Item 6

●

 During the three year period ended December 31, 2014, the most significant event affecting our financial performance was the decrease in the price of antimony (see table page 6).  During the year ended December 31, 2014, the most significant event was an agreement to process antimony concentrate for Hillgrove LTD of Australia.  The expansion of production at our Mexico operations caused our reported operating costs to be elevated when compared to years when we were not initiating the start-up of new production facilities. The Mexican production of antimony (metal contained) and sold was 586,368 pounds during 2014 compared to 647,393 pounds for 2013, a decrease of 9.4%.  2013 and 2014 are regarded as “start- up years” during which the holding costs, permitting, and metallurgical research was categorized as a “non-production” operating expense. During both years, Los Juarez concentrate was not produced and Soyatal oxide ore was in a research phase at the Puerto Blanco oxide circuit. Guadalupe shipped dump material while they obtained an explosives license and prepared the underground for mining higher grade rock.  The Puerto Blanco mill circuits were utilized less than 10% of their capacity.  Going forward, the increased supply of raw material from Mexico and the metal prices for both antimony and precious metals will be the most significant factors influencing our operations.  The following are highlights of the significant changes during 2014 and the three year period then ended:

a.

Our sales of antimony for 2014 increased by approximately 149,000 lbs from 2013. Our revenues from antimony decreased in 2013 by approximately $378,000 (4%) from 2012 primarily due to a decrease in the price of antimony metal. Revenues from antimony sales in 2014 were approximately $243,000 (3%) smaller than 2013 due to a decrease in the price of antimony.  The average sale price for antimony contained in all products declined from $6.24 in 2012 to $5.30 in 2013, a decrease of $0.94 (17.7%), and from $5.30 to $4.71 in 2014, a decrease of $0.59 (11.1%).

b.

The metallurgical problem with the Los Juarez feed has been solved, and mining, milling, and smelting will resume when the necessary permits are obtained. This will put the Puerto Blanco mill in operation. During 2013 and 2014, the Puerto Blanco mill was operating at less than 10% of capacity.

c.

The Soyatal oxide ore recovery problem has been solved, and high grade oxide concentrates are being produced. Oxide mineralized rock from dumps will be mined and underground development will be started.

d.

Explosives were permitted at Guadalupe in 2014, and underground development has started. A lack of capital by the operator has hampered production.

●

Assuming that Guadalupe and Los Juarez feed are going to the Puerto Blanco mill, the 500 ton per day mill that is estimated at 40% of completion will need to be completed.

●

If the Mexican “non-production” holding expenses for properties that are being developed are excluded, the cost of production of 1,780,134 pounds of contained metal was $4.10 per pound for 2013 and $4.45 for 2014. The average sale price during 2013 and 2014 was $5.30 and $4.71 per pound, respectively.

●

Our cost of goods sold for antimony decreased by approximately $5,000 for 2014 even though our production increased, and our cost of goods sold for 2013 increased by approximately $583,000 from 2012 primarily due to an increase in raw material costs and start-up costs in Mexico. For the three years ending December 31, 2014, costs of goods sold include operating and non-operating production costs from Mexico operations.  As production increased in Mexico, we saw an increase in our smelter costs through the third quarter of 2014 due to the high cost of propane in Mexico. Our switch to natural gas as a fuel for our smelter at Madero in the fourth quarter of 2014 has provided a significant improvement in our Mexico operating costs. In addition to the cost of propane, the cost of goods sold during all years has been impacted by an increase in the cost of operating supplies, such as fuel, trucking, insurance, refractory costs, and steel.

●

Our volume of zeolite sold was down less than 1% in 2014, from 11,182 tons in 2013 to 11,079 tons in 2014, and by approximately 8% in 2013, from 12,189 tons in 2012 to 11,182 tons in 2013. Total revenue decreased by approximately $33,000 in 2014 and approximately $439,000 in 2013.  In 2012, we sold more products with additives, which are higher priced, than we did in 2013.  Our cost of goods sold increased by approximately $44,500 for 2014, and decreased by approximately $522,000 for 2013 from 2012, primarily because we had a decrease in the volume of product sold in 2013, and because we did not pre-purchase as many supplies.  We inventoried the cost of additives, drying, blending, and overall operating costs for a special product mix prepared in advance for winter sales in 2013 and 2014.

●

General and administrative costs, as reported in our statement of operations, include fees paid to directors through stock based compensation. In 2014, 2013 and 2012, we incurred $40,000, $40,000 and $88,000, respectively, in fees to the NYSE MKT that were included in general and administrative expenses.  General and administrative costs for 2014, 2013 and 2012 include general and administrative costs related to commencement of production at our facilities in Mexico.  The combined general and administrative costs were 5.8%, 6.7%, and 6.7% of sales for 2014, 2013 and 2012, respectively.

●

The decrease in professional fees for 2014 and 2013 (approximately $17,000 and $34,000, respectively) was primarily due to decreased costs related to our audits and financial statement preparation. The increase in professional fees for 2012 from 2011, (approximately $52,500) was primarily due to increased costs related to our audits and financial statement preparation during the year we became listed on the NYSE MKT.

Factoring costs decreased in 2014, and were similar in 2013 to 2012. Factoring costs decreased in 2014 by approximately $22,000 as we were able to reduce our collection time for accounts receivable.  The discounts we gave for early payments increased by approximately $42,100 in 2013 from 2012.

●

For the year ended December 31, 2010, we determined that it was likely that we would be profitable in the future, and that it was appropriate to record a tax benefit of $493,000 for the value of tax losses from prior years that could be used to reduce income tax in future periods.  For the years ended December 31, 2013, 2012, and 2011, this benefit was reduced by $229,451, $167,107, and $96,442, respectively, for increases in the valuation allowance due to changed expectations about when we would have taxable income, and changes in the components that made up the base for calculating the future tax benefit.

SubsidiariesThe Company has a 100% investment in two subsidiaries in Mexico, USAMSA and AM, whose carrying value was assessed at December 31, 2014, 2013, and 2012, for impairment.  Management’s assessment of the subsidiaries’ fair value was based on their future benefit to us.


Item 6

Our net working capital increased for the year ended December 31, 2014, from a negative amount of $568,777 at the beginning of the year to a positive amount of $11,029 at the end of 2014.  Our current assets increased primarily due to an increase in our inventories in Montana and in Mexico.  The capital improvements were mainly financed by the sale of stock.

Our net working capital decreased for the year ended December 31, 2013, from a positive amount of $1,480,487 at the beginning of the year to a negative amount of $568,777 at the end of 2013.  During 2013, our current assets decreased and our current liabilities increased primarily due to expenditures for capital improvements in Mexico.  The capital improvements in 2013 were mainly financed by the sale of stock and an increase in current liabilities. Our financial condition and liquidity improved for the year ended December 31, 2012.  This was due to an increase in our cash provided by operations and the sale of stock each year.  We used most of our resources from operating cash flows and the sale of stock to expand and improve our mine, mill, and smelter production facilities in Mexico.  Over the three year period, we raised approximately $8,842,000 from issuing stock, and we used approximately $9,162,000, including $1,779,000 of assets purchased with debt, for capital improvements in Mexico ($8,072,000), Montana ($466,000), and at the Bear River Zeolite plant ($629,000).  In Mexico, we completed the final installation of the crusher, ball mill and flotation circuit, four additional furnaces at Madero, started the installation of a 500 ton per day ball mill, and paid for final construction of a natural gas pipeline.During the year ending December 31, 2015, we are planning to finance our improvements with operating cash flow. Our 2015 improvements are expected to include installation of more furnaces at both the Madero smelter and the Thompson Falls smelter, building an expanded smelter and warehouse building at Thompson Falls, and completing the installation of a 400 - 500 ton per day flotation mill at Puerto Blanco.In 2014, cash used by operations was primarily due to our net loss of approximately $1.595 million and an increase of approximately $534,000 in our inventories and other assets.  We had cash provided of approximately $1.226 million from non-cash expenses (depreciation and amortization), stock issued for expenses, decrease in accounts receivable, an increase in accounts payable, and cash advanced from Hillgrove mines.In 2013, cash provided by operations was primarily due to an increase in accounts payable and other accrued liabilities.In 2012, cash provided by operations was primarily due to the collection of approximately $978,000 of accounts receivable, which were approximately $1,438,000 at the beginning of the year, and approximately $460,000 as of December 31, 2012.The current portion of our long term debt is serviceable from the cash generated by operations.Our stockholders’ equity section makes note that we have a liquidation preference of $5,835,727 for our preferred stock.  This consists of a liquidation payment of $5,281,519 due if we liquidate our company or sell substantially all our assets, and $554,208 of undeclared dividends.  The Board of Directors’ does not intend to declare dividends on preferred stock as due and payable at any time in the near future.  We do not feel that the liquidation preference and undeclared dividends related to our preferred stock will be an impediment to raising capital in the future by issuing additional shares of common stock, and are not going to affect our liquidity.


PART III

Business Experience of Directors and Executive OfficersJohn C. Lawrence.  Mr. Lawrence has been the president and a director since our inception.  Mr. Lawrence was the president and a director of AGAU Mines, Inc., our corporate predecessor, since the inception of AGAU Mines, Inc. in 1968.  He is a member of the Society of Mining Engineers and a recipient of the Uuno Sahinen Silver Medallion Award presented by Butte Tech, University of Montana.  He has a vast background in mining, milling, smelting, chemical processing and oil and gas.Gary D. Babbitt.  Mr. Babbitt has experience in mining industry with approximately 30 years dealing with joint ventures, purchases, royalty leases and contracts. He has a working knowledge of Spanish and has negotiated supply and mining agreements in Mexico.  Mr. Babbitt has a B.A. from the Albertson College of Idaho, and earned his J.D. from the University of Chicago.Russell C. Lawrence.  Mr. Lawrence has experience in the lines of applied physics, mining, refining, excavation, electricity, electronics, and building contracting.  He graduated from the University of Idaho in 1994 with a degree in physics, and worked for the Physics Department at the University of Idaho for a period of 10 years. He has also worked as a building contractor and for USAC at the smelter and laboratory at Thompson Falls, for USAMSA in the construction and operation of the USAMSA smelter in Mexico, and for Antimonio de Mexico, S. A. de C. V. at the San Miguel Mine and the Cadereyta mill site in Mexico.Hart W. Baitis.  Mr. Baitis graduated from the University of Oregon in 1971 with a B.S. in Geology, and was awarded a Ph. D. in Geology in 1976. He has 35 years of experience as an exploration geologist in the United States, Canada, Central America, and Mexico.  Mr. Baitis is experienced in numerous geologic environments and terrains, and has been involved in all phases of exploration, ranging from field geologist, consultant, management, and acquisition team director.Whitney Ferer.  Mr. Ferer, who was nominated to the board in February 2012, has worked for 34 years for Aaron Ferer & Sons, or AF&S, headquartered in Omaha, Nebraska, where he is currently the Vice President of Trading and Operations and Vice Chairman of the Board of AF&S.  He has been involved in the patenting of various processes for the breakdown of plastics and metal recovery, and was Vice President of the Lead & Zinc Division of AF&S.  In addition, Mr. Ferer has been active in the trading of all metals, and facilitated the opening of eight offices in the Far East and China.  He is one of the largest traders of antimony metal and oxide in the United States.Daniel L. Parks. Mr. Parks graduated from the University of Idaho in 1974 with a B.S. in Accounting, and was licensed as a certified public accountant in 1976.  He worked as an auditor for Coopers & Lybrand for three years, as controller for a lumber manufacturing company for one year, and owned his own accounting practice for thirty years.  Mr. Parks was extensively involved in auditing and financial statement preparation during this time.We are not aware of any involvement by our directors or executive officers during the past five years in legal proceedings that are material to an evaluation of the ability or integrity of any director or executive officer.Board Meetings and Committees   Our Board of Directors held four (4) regular meetings during the 2014 calendar year.  Each incumbent director attended all of the meetings held during the 2014 calendar year, in the aggregate, by the Board and each committee of the Board of which he was a member.Our Board of Directors established an Audit Committee on December 10, 2011. It consists of three members, Gary Babbitt (Chairman), Whitney Ferer, and Hart Baitis.  None of the Audit Committee members are involved in our day-to-day financial management.  Hart Baitis is considered a financial expert.During 2011, the Board also established a Compensation Committee and a Nominating Committee.Board Member Compensation   Following is a summary of fees, cash payments, stock awards, and other reimbursements to Directors during the year ended December 31, 2014:Directors Compensation

| Name | Age | Affiliation | Expiration of Term |
| --- | --- | --- | --- |
|  |  |  |  |
| John C. Lawrence | 76 | Chairman, President, Director | Annual meeting |
|  |  |  |  |
| John C. Gustavsen | 66 | First Vice-President | Annual meeting |
|  |  |  |  |
| Russell C. Lawrence | 46 | Second Vice-President | Annual meeting |
|  |  |  |  |
| Matthew Keane | 59 | Third Vice-President | Annual meeting |
|  |  |  |  |
| Daniel L. Parks | 66 | Chief Financial Officer | Annual meeting |
|  |  |  |  |
| Alicia Hill | 33 | Secretary, Controller and Treasurer | Annual meeting |
|  |  |  |  |
| Gary D. Babbitt | 69 | Director | Annual meeting |
|  |  |  |  |
| Whitney Ferer | 56 | Director | Annual meeting |
|  |  |  |  |
| Hart W. Baitis | 65 | Director | Annual meeting |


PART III

Section 16(a) Beneficial Ownership Reporting Compliance   Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers and the holders of 10% or more of our common stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and stockholders holding more than 10% of our common stock are required by the regulation to furnish us with copies of all Section 16(a) forms they have filed. Based solely on our review of copies of Forms 3, 4 and 5 furnished to us, Mr. John Lawrence, Mr. Baitis, Mr. Babbitt, Mr. Ferer, and Mr. Russell Lawrence did not file timely Forms 3, 4 or Form 5 reports during 2014, 2013, or 2012.Code of EthicsThe Company has adopted a Code of Ethics that applies to the Company's executive officers and its directors.  The Company will provide, without charge, a copy of the Code of Ethics on the written request of any person addressed to the Company at: United States Antimony Corporation, P.O. Box 643, Thompson Falls, MT 59873.


PART III

(2)

These figures represent the fair values, as of the date of issuance, of the annual director's fee payable to Mr. Lawrence in the form of shares of USAC's common stock.

Compensation for all executive officers, except for the President/CEO position, is recommended to the compensation committee of the Board of Directors by the President/CEO.  The compensation committee makes the recommendation for the compensation of the President/CEO.  The compensation committee has identified a peer group of mining companies to aid in reviewing the President’s compensation recommendations for executives, and for reviewing the compensation of the President/CEO.  The full Board approves the compensation amounts recommended by the compensation committee. Currently, the executive managements’ compensation only includes base salary and health insurance.  The Company does not have annual performance based salary increases, long term performance based cash incentives, deferred compensation, retirement benefits, or disability benefits.  For the year ended December 31,2014, The Chief Executive Officer (CEO) received an increase in base compensation of $15,000 annually.  The Board of Directors determined that the CEO’s compensation for the prior years was substantially less than that of Chief Executive Officers for similar companies, and that a raise was appropriate to compensate the CEO for management of a Company with the complexities of United States Antimony Corporation.

Two executive officers, the President/CEO and the Vice-President for the Latin American operations, receive restricted stock awards for their services as Board members.

The following table sets forth information concerning the outstanding equity awards at December 31, 2014, held by our principal executive officer.  There were not any other outstanding equity awards or plan based awards to officers or directors as of December 31, 2014.


PART III

Item 12   Security Ownership of Certain Beneficial Owners and Management

|  |  |  | | | | | |  |  | Outstanding Equity Awards at | |  |  |  | |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  | |  |  |  | |  |  | Fiscal Year End | |  |  |  | |  |  |
|  |  | Number of Securities Underlying Unexercised Options | | | | | |  |  | Number of Securities | |  |  | Average | |  | Option |
|  |  | Exercisable | |  |  | Unexercisable | |  |  | Underlying Unexercised | |  |  | Exercise | |  | Exercise |
| Name |  |  | # |  |  |  | # |  |  | Unearned Options | |  |  | Price | |  | Dates |
| John C. Lawrence |  |  | 250,000 |  |  |  | 0 |  |  |  | 0 |  |  | $ | 0.25 |  | None |
| (Chairman of the Board Of |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Directors and Chief Executive |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Officer) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |


PART III

(1)Beneficial Ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable or convertible, or exercisable or convertible within 60 days of March 16, 2015, are deemed outstanding for computing the percentage of the person holding options or warrants but are not deemed outstanding for computing the percentage of any other person. Percentages are based on a total of 66,027,453 shares of common stock, 750,000 shares of Series B Preferred Stock, 177,904 shares of Series C Preferred Stock, and 1,751,005 shares of Series D Preferred Stock outstanding on March 16, 2015.  Total voting stock of 67,956,632 shares is a total of all the common stock issued, and all of the Series C and Series D Preferred Stock.

(2)

Includes 3,892,235 shares of common stock and 250,000 stock purchase warrants.  Excludes 183,324 shares owned by Mr. Lawrence's sister, as to which Mr. Lawrence disclaims beneficial ownership.

(3)

Includes shares owned by the estate of Al W. Dugan and shares owned by companies owned and controlled by the estate of Al W. Dugan.  Excludes 183,333 shares owned by Lydia Dugan as to which the estate of Mr. Dugan disclaims beneficial ownership.

(4)

The outstanding Series C and Series D preferred shares carry voting rights equal to the same number of shares of common stock.

(5)

 The outstanding Series B preferred shares carry voting rights only if the Company is in default in the payment of declared dividends.  The Board of Directors has not declared any dividends as due and payable for the Series B preferred stock.

| Title of Class |  | Name and Address of  Beneficial Owner (1) |  | Amount and Nature of  Beneficial Ownership |  | Percent of Class (1) |  | Percent of all Voting Stock |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Common Stock |  | Cardinal capital Management LLC       Four Greenwich Office Park   Greenwich CT 06831 |  | 4,008,694 |  | 6.07% |  | 5.91% |
| Common Stock |  | Reed Family Limited Partnership          328 Adams Street                          Milton, MA 02186 |  | 4,018,335 |  | 6.09% |  | 5.92% |
| Common Stock |  | The Dugan Family                                 c/o A.W.Dugan                                  1415 Louisana Street, Suite 3100              Houston, TX 77002 |  | 6,362,927(3) |  | 9.64% |  | 9.38% |
| Series B Preferred |  | Excel Mineral Company                     P.O. Box 3800                                     Santa Barbara, CA 93130 |  | 750,000(5) |  | 100.00% |  | N/A |
| Series C Preferred |  | Richard A. Woods                                  59 Penn Circle West                            Penn Plaza Apts.                       Pittsburgh, PA 15206 |  | 48,305(4) |  | 27.10% |  | \* |
| Series C Preferred |  | Dr. Warren A. Evans                             69 Ponfret Landing Road                            Brooklyn, CT  06234 |  | 32,203(4) |  | 18.10% |  | \* |
| Series C Preferred |  | Edward Robinson                             1007 Spruce Street, 1st floor                            Philadelphia, PA 19107 |  | 32,203(4) |  | 18.10% |  | \* |
| Series C Preferred |  | All Series C Preferred Shareholders as a Group |  | 177,904(4) |  | 100.00% |  | \* |
| Common Stock |  | John C. Lawrence                             Russell Lawrence                                       Hart Baitis                                              Garry Babbitt                                        Whitney Ferer                        Mathew Keane                           Daniel Parks |  | 4,142,235(2)  179,582  34,415  148,056  71,915  10,300  40,000 |  | 89.53%  3.88%  \*  3.20%  1.60% \*  \*  \* |  | 6.11%                       \*                           \*                              \*                                  \*                           \*                          \* |
| Common Stock |  | All Directors and Executive Officers as a Group |  | 4,626,503 |  | 100.00% |  | 6.82% |
| Series D Preferred |  | John C. Lawrence                             Leo Jackson   Garry Babbitt |  | 1,590,672(4)  102,000  58,333 |  | 90.80%  5.80%  3.40% |  | 2.40% \* \* |
| Series D Preferred |  | All Series D Preferred Shareholders as a Group |  | 1,751,005(4) |  | 100.00% |  | 2.70% |
| Common Stock  and  Preferred Stock  w/voting rights |  | All Directors and Executive Officers  as a Group All preferred Shareholders that are  officers or directors |  | 4,626,503(2)  -  1,751,005(4) |  | 72.55%  -  27.45% |  | 6.82% - 2.70% |
| Common and  Preferred Voting  Stock |  | All Directors and Executive  Officers as a Group |  | 6,377,508 |  | 100.00% |  | 9.40% |


PART III

*    Filed herewith.Reports on Form 8-K

| 10.38 | Memorandum of Understanding with Geosearch Inc. |
| --- | --- |
|  |  |
| 10.39 | Factoring Agreement-Systran Financial Services Company |
|  |  |
| 10.40 | Mortgage to John C. Lawrence |
|  |  |
| 10.41 | Warrant Issue-Al W. Dugan filed as an exhibit to USAC's Quarterly Report on Form 10-QSB for the quarter ended March 31, 2000 (File No. 001-08675) is incorporated herein by this reference |
|  |  |
| 10.42 | Agreement between United States Antimony Corporation and Thomson Kernaghan & Co., Ltd. filed as an exhibit to USAC form 10-QSB for the quarter ended June 30, 2000 (File No. 001-08675) are incorporated herein by this reference |
|  |  |
| 10.43 | Settlement agreement and release of all claims between the Estate of Bobby C. Hamilton and United States Antimony Corporation filed as an exhibit to USAC form 10-QSB for the quarter ended June 30, 2000 (File No. 001-08675) are incorporated herein by this reference. |
|  |  |
| 10.44 | Supply Contracts with Fortune America Trading Ltd. filed as an exhibit to USAC form 10-QSB for the quarter ended June 30, 2000 (File No. 001-08675) are incorporated herein by this reference |
|  |  |
| 10.45 | Amended and Restated Agreements with Thomson Kernaghan & Co., Ltd, filed as an exhibit to amendment No. 3 to USAC's Form SB-2 Registration Statement (Reg. No. 333-45508), are incorporated herein by this reference |
|  |  |
| 10.46 | Purchase Order from Kohler Company, filed as an exhibit to amendment No. 4 to USAC's Form SB-2 Registration Statement (Reg. No. 333-45508) are incorporated herein by this reference |
|  |  |
| Documents filed as an exhibit to USAC's Form 10-QSB for the quarter ended June 30, 2002 (File No. 001-08675) are incorporated herein by this reference: | |
|  |  |
| 10.47 | Bear River Zeolite Company Royalty Agreement, dated May 29, 2002 |
|  |  |
| 10.48 | Grant of Production Royalty, dated June 1, 2002 |
|  |  |
| 10.49 | Assignment of Common Stock of Bear River Zeolite Company, dated May 29, 2002 |
|  |  |
| 10.50 | Agreement to Issue Warrants of USA, dated May 29, 2002 |
|  |  |
| 10.51 | Secured convertible note payable - Delaware Royalty Company dated December 22, 2003\* |
|  |  |
| 10.52 | Convertible note payable - John C. Lawrence dated December 22, 2003\* |
|  |  |
| 10.53 | Pledge, Assignment and Security Agreement dated December 22, 2003\* |
|  |  |
| 10.54 | Note Purchase Agreement dated December 22, 2003\* |
|  |  |
| 14.0 | Code of Ethics\* |
|  |  |
| 31.1 | Rule 13a-14(a)/15d-14(a) Certifications |
|  | Certification of John C. Lawrence\* |
|  |  |
| 32.1 | Section 1350 Certifications |
|  | Certification of John C. Lawrence\* |
|  |  |
| 44.1 | CERCLA Letter from U.S. Forest Service filed as an exhibit to USAC form 10-QSB for the quarter ended June 30, 2000 (File No. 001-08675) are incorporated herein by this reference and filed as an exhibit to USAC's Form 10-KSB for the year ended December 31, 1995 (File No. 1-8675) is incorporated herein by this reference |


F-2

The accompanying notes are an integral part of these consolidated financial statements.

F-3


F-2

For the years ended December 31, 2014, 2013, and 2012

| United States Antimony Corporation and Subsidiaries |
| --- |
| Consolidated Statements of Changes in Stockholders' Equity |


F-2

The accompanying notes are an integral part of these consolidated financial statements.

F-4


F-2

The accompanying notes are an integral part of these consolidated financial statements.

F-5

United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2014, 2013 and 2012
1.Background of Company and Basis of PresentationAGAU Mines, Inc., predecessor of United States Antimony Corporation ("USAC" or "the Company"), was incorporated in June 1968 as a Delaware corporation to mine gold and silver. USAC was incorporated in Montana in January 1970 to mine and produce antimony products. In June 1973, AGAU Mines, Inc. was merged into USAC. In December 1983, the Company suspended its antimony mining operations when it became possible to purchase antimony raw materials more economically from foreign sources.  The principal business of the Company has been the production and sale of antimony products.During 2000, the Company formed a 75% owned subsidiary, Bear River Zeolite Company ("BRZ"), to mine and market zeolite and zeolite products from a mineral deposit in southeastern Idaho.  In 2001, an operating plant was constructed at the zeolite site and zeolite production and sales commenced.  During 2002, the Company acquired the remaining 25% of BRZ and continued to produce and sell zeolite products.During 2005, the Company formed a 100% owned subsidiary, Antimonio de Mexico S.A. de C.V. (“AM”), to explore and develop potential antimony properties in Mexico.During 2006, the Company acquired 100% ownership in United States Antimony, Mexico S.A. de C.V. (“USAMSA”), which became a wholly-owned subsidiary of the Company.2.Concentrations of Risk


F-2

The Company's revenues from antimony sales are strongly influenced by world prices for such commodities, which fluctuate and are affected by numerous factors beyond the Company's control, including inflation and worldwide forces of supply and demand. The aggregate effect of these factors is not possible to predict accurately.


F-9

The Company’s financial instruments include cash and cash equivalents, certificates of deposits, restricted cash, due to factor, and long-term debt.  The carrying value of certificates of deposit, restricted cash, due to factor, and long-term debt approximates fair value based on the contractual terms of those instruments.Fair Value MeasurementsAccounting Standards  Codification (“ASC”) 820, “Fair Value Measurements and Disclosures”, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value.The Company discloses the following information for each class of assets and liabilities that are measured at fair value:

1.

the fair value measurement;

2.

the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3);

3.

for fair value measurements using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following:

a.

total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings, and a description of where those gains or losses included in earnings  are reported in the statement of operations;

b.

the amount of these gains or losses attributable to the change in unrealized gains or losses relating to those assets or liabilities still held at the reporting period date and a description of where those unrealized gains or losses are reported;

c.

purchases, sales, issuances, and settlements (net); and

d.

transfers into and/or out of Level 3.

4.

the amount of the total gains or losses for the period included in earnings  that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date and a description of where those unrealized gains or losses are reported in the statement of operations; and

5.

in annual periods only, the valuation technique(s) used to measure fair value and a discussion of changes in valuation techniques, if any, during the period.


F-10

Recent Accounting PronouncementsIn July 2013, the FASB issued ASU 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” (“ASU 2013-11”). ASU 2013-11 provides guidance on the presentation of unrecognized tax benefits related to any disallowed portion of net operating loss carryforwards, similar tax losses, or tax credit carryforwards, if they exist. ASU 2013-11 is effective for fiscal years beginning after December 15, 2013. The adoption of ASU 2013-11 is not expected to have a material impact on the Company’s consolidated financial statements.In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements—Going Concern.” The provisions of ASU No. 2014-15 require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this ASU are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently assessing the impact of ASU No. 2014-15 on the Company’s consolidated financial statements once adopted.Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.4.         Accounts Receivable and Due to FactorThe Company factors designated trade receivables pursuant to a factoring agreement with LSC Funding Group L.C., an unrelated factor (the “Factor”).  The agreement specifies that eligible trade receivables are factored with recourse.   The performance of all obligations and payments to the factoring company is personally guaranteed by John C. Lawrence, the Company’s President and Chairman of the Board of Directors.  Selected trade receivables are submitted to the factor, and the Company receives 85% of the face value of the receivable by wire transfer. Upon payment by the customer, the remainder of the amount due is received from the Factor, less a one-time servicing fee of 2% for the receivables factored.  This servicing fee is recorded on the consolidated statement of operations in the period of sale to the factor.


F-11

Factoring fees paid by the Company during the years ended December 31, 2014, 2013 and 2012 were $49,364, $71,772, and $78,100, respectively.  For the years ended December 31, 2014, 2013, and 2012, net accounts receivable of approximately $2.30 million, $3.28 million, and $3.80 million, respectively, were sold under the agreement.Proceeds from the sales were used to fund inventory purchases and operating expenses.  The agreement is for a term of one year with automatic renewal for additional one-year terms.5.InventoriesThe major components of the Company's inventories at December 31, 2014 and 2013 were as follows:


F-11

At December 31, 2014 and 2013, antimony metal consisted principally of recast metal from antimony-based compounds, and metal purchased from foreign suppliers.  Antimony oxide inventory consisted of finished product oxide held at the Company's plant. Antimony concentrates and ore was held primarily at sites in Mexico and is essentially raw material, carried at cost.   The Company's zeolite inventory consists of salable zeolite material held at BRZ's Idaho mining and production facility, and is carried at cost.


F-12

7.         Asset Retirement Obligation and Accrued Reclamation CostsDuring 2011, the Company assessed the obligation for removal and remediation costs relating to its plants and mine in Mexico.  Management assigned a cost to the expected work involved in complying with the requirements of the Mexico operating permits.  Management applied, based on a 20 year life, a cost inflation factor, and then discounted that cost to a current net present value based on a discount rate of 6% (management’s estimate of its credit-adjusted interest rate). During 2011, management determined a future cost in 2031 of approximately $430,000 with a net present value of $134,000.


F-12

The Company’s total asset retirement obligation and accrued reclamation costs of $255,190 and $257,580 at December 31, 2014 and 2013, respectively include reclamation obligations for Idaho and Montana operations of $107,500.(1) During 2014, an adjustment was made to correct immaterial excess accretion expense recognized in 2013 and 2012.


F-15

10.         Notes Payable to BankAt December 31, 2013, the Company had the following notes payable to the bank:


F-15

These notes are personally guaranteed by John C. Lawrence the Company’s President and Chairman of the Board of Directors.  The Company paid the notes in full during 2014.

11.      Hillgrove Advances Payable

On November 7, 2014, the Company entered into a loan and processing agreement with Hillgrove Mines Pty Ltd of Australia (Hillgrove) by which Hillgrove will advance the Company funds to be used to expand their smelter in Madero, Mexico, and in Thompson Falls, Montana, so that they may process antimony and gold concentrates produced by Hillgrove’s mine in New South Wales, Australia.  The agreement requires that the Company will construct equipment so that it can process approximately 200 metric tons of concentrate initially shipped by Hillgrove, with a provision so that the Company may expand to process more than that.  The parties contemplate that the equipment will be owned by USAC and USAMSA. The final terms of when the repayment takes place have not yet been agreed on.  The Company will also sell the final product for Hillgrove, and Hillgrove will have approval rights of the customers for their products.  The agreement allows the Company to recover its operating costs as approved by Hillgrove, and to charge a 7.5% processing fee and a 2.0% sales commission.  The initial term of the agreement is five years; however, Hillgrove may suspend or terminate the agreement at its discretion.  The Company may terminate the agreement and begin using the furnaces for their own production if Hillgrove fails to recommence shipments within 365 days of a suspension notice. If a stop notice is issued by Hillgrove within one year of the date of the agreement, the Company is only obligated to repay 50% of the funds advanced at that point.  If a stop notice is issued between one year and two years, there is a formula to prorate the repayment amount from 50% to 81.25%.  If a stop order is issued after two years, the repayment obligation is 81.25% of the funds advanced at that point. The Company has recorded the Hillgrove advances payable net of the 18.75% discount on the obligation due if Hillgrove issues a stop order after two years.  The discount of $37,232 is classified as deferred revenue and will be recognized ratably over a two year period. During the last quarter of 2014 Hillgrove advanced the Company $198,571, of which $161,339 has been recorded as a long-term liability at December 31, 2014.

| Promissory note payable to First Security Bank of Missoula, bearing interest at 3.150%, maturing February 27, 2014, payable on demand, collateralized by a lien on Certificate of Deposit number 48614 | $ | 70,952 |
| --- | --- | --- |
| Promissory note payable to First Security Bank of Missoula, bearing interest at 3.150%, maturing February 27, 2014, payable on demand, collateralized by a lien on Certificate of Deposit number 48615 |  | 67,568 |
| Total notes payable to bank | $ | 138,520 |


F-17

Preferred StockThe Company's Articles of Incorporation authorize 10,000,000 shares of $0.01 par value preferred stock available for issuance with such rights and preferences, including liquidation, dividend, conversion, and voting rights, as the Board of Directors may determine.Series BDuring 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; 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 the years ended December 31, 2014 and 2013 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, 2014 and 2013, cumulative dividends in arrears on the outstanding Series B shares were $142,500 and $135,000, respectively. Series CDuring 2000, the Board established a Series C preferred stock, consisting of 205,996 shares.  In 2002, 28,092 shares were converted to common stock and cancelled, leaving 177,904 Series C preferred shares authorized and outstanding.  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.


F-19

At December 31, 2014, 2013 and 2012, the Company had net deferred tax assets as follows:


F-19

At December 31, 2014, the Company has United States net operating loss carry forwards of approximately $600,000 that expire at various dates between 2029 and 2034.  In addition, the company has unexpired Montana state net operating loss carry forwards of approximately $2,016,000 which expire between 2016 and 2021, and unexpired Idaho state net operating loss carry forwards of approximately $1,140,000, which expire in 2032 and 2034.  The company has approximately $6.4 million of Mexican net operating loss carry forwards which expire between 2021 and 2024.At December 31 2014 and 2013, the Company had deferred tax assets arising principally from net operating loss carry forwards for income tax purposes.  As management cannot determine that it is more likely than not that we will realize the benefit of the net deferred tax asset, a valuation allowance equal to 100% of the net deferred tax asset has been recorded at December 31, 2014 and 2013.


F-20

During the years ended December 31, 2014, 2013, and 2012, there were no material uncertain tax positions taken by the Company.  The Company United States income tax filings are subject to examination for the years 2012 through 2014, and 2010 and 2014 in Mexico. In the event that the Company is assessed penalties and or interest, penalties will be charged to other operating expense and interest will be charged to interest expense.15.Related-Party TransactionsThe Company’s President and Chairman, John Lawrence, rents equipment and an aircraft to the Company and charges the Company for lodging and meals provided to consultants, customers and other parties by an entity that Mr. Lawrence owns.Transactions due to (due from) Mr. Lawrence during 2014, 2013, and 2012 were as follows:


F-20

In addition, during 2014, Mr. Lawrence loaned the Company $65,300 for short-term operating capital and was paid back without interest during 2014.The Chairman of the audit committee and compensation committee received $36,000 in cash during 2014 and 2013 for services performed. The Chairman of the audit committee and compensation committee and one other audit committee member received a total of $56,000 in cash during 2012 for services performed.In addition to the transactions described above, during 2014, 2013, and 2012, the Company had the following transactions with related parties:

●

During 2014, 2013, and 2012, the Company paid $82,505, $81,642, and $89,204, respectively, to a former director for development of Mexican mill sites and consulting fees.


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

Overview

●

Our cost of production was elevated for the year ending December 31, 2012, because we were starting a major mining and production facility in Mexico. The same workers responsible for production were also a significant part of building and testing the manufacturing plants and equipment at Puerto Blanco, and Madero, Mexico, which resulted in costs that won’t be incurred when construction and testing is complete.  To a lesser degree, we incurred similar costs at our plant in Thompson Falls, Montana.  There will still be some overlapping costs in the first quarter of 2013 because the plants are still in a shakedown mode, but it should be less for 2013 than 2012.

●

Although we are expanding our operations in Mexico, we still purchase significant raw materials from our suppliers. We will remain an antimony producer, although we anticipate greater revenue from precious metals and zeolite.

●

We are producing our own raw materials from our mine, mill, and smelter in Mexico, which will allow us to ensure a steady flow of products for sale.  Our mine at Los Juarez, our Puerto Blanco mill, and our smelter at Madero, Mexico, will be producing a significant portion of our raw materials commencing in 2013.  Our company-wide production for 2013 is expected to double that of 2012. We completed the installation of more crusher capacity, the flotation and ball mill, and more smelter furnaces in Mexico during 2012, and we therefore expect more sales in 2013 due to the availability of more raw materials.

●

We have also commenced installation of a natural gas pipeline to replace propane as the fuel used in our Mexico smelter, which we expect to be finished by May of 2013.  We expect the pipeline to cost approximately $1.2 million dollars when completed, and that it will reduce our smelter fuel cost by approximately 75%. We have spent $584,000 on construction as of December 31, 2012.

●

 We are initiating the installation of a 400 - 500 ton per day flotation mill to be completed by the end of 2013 that we expect to cost between $400,000 and $500,000 to install. This mill will be dedicated to processing ore from the Los Juarez mining property, and, in addition to the increase in antimony production, it will increase our precious metals revenue significantly. We have adequate crushing capacity in place to feed the 500 ton per day mill and the existing mill.

●

 The increased production from Los Juarez will also create a significant increase in our precious metals revenue for 2013 and 2014.

●

 If the world economy improves, we expect to benefit from an increase in antimony prices. If the world economy does not improve, or if it worsens, we expect to see stagnant or decreasing commodity prices for antimony.

Our principal smelter, precious metals recovery operation, and our Company headquarters remain in Montana. With increased production, we expect to widen our base of customers.


During the three year period ending December 31, 2012, the most significant event affecting our financial performance was the fluctuation in the price of antimony (see table page 6).  During the year ending December 31, 2012, the most significant event was the commencement of production at our Mexico operations which caused our reported operating costs to be elevated when compared to years when we were not initiating the operation of a new production facility.  During the year ending December 31, 2010, we recorded an impairment loss of $199,302.  Going forward, the increased supply of raw material from Mexico and the metal prices for both antimony and precious metals, will be the most significant factors influencing our operations.  The following are highlights of the significant changes during the three year period:

●

Revenues from antimony sales in 2012 were approximately $1,653,000 (16%) smaller than 2011 primarily due to a decrease in the price of antimony.  Our revenues from antimony increased in 2011 by approximately $4,233,000 (68%) from 2010 primarily due to an increase in the price of antimony metal (approximately $4,135,000).

●

Our cost of goods sold for antimony for 2012 decreased by approximately $790,000 for 2012 due to a decrease in our raw materials cost, but was a greater per cent of sales than in prior years primarily due to costs associated with starting a major production facility in Mexico. Our cost of goods sold for antimony during 2011 and 2010 increased by approximately $3,765,000 (65%) and $3,539,000 (159%), respectively.  The increase in cost of goods sold in 2011 was primarily due to the increase in the cost of our raw materials, and the increase in 2010 was due to the increase in the price of metal and increased production.  For all three years, costs of goods sold include production costs from Mexico operations.  The cost of goods sold during all years has been impacted by an increase in the cost of operating supplies, such as fuel, trucking, insurance, refractor costs, steel, and propane.

●

Our volume of zeolite sold was nearly the same in 2012 as 2011, but total revenue increased by approximately $598,000.  In 2012, we sold more products with additives, which are higher priced, than we did in 2011, and we raised prices for most products due to our increased operating costs.  Our cost of goods sold for 2012 increased by approximately $354,000 from 2011, primarily due to the cost of additives, drying, blending, and overall operating cost increases.  Our revenues from zeolite were up both in price and tons sold (approximately $880,000) in 2010 from 2009.  This was primarily due to a contract for nuclear remediation with the Department of Energy.  That contract was not ongoing in 2011, which was the primary cause for a decrease of  approximately 3,200 tons sold (approximately $500,000).  Although tons sold for 2011 was less than 2010, there was an increase in the sales price per ton which accounted for an increase in revenue of approximately $130,000.  The increase in the price for 2011 was mainly due to an additive, drying, and blending for a customer, which also caused a similar increase in our cost of production for 2011.

●

General and administrative costs, as reported in our statement of operations, include fees paid to directors through stock based compensation. In 2012, we incurred $88,000 in fees to the NYSE MKT that were included in general and administrative expenses.  General and administrative costs for both 2012 and 2011 include general and administrative costs related to commencement of production at our facilities in Mexico.  The combined general and administrative costs were 5.5% and 4.0% of sales for 2012 and 2011, respectively.

●

The increase in professional fees for 2012, 2011, and 2010 (approximately $39,600, $52,500 and $ 30,700, respectively) was primarily due to increased costs related to our audits and financial statement preparation.

●

Factoring costs decreased in 2012 by approximately $76,100 as we were able to reduce our collection time for accounts receivable.  Our discount to customers for early payment increased by approximately $42,100 in 2012 from 2011.  Factoring expense increased for each year in 2011and 2010 by approximately $35,100 and $30,700, respectively, because of increased revenue and greater amounts of accounts receivable available for factoring.

●

For the year ending December 31, 2010, we determined that it was likely that we would be profitable in the future, and that it was appropriate to record a tax benefit of $493,000 for the value of tax losses from prior years that could be used to reduce income tax in future periods.  For the year ending December 31, 2011, this benefit was reduced by approximately $105,600 for tax expenses due to taxable income in that year.  For the year ended December 31, 2012, certain assets recorded for tax purposes that are not recorded on our books were reduced, causing a further reduction in this benefit of approximately $167,100.

SubsidiariesThe Company has a 100% investment in two subsidiaries in Mexico, USAMSA and AM, whose carrying value was assessed at December 31, 2012, 2011, and 2010, for impairment.  Management’s assessment of the subsidiaries’ fair value was based on their future benefit to us.  During fiscal year 2010 USAMSA was forced to relocate to a new mill site, resulting in an impairment of approximately $200,000.


Our financial condition and liquidity, i.e., our net working capital, has improved each year for the three years ended December 31, 2012.  This was due to an increase in our cash provided by operations and the sale of stock each year.  We used most of our resources from operating cash flows and the sale of stock to complete our mine, mill, and smelter production facility in Mexico.  Over the three year period, we raised approximately $6,870,000 from issuing restricted stock, and we used approximately $9,183,000, including $1,998,000 of assets purchased with debt, for capital improvements in Mexico ($7,881,000), Montana ($482,000), and at the Bear River Zeolite plant ($820,000).  In Mexico, we completed the final installation of the crusher, ball mill and flotation circuit, four additional furnaces at Madero, and paid for partial construction of a natural gas pipeline.During the next year ending December 31, 2013, we are planning on financing our improvements through operating cash flow, including final installation of a natural gas pipeline to the Madero smelter, and installation of a 400 - 500 ton per day flotation mill that will increase our production from the Los Juarez ore.In 2012, cash provided by operations was primarily due to the collection of approximately $978,000 of accounts receivable, which were approximately $1,438,000 at the beginning of the year, and approximately $460,000 as of December 31, 2012.  During the year ended December 31, 2010, the cash provided by operations was increased by the addition of a deferred tax asset for $493,000.  In 2011, an increase in inventories due to raw materials purchased per supply agreements reduced cash flows from operations by approximately $923,000, and in 2011 and 2010, increases in accounts receivable due to December sales reduced cash flows from operations by approximately $693,000 and $583,000, respectively.  An increase in accounts payable, not paid because of the increase in the amount of accounts receivable due at year end, increased our cash flow from operations by approximately $585,000 for 2011.  The current portion of our long term debt is serviceable from the cash generated by operations.Our stockholders’ equity section makes note that we have a liquidation preference of $5,689,780 as concerns our preferred stock.  This consists of a liquidation payment of $5,225,360 due if we liquidate our company or sell substantially all our assets, and $464,420 of undeclared dividends.  The Board of Directors’ does not intend to declare dividends on preferred stock as due and payable at any time in the near future.  We do not feel that the liquidation preference and undeclared dividends related to our preferred stock will be an impediment to raising capital in the future by issuing additional shares of common stock, and are not going to affect our liquidity.


SECTION 16(A) OF THE EXCHANGE ACT

Business Experience of Directors and Executive OfficersJohn C. Lawrence.  Mr. Lawrence has been the president and a director since our inception.  Mr. Lawrence was the president and a director of AGAU Mines, Inc., our corporate predecessor, since the inception of AGAU Mines, Inc. in 1968.  He is a member of the Society of Mining Engineers and a recipient of the Uuno Sahinen Silver Medallion Award presented by Butte Tech, University of Montana.  He has a vast background in mining, milling, smelting, chemical processing and oil and gas.Gary D. Babbitt.  Mr. Babbitt has experience in mining industry with approximately 30 years dealing with joint ventures, purchases, royalty leases and contracts. He has a working knowledge of Spanish and has negotiated supply and mining agreements in Mexico.  Mr. Babbitt has a B.A. from the Albertson College of Idaho, and earned his J.D. from the University of Chicago.Bernard J. Guarnera.  Mr. Guarnera, who was nominated to the Board in May 2012, has more than 40 years of experience in the global mining industry.  Most recently he served as Chairman and CEO of Behre Dolbear & Company, an internationally recognized mining consulting firm which was founded in 1991.  He previously served with Texaco’s Minerals Group, Daymes & Moore, and Boise Cascade, firms where he worked in the coal and uranium, precious and base metals and industrial minerals sectors.  Mr. Guarnera has degrees from the Michigan College of Mining & Technology (B.Sc. Geological Engineering (mining emphasis) and M.Sc. Economic Geology).Russell C. Lawrence.  Mr. Lawrence has experience in the lines of applied physics, mining, refining, excavation, electricity, electronics, and building contracting.  He graduated from the University of Idaho in 1994 with a degree in physics, and worked for the Physics Department at the University of Idaho for a period of 10 years. He has also worked as a building contractor and for USAC at the smelter and laboratory at Thompson Falls, for USAMSA in the construction and operation of the USAMSA smelter in Mexico, and for Antimonio de Mexico, S. A. de C. V. at the San Miguel Mine and the Cadereyta mill site in Mexico.Hart W. Baitis.  Mr. Baitis graduated from the University of Oregon in 1971 with a B.S. in Geology, and was awarded a Ph. D. in Geology in 1976. He has 35 years of experience as an exploration geologist in the United States, Canada, Central America, and Mexico.  Mr. Baitis is experienced in numerous geologic environments and terrains, and has been involved in all phases of exploration, ranging from field geologist, consultant, management, and acquisition team director.Whitney Ferer.  Mr. Ferer, who was nominated to the board in February 2012, has worked for 34 years for Aaron Ferer & Sons, or AF&S, headquartered in Omaha, Nebraska, where he is currently the Vice President of Trading and Operations and Vice Chairman of the Board of AF&S.  He has been involved in the patenting of various processes for the breakdown of plastics and metal recovery, and was Vice President of the Lead & Zinc Division of AF&S.  In addition, Mr. Ferer has been active in the trading of all metals, and facilitated the opening of eight offices in the Far East and China.  He is one of the largest traders of antimony metal and oxide in the United States.Daniel L. Parks. Mr. Parks graduated from the University of Idaho in 1974 with a B.S. in Accounting, and was licensed as a certified public accountant in 1976.  He worked as an auditor for Coopers & Lybrand for three years, as controller for a lumber manufacturing company for one year, and owned his own accounting practice for thirty years.  Mr. Parks was extensively involved in auditing and financial statement preparation during this time.We are not aware of any involvement by our directors or executive officers during the past five years in legal proceedings that are material to an evaluation of the ability or integrity of any director or executive officer.Board Meetings and Committees.  Our Board of Directors held four (4) regular meetings during the 2012 calendar year.  Each incumbent director attended all of the meetings held during the 2012 calendar year, in the aggregate, by the Board and each committee of the Board of which he was a member.Our Board of Directors established an Audit Committee on December 10, 2011. It consists of three members, Gary Babbitt (Chairman), Whitney Ferer, and Hart Baitis.  None of the Audit Committee members are involved in our day-to-day financial management.  Hart Baitis is considered a financial expert.During 2011, the Board also established a Compensation Committee and a Nominating Committee.Board Member Compensation.  We paid directors' fees in the form of 26,000 shares of our common stock per director during 2010.  In January of 2012, we issued the directors 149,500 shares, of which 95,835 shares were for services during 2011.  The remaining shares will be part of the directors’ compensation for 2012.  Following is a summary of fees, cash payments, stock awards, and other reimbursements to Directors during the year ended December 31, 2012:

| Name |  | Age |  | Affiliation |  | Expiration of Term |
| --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |
| John C. Lawrence |  | 74 |  | Chairman, President, |  | Annual meeting |
|  |  |  |  | Treasurer; Director |  |  |
|  |  |  |  |  |  |  |
| John C. Gustavsen |  | 64 |  | First Vice-President |  | Annual meeting |
|  |  |  |  |  |  |  |
| Russell C. Lawrence |  | 44 |  | Second Vice-President |  | Annual meeting |
|  |  |  |  | And Director |  |  |
|  |  |  |  |  |  |  |
| Matthew Keane |  | 58 |  | Third Vice-President |  | Annual meeting |
|  |  |  |  |  |  |  |
| Daniel L. Parks |  | 64 |  | Chief Financial Officer |  | Annual meeting |
|  |  |  |  |  |  |  |
| Alicia Hill |  | 31 |  | Secretary and Controller |  | Annual meeting |
|  |  |  |  |  |  |  |
| Bernard Guarnera |  | 69 |  | Director |  | Annual meeting |
|  |  |  |  |  |  |  |
| Gary D. Babbitt |  | 67 |  | Director |  | Annual meeting |
|  |  |  |  |  |  |  |
| Whitney Ferer |  | 54 |  | Director |  | Annual meeting |
|  |  |  |  |  |  |  |
| Hart W. Baitis |  | 63 |  | Director |  | Annual meeting |


SECTION 16(A) OF THE EXCHANGE ACT

Section 16(a) Beneficial Ownership Reporting Compliance.  Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers and the holders of 10% or more of our common stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and stockholders holding more than 10% of our common stock are required by the regulation to furnish us with copies of all Section 16(a) forms they have filed. Based solely on our review of copies of Forms 3, 4 and 5 furnished to us, Mr.John Lawrence, Mr. Baitis, Mr. Babbitt, Mr. Ferer, Mr. Guarnera, and Mr.Russell Lawrence did not file timely Forms 3, 4 or Form 5 reports during 2012, 2011, or 2010.Code of EthicsThe Company has adopted a Code of Ethics that applies to the Company's executive officers and its directors.  The Company will provide, without charge, a copy of the Code of Ethics on the written request of any person addressed to the Company at: United States Antimony Corporation, P.O. Box 643, Thompson Falls, MT 59873.


ITEM 11. EXECUTIVE COMPENSATION

(1)

Represents earned but unused vacation.

(2)

These figures represent the fair values, as of the date of issuance, of the annual director's fee payable to Mr. Lawrence in the form of shares of USAC's common stock.

Compensation for all executive officers, except for the President/CEO position, is recommended to the compensation committee of the Board of Directors by the President/CEO.  The compensation committee makes the recommendation for the compensation of the President/CEO.  The compensation committee has identified a peer group of mining companies to aid in reviewing the President’s compensation recommendations for executives, and for reviewing the compensation of the President/CEO.  The full Board approves the compensation amounts recommended by the compensation committee. Currently, the executive managements’ compensation only includes base salary and health insurance.  The Company does not have annual performance based salary increases, long term performance based cash incentives, deferred compensation, retirement benefits, or disability benefits.  For the year ended December 31, 2011, The Chief Executive Officer (CEO) received an increase in base compensation of $24,000 annually.  The Board of Directors determined that the CEO’s compensation for the prior year ended December 31, 2010, was substantially less than that of Chief Executive Officers for similar companies, and that a raise was appropriate to compensate the CEO for management of a Company with the complexities of United States Antimony Corporation.

Two executive officers, the President/CEO and the Vice-President for the Latin American operations, receive restricted stock awards for their services as Board members.

The following table sets forth information concerning the outstanding equity awards at December 31, 2012, held by our principal executive officer.  There were not any other outstanding equity awards or plan based awards to officers or directors as of December 31, 2012.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(1)

Beneficial Ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable or convertible, or exercisable or convertible within 60 days of March 18, 2013, are deemed outstanding for computing the percentage of the person holding options or warrants but are not deemed outstanding for computing the percentage of any other person. Percentages are based on a total of 61,896,726 shares of common stock, 750,000 shares of Series B Preferred Stock, 177,904 shares of Series C Preferred Stock, and 1,751,005 shares of Series D Preferred Stock outstanding on March 18, 2013.  Total voting stock of 63,825,635 shares is a total of all the common stock issued, and all of the Series C and Series D Preferred Stock.

(2)

Includes 3,801,653 shares of common stock and 250,000 stock purchase warrants.  Excludes 183,324 shares owned by Mr. Lawrence's sister, as to which Mr. Lawrence disclaims beneficial ownership.

(3)

Includes shares owned by the estate of Al W. Dugan and shares owned by companies owned and controlled by the estate of Al W. Dugan.  Excludes 183,333 shares owned by Lydia Dugan as to which the estate of Mr. Dugan disclaims beneficial ownership.

(4)

The outstanding Series C and Series D preferred shares carry voting rights equal to the same number of shares of common stock.

(5)

The outstanding Series B preferred shares carry voting rights only if the Company is in default in the payment of declared dividends.  The Board of Directors has not declared any dividends as due and payable for the Series B preferred stock.

|  |  | Name and Address of |  | Amount and Nature of |  | Percent of |  | Percent of |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Title of Class |  | Beneficial Owner(1) |  | Beneficial Ownership |  | Class(1) |  | all Voting Stock |
|  |  |  |  |  |  |  |  |  |
| Common stock |  | Reed Family Limited Partnership |  | 3,918,335 |  | 7 |  | 7 |
|  |  | 328 Adams Street |  |  |  |  |  |  |
|  |  | Milton, MA 02186 |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |
| Common stock |  | The Dugan Family |  | 6,362,927(3) |  | 10 |  | 10 |
|  |  | c/o A. W. Dugan |  |  |  |  |  |  |
|  |  | 1415 Louisiana Street, Suite 3100 |  | |  |  |  |  |
|  |  | Houston, TX 77002 |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |
| Series B Preferred |  | Excel Mineral Company |  | 750,000(5) |  | 100 |  | N/A |
|  |  | PO Box 3800 |  |  |  |  |  |  |
|  |  | Santa Barbara, CA 93130 |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |
| Series C Preferred |  | Richard A. Woods |  | 48,305(4) |  | 27 |  | Nil |
|  |  | 59 Penn Circle West |  |  |  |  |  |  |
|  |  | Penn Plaza Apts. |  |  |  |  |  |  |
|  |  | Pittsburgh, PA 15206 |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |
| Series C Preferred |  | Dr. Warren A. Evans |  | 48,305(4) |  | 27 |  | Nil |
|  |  | 69 Ponfret Landing Road |  |  |  |  |  |  |
|  |  | Brooklyn, CT 06234 |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |
| Series C Preferred |  | Edward Robinson |  | 32,203(4) |  | 18 |  | Nil |
|  |  | 1007 Spruce Street 1st Floor |  |  |  |  |  |  |
|  |  | Philadelphia, PA 19107 |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |
| Series C Preferred |  | All Series C Preferred Shareholders |  |  |  |  |  |  |
|  |  | as a group |  | 177,904(4) |  | 100 |  | Nil |
|  |  |  |  |  |  |  |  |  |
| Common stock |  | John C. Lawrence |  | 4,128,346(2) |  | 7 |  | 7 |
| Common stock |  | Hart Baitis |  | 20,526 |  | Nil |  | Nil |
| Common stock |  | Russ Lawrence |  | 165,693 |  | Nil |  | Nil |
| Common stock |  | Bernard Guarnera |  | 12,275 |  | Nil |  | Nil |
| Common stock |  | Gary Babbitt |  | 134,167 |  | Nil |  | Nil |
| Common stock |  | Whitney Ferer |  | 58,026 |  | Nil |  | Nil |
| Common stock |  | Matthew Keane |  | 10,300 |  | Nil |  | Nil |
| Common stock |  | Daniel Parks |  | 35,400 |  | Nil |  | Nil |
| Common Stock |  | All directors and executive |  |  |  |  |  |  |
|  |  | officers as a group |  | 4,564,733 |  | 7 |  | 7 |
|  |  |  |  |  |  |  |  |  |
| Series D Preferred |  | John C. Lawrence |  | 1,590,672(4) |  | 91 |  | 3 |
| Series D Preferred |  | Leo Jackson |  | 102,000 |  | 5 |  | Nil |
| Series D Preferred |  | Gary Babbit |  | 58,333 |  | Nil |  | Nil |
| Series D Preferred |  | All Series D Preferred Shareholders |  |  |  |  |  |  |
|  |  | as a group |  | 1,751,005(4) |  | 100 |  | 3 |


ITEM 15.  EXHIBITS AND REPORTS ON FORM 8-K

*    Filed herewith.Reports on Form 8-K

| 10.43 |  | Settlement agreement and release of all claims between the Estate of Bobby C. Hamilton and United States Antimony Corporation filed as an exhibit to USAC form 10-QSB for the quarter ended June 30, 2000 (File No. 001-08675) are incorporated herein by this reference. |
| --- | --- | --- |
|  |  |  |
| 10.44 |  | Supply Contracts with Fortune America Trading Ltd. filed as an exhibit to USAC form 10-QSB for the quarter ended June 30, 2000 (File No. 001-08675) are incorporated herein by this reference |
|  |  |  |
| 10.45 |  | Amended and Restated Agreements with Thomson Kernaghan & Co., Ltd, filed as an exhibit to amendment No. 3 to USAC's Form SB-2 Registration Statement (Reg. No. 333-45508), are incorporated herein by this reference |
|  |  |  |
| 10.46 |  | Purchase Order from Kohler Company, filed as an exhibit to amendment No. 4 to USAC's Form SB-2 Registration Statement (Reg. No. 333-45508) are incorporated herein by this reference |
|  |  |  |
| Documents filed as an exhibit to USAC's Form 10-QSB for the quarter ended June 30, 2002 (File No. 001-08675) are incorporated herein by this reference: | | |
|  |  |  |
| 10.47 |  | Bear River Zeolite Company Royalty Agreement, dated May 29, 2002 |
|  |  |  |
| 10.48 |  | Grant of Production Royalty, dated June 1, 2002 |
|  |  |  |
| 10.49 |  | Assignment of Common Stock of Bear River Zeolite Company, dated May 29, 2002 |
|  |  |  |
| 10.50 |  | Agreement to Issue Warrants of USA, dated May 29, 2002 |
|  |  |  |
| 10.51 |  | Secured convertible note payable - Delaware Royalty Company dated December 22, 2003\* |
|  |  |  |
| 10.52 |  | Convertible note payable - John C. Lawrence dated December 22, 2003\* |
|  |  |  |
| 10.53 |  | Pledge, Assignment and Security Agreement dated December 22, 2003\* |
|  |  |  |
| 10.54 |  | Note Purchase Agreement dated December 22, 2003\* |
|  |  |  |
| 14.0 |  | Code of Ethics\* |
|  |  |  |
| 31.1 |  | Rule 13a-14(a)/15d-14(a) Certifications |
|  |  | Certification of John C. Lawrence\* |
|  |  |  |
| 32.1 |  | Section 1350 Certifications |
|  |  | Certification of John C. Lawrence\* |
|  |  |  |
| 44.1 |  | CERCLA Letter from U.S. Forest Service filed as an exhibit to USAC form 10-QSB for the quarter ended June 30, 2000 (File No. 001-08675) are incorporated herein by this reference and filed as an exhibit to USAC's Form 10-KSB for the year ended December 31, 1995 (File No. 1-8675) is incorporated herein by this reference |


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

|  | UNITED STATES ANTIMONY CORPORATION | |  |
| --- | --- | --- | --- |
|  | (Registrant) | |  |
|  |  |  |  |
| Date: March 18, 2013 | By: |  |  |
|  |  | John C. Lawrence, President, Director, |  |
|  |  | and Principal Executive Officer |  |
|  |  |  |  |
| Date: March 18, 2013 | By: |  |  |
|  |  | Daniel L. Parks, Chief Financial Officer |  |
|  |  |  |  |
| Date: March 18, 2013 | By: |  |  |
|  |  | Alicia Hill, Controller |  |


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The accompanying notes are an integral part of these consolidated financial statements.

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Table of Contents


The Company's revenues from antimony sales are strongly influenced by world prices for such commodities, which fluctuate and are affected by numerous factors beyond the Company's control, including inflation and worldwide forces of supply and demand. The aggregate effect of these factors is not possible to predict accurately.

F-6

Table of Contents

United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2012, 2011 and 2010

3.    Summary of Significant Accounting PoliciesPrinciples of ConsolidationThe Company's consolidated financial statements include the accounts of BRZ, USAMSA and AM, all wholly-owned subsidiaries.  Intercompany balances and transactions are eliminated in consolidation.Use of EstimatesThe preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant and critical estimates include property, plant and equipment impairment, accounts receivable allowance, deferred income taxes, environmental remediation liabilities and asset retirement obligations. Actual results could differ from those estimates.ReclassificationsCertain reclassifications have been made to the 2011 and 2010 financial statements in order to conform to the 2012 presentation.  These reclassifications have no effect on net income (loss), total assets or stockholders' equity as previously reported.Cash and Cash EquivalentsThe Company considers cash in banks and investments with original maturities of three months or less when purchased to be cash equivalents.Restricted CashRestricted cash at December 31, 2012 and 2011 consists of cash held for reclamation performance bonds, and is held as certificates of deposit with financial institutions.Accounts ReceivableAccounts receivable are stated at the amount that management expects to collect from outstanding balances.  Management provides for probable uncollectible amounts through an allowance for doubtful accounts.  Changes to the allowance for doubtful accounts are based on management’s judgment, considering historical write-offs, collections and current credit conditions.  Balances which remain outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to the applicable accounts receivable.  Payments received on receivables subsequent to being written off are considered a bad debt recovery.InventoriesInventories at December 31, 2012 and 2011, consisted primarily of finished antimony products, antimony metal, antimony ore, and finished zeolite products that are stated at the lower of first-in, first-out cost or estimated net realizable value. Finished antimony products, antimony metal and finished zeolite products costs include raw materials, direct labor and processing facility overhead costs and freight allocated based on production quantity. Since the Company's antimony inventory is a commodity with a sales value that is subject to world prices for antimony that are beyond the Company's control, a significant change in the world market price of antimony could have a significant effect on the net realizable value of inventories. The Company periodically reviews its inventories to identify excess and obsolete inventories and to estimate reserves for obsolete inventories as necessary to reflect inventories at net realizable value.

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Table of Contents

United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2012, 2011 and 2010

3.    Summary of Significant Accounting Policies, continued
Properties, Plants and EquipmentProperties, plants and equipment are stated at historical cost and are depreciated using the straight-line method over estimated useful lives of five to fifteen years. Vehicles and office equipment are stated at cost and are depreciated using the straight-line method over estimated useful lives of three to seven years.  Maintenance and repairs are charged to operations as incurred. Betterments of a major nature are capitalized.  Expenditures for new propertyplant, equipment, and improvements that extend the useful life or functionality of the asset are capitalized.  The Company capitalized $5,002,392 and $2,473,750 in plant construction and other capital costs for the years ended December 31, 2012 and 2011, respectively.  These amounts include capitalized interest of $14,313 and $10,888, respectively. When assets are retired or sold, the costs and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is reflected in operations.Management of the Company periodically reviews the net carrying value of all of its long-lived assets. These reviews consider the net realizable value of each asset or group to determine whether a permanent impairment in value has occurred and the need for any asset write-down. An impairment loss is recognized when the estimated future cash flows (undiscounted and without interest) expected to result from the use of an asset are less than the carrying amount of the asset.  Measurement of an impairment loss is based on the estimated fair value of the asset if the asset is expected to be held and used.Translations of Foreign CurrenciesAll amounts are presented in United States (US) Dollars, and the US Dollar is the functional currency of the Company and its foreign subsidiaries.  All transactions are carried out in US Dollars, or translated at the time of the transaction.  There are no accounts carried in foreign currencies that would require translation at year end.Mineral RightsThe cost to obtain the legal right to explore, extract and retain at least a portion of the benefits from mineral deposits are capitalized as mineral rights in the year of acquisition.  These capitalized costs will be amortized to the statement of operations using the unit of production method when placed into production.  Mineral rights are assessed for impairment when facts and circumstances indicate that the potential for impairment exists.  No impairment has been indicated for the years ended December 31, 2012 or 2011 as a result of this assessment.  Mineral rights are subject to write down in the period the property is abandoned.Exploration and DevelopmentThe Company records exploration costs as operating expenses in the period they occur, and capitalizes development costs on discrete mineralized bodies that have proven reserves in compliance with SEC Industry Guide 7, and are in development or production.Reclamation and RemediationAll of the Company's mining operations are subject to reclamation and remediation requirements. Minimum standards for mine reclamation have been established by various governmental agencies. Costs are estimated based primarily upon environmental and regulatory requirements and are accrued. The liability for reclamation is classified as current or noncurrent based on the expected timing of expenditures.  Reclamation differs from an asset retirement obligation in that no associated asset is recorded in the case of reclamation liabilities.

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Table of Contents

United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2012, 2011 and 2010
3.    Summary of Significant Accounting Policies, continuedIt is reasonably possible that because of uncertainties associated with defining the nature and extent of environmental contamination, application of laws and regulations by regulatory authorities, and changes in remediation technology, the ultimate cost of remediation and reclamation could change in the future. The Company continually reviews its accrued liabilities for such remediation and reclamation costs as evidence becomes available indicating that its remediation and reclamation liability has changed.The Company records the fair value of an asset retirement obligation as a liability in the period in which the Company incurs a legal obligation for the retirement of long-lived assets, it is probable that such costs will be incurred and they are reasonably estimable.  A corresponding asset is also recorded and depreciated over the life of the assets on a units-of-production basis.  After the initial measurement of the asset retirement obligation, the liability will be adjusted at the end of each reporting period to reflect changes in the estimated future cash flows underlying the obligation.  Determination of any amounts recognized upon adoption is based upon numerous estimates and assumptions, including future retirement costs, future inflation rates, and the credit-adjusted risk-free interest rates.Revenue RecognitionSales of antimony and zeolite products are recorded upon shipment and when title passes to the customer.  Prepayments received from customers prior to the time that products are shipped are recorded as deferred revenue.  When the related products are shipped, the amount recorded as deferred revenue is recognized as revenue.  The Company's sales agreements provide for no product returns or allowances.Sales of precious metals are recognized when pervasive evidence of an arrangement exists, the price is fixed and determinable, the product has been delivered, title has transferred, and collection is reasonably assured.Common Stock Issued for Consideration Other than CashAll transactions in which goods or services are received for the issuance of shares of the Company’s common stock are accounted for based on the fair value of the consideration received or the fair value of the common stock issued, whichever is more readily determinable.Income TaxesIncome taxes are accounted for under the liability method.  Under this method, deferred income tax liabilities or assets are determined at the end of each period using the tax rate expected to be in effect when the taxes are actually paid or recovered.  A valuation allowance is recognized on deferred tax assets when it is more likely than not that some or all of these deferred tax assets will not be realized.The Company applies generally accepted accounting principles for recognition of uncertainty in income taxes and prescribing a recognition threshold and measurement attribute for the recognition and measurement of a tax position taken or expected to be taken in a tax return.Allowance for Doubtful AccountsThe allowance for doubtful accounts is based on management’s regular evaluation of individual customer’s receivables and consideration of a customer’s financial condition and credit history.  Trade receivables are written off when deemed uncollectible.  Recoveries of trade receivables previously written off are recorded when received.  Interest is not charged on past due accounts.

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Table of Contents

United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2012, 2011 and 2010

3.    Summary of Significant Accounting Policies, continuedIncome (Loss) Per Common ShareBasic earnings per share is calculated by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period.  Diluted earnings per share is calculated based on the weighted average number of common shares outstanding during the period plus the effect of potentially dilutive common stock equivalents, including warrants to purchase the Company's common stock and convertible preferred stock.  Management has determined that the calculation of diluted earnings per share for the years ended December 31, 2012, 2011 and 2010, adds none, 525,827 and 221,361 shares, respectively, to basic weighted average shares, related to common stock purchase warrants.  Shares related to warrants and convertible preferred stock was not added to the weighted average of common stock for 2012 because the results would have been anti-dilutive. As of December 31, 2012, 2011 and 2010, the remaining potentially dilutive common stock equivalents not included in the calculation of diluted earnings per share are as follows:


Fair Value of Financial InstrumentsThe Company’s financial instruments include cash and cash equivalents, restricted cash and long-term debt.  The carrying value of certificates of deposit, restricted cash, and long-term debt approximates fair value based on the contractual terms of those instruments.Fair Value MeasuresASC 820, “Fair Value Measurements and Disclosures”, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

●

Level 1: Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

●

Level 2: Applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

●

Level 3: Applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

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Table of Contents

United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2012, 2011 and 2010

3.    Summary of Significant Accounting Policies, continuedThe table below sets forth our financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2012 and 2011, respectively, and the fair value calculation input hierarchy level that we have determined applies to each asset and liability category.


4.     Accounts Receivable and Due to Factor


The factoring agreement requires the Company to pay a financing fee equal to 2% of the face amount of receivables sold.  Factoring fees paid by the Company during the years ended December 31, 2012, 2011 and 2010 were $78,100, $154,206, and $119,107, respectively.  For the years ended December 31, 2012, 2011, and 2010, net accounts receivable of approximately $ 3.80 million, $7.39 million, and $5.96 million, respectively, were sold under the agreement.Proceeds from the sales were used to fund inventory purchases and operating expenses.  The agreement is for a term of one year with automatic renewal for additional one-year terms.

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Table of Contents

United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2012, 2011 and 2010

5.    InventoriesThe major components of the Company's inventories at December 31, 2012 and 2011 were as follows:


At December 31, 2012 and 2011, antimony metal consisted principally of recast metal from antimony-based compounds, and metal purchased from foreign suppliers.  Antimony oxide inventory consisted of finished product oxide held at the Company's plant. Antimony concentrates and ore was held primarily at sites in Mexico and is essentially raw material, carried at cost.   The Company's zeolite inventory consists of salable zeolite material held at BRZ's Idaho mining and production facility, and is carried at cost.As we processed purchased ore from our inventory n Mexico, we became aware that, due to analytical problems, we were over paying for direct shipping ore.  We received credits from some of our Mexican ore suppliers for previously purchased ore.  As part of the negotiations, we exercised our option to purchase the Soyatal mine properties for approximately $1.3MM.  We are obligated to make payments of $200,000 annually through 2018, and a final payment of $100,000 is due in 2019.  This obligation is recorded in long-term debt as Soyatal Mine. We have credits of approximately $342,000 recorded in other assets for advances to the previous Soyatal operator which can be used as a payment on our debt at a rate of $100,000 per year, or offset from future ore purchase payments which may become due to the suppliers.6.    Properties, Plants and EquipmentThe major components of the Company's properties, plants and equipment at December 31, 2012 and 2011 are shown below.  Approximately $1.4 million and $1.6 million of capitalized costs at December 31, 2012 and 2011, respectively, related primarily to the construction of an antimony mill in Mexico, have not yet been placed in service and, therefore, have not been subject to depreciation for those years.During 2010 the Company incurred an impairment charge of $199,302 on certain constructed assets at its Cal Los Arcos Mexican mill site because it was determined that the mill site was no longer viable.  Assets such as installation costs and concrete work that were unable to be transported to the new mill site at Corral Blanco were deemed to be impaired and therefore written off.

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United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2012, 2011 and 2010

6.    Properties, Plants and Equipment, continued


During 2011, the Company assessed the obligation for removal and remediation costs relating to its plants and mine in Mexico.  Management assigned a cost to the expected work involved in complying with the requirements of the Mexico operating permits.  Management applied, based on a 20 year life, a cost inflation factor, and then discounted that cost to a current net present value based on a discount rate of 6% (management’s estimate of its credit-adjusted interest rate). Management determined a future cost in 2031 of approximately $430,000 with a net present value of $142,040.


The asset retirement obligation liability is combined with reclamation obligations for Idaho and Montana operations of $107,500 at December 31, 2012.

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Table of Contents

United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2012, 2011 and 2010

7.    Long-Term Debt:


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Table of Contents

United States Antimony Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2012, 2011 and 2010

7.    Long-Term Debt, continued
At December 31, 2102, principal payments on debt are due as follows:

| Long-Term debt at December 31, 2012 and 2011, is as follows: |  |  | |  |  |  | |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  | 2012 | |  |  | 2011 | |  |
| Note payable to Thermo Fisher Financial Co., bearing interest |  |  | |  |  |  | |  |
| at 5.67%; payable in monthly installments of $3,522; maturing |  |  | |  |  |  | |  |
| September 2013; collateralized by equipment. |  | $ | 34,310 |  |  | $ | - |  |
| Note payable to Thermo Fisher Financial Co., bearing interest |  |  |  |  |  |  |  |  |
| at 8.54%; payable in monthly installments of $2,792; maturing |  |  |  |  |  |  |  |  |
| December 2013; collateralized by equipment. |  |  | 30,708 |  |  |  | - |  |
| Note payable to Stearns Bank, bearing interest |  |  |  |  |  |  |  |  |
| at 6.9%; payable in monthly installments of $3,555; maturing |  |  |  |  |  |  |  |  |
| December 2014; collateralized by equipment. |  |  | 79,500 |  |  |  | - |  |
| Note payable to Western States Equipment Co., bearing interest |  |  |  |  |  |  |  |  |
| at 6.15%; payable in monthly installments of $2,032; maturing |  |  |  |  |  |  |  |  |
| June 2015; collateralized by equipment. |  |  | 56,390 |  |  |  | 77,040 |  |
| Note payable to CNH Capital America, LLC, bearing interest |  |  |  |  |  |  |  |  |
| at 4.5%; payable in monthly installments of $505; maturing |  |  |  |  |  |  |  |  |
| June 2013; collateralized by equipment. |  |  | 3,478 |  |  |  | 8,648 |  |
| Note payable to Catepillar Financial, bearing interest at 5.95%; |  |  |  |  |  |  |  |  |
| payable in monthly installments of $827; maturing September 2015; |  |  |  |  |  |  |  |  |
| collateralized by equipment. |  |  | 25,823 |  |  |  | - |  |
| Note payable to GE Capital, bearing interest at 2.25%; payable in |  |  |  |  |  |  |  |  |
| monthly installments of $359; maturing July 2013; collateralized by |  |  |  |  |  |  |  |  |
| equipment. |  |  | 2,847 |  |  |  | 6,531 |  |
| Note payable toDe Lage Landen Financial Services |  |  |  |  |  |  |  |  |
| bearing interest at 5.30%; payable in monthly installments of $549; |  |  |  |  |  |  |  |  |
| maturing  March 2016; collateralized by equipment. |  |  | 19,629 |  |  |  | - |  |
| Note payable to Phyllis Rice, bearing interest |  |  |  |  |  |  |  |  |
| at 1%; payable in monthly installments of $2,000; maturing |  |  |  |  |  |  |  |  |
| March 2015; collateralized by equipment. |  |  | 55,365 |  |  |  | 80,882 |  |
| Note payable to De Lage Landen Financial Services, |  |  |  |  |  |  |  |  |
| bearing interest at 5.12%; payable in monthly installments of $697; |  |  |  |  |  |  |  |  |
| maturing December 2014; collateralized by equipment. |  |  | 16,496 |  |  |  | 19,229 |  |
| Note payable to Catepillar Financial, bearing interest |  |  |  |  |  |  |  |  |
| at 6.15%; payable in monthly installments of $766; maturing |  |  |  |  |  |  |  |  |
| August 2014; collateralized by equipment. |  |  | 14,535 |  |  |  | 21,990 |  |
| Note payable to De Lage Landen Financial Services, |  |  |  |  |  |  |  |  |
| bearing interest at 5.28%; payable in monthly installments of $709; |  |  |  |  |  |  |  |  |
| maturing June 2014; collateralized by equipment. |  |  | 12,235 |  |  |  | 23,529 |  |
| Note payable for Corral Blanco Land, bearing interest at 6.0%, |  |  |  |  |  |  |  |  |
| due May 1, 2013; collateralized by land |  |  | 86,747 |  |  |  | - |  |
| Note payable for Soyatal Mine, 7.0 % interest, |  |  |  |  |  |  | - |  |
| annual payments of $200,000  through 2019; |  |  | 1,067,431 |  |  |  |  |  |
|  |  |  | 1,505,494 |  |  |  | 237,849 |  |
| Less Current portion |  |  | (461,354 | ) |  |  | (79,631 | ) |
| Non-Current portion |  | $ | 1,044,140 |  |  | $ | 158,218 |  |


8.    Stockholders' Equity