuant to Rule 153 or Rule 172 under the Securities Act), the Company will comply in all material respects with all requirements imposed upon it by the Securities Act, as from time to time in force, and to file on or before their respective due dates all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14, 15(d) or any other provision of or under the Exchange Act. If during such period any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances then existing, not misleading, or if during such period it is necessary to amend or supplement the Registration Statement or Prospectus to comply with the Securities Act, the Company will promptly notify the Sales Agent to suspend the offering of Placement Shares during such period and the Company will promptly amend or supplement the Registration Statement or Prospectus (at the expense of the Company) so as to correct such statement or omission or effect such compliance; provided, however, that the Company may delay any such amendment or supplement if, in the reasonable judgment of the Company, it is in the best interests of the Company to do so.
(d) Listing of Placement Shares. During any period in which the Prospectus relating to the Placement Shares is required to be delivered by the Sales Agent under the Securities Act with respect to a pending sale of the Placement Shares (including in circumstances where such requirement may be satisfied pursuant to Rule 153 or Rule 172 under the Securities Act), the Company will use its commercially reasonable efforts to cause the Placement Shares to be listed on the Exchange and to qualify the Placement Shares for sale under the securities laws of such jurisdictions as the Sales Agent reasonably designates and to continue such qualifications in effect so long as required for the distribution of the Placement Shares; provided, however, that the Company shall not be required in connection therewith to qualify as a foreign corporation or dealer in securities or file a general consent to service of process in any jurisdiction.
(e) Delivery of Registration Statement and Prospectus. The Company will furnish to the Sales Agent and its counsel (at the expense of the Company) electronic copies of the Registration Statement, the Prospectus (including all documents incorporated by reference therein) and all amendments and supplements to the Registration Statement or Prospectus that are filed with the Commission during any period in which a Prospectus relating to the Placement Shares is required to be delivered under the Securities Act (including all documents filed with the Commission during such period that are deemed to be incorporated by reference therein), in each case as soon as reasonably practicable and in such quantities as the Sales Agent may from time to time reasonably request and, at the Sales Agent’s request, will also furnish electronic copies of the Prospectus to each exchange or market on which sales of the Placement Shares may be made; provided, however, that the Company shall not be required to furnish any document (other than the Prospectus) to the Sales Agent to the extent such document is available on EDGAR.
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(f) Earnings Statement. The Company will make generally available to its security holders as soon as practicable, but in any event not later than 15 months after the end of the Company’s current fiscal quarter, an earnings statement of the Company and its subsidiaries (which need not be audited) covering a 12-month period that complies with Section 11(a) and Rule 158 of the Securities Act. The terms “earnings statement” and “make generally available to its security holders” shall have the meanings set forth in Rule 158 under the Securities Act.
(g) Expenses. The Company, whether or not the transactions contemplated hereunder are consummated or this Agreement is terminated in accordance with the provisions of Section 11 hereunder, will pay the following expenses all incident to the performance of its obligations hereunder, including, but not limited to, expenses relating to (i) the preparation and filing of the Registration Statement and each amendment and supplement thereto, of each Prospectus and of each amendment and supplement thereto, (ii) the preparation, issuance and delivery of the Placement Shares, including any stock or other transfer taxes and any stamp or other duties payable upon the sale, issuance or delivery of the Placement Shares to the Sales Agent, (iii) the fees and disbursements of the counsel, accountants and other advisors to the Company in connection with the transactions contemplated by this Agreement; (iv) the qualification of the Placement Shares under securities laws in accordance with the provisions of Section 7(d) of this Agreement, including filing fees (provided, however, that any fees or disbursements of counsel for the Sales Agent in connection therewith shall be paid by the Sales Agent except as set forth in (ix) below), (v) the printing and delivery to the Sales Agent of copies of the Prospectus and any amendments or supplements thereto, and of this Agreement, (vi) the fees and expenses incurred in connection with the listing or qualification of the Placement Shares for trading on the Exchange, (vii) the fees and expenses of the transfer agent or registrar for the Common Stock; (viii) filing fees and expenses, if any, of the Commission and the FINRA Corporate Financing Department (provided, however, that any fees or disbursements of counsel for the Sales Agent in connection therewith shall be paid by the Sales Agent except as set forth in (ix) below), (ix) the Company shall reimburse the Sales Agent for its reasonable and documented out-of-pocket expenses (including but not limited to the Sales Agent’s transaction costs and the reasonable and documented fees and expenses of counsel to the Sales Agent) in an amount not to exceed $60,000 (the “Sales Agent Expenses”) which Sales Agent Expenses shall be due and payable prior to the first Placement pursuant to this Agreement, provided further that the Company shall reimburse the Sales Agent for its reasonable and documented out-of-pocket expenses related to quarterly maintenance of the Agreement (including but not limited to the Sales Agent’s transaction costs and the reasonable and documented fees and expenses of counsel to the Sales Agent) on an quarterly basis in an amount not to exceed $10,000 which shall be due and payable prior to each Representation Date following the filing of an annual report on Form 10-K or quarterly report on Form 10-Q.
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(h) Use of Proceeds. The Company will use the Net Proceeds as described in the Prospectus in the section entitled “Use of Proceeds.”
(i) Notice of Other Sales. The Company (I) shall provide the Sales Agent notice as promptly as reasonably possible before it offers to sell, contracts to sell, sells, grants any option to sell or otherwise disposes of any shares of Common Stock (other than Placement Shares offered pursuant to the provisions of this Agreement) or securities convertible into or exchangeable for Common Stock, or warrants or any rights to purchase or acquire Common Stock, during the period beginning on the fifth (5th) Trading Day immediately prior to the date on which any Placement Notice is delivered to the Sales Agent hereunder and ending on the fifth (5th) Trading Day immediately following the final Settlement Date with respect to Placement Shares sold pursuant to such Placement Notice (or, if the Placement Notice has been terminated or suspended prior to the sale of all Placement Shares covered by a Placement Notice, the fifth (5th) Trading Day immediately following the date of such suspension or termination), and (II) will not directly or indirectly engage in any other “at the market” or continuous equity transaction offer to sell, sell, contract to sell, grant any option to sell or otherwise dispose of any shares of Common Stock (other than the Placement Shares offered pursuant to this Agreement) or securities convertible into or exchangeable for shares of Common Stock, warrants or any rights to purchase or acquire, shares of Common Stock prior to the termination of this Agreement without the prior written consent of the Sales Agent; provided, however, that such notice requirements or restrictions, as the case may be, will not be required in connection with the Company’s issuance or sale of (i) shares of Common Stock, options to purchase shares of Common Stock, other equity awards or shares of Common Stock issuable upon the exercise of options or other equity awards, pursuant to any employee or director stock option or benefits plan, stock ownership plan or dividend reinvestment plan of the Company whether now in effect or hereafter implemented, (ii) shares of Common Stock issuable upon exchange, conversion or redemption of securities or the exercise of warrants, options or other rights in effect or outstanding, and disclosed in filings by the Company available on EDGAR or otherwise in writing (including by email correspondence) to the Sales Agent and (iii) shares of Common Stock or securities convertible into or exchangeable for shares of Common Stock as consideration for mergers, acquisitions, sale or purchase of assets or other business combinations or strategic alliances occurring after the date of this Agreement which are not issued for capital raising purposes. Notwithstanding the foregoing, the Company shall provide the Sales Agent notice at least two (2) days prior to pursuing any private or public offerings of equity and/or other securities (including debt securities) in one or more transactions.
(j) Change of Circumstances. The Company will, at any time during a fiscal quarter in which the Company intends to tender a Placement Notice or sell Placement Shares, advise the Sales Agent promptly after it shall have received notice or obtained knowledge thereof, of any information or fact that would alter or affect in any material respect any opinion, certificate, letter or other document provided to the Sales Agent pursuant to this Agreement.
(k) Due Diligence Cooperation. The Company will cooperate with any reasonable due diligence review conducted by the Sales Agent or its agents in connection with the transactions contemplated hereby, including, without limitation, providing information and making available documents and senior corporate officers, during regular business hours and at the Company’s principal offices, as the Sales Agent may reasonably request.
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(l) Required Filings Relating to Placement of Placement Shares. The Company shall set forth in each Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed by the Company with the Commission in respect of any quarter in which sales of Placement Shares were made by or through the Sales Agent under this Agreement, with regard to the relevant period, the amount of Placement Shares sold to or through the Sales Agent, the Net Proceeds to the Company and the compensation payable by the Company to the Sales Agent with respect to such sales of Placement Shares. To the extent that the filing of a prospectus supplement with the Commission with respect to any sales of Placement Shares becomes required under Rule 424(b) under the Securities Act, the Company agrees that, on or before such dates as the Securities Act shall require, the Company will (i) file a prospectus supplement with the Commission under the applicable paragraph of Rule 424(b) under the Securities Act, which prospectus supplement will set forth, with regard to the relevant period, the amount of Placement Shares sold to or through the Sales Agent, the Net Proceeds to the Company and the compensation payable by the Company to the Sales Agent with respect to such Placement Shares, and (ii) deliver such number of copies of each such prospectus supplement to each exchange or market on which such sales were effected as may be required by the rules or regulations of such exchange or market. The Company shall afford the Sales Agent and its counsel with a reasonable opportunity to review and comment upon, shall consult with the Sales Agent and its counsel on the form and substance of, and shall give due consideration to all such comments from the Sales Agent or its counsel on, any such filing prior to the issuance, filing or public disclosure thereof; provided, however, that the Company shall not be required to submit for review (A) any portion of any periodic reports filed with the Commission under the Exchange Act other than the specific disclosure relating to any sales of Placement Shares and (B) any disclosure contained in periodic reports filed with the Commission under the Exchange Act if it shall have previously provided the same disclosure for review in connection with a previous filing.
(m) Representation Dates; Certificate. On or prior to the date the first Placement Notice is given hereunder and each time the Company (i) files the Prospectus relating to the Placement Shares or amends or supplements the Registration Statement or the Prospectus relating to the Placement Shares (other than (A) a prospectus supplement filed in accordance with Section 7(l) of this Agreement or (B) a supplement or amendment that relates to an offering of securities other than the Placement Shares) by means of a post-effective amendment, sticker, or supplement but not by means of incorporation of document(s) by reference to the Registration Statement or the Prospectus relating to the Placement Shares; (ii) files an annual report on Form 10-K under the Exchange Act (including any Form 10-K/A containing amended financial information or a material amendment to the previously filed Form 10-K); (iii) files a quarterly report on Form 10-Q under the Exchange Act; or (iv) files a current report on Form 8-K containing amended financial information (other than an earnings release, to “furnish” information pursuant to Items 2.02 or 7.01 of Form 8-K or to provide disclosure pursuant to Item 8.01 of Form 8-K relating to the reclassification of certain properties as discontinued operations in accordance with Statement of Financial Accounting Standards No. 144) under the Exchange Act (each date of filing of one or more of the documents referred to in clauses (i) through (iv) shall be a “Representation Date”), the Company shall furnish the Sales Agent within three (3) Trading Days after each Representation Date with a certificate, in the form attached hereto as Exhibit 7(m). The requirement to provide a certificate under this Section 7(m) shall be waived for any Representation Date occurring at a time at which no Placement Notice is pending, which waiver shall continue until the earlier to occur of the date the Company delivers a Placement Notice hereunder (which for such calendar quarter shall be considered a Representation Date) and the next occurring Representation Date; provided, however, that such waiver shall not apply for any Representation Date on which the Company files its annual report on Form 10-K. Notwithstanding the foregoing, if the Company subsequently decides to sell Placement Shares following a Representation Date when the Company relied on such waiver and did not provide the Sales Agent with a certificate under this Section 7(m), then before the Company delivers the Placement Notice or the Sales Agent sells any Placement Shares, the Company shall provide the Sales Agent with a certificate, in the form attached hereto as Exhibit 7(m), dated the date of the Placement Notice.
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(n) Legal Opinion. On or prior to the date the first Placement Notice is given hereunder, the Company shall cause to be furnished to the Sales Agent (i) the written opinion and negative assurance letter of Duane Morris LLP, as corporate counsel to the Company (“Company Corporate Counsel”) and (ii) the written opinion of Hall Booth Smith, P.C., Montana counsel to the Company (“Montana Company Counsel”) or other counsel reasonably satisfactory to the Sales Agent (together with Company Corporate Counsel and Montana Company Counsel, “Company Counsel”). Thereafter, within three (3) Trading Days after each Representation Date with respect to which the Company is obligated to deliver a certificate pursuant to Section 7(m) for which no waiver is applicable pursuant to Section 7(m), the Company shall cause to be furnished to the Sales Agent the written opinion and a negative assurance letter of Company Counsel substantially in the forms previously agreed between the Company and the Sales Agent, modified, as necessary, to relate to the Registration Statement and the Prospectus as then amended or supplemented; provided, however, that if Company Counsel has previously furnished to the Sales Agent such written opinion and negative assurance letter of such counsel, in each case substantially in the forms previously agreed between the Company and the Sales Agent, then each Company Counsel may, in respect of any future Representation Date, furnish the Sales Agent with a letter signed by such counsel (each, a “Reliance Letter”) in lieu of such opinion and negative assurance letter of such counsel to the effect that the Sales Agent may rely on the prior opinion and negative assurance letter of such counsel delivered pursuant to this Section 7(n) to the same extent as if it were dated the date of such Reliance Letter (except that statements in such prior opinion and negative assurance shall be deemed to relate to the Registration Statement and the Prospectus as amended or supplemented to the date of such Reliance Letter).
(o) Comfort Letter. On or prior to the date the first Placement Notice is given hereunder and within three (3) Trading Days after each subsequent Representation Date with respect to which the Company is obligated to deliver a certificate pursuant to Section 7(m) for which no waiver is applicable pursuant to Section 7(m), the Company shall cause its independent accountants to furnish the Sales Agent letters (the “Comfort Letters”), dated the date that the Comfort Letter is delivered, in form and substance satisfactory to the Sales Agent, (i) confirming that they are an independent registered public accounting firm within the meaning of the Securities Act, the Exchange Act and the rules and regulations of the PCAOB and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of such date, the conclusions and findings of such firm with respect to the financial information and other matters ordinarily covered by accountants’ “comfort letters” to the Sales Agent in connection with registered public offerings (the first such letter, the “Initial Comfort Letter”) and (iii) updating the Initial Comfort Letter with any information that would have been included in the Initial Comfort Letter had it been given on such date and modified as necessary to relate to the Registration Statement and the Prospectus, as amended and supplemented to the date of such letter.
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(p) Market Activities. The Company will not, directly or indirectly, (i) take any action designed to cause or result in, or that constitutes or might reasonably be expected to constitute, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Common Stock or (ii) sell, bid for, or purchase shares of Common Stock in violation of Regulation M, or pay anyone any compensation for soliciting purchases of the Placement Shares other than the Sales Agent.
(q) Insurance. The Company and its subsidiaries shall maintain, or cause to be maintained, insurance in such amounts and covering such risks as the Company and its subsidiaries reasonably believe are adequate for the business in which they are engaged.
(r) Investment Company Act. The Company will conduct its affairs in such a manner so as to reasonably ensure that neither it nor its subsidiaries or, after giving effect to the offering and sale of the Placement Shares and the application of proceeds therefrom as described in the Prospectus, will be, an “investment company” within the meaning of such term under the Investment Company Act.
(s) Securities Act and Exchange Act. The Company will use its reasonable best efforts to comply with all requirements imposed upon it by the Securities Act and the Exchange Act as from time to time in force, so far as necessary to permit the continuance of sales of, or dealings in, the Placement Shares as contemplated by the provisions hereof and the Prospectus.
(t) No Offer to Sell. Other than the Prospectus and an Issuer Free Writing Prospectus approved in advance by the Company and the Sales Agent in its capacity as principal or agent hereunder, neither the Sales Agent nor the Company (including its agents and representatives, other than the Sales Agent in its capacity as such) will make, use, prepare, authorize, approve or refer to any written communication (as defined in Rule 405 under the Securities Act), required to be filed with the Commission, that constitutes an offer to sell or solicitation of an offer to buy Placement Shares hereunder.
(u) Sarbanes-Oxley Act. The Company will use its reasonable best efforts to comply with all effective applicable provisions of the Sarbanes-Oxley Act.
(v) Transfer Agent. The Company shall maintain, at its sole expense, a registrar and transfer agent for the Common Stock.
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8. Conditions to the Sales Agent’s Obligations. The obligations of the Sales Agent hereunder with respect to a Placement will be subject to the continuing accuracy and completeness of the representations and warranties made by the Company herein, to the due performance by the Company of its obligations hereunder, to the completion by the Sales Agent of a due diligence review satisfactory to the Sales Agent in its reasonable judgment, and to the continuing satisfaction (or waiver by the Sales Agent in its sole discretion) of the following additional conditions:
(a) Registration Statement Effective. The Registration Statement shall be effective and shall be available for the sale of all Placement Shares contemplated to be issued by any Placement Notice.
(b) Securities Act Filings Made. All filings with the Commission required by Rule 424(b) or Rule 433 under the Securities Act to have been filed prior to the issuance of any Placement Notice hereunder shall have been made within the applicable time period prescribed for such filing by Rule 424(b) (without reliance on Rule 424(b)(8) of the Securities Act) or Rule 433, as applicable.
(c) No Material Notices. None of the following events shall have occurred and be continuing to the Company’s knowledge: (i) receipt by the Company or any of its subsidiaries of any request for additional information from the Commission or any other federal or state governmental authority during the period of effectiveness of the Registration Statement, the response to which would require any post-effective amendments or supplements to the Registration Statement or the Prospectus; (ii) the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iii) receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Placement Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; (iv) the occurrence of any event that makes any material statement made in the Registration Statement or the Prospectus or any material document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in the Registration Statement, related Prospectus or such documents so that, in the case of the Registration Statement, it will not contain any materially untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and, that in the case of the Prospectus, it will not contain any materially untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(d) No Misstatement or Material Omission. The Sales Agent shall not have advised the Company that the Registration Statement or Prospectus, or any amendment or supplement thereto, contains an untrue statement of fact that in the Sales Agent’s reasonable opinion is material, or omits to state a fact that in the Sales Agent’s reasonable opinion is material and is required to be stated therein or is necessary to make the statements therein not misleading.
(e) Material Changes. Except as contemplated in the Prospectus, or disclosed in the Company’s reports filed with the Commission, there shall not have been any material adverse change in the authorized capital stock of the Company or any Material Adverse Change or any development that could reasonably be expected to result in a Material Adverse Change, the effect of which, in the case of any such action by a rating organization described above, in the reasonable judgment of the Sales Agent (without relieving the Company of any obligation or liability it may otherwise have), is so material as to make it impracticable or inadvisable to proceed with the offering of the Placement Shares on the terms and in the manner contemplated by this Agreement and the Prospectus.
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(f) Representation Certificate. The Sales Agent shall have received the certificate required to be delivered pursuant to Section 7(m) on or before the date on which delivery of such certificate is required pursuant to Section 7(m).
(g) Legal Opinion. The Sales Agent shall have received the opinion and negative assurance letter of Company Counsel required to be delivered pursuant Section 7(n) on or before the date on which such delivery of such opinion and negative assurance is required pursuant to Section 7(n).
(h) Comfort Letter. The Sales Agent shall have received the Comfort Letter required to be delivered pursuant Section 7(o) on or before the date on which such delivery of such Comfort Letter is required pursuant to Section 7(o).
(i) Officer’s Certificate. On or prior to the date the first Placement Notice is given hereunder, the Sales Agent shall have received a certificate, signed on behalf of the Company by its chief financial officer, certifying as to (i) the certificate of incorporation of the Company (as the same may be amended or restated from time to time), (ii) the bylaws of the Company (as the same may be amended or restated from time to time), (iii) the resolutions of the Board of Directors of the Company (or a committee thereof) authorizing the execution, delivery and performance of this Agreement and the issuance of the Placement Shares and (iv) the incumbency of the officers duly authorized to execute this Agreement and the other documents contemplated by this Agreement.
(j) No Suspension. Trading in the Common Stock shall not have been suspended on the Exchange and the Common Stock shall not have been delisted from the Exchange.
(k) Other Materials. On each date on which the Company is required to deliver a certificate pursuant to Section 7(m), the Company shall have furnished to the Sales Agent such appropriate further opinions, certificates, letters and documents as the Sales Agent may have reasonably requested. All such opinions, certificates, letters and other documents shall have been in compliance with the provisions hereof. The Company will furnish the Sales Agent with such conformed copies of such opinions, certificates, letters and other documents as the Sales Agent shall have reasonably requested.
(l) Approval for Listing. The Placement Shares shall either have been (i) approved for listing on the Exchange, subject only to notice of issuance, or (ii) the Company shall have filed an application for listing of the Placement Shares on the Exchange at, or prior to, the issuance of any Placement Notice.
(m) No Termination Event. There shall not have occurred any event that would permit the Sales Agent to terminate this Agreement pursuant to Section 11(a).
(n) FINRA. The Sales Agent shall have received a letter from the Corporate Financing Department of FINRA confirming that such department has determined to raise no objection with respect to the fairness or reasonableness of the terms and arrangements related to the sale of the Placement Shares pursuant to this Agreement.
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9. Indemnification and Contribution.
(a) Company Indemnification. The Company agrees to indemnify and hold harmless the Sales Agent, the directors, officers, members, partners, employees and agents of the Sales Agent each broker dealer affiliate of the Sales Agent, and each Sales Agent Affiliate, if any, from and against any and all losses, claims, liabilities, expenses and damages (including, but not limited to, any and all reasonable investigative, legal and other expenses incurred in connection with, and any and all amounts paid in settlement (in accordance with Section 9(c)) of, any action, suit or proceeding between any of the indemnified parties and any indemnifying parties or between any indemnified party and any third party, or otherwise, or any claim asserted), as and when incurred, to which the Sales Agent, or any such person, may become subject under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, liabilities, expenses or damages arise out of or are based, directly or indirectly, on (x) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus or any amendment or supplement thereto or in any Issuer Free Writing Prospectus or in any application or other document executed by or on behalf of the Company or based on written information furnished by or on behalf of the Company filed in any jurisdiction in order to qualify the Common Stock under the securities laws thereof or filed with the Commission, (y) the omission or alleged omission to state in any such document a material fact required to be stated in it or necessary to make the statements in it not misleading or (z) any breach by any of the indemnifying parties of any of their respective representations, warranties and agreements contained in this Agreement; provided, however, that this indemnity agreement shall not apply to the extent that such loss, claim, liability, expense or damage arises from the sale of the Placement Shares pursuant to this Agreement and is caused directly by an untrue statement or omission made in reliance upon and in strict conformity with written information relating to the Sales Agent and furnished to the Company by the Sales Agent expressly for inclusion in any document as described in clause (x) of this Section 9(a). This indemnity agreement will be in addition to any liability that the Company might otherwise have.
(b) The Sales Agent Indemnification. The Sales Agent agrees to indemnify and hold harmless the Company and its directors and each officer of the Company that signed the Registration Statement, and each person, if any, who (i) controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act or (ii) is controlled by or is under common control with the Company (each, a “Company Affiliate”) from and against any and all losses, claims, liabilities, expenses and damages (including, but not limited to, any and all reasonable investigative, legal and other expenses incurred in connection with, and any and all amounts paid in settlement (in accordance with Section 9(c)) of, any action, suit or proceeding between any of the indemnified parties and any indemnifying parties or between any indemnified party and any third party, or otherwise, or any claim asserted), as and when incurred, to which any such Company Affiliate, may become subject under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, liabilities, expenses or damages arise out of or are based, directly or indirectly, on (x) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus or any amendment or supplement thereto, or (y) the omission or alleged omission to state in any such document a material fact required to be stated in it or necessary to make the statements in it not misleading; provided, however, that this indemnity agreement shall apply only to the extent that such loss, claim, liability, expense or damage is caused directly by an untrue statement or omission made in reliance upon and in strict conformity with written information relating to the Sales Agent and furnished to the Company by the Sales Agent expressly for inclusion in any document as described in clause (x) of this Section 9(b).
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(c) Procedure. Any party that proposes to assert the right to be indemnified under this Section 9 will, promptly after receipt of notice of commencement of any action against such party in respect of which a claim is to be made against an indemnifying party or parties under this Section 9, notify each such indemnifying party of the commencement of such action, enclosing a copy of all papers served, but the omission so to notify such indemnifying party will not relieve the indemnifying party from (i) any liability that it might have to any indemnified party otherwise than under this Section 9 and (ii) any liability that it may have to any indemnified party under the foregoing provision of this Section 9 unless, and only to the extent that, such omission results in the forfeiture of substantive rights or defenses by the indemnifying party. If any such action is brought against any indemnified party and it notifies the indemnifying party of its commencement, the indemnifying party will be entitled to participate in and, to the extent that it elects by delivering written notice to the indemnified party promptly after receiving notice of the commencement of the action from the indemnified party, jointly with any other indemnifying party similarly notified, to assume the defense of the action, with counsel reasonably satisfactory to the indemnified party, and after notice from the indemnifying party to the indemnified party of its election to assume the defense, the indemnifying party will not be liable to the indemnified party for any legal or other expenses except as provided below and except for the reasonable costs of investigation subsequently incurred by the indemnified party in connection with the defense. The indemnified party will have the right to employ its own counsel in any such action, but the fees, expenses and other charges of such counsel will be at the expense of such indemnified party unless (1) the employment of counsel by the indemnified party has been authorized in writing by the indemnifying party, (2) the indemnified party has reasonably concluded (based on advice of counsel) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, (3) a conflict or potential conflict exists (based on advice of counsel to the indemnified party) between the indemnified party and the indemnifying party (in which case the indemnifying party will not have the right to direct the defense of such action on behalf of the indemnified party) or (4) the indemnifying party has not in fact employed counsel to assume the defense of such action within a reasonable time after receiving notice of the commencement of the action, in each of which cases the reasonable fees, disbursements and other charges of counsel will be at the expense of the indemnifying party or parties. It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm admitted to practice in such jurisdiction at any one time for all such indemnified party or parties. All such fees, disbursements and other charges will be reimbursed by the indemnifying party promptly as they are incurred. An indemnifying party will not, in any event, be liable for any settlement of any action or claim effected without its written consent. No indemnifying party shall, without the prior written consent of each indemnified party, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding relating to the matters contemplated by this Section 9 (whether or not any indemnified party is a party thereto), unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising or that may arise out of such claim, action or proceeding.
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(d) Contribution. In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in the foregoing paragraphs of this Section 9 is applicable in accordance with its terms but for any reason is held to be unavailable from the Company or the Sales Agent, the Company and the Sales Agent will contribute to the total losses, claims, liabilities, expenses and damages (including any investigative, legal and other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted, but after deducting any contribution received by the Company from persons other than the Sales Agent, such as persons who control the Company within the meaning of the Securities Act, officers of the Company who signed the Registration Statement and directors of the Company, who also may be liable for contribution) to which the Company and the Sales Agent may be subject in such proportion as shall be appropriate to reflect the relative benefits received by the Company on the one hand and the Sales Agent on the other. The relative benefits received by the Company on the one hand and the Sales Agent on the other hand shall be deemed to be in the same proportion as the total Net Proceeds from the sale of the Placement Shares received by the Company bear to the total compensation received by the Sales Agent from the sale of Placement Shares on behalf of the Company. If, but only if, the allocation provided by the foregoing sentence is not permitted by applicable law, the allocation of contribution shall be made in such proportion as is appropriate to reflect not only the relative benefits referred to in the foregoing sentence but also the relative fault of the Company, on the one hand, and the Sales Agent, on the other, with respect to the statements or omission that resulted in such loss, claim, liability, expense or damage, or action in respect thereof, as well as any other relevant equitable considerations with respect to such offering. Such relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or the Sales Agent, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Sales Agent agree that it would not be just and equitable if contributions pursuant to this Section 9(d) were to be determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, liability, expense, or damage, or action in respect thereof, referred to above in this Section 9(d)shall be deemed to include, for the purpose of this Section 9(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim to the extent consistent with Section 9(c) hereof. Notwithstanding the foregoing provisions of this Section 9(d), the Sales Agent shall not be required to contribute any amount in excess of the commissions received by it under this Agreement and no person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 9(d), any person who controls a party to this Agreement within the meaning of the Securities Act will have the same rights to contribution as that party (and any officers, directors, members, partners, employees or agents of the Sales Agent and each broker dealer affiliate of the Sales Agent will have the same rights to contribution as the Sales Agent), and each officer of the Company who signed the Registration Statement and each director of the Company will have the same rights to contribution as the Company, subject in each case to the provisions hereof. Any party entitled to contribution, promptly after receipt of notice of commencement of any action against such party in respect of which a claim for contribution may be made under this Section 9(d), will notify any such party or parties from whom contribution may be sought, but the omission to so notify will not relieve that party or parties from whom contribution may be sought from any other obligation it or they may have under this Section 9(d) except to the extent that the failure to so notify such other party materially prejudiced the substantive rights or defenses of the party from whom contribution is sought. Except for a settlement entered into pursuant to the last sentence of Section 9(c) hereof, no party will be liable for contribution with respect to any action or claim settled without its written consent if such consent is required pursuant to Section 9(c) hereof.
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10. Representations and Agreements to Survive Delivery. The indemnity and contribution agreements contained in Section 9 of this Agreement and all representations and warranties of the Company herein or in certificates delivered pursuant hereto shall survive, as of their respective dates, regardless of (i) any investigation made by or on behalf of the Sales Agent, any controlling person of the Sales Agent, or the Company (or any of their respective officers, directors, members or controlling persons), (ii) delivery and acceptance of the Placement Shares and payment therefor or (iii) any termination of this Agreement.
11. Termination.
(a) The Sales Agent shall have the right by giving notice as hereinafter specified at any time to terminate this Agreement if (i) any Material Adverse Change, or any development that could reasonably be expected to result in a Material Adverse Change has occurred that, in the reasonable judgment of the Sales Agent, may materially impair the ability of the Sales Agent to sell the Placement Shares hereunder, (ii) the Company shall have failed, refused or been unable to perform any agreement on its part to be performed hereunder; provided, however, in the case of any failure of the Company to deliver (or cause another person to deliver) any certification, opinion, or letter required under Sections 7(m), 7(n), 7(o) or 7(p), the Sales Agent’s right to terminate shall not arise unless such failure to deliver (or cause to be delivered) continues for more than thirty (30) days from the date such delivery was required, (iii) any other condition of the Sales Agent’s obligations hereunder is not fulfilled, or (iv) any suspension or limitation of trading in the Placement Shares or in securities generally on the Exchange shall have occurred (including automatic halt in trading pursuant to market-decline triggers, other than those in which solely program trading is temporarily halted), or a major disruption of securities settlements or clearing services in the United States shall have occurred, or minimum prices for trading have been fixed on the Exchange. Any such termination shall be without liability of any party to any other party except that the provisions of Section 7(g) (Expenses), Section 9 (Indemnification and Contribution), Section 10 (Representations and Agreements to Survive Delivery), Section 11(f), Section 16 (Applicable Law; Consent to Jurisdiction) and Section 17 (Waiver of Jury Trial) hereof shall remain in full force and effect notwithstanding such termination. If the Sales Agent elects to terminate this Agreement as provided in this Section 11(a), the Sales Agent shall provide the required notice as specified in Section 12 (Notices).
(b) The Company shall have the right, by giving five (5) days’ notice as hereinafter specified in Section 12, to terminate this Agreement in its sole discretion at any time after the date of this Agreement. Any such termination shall be without liability of any party to any other party except that the provisions of Section 7(g), Section 9, Section 10, Section 11(f), Section 16 and Section 17 hereof shall remain in full force and effect notwithstanding such termination.
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(c) The Sales Agent shall have the right, by giving five (5) days’ notice as hereinafter specified in Section 12, to terminate this Agreement in its sole discretion at any time after the date of this Agreement. Any such termination shall be without liability of any party to any other party except that the provisions of Section 7(g), Section 9, Section 10, Section 11(f), Section 16 and Section 17 hereof shall remain in full force and effect notwithstanding such termination.
(d) Unless earlier terminated pursuant to this Section 11, this Agreement shall automatically terminate upon the issuance and sale of all of the Placement Shares to or through the Sales Agent on the terms and subject to the conditions set forth herein; provided that the provisions of Section 7(g), Section 9, Section 10, Section 11(f), Section 16 and Section 17 hereof shall remain in full force and effect notwithstanding such termination.
(e) This Agreement shall remain in full force and effect unless terminated pursuant to Sections 11(a), (b), (c) or (d) above or otherwise by mutual agreement of the parties; provided, however, that any such termination by mutual agreement shall in all cases be deemed to provide that Section 7(g), Section 9, Section 10, Section 11(f), Section 16 and Section 17 shall remain in full force and effect.
(f) Any termination of this Agreement shall be effective on the date specified in such notice of termination; provided, however, that such termination shall not be effective until the close of business on the date of receipt of such notice by the Sales Agent or the Company, as the case may be. If such termination shall occur prior to the Settlement Date for any sale of Placement Shares, such termination shall not become effective until the close of business on such Settlement Date and such Placement Shares shall settle in accordance with the provisions of this Agreement.
12. Notices. All notices or other communications required or permitted to be given by any party to any other party pursuant to the terms of this Agreement shall be in writing, unless otherwise specified, and if sent to the Sales Agent, shall be delivered to:
A.G.P./Alliance Global Partners
590 Madison Avenue
New York, NY 10022
Attention: Tom Higgins
Email: atm@allianceg.com
with a copy (which shall not constitute notice) to:
Sullivan & Worcester LLP
1251 Avenue of the Americas
New York, NY 10020
Attention: Ron Ben-Bassat
Telephone: (212) 660-3000
Email: rbenbassat@sullivanlaw.com
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and if to the Company, shall be delivered to:
United States Antimony Corporation
P.O. Box 540308
Dallas, TX 75354
Attention: Gary C. Evans
Email: gevans@usantimony.com
with a copy (which shall not constitute notice) to:
Duane Morris LLP
1540 Broadway
New York, NY 10036
Attention: Dean Colucci
Telephone: (973) 424-2020
Email: dmcolucci@duanemorris.com
Each party may change such address for notices by sending to the other party to this Agreement written notice of a new address for such purpose. Each such notice or other communication shall be deemed given (i) when delivered personally, by email or by verifiable facsimile transmission (with an original to follow) on or before 4:30 p.m., New York City time, on a Business Day or, if such day is not a Business Day, on the next succeeding Business Day, (ii) on the next Business Day after timely delivery to a nationally-recognized overnight courier and (iii) on the Business Day actually received if deposited in the U.S. mail (certified or registered mail, return receipt requested, postage prepaid). For purposes of this Agreement, “Business Day” shall mean any day on which the Exchange and commercial banks in the City of New York are open for business.
An electronic communication (“Electronic Notice”) shall be deemed written notice for purposes of this Section 12 if sent to the electronic mail address specified by the receiving party under separate cover. Electronic Notice shall be deemed received at the time the party sending Electronic Notice receives confirmation of receipt by the receiving party (other than pursuant to auto-reply). Any party receiving Electronic Notice may request and shall be entitled to receive the notice on paper, in a nonelectronic form (“Nonelectronic Notice”) which shall be sent to the requesting party within ten (10) days of receipt of the written request for Nonelectronic Notice.
13. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Company and the Sales Agent and their respective successors and permitted assigns and, as to Sections 5(b) and 9, the other indemnified parties specified therein. References to any of the parties contained in this Agreement shall be deemed to include the successors and permitted assigns of such party. Nothing in this Agreement, express or implied, is intended to confer upon any other person any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. Neither party may assign its rights or obligations under this Agreement without the prior written consent of the other party; provided, however, that the Sales Agent may assign its rights and obligations hereunder to an affiliate of the Sales Agent without obtaining the Company’s consent.
14. Adjustments for Share Splits. The parties acknowledge and agree that all share-related numbers contained in this Agreement shall be adjusted to take into account any share split, share dividend or similar event effected with respect to the Common Stock.
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15. Entire Agreement; Amendment; Severability. This Agreement (including all schedules and exhibits attached hereto and Placement Notices issued pursuant hereto) and any other writing entered into by the parties relating to this Agreement constitutes the entire agreement and supersedes all other prior and contemporaneous agreements and undertakings, both written and oral, among the parties hereto with regard to the subject matter hereof. Neither this Agreement nor any term hereof may be amended except pursuant to a written instrument executed by the Company and the Sales Agent. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable as written by a court of competent jurisdiction, then such provision shall be given full force and effect to the fullest possible extent that it is valid, legal and enforceable, and the remainder of the terms and provisions herein shall be construed as if such invalid, illegal or unenforceable term or provision was not contained herein, but only to the extent that giving effect to such provision and the remainder of the terms and provisions hereof shall be in accordance with the intent of the parties as reflected in this Agreement.
16. Applicable Law; Consent to Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York, without regard to the principles of conflicts of laws. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection with any transaction contemplated hereby, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof (certified or registered mail, return receipt requested) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.
17. Waiver of Jury Trial. The Company and the Sales Agent each hereby irrevocably waives any right it may have to a trial by jury in respect of any claim based upon or arising out of this Agreement or any transaction contemplated hereby.
18. Absence of Fiduciary Relationship. The Company acknowledges and agrees that:
(a) the Sales Agent is acting solely as agent in connection with the sale of the Placement Shares contemplated by this Agreement and the process leading to such transactions, and no fiduciary or advisory relationship between the Company or any of its respective affiliates, stockholders (or other equity holders), creditors or employees or any other party, on the one hand, and the Sales Agent, on the other hand, has been or will be created in respect of any of the transactions contemplated by this Agreement, irrespective of whether the Sales Agent has advised or is advising the Company on other matters, and the Sales Agent has no obligation to the Company with respect to the transactions contemplated by this Agreement, except the obligations expressly set forth in this Agreement;
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(b) the Company is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated by this Agreement;
(c) the Sales Agent has not provided any legal, accounting, regulatory or tax advice with respect to the transactions contemplated by this Agreement, and the Company has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate;
(d) the Company has been advised and is aware that the Sales Agent and its affiliates are engaged in a broad range of transactions which may involve interests that differ from those of the Company and that the Sales Agent has no obligation to disclose such interests and transactions to the Company by virtue of any fiduciary, advisory or agency relationship; and
(e) the Company waives, to the fullest extent permitted by law, any claims it may have against the Sales Agent, for breach of fiduciary duty or alleged breach of fiduciary duty and agrees that the Sales Agent shall have no liability (whether direct or indirect, in contract, tort or otherwise) to the Company in respect of such a fiduciary claim or to any person asserting a fiduciary duty claim on behalf of or in right of the Company, including stockholders, partners, employees or creditors of the Company.
19. Use of Information. The Sales Agent may not provide any information gained in connection with this Agreement and the transactions contemplated by this Agreement, including due diligence, to any third party other than its legal counsel advising it on this Agreement unless expressly approved by the Company in writing.
20. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed Agreement by one party to the other may be made by facsimile, email or other means of electronic transmission.
21. Effect of Headings; Knowledge of the Company. The section and Exhibit headings herein are for convenience only and shall not affect the construction hereof. All references in this Agreement to the “knowledge of the Company” or the “Company’s knowledge” or similar qualifiers shall mean the actual knowledge of the directors and officers of the Company, after due inquiry.
22. Definitions. As used in this Agreement, the following term has the meaning set forth below:
(a) “Applicable Time” means the date of this Agreement, each Representation Date, each date on which a Placement Notice is given, each Point of Sale, and each Settlement Date.
(b) “Material Properties” means the properties listed in Item 2 in the Company’s most recent Annual Report on Form 10-K as may be further updated in the Company’s subsequent filings with the SEC that are incorporated by reference into the Registration Statement and Prospectus.
(c) “Mining Rights” means, without limitation, freehold title, fee title, leases, concessions, patented mining claims and mill sites, mining claims and mill sites, prospecting and exploration rights, mining and mineral rights, in respect of the Material Properties, or other conventional property or proprietary interests or rights, recognized in the jurisdiction in which the Material Properties are located.
(d) “Permitted Liens” means (i) the mortgages, deeds of trusts and related security interests described in the Registration Statement and Prospectus, (ii) the production royalties described in the Registration Statement and Prospectus, (iii) Liens for taxes and other obligations owing to any court or arbitrator or any governmental or regulatory authority and assessments not yet due or delinquent or that are being contested in good faith by appropriate proceedings, (iv) Liens imposed by applicable state and federal laws, rules and regulations and incurred in the ordinary course for obligations not yet due or delinquent, (v) Liens in respect of pledges or deposits under workers’ compensation, social security or similar laws, (vi) easements, restrictions and reservations of record, if any, that do not materially detract from the value of or materially impair the use or marketability of the property affected, (vii) building and zoning by-laws, ordinances and regulations that do not materially detract from the value of or materially impair the use or marketability of the property affected, (viii) Liens securing indebtedness reflected in the financial information, and (ix) other Liens or imperfections on property which are not material in amount and do not materially detract from the value of or materially impair the use or marketability of the property affected by such Lien or imperfections.
[Remainder of Page Intentionally Blank]
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If the foregoing correctly sets forth the understanding between the Company and the Sales Agent, please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement between the Company and the Sales Agent.
| Very truly yours, |
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| UNITED STATES ANTIMONY CORPORATION |
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| By: | /s/ Gary C. Evans |
| |
| Name: Gary C. Evans |
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| Title: Co-CEO and Chairman of the Board |
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|
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| ACCEPTED as of the date first-above written: |
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|
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| A.G.P./ALLIANCE GLOBAL PARTNERS |
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|
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| By: | /s/ Thomas J. Higgins |
| |
| Name: Thomas J. Higgins |
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| Title: Managing Director |
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[Signature Page to Sales Agreement]
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SCHEDULE 1
Form of Placement Notice
| From: | United States Antimony Corporation |
|
To: |
A.G.P./Alliance Global Partners |
| Attention: [●] | |
|
Subject: |
Placement Notice |
|
Date: |
[●], 20[●] |
Ladies and Gentlemen:
Pursuant to the terms and subject to the conditions contained in the Sales Agreement (the “Sales Agreement”) between United States Antimony Corporation, a Montana corporation (the “Company”), and A.G.P./Alliance Global Partners (the “Sales Agent”), dated November 12, 2024, the Company hereby requests that the Sales Agent sell up to [●] shares of the Company’s common stock, par value $0.01 per share (the “Placement Shares”), at a minimum market price of $[●] per share, during the time period beginning [month, day, time] and ending [month, day, time] [and with no more than [●] Placement Shares sold in any one Trading Day].
[The Company may include such other sale parameters as it deems appropriate.]
Capitalized terms used and not defined herein shall have the respective meanings assigned to them in the Sales Agreement.
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SCHEDULE 2
Notice Parties
THE COMPANY
Gary Evans (gevans@usantimony.com)
Richard Isaak (risaak@usantimony.com)
Rachel Hubert (rhubert@usantimony.com)
THE SALES AGENT
Tom Higgins (thiggins@allianceg.com)
With copies to:
atm@allianceg.com
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SCHEDULE 3
Compensation
The Company shall pay to the Sales Agent in cash, upon each sale of Placement Shares through the Sales Agent pursuant to this Agreement, an amount equal to up to 3.0% of the aggregate gross proceeds from each sale of Placement Shares.*
* The foregoing rate of compensation shall not apply when the Sales Agent purchases Placement Shares on a principal basis, in which case the Company may sell the Placement Shares to the Sales Agent as principal at a price to be mutually agreed upon by the Company and the Sales Agent at the relevant Point of Sale pursuant to the applicable Placement Notice (it being hereby acknowledged and agreed that the Sales Agent shall be under no obligation to purchase Placement Shares on a principal basis pursuant to the Sales Agreement, except as otherwise agreed by the Sales Agent and the Company in writing and expressly set forth in a Placement Notice).
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Exhibit 7(m)
OFFICER CERTIFICATE
The undersigned, the duly qualified and appointed _____________________ of United States Antimony Corporation, a Montana corporation (the “Company”), does hereby certify in such capacity and on behalf of the Company, pursuant to Section 7(m) of the Sales Agreement, dated November 12, 2024 (the “Sales Agreement”), between the Company and A.G.P./Alliance Global Partners, that:
| (i) | the representations and warranties of the Company in Section 6 of the Sales Agreement (A) to the extent such representations and warranties are subject to qualifications and exceptions contained therein relating to materiality or Material Adverse Change, are true and correct on and as of the date hereof with the same force and effect as if expressly made on and as of the date hereof, except for those representations and warranties that speak solely as of a specific date and which were true and correct as of such date, and (B) to the extent such representations and warranties are not subject to any qualifications or exceptions, are true and correct in all material respects as of the date hereof as if made on and as of the date hereof with the same force and effect as if expressly made on and as of the date hereof except for those representations and warranties that speak solely as of a specific date and which were true and correct as of such date; |
| (ii) | the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied pursuant to the Sales Agreement at or prior to the date hereof; |
| (iii) | as of the date hereof, (i) the Registration Statement does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, (ii) the Prospectus does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading and (iii) no event has occurred as a result of which it is necessary to amend or supplement the Registration Statement or the Prospectus in order to make the statements therein not untrue or misleading for clauses (i) and (ii) above, respectively, to be true and correct; |
| (iv) | there has been no Material Adverse Change since the date as of which information is given in the Prospectus, as amended or supplemented; |
| (v) | the Company does not currently possess and will not be in possession of any material non-public information at the time of delivery of any Placement Notice and/or as long as such Placement Notice is effective; and |
| (vi) | the aggregate offering price of the Placement Shares that may be issued and sold pursuant to the Sales Agreement and the maximum number or amount of Placement Shares that may be sold pursuant to the Sales Agreement have been duly authorized by the Company’s board of directors or a duly authorized committee thereof. |
Terms used herein and not defined herein have the meanings ascribed to them in the Sales Agreement.
| Dated: | By |
| |
| Name: |
| ||
| Title: |
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EXHIBIT 4.1
DESCRIPTION OF SECURITIES
The following description of capital stock summarizes certain provisions of our Third Restated Articles of Incorporation (the “Articles of Incorporation”) and our First Restated By-Laws (the “Bylaws”). The description is intended as a summary, and is qualified in its entirety by reference to our Articles of Incorporation and our Bylaws.
Authorized Capital Stock
Our authorized capital stock consists of 150,000,000 shares of Common stock and 10,0000,000 shares of preferred stock, par value $0.01 per share. There were 108,438,984 shares of common stock, 750,000 shares of Series B preferred stock and 177,904 shares of Series C preferred stock outstanding as of November 5, 2024.
Provisions of Note in Articles of Incorporation and Bylaws
Our Articles of Incorporation includes a forum selection provision designating the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware) as the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Company; (b) any action asserting a claim for breach of a fiduciary duty owed by any director, officer, employee, or shareholder of the Company to the Company or the Company’s shareholders; (c) any action asserting a claim arising pursuant to any provision of the Montana Business Corporation Act (the “MBCA”), the Articles of Incorporation, or the Bylaws (as either may be amended or restated) or as to which the MBCA confers jurisdiction on the State of Montana District Court of Lake and Sanders Counties; or (d) any action asserting a claim governed by the internal affairs doctrine. If any action the subject matter of which is within the scope of this section is filed in a court other than a court located within the State of Montana (a “Foreign Action”) in the name of any shareholder, such shareholder shall be deemed to have consented to: (i) the personal jurisdiction of the state and federal courts located within the State of Montana in connection with any action brought in any such court to enforce this section (an “Enforcement Action”); and (ii) having service of process made upon such shareholder in any such Enforcement Action by service upon such shareholder’s counsel in the Foreign Action as agent for such shareholder.
This forum selection provision may limit investors’ ability to bring claims in judicial forums that they find favorable to such disputes and may discourage lawsuits with respect to such claims. The Company has adopted this provision to limit the time and expense incurred by its management to challenge any such claims. As a company with a small management team, this provision allows its officers to not lose a significant amount of time travelling to any particular forum so they may continue to focus on operations of the Company.
The following is a description of the Articles of Incorporation and Bylaws and reflects the terms of the Company’s authorized capital stock.
Anti-Takeover Effects of Our Articles of Incorporation and Bylaws
Our Articles of Incorporation and Bylaws contain certain provisions that could have the effect of delaying, deferring or discouraging another party from acquiring control of us. These provisions, which are summarized below, could discourage takeovers, coercive or otherwise. These provisions are also designed, in part, to encourage persons seeking to acquire control of us to negotiate first with our Board of Directors. We believe that the benefits of increased protection of our potential ability to negotiate with an unfriendly or unsolicited acquirer outweigh the disadvantages of discouraging a proposal to acquire us.
Authorized but Unissued Capital Stock
We have authorized but unissued shares of preferred stock and common stock, and our Board of Directors may authorize the issuance of one or more series of preferred stock without stockholder approval. These shares could be used by our Board of Directors to make it more difficult or to discourage an attempt to obtain control of us through a merger, tender offer, proxy contest or otherwise.
Limits on Stockholders’ ability to Call a Special Meeting
Our Bylaws provide that special meetings of the stockholders may be called only by (i) the Board of Directors or (ii) by the Chairman of the Board of Directors or Secretary of the Company upon the written request of one or more persons that own shares representing at least 25% of the voting power of the stock entitled to vote on the matter or matters to be brought before the proposed special meeting. This may delay the ability of our stockholders to force consideration of a proposal or for holders controlling less than 25% of our capital stock to take any action, including the removal of directors.
Common Stock
Voting Rights
Each holder of the Company’s Common stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders, including the election of directors.
Dividend Rights
Holders of Common stock are entitled to receive dividends, as may be declared from time to time by the Board of Directors payable from earnings and profits of the corporation, as detailed in the Company’s Articles of Incorporation and the Bylaws. The Company currently does not anticipate paying any cash dividends in the foreseeable future.
Liquidation Rights
In the event of a voluntary or involuntary liquidation, dissolution, or winding up of the Company, the holders of the Common stock are entitled to share ratably in the net assets legally available for distribution to stockholders after the payment of all debts and other liabilities of the Company. Holders of our preferred stock are entitled to a liquidation preference that is senior to holders of the Common stock, and therefore would receive dividends and liquidation assets prior to the holders of the Common stock.
Preferred Stock
Subject to amounts of outstanding preferred stock, additional shares of our preferred stock may be divided into and issued in one or more additional series. Our board of directors is authorized to divide the authorized but unissued shares of preferred stock into one or more series, each of which shall be so designated as to distinguish the shares thereof from the shares of all other series and classes. Our board of directors is authorized, within the limitations prescribed by law and our Articles of Incorporation, to fix and determine the designations, rights, qualifications, preferences, limitations and terms of the shares of any series of preferred stock.
The following is a description of our outstanding series of preferred stock (there are no shares of Series A or Series D preferred stock outstanding):
Series B Preferred Stock
In 1993, the Board established a Series B preferred stock, consisting of 750,000 shares. The Series B preferred stock has preference over the Company’s common stock and Series A preferred stock (none of which are outstanding); has no voting rights (absent default in payment of declared dividends); and is entitled to cumulative dividends of $0.01 per share per year, payable if and when declared by the Board of Directors. During each of the years ended December 31, 2023 and 2022, the Company recognized $7,500 in Series B preferred stock dividend. In the event of dissolution or liquidation of the Company, the preferential amount payable to Series B preferred stockholders is $1.00 per share plus dividends in arrears. No dividends have been declared or paid with respect to the Series B preferred stock. The Series B Preferred stock is no longer convertible to shares of the Company’s common stock. At December 31, 2023 and 2022, cumulative dividends in arrears on the outstanding Series B shares were $217,500 and $210,000, respectively and the aggregate Series B liquidation preference at December 31, 2023 and 2022 were $967,500 and $960,000, respectively.
| 2 |
Series C Preferred Stock
In 2000, the Board established a Series C preferred stock. The Series C preferred stock has preference over the Company’s common stock and has voting rights equal to that number of shares outstanding, but no conversion or dividend rights. In the event of dissolution or liquidation of the Company, the preferential amount payable to Series C preferred stockholders is $0.55 per share.
We refer you to our Articles of Incorporation, Bylaws and the applicable statutes of the State of Montana for a more complete description of the rights and liabilities of holders of our securities.
Warrants
On July 23, 2020, we entered into a Securities Purchase Agreement with certain investors, pursuant to which we sold units consisting of one share of common stock and one warrant to purchase one share of common stock. Such warrants were issued on July 27, 2020. Each warrant has an exercise price of $0.46 per share, is exercisable six months following issuance and has a term of five and one-half years following issuance. As of November 5, 2024, warrants to purchase 2,285,715 shares of common stock remain outstanding.
On July 27, 2020, we issued warrants to purchase shares of common stock to Roth Capital Partners, LLC as partial compensation for services rendered in connection with the July 2020 unit offering. Each warrant has an exercise price of $0.46 per share, is exercisable six months following issuance and has a term of five and one-half years following issuance. As of November 5, 2024, warrants to purchase 804,000 shares of common stock remain outstanding.
On February 1, 2021, we entered into a Securities Purchase Agreement with certain investors, pursuant to which we sold shares of common stock in a registered direct offering and unregistered warrants to purchase shares of common stock in a concurrent private placement. Such warrants were issued on February 3, 2021. Each warrant has an exercise price of $0.85 per share, is exercisable six months following issuance and has a term of five and one-half years following issuance. As of November 5, 2024, warrants to purchase 7,650,000 shares of common stock remain outstanding.
On February 3, 2021, we issued warrants to purchase shares of common stock to Roth Capital Partners, LLC as partial compensation for services rendered in connection with the February 2021 offerings. Each warrant has an exercise price of $0.85 per share, is exercisable six months following issuance and has a term of five years following issuance. As of November 5, 2024, warrants to purchase 1,606,500 shares of common stock remain outstanding.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Direct Transfer, LLC, Issuer Direct Corporation, One Glenwood Avenue, Suite 1001, Raleigh, North Carolina 27603.
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EXHIBIT 5.1
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| Joel Henry Phone: 406.317.0082 joelhenry@hallboothsmith.com | 101 E. Front Street Suite 402 Missoula, MT 59802 | ||
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| Office: 406.317.0070 Fax: 406.919.7889 www.hallboothsmith.com |
November 12, 2024
VIA EMAIL
United States Antimony Corporation
PO Box 643
Thompson Falls, Montana 59873
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| RE: | United States Antimony Corporation – Registration Statement on Form S-3 |
Ladies and Gentlemen:
We act as local counsel to United States Antimony Corporation, a Montana corporation (the “Company”), in connection with that certain Sales Agreement by and between A.G.P./Alliance Global Partners (the “Sales Agent”) and the Company, dated October ☑, 2024 (the “Agreement”) pursuant to which the Company may issue and sell up to an aggregate of $25,000,000 of shares of common stock, par value $0.01 per share (the “Shares”). The Shares are being offered and sold pursuant to the Company’s shelf registration statement on Form S-3 (Registration No. 333-262206), initially filed by the Company with the Securities and Exchange Commission (the “Commission”) on January 14, 2022, as amended on January 27, 2022, and declared effective on January 31, 2022 (the “Registration Statement”), in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder (collectively, the “Act”), relating to the issuance and sale of the Shares.
In rendering the opinion set forth below, we have examined and relied upon originals, or copies certified to our satisfaction, of such corporate records of the Company, agreements and other instruments, certificates of public officials, certificates of officers and representatives of the Company and other documents as we have deemed it necessary as a basis for the opinions hereinafter expressed. Specifically, for purposes of our opinion, we have examined and are familiar with originals or copies, certified or otherwise identified to our satisfaction, of the following documents:
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| • | The Registration Statement, including the prospectus contained therein (the “Base Prospectus”); |
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| • | The prospectus supplement, dated October [•], 2024, in the form filed with the Commission pursuant to Rule 424(b) under the Act (the “Prospectus Supplement,” together with the Base Prospectus and the documents incorporated and deemed to be incorporated by reference therein, herein collectively referred to as the “Prospectus”); |
| MISSOULA, MT |
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| 1 |
United States Antimony Corporation
RE: Registration Statement on Form S-3
November 7, 2024
Page 2
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| • | Restated Certificate of Incorporation of the Company, as currently in effect; |
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| • | Amended and Restated Bylaws of the Company, as currently in effect; |
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| • | Records of proceedings of the Board of Directors, or committees thereof authorizing the issuance of the Shares pursuant to the terms of the Agreement, and the preparation and filing of the Registration Statement under the Securities Act; and |
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| • | The Agreement. |
Subject to the foregoing and the other matters set forth herein, it is our opinion that, as of the date hereof, the Shares have been duly authorized, and when the Shares are issued and paid for in accordance with the terms and conditions of the Agreement, the Shares will be validly issued, fully paid and non-assessable.
Our opinion herein is limited to the General Corporation Law of the State of Montana and the federal laws of the United States of America. We express no opinion with respect to the laws of any other jurisdiction.
This opinion is for your benefit in connection with the Registration Statement and may be relied upon by you and by persons entitled to rely upon it pursuant to the applicable provisions of the Act. We hereby consent to the filing of this opinion letter as Exhibit 5.1 to the Registration Statement and to the reference to our firm under the caption "Legal Matters" in the prospectus included in the Registration Statement. In giving such consent, we do not thereby admit that we are experts within the meaning of the Securities Act or the rules and regulations of the Commission or that this consent is required by Section 7 of the Securities Act.
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| Very Truly Yours,
/s/ Joel Henry
Joel Henry |
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EXHIBIT 31.1A
Certification
I, Gary C. Evans, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of United States Antimony Corporation for the quarter ended September 30, 2024; |
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| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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| 4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have: |
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| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 12, 2024
| /s/ Gary C. Evans |
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| Gary C. Evans |
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| Co-CEO and Chairman of the Board |
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EXHIBIT 31.1B
Certification
I, Lloyd Joseph Bardswich, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of United States Antimony Corporation for the quarter ended September 30, 2024; |
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| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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| 4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have: |
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| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 12, 2024
| /s/ Lloyd Joseph Bardswich |
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| Lloyd Joseph Bardswich |
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| Co-CEO and Director |
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EXHIBIT 31.2
Certification
I, Richard R. Isaak, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of United States Antimony Corporation for the quarter ended September 30, 2024; |
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| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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| 4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have: |
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| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 12, 2024
| /s/ Richard R. Isaak |
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| Richard R. Isaak |
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| SVP, Chief Financial Officer |
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EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of United States Antimony Corporation (the “Company”) on Form 10‑Q for the quarter ended September 30, 2024, as filed with the Securities and Exchange Commission (the “Report”), Gary C. Evans, Co-Chief Executive Officer and Chairman of the Board of the Company, Lloyd Joseph Bardswich, Co-Chief Executive Officer and Director of the Company, and Richard R. Isaak, SVP and Chief Financial Officer of the Company, each certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
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| (1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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| (2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: November 12, 2024 |
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| /s/ Gary C. Evans |
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| Gary C. Evans |
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| Co-Chief Executive Officer and Chairman of the Board |
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| Date: November 12, 2024 |
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| /s/ Lloyd Joseph Bardswich |
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| Lloyd Joseph Bardswich |
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| Co-Chief Executive Officer and Director |
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| Date: November 12, 2024 |
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| /s/ Richard R. Isaak |
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| Richard R. Isaak |
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| SVP, Chief Financial Officer |
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EXHIBIT 95
MINE SAFETY DISCLOSURE
Pursuant to Section 1503(a) of the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, issued under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”) by the Mine Safety and Health Administration (the “MSHA”), as well as related assessments and legal actions, and mining-related fatalities.
The following table provides information for the nine months ended September 30, 2024:
| Mine |
| §104 Significant and Substantial Citations (1) |
| §104(b) Orders (2) |
| §104(d) Citations and Orders (3) |
| §110(b)(2) Violations (4) |
| §107(a) Orders (5) |
| Proposed Assessments from MSHA (In dollars $) |
| Mining Related Fatalities |
| §104(e) Notice (yes/no) (6) |
| Pending Legal Action before Federal Mine Safety and Health Review Commission (yes/no) |
| Bear River Zeolite |
| 4 |
| 0 |
| 0 |
| 0 |
| 0 |
| $18,824 |
| 0 |
| No |
| No |
| (1) | The total number of violations received from MSHA under §104 of the Mine Act, which includes citations for health or safety standards that could significantly and substantially contribute to a serious injury if left unabated. |
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| (2) | The total number of orders issued by MSHA under §104(b) of the Mine Act, which represents a failure to abate a citation under §104(a) within the period of time prescribed by MSHA. |
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| (3) | The total number of citations and orders issued by MSHA under §104(d) of the Mine Act for unwarrantable failure to comply with mandatory health or safety standards. |
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| (4) | The total number of flagrant violations issued by MSHA under §110(b)(2) of the Mine Act. |
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| (5) | The total number of orders issued by MSHA under §107(a) of the Mine Act for situations in which MSHA determined an imminent danger existed. |
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| (6) | A written notice from the MSHA regarding a pattern of violations, or a potential to have such pattern under §104(e) of the Mine Act. |