Brazil Minerals, Inc. (Form: 10-K/A, Received: 07/01/2014 06:01:50)

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No. 1)

(Mark One)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2013

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 333-180624

Brazil Minerals, Inc.

(Exact name of registrant as specified in its charter)

Nevada		39-2078861
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification No.)

324 South Beverly Drive, Suite 118

Beverly Hills, California 90212

(Address of principal executive offices)

Issuer’s telephone number, including area code: (213) 590-2500

Securities registered pursuant to Section 12(b) of the Act: None.

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $.001 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. (as defined in Rule 12b-2 of the Exchange Act). Check one:

Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company þ
		(Do not check if a smaller
		reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) . Yes ¨ No þ

As of April 10, 2014, the aggregate market value of the shares of the registrant’s common stock held by non-affiliates (based upon the closing stock price of $0.10 on such date as reported on otcmarkets.com) was approximately $4,386,407. Shares of the Registrant’s common stock held by each executive officer and director and by each person who owns 10 percent or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates of the Registrant. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of April 10, 2014, there were outstanding 76,409,116 shares of the registrant’s common stock, $.001 par value.

Documents incorporated by reference: None.

EXPLANATORY NOTE

We are filing this Amendment No. 1 to the Annual Report on Form 10-K of Brazil Minerals, Inc. for the fiscal year ended December 31, 2013 that we filed with the Securities and Exchange Commission (the “SEC”) on April 14, 2014 to revise certain disclosures pursuant to a comment letter we received from the SEC in connection with our filing of the Registration Statement on Form 10 with the SEC on April 29, 2014.

FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-K (“Annual Report”) contains forward-looking statements. Forward-looking statements for Brazil Minerals, Inc. reflect current expectations, as of the date of this Annual Report, and involve certain risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors. Factors that could cause future results to materially differ from the recent results or those projected in forward-looking statements include : unprofitable efforts resulting not only from the failure to discover mineral deposits but also from finding mineral deposits that, though present, are insufficient in quantity and quality to return a profit from production; market fluctuations; government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals, and environmental protection; competition; the loss of services of key personnel; unusual or infrequent weather phenomena, sabotage, government or other interference in the maintenance or provision of infrastructure as well as general economic conditions.

PART I

ITEM 1. BUSINESS

Overview

Brazil Minerals, Inc. (OTCQB: BMIX) (the "Company", "BMIX", “we”, “us”, or “our”) is a U.S. holding company with investments in Brazil. The primary business of BMIX is to acquire ownership positions in producing mining companies in Brazil. The secondary business of BMIX is to engage in the creation of new companies in Brazil with mineral properties for exploration and development.

In 2013, our consolidated revenues were generated from the sale of rough diamonds and gold by one of the companies in which we had invested. Starting in 2014, our consolidated revenues derived from such subsidiary include sales of polished diamonds as well as rough diamonds and gold.

General Development of our Business

We were incorporated under the laws of the State of Nevada under the name of Flux Technologies, Corp. on December 15, 2011. From inception until December 2012, the Company’s operations were limited to the development of a business plan, the completion of sales of our common stock, discussion with potential customers, and the signing and performance of a service agreement with one company.

Immediately after the transactions discussed below, the Company discontinued its 3D animation services business and entered its current business of investment in mining companies and mineral assets in Brazil.

On December 18, 2012, the Company, Iryna Antaniuk, the then sole director and sole officer of the Company (“Antaniuk”), and Brazil Mining, Inc., a Delaware corporation (“Brazil Mining”) entered into, and on December 19, 2012 they consummated, an Acquisition Agreement (the “Acquisition Agreement”). Pursuant to the Acquisition Agreement, (a) 3,000,000 shares of Common Stock held by Antaniuk were cancelled and retired, (b) Brazil Mining paid to the Company $25,000, (c) the Company used the $25,000 payment from Brazil Mining to pay and satisfy all of the Company’s liabilities and (d) the Company’s sole officer and director prior to the signing of the Agreement resigned and Marc Fogassa was elected as a director of the Company.

On December 19, 2012, the Company consummated Subscription Agreements with 37 investors pursuant to which the Company issued and sold to these investors for $33.333 per share an aggregate of 60,002 shares of the Company’s Common Stock for an aggregate purchase price of $2,000,006.66. Such Common Stock was issued in accordance with an exemption from the registration requirements of the Securities Act of 1933 as amended (the “Securities Act”), under Section 4(2) of the Securities Act by virtue of compliance with the provisions of Regulation D under the Securities Act.

As contemplated by the Subscription Agreements, on December 18, 2012, the Company amended its Articles of Incorporation to authorize 10,000,000 shares of a class of “blank check” preferred stock and filed a Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock. One share of Series A Convertible Preferred Stock (“Series A Stock”) was designated and issued by the previous management of the Company for $1.00 to Marc Fogassa, who was elected on such date as a director and as the Chief Executive Officer of the Company. The Certificate of Designations of the Series A Stock, among other things, provides that, for so long as Series A Stock is issued and outstanding, the holders of Series A Stock shall vote together as a single class with the holders of the Common Stock, and the holders of any other class or series of shares entitled to vote with the Common Stock, with the holders of Series A Preferred Stock being entitled to 51% of the total votes on all such matters regardless of the actual number of shares of Series A Preferred Stock then outstanding, and the holders of Common Stock and any other shares entitled to vote being entitled to their proportional share of the remaining 49% of the total votes based on their respective voting power.

In connection with the Acquisition Agreement, the Company entered into and consummated a Contribution Agreement with Brazil Mining (the “Contribution Agreement”) pursuant to which Brazil Mining contributed to the Company by way of an Assignment of Mineral Rights, the mineral exploration rights on a mining claim with approximately 24,700 acres located in the municipality of Borba, State of Amazonas, Brazil. Brazil Mining also entered into an Option Agreement with the Company pursuant to which Brazil Mining granted to the Company an option to purchase for $800,000 a 20% share of the monthly diamond production that Brazil Mining would actually receive in respect of Brazil Mining’s then anticipated acquisition of a 55% equity interest in a Brazilian entity (the “Option Agreement”). Pursuant to the Contribution Agreement, the Company issued to Brazil Mining an aggregate of 1,073,511 shares of the Company’s Common Stock, par value $.001 per share, constituting 51% of the issued and outstanding shares of Common Stock of the Company giving effect to all of the transactions consummated on December 19, 2012 including issuances of stock and warrants to the placement agent on a fully diluted basis. On January 2, 2013, the Company exercised the option granted to the Company pursuant to the Option Agreement.

On January 24, 2013, the Company filed with the Secretary of State of the State of Nevada a Certificate of Amendment to the Articles of Incorporation of the Company to increase the number of authorized shares of its Common Stock from 75 million to 150 million shares. The Company declared a 33.333-1 stock dividend payable to holders of record of the Company’s Common Stock as of January 22, 2013. The payment date for the dividend was January 25, 2013.

On March 23, 2013, the Company and Brazil Mining entered into, and on April 30, 2013 consummated, an Exchange Agreement (the “Exchange Agreement”) pursuant to which Brazil Mining sold to a 99.99% owned Brazilian subsidiary of the Company (“BMIXP”), the rights to all profits, losses and appreciation or depreciation and all other economic and voting interests of any kind in Brazil Mining’s 55% equity interest in Mineração Duas Barras Ltda., a Brazilian company (“MDB”) in exchange for the issuance to Brazil Mining of 1,000,000 shares of the Company’s Common Stock.

As discussed in further detail throughout this report, some further significant developments to our business during 2013 were as follows:

(1)

Our revenues increased to $791,780, compared with zero during 2012;

(2)

We obtained from the Brazilian federal authority the license to export MDB’s production;

(3)

We decided to verticalize our business model and enter the business of cutting and polishing a small part of MDB’s diamond production;

(4)

We graded and certified at the Gemological Institute of America (GIA) our first lot of polished diamonds from MDB’s production which were exported from Brazil to the U.S.;

(5)

We confirmed the geochemical occurrence of gold and copper in our property in the state of Amazonas in Brazil;

(6)

We raised $100,000 through the private placement of securities to two accredited investors.

Subsequent to the end of our fiscal year 2013, and through March 31, 2014, the following significant developments have occurred:

(1)

We received $1,048,000 in cash without the outright sale of any of our stock; this cash consisted of $525,000 in revenues from sales of polished diamonds for forward delivery and $523,000 in convertible notes;

(2)

We paid off and retired $25,000 in principal from a 2013 convertible note;

(3)

We added a preeminent Brazilian mining lawyer who is also a licensed geologist to our Board of Directors;

(4)

As of March 31, 2014, we had 2,754 stockholders of record of our common stock.

Emerging Growth Company Status

We may be deemed to be an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act. As long as we remain an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding an annual nonbinding advisory vote on executive compensation and seeking nonbinding stockholder approval of any golden parachute payments not previously approved. We may take advantage of these reporting exemptions until we are no longer an “emerging growth company.”

Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

We will remain an “emerging growth company” for up to five years, although we would cease to be an “emerging growth company” prior to such time if we have more than $1 billion in annual revenue, more than $700 million in market value of our common stock is held by non-affiliates, or we issue more than $1 billion of non-convertible debt over a three-year period.

Certain Definitions

As used herein, the following terms have the meanings indicated:

Gemological Institute of America (GIA) : The Gemological Institute of America, or GIA, is a nonprofit institute dedicated to research and education in the field of gemology and the jewelry arts. Founded in 1931, GIA's mission is to protect all buyers and sellers of gemstones by setting and maintaining the standards used to evaluate gemstone quality. In 1953 the GIA developed its International Diamond Grading System and the Four Cs (cut, clarity, color, and carat weight) as a standard to compare and evaluate the quality of diamonds. GIA is headquartered in Carlsbad, California and operates out of 14 countries, with 12 campuses, seven laboratories and four research centers worldwide. We have had MDB’s polished diamonds graded at GIA’s Carlsbad laboratory.

SGS-Geosol : SGS-Geosol is considered the premier company in Brazil that performs analysis of mineral samples. Its clients include most of major global mining companies operating in Brazil. SGS Geosol has a central laboratory and 6 other branches and units throughout the country. We have had geochemical studies in samples collected by our geologists in various assignments analyzed at their Belo Horizonte headquarters facility.

2013 Significant Developments

Mineração Duas Barras Ltda.

On March 23, 2013, we entered into an agreement with Brazil Mining, Inc. (“BMI”) pursuant to which we acquired, through a subsidiary, BMI’s 55% interest in MDB for $660,000 in consideration.

Export License

In July 2013, we obtained the necessary license from the Brazilian federal regulator (Siscomex) allowing the export of rough and polished diamonds as well as gold from MDB.

Verticalization of Our Business Model

During the third quarter of 2013, we began to cut and polish a small percentage of the rough diamonds produced from MDB. We have utilized a cutting and polishing center in Brazil, managed by a very experienced master diamond cutter and polisher with over 30 years of experience.

Exporting and Grading MDB’s Polished Diamonds

In November 2013, MDB exported some polished diamonds to the U.S. These diamonds were subsequently taken to the Gemological Institute of America (“GIA”) for grading and certification. Because MDB’s diamonds are not subject to post-extraction treatment, 100 percent of them were accepted for grading and certification by the GIA.

Confirming Gold and Copper in Our Property in the State of Amazonas (Borba Project)

In 2013, we confirmed by a visit of a geologist to the site for inspection and geochemical testing that our project in the municipality of Borba, state of Amazonas, in Brazil, contains gold and copper.

2013 Financings

On September 30, 2013, we received in investment of $100,000 in total from two accredited investors, one a trust for the benefit of two persons and the other, an individual. We sold such investors a total of four investment units, each unit consisting of a $25,000 convertible promissory note and warrants to purchase 50,000 shares of our common stock until December 31, 2019.

The notes bear interest at 10% per annum and may be converted into our common stock at $0.125 per share, a premium of 25% above our stock price at the time the transaction was entered into. The notes are due on May 31, 2014. The exercise price of the warrants is $0.15 per share, a premium of 50% above our stock price at the time.

As of March 31, 2014, 25% of these notes had already been repaid, and the outstanding principal from the unpaid notes was $75,000.

2014 Significant Developments

Polished Diamond Sales

On January 2, 2014, we received proceeds of $25,000 from a sale of polished and GIA graded diamonds pursuant to an agreement with a buyer in which the buyer agreed to receive these diamonds over a period of time.

On March 4, 2014, we received proceeds of $500,000 from a sale of polished and GIA graded diamonds pursuant to an agreement with two buyers that agreed to receive these diamonds over a period of one year. As part of this transaction, we pledged with a third party collateral agent an aggregate of 11,000,000 shares of our common stock, valued at approximately $990,000 at the time the transaction was consummated, in order to secure the delivery of the diamonds. The number of shares pledged is subject to periodic adjustment as diamonds are delivered and as the market price of our common stock may change. We also issued to the buyers two-year options to purchase an aggregate of 3,000,000 shares of our common stock at an exercise price (subject to adjustment upon the occurrence of certain events) of $0.12 per share, a premium of 33% above our stock price when the transaction was consummated.

Financings

On January 7, 2014, we received $244,000 in investment from the Heather U. Baines and Lloyd McAdams AB Living Trust dated 8/1/2001 (the “Trust”) in exchange for a senior secured convertible promissory note in the principal amount of $244,000 and warrants to purchase an aggregate of 488,000 shares of our common stock through December 26, 2018 issued to a designee of the Trust. The notes bear interest at 12% per annum and may be converted into common stock at $0.125 per share, a premium of 42% above our stock price at the time the transaction was entered into. The exercise price of the warrants is $0.125 per share (subject to adjustment upon the occurrence of certain events), a premium of 79% above our stock price at the time. Interest on the note is payable on September 30, 2014 and on March 31, 2015, the maturity date of the note. The note is secured by certain capital equipment purchased by us with the proceeds received; this equipment is now being used in MDB and is comprised of an excavator, a bulldozer, a truck, a portable motor and generator, among other items. Besides this capital equipment, the note is secured by our pledge of common stock having a value of 200% of the outstanding principal and accrued interest of the note. The note is repaid by depositing $20,000 monthly to a sinking fund. As of April 3, 2014, we had deposited $40,000 into the sinking fund, and our sinking fund obligation was current; this amount deposited has been requested by us to be applied to satisfaction of principal and interest of the note; the holder of the note has 60 days following a deposit into the sinking fund to choose between accepting repayment or converting the amount deposited to our common stock.

On January 24, 2014, we received proceeds of $25,000 from an investment by Black Mountain Equities, Inc., an accredited investor, in exchange for an unsecured convertible promissory note in the principal amount of $27,500. The note bears interest at the rate of 10% per annum. The note must be converted by the holder (unless repaid by us) by December 31, 2014. We retain the option, but not the obligation, to repay the note in cash. The conversion price is the lesser of (a) $0.07 or (b) 60% of the lowest daily volume weighted average price of our common stock during the twenty trading days immediately prior the applicable date on which the holder of the note elects to convert all or part of the note. The note is not secured by any collateral.

On February 21, 2014, we received proceeds of $200,000 from an investment by St. George Investments, LLC (“St. George”) in exchange for an unsecured convertible promissory note in the principal amount of $222,500. The difference between the face amount of the note and the gross proceeds received was comprised of legal costs and origination discount. The note bears interest at 10% per annum and the conversion price is $0.11 per share, a premium of 38% above our stock price when the transaction was consummated. Principal and accrued interest on the note are due in five consecutive monthly installments of $44,500 plus accrued interest commencing on August 21, 2014. The monthly installments are payable in cash or in common stock, at our option, or in diamonds that have been graded by GIA, upon the request of St. George. All principal and accrued interest on the note is payable on December 21, 2014. The note is not secured by any collateral.

On March 31, 2014, we received net proceeds of $54,000, after compensation paid to a broker-dealer, from an investment by Group 10 Holdings LLC, an accredited investor, in exchange for an unsecured convertible promissory note in the principal amount of $63,000. The note bears interest at the rate of 10% per annum. The note must be converted by the holder (unless repaid by us) by March 31, 2015. We retain the option, but not the obligation, to repay the note in cash. The conversion price is the lesser of (a) $0.11 or (b) 60% of the lowest closing price of our common stock during the twenty trading days prior to the maturity date or the date that a notice of conversion is given by the holder. The note is not secured by any collateral.

Our Operational Information

The primary business of BMIX is to acquire ownership positions in producing mining companies in Brazil. The secondary business of BMIX is to engage in the creation of new companies in Brazil with mineral properties for exploration and development. For information concerning our initial investments and assets see Item 2. Properties, which is incorporated herein by reference.

In 2013, our consolidated revenues were derived almost exclusively from sales of diamonds and gold by MDB. MDB's revenues were approximately 69% from the sale of rough diamonds and 31% from the sale of gold. All of the buyers were Brazilian institutional buyers.

While our consolidated financial results are in part tied to the price of diamonds and gold, both commodities that are traded globally, the biggest factor by far in generating revenues and profits is MDB’s ability to effectively mine diamonds and gold. Alluvial mines, such as MDB’s, are not homogeneous: some mining fronts have very rich concentration of diamondiferous and auriferous gravel whereas others do not. Additionally, some areas have easy access, whereas others may be underwater, and thus require water removal prior to excavation. Our ability to choose the mining fronts to pursue and to provide the necessary equipment, fuel, and labor are a significant factor in our results.

Competition

Our main source of revenue is from sales of diamonds and gold produced by MDB. Diamond production is a difficult field to penetrate due to regulatory and limited availability of new resource areas.

Seasonality

MDB’s ability to mine diamonds and gold is highly seasonal. The rainy season in the northern area of the state of Minas Gerais, Brazil, lasts from December through April. We expect that during these months MDB’s revenues will be substantially lower than during other periods.

Regulation

The Brazilian mining industry is highly regulated. MDB’s operations in Brazil are in full compliance with federal, state, and municipal regulations.

Available Information

We maintain an internet website at www.brazil-minerals.com . On our website, we provide a link to the Securities and Exchange Commission (“SEC”) webpage that contains all of the public filings of Brazil Minerals. Our SEC filings are also directly available at the SEC’s website at www.sec.gov or from the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The information on our website is not, and shall not be deemed to be, a part hereof or incorporated into this or any of our other filings with the SEC.

Personnel

As of March 31, 2014, the number of employees and consultants working for us or for our subsidiaries was as following. MDB had 11 full-time employees and four consultants, all of them based in Brazil. BMIXP had three full-time employees and two consultants, all of them based in Brazil. BMIX had one full-time employee based in the U.S. Therefore, on a consolidated basis the Company had 15 employee in total, all of which are full-time employees. We also periodically retain consultants and independent contractors to provide services deemed useful to the operation of our business.

ITEM 1A. RISK FACTORS

You should carefully consider the risks described below before making an investment decision. Our business, financial condition, results of operations, and cash flows could be materially adversely affected by any of these risks. The market or trading price of our securities could decline due to any of these risks. In addition, please see our note about forward-looking statements included in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K.

We operate in a changing environment that involves numerous known and unknown risks and uncertainties that could materially adversely affect our operations and our stock price. The following highlights some of the factors that may affect our operations and our stock price.

Risks Related to Our Operations

We have a limited operating history.

The current business model and management team has been in place only since December 2012. Our limited operating history makes it difficult to evaluate our business or prospective operations. As an early stage company, we are subject to all of the risks inherent in the initial organization, financing, expenditures, complications, and delays inherent in a new business. Investors should evaluate an investment in us in light of the uncertainties encountered by developing companies in a competitive environment. Our business is dependent upon the implementation of our business plan. There can be no assurance that our efforts will be successful or that we will ultimately be able to attain profitability.

Our ability to execute our business plan depends on the continuation of a favorable mining environment in Brazil.

Our management believes that Brazil has a favorable mining environment for some of the following reasons:

- Brazil has a strong tradition in production and export of natural resources ;

- Brazil has a qualified work force for mining and ancillary services to support mining ;

- Unlike other jurisdictions with defined time horizons, mining concessions in Brazil can be mined in perpetuity as lo ng as there is continued mining;

- Most of Brazil ’s vast territory has not been properly research ed on a geological basis, and therefore opportunity exists for new mineralized areas to be identified ; and

- Mineral rights are constitutionally guaranteed and the right to mine in general prevails over surface rights .

Mining operations in Brazil are heavily regulated. Any significant change in mining legislation or other changes in Brazil’s current mining environment may slow down or alter our business prospects.

We may be unable to find sources of funding if and when needed, resulting in the failure of our business.

Even though we have recently completed several transactions providing financing to us, we will likely require additional sources of funding to execute our business plan. We will need additional equity or debt financing beyond our existing cash to pursue our strategy, including the acquisition of additional investments in mining companies or to enter into strategic relationships with third parties to further study and/or develop mineral properties. Any additional financing that we need may not be available and, if available, may not be available on terms that are acceptable to us. Our failure to obtain financing on a timely basis, or on economically favorable terms, could prevent us from pursuing our acquisition strategy or from responding to changing business or economic conditions and could cause us to experience difficulty in withstanding adverse operating results.

If we do obtain alternative source of capital, the terms and conditions of acquiring such capital may result in dilution and the resultant lessening of value of the shares of stockholders.

If we are not successful in raising sufficient capital, we will have to modify our business plans and reduce operations. In this event, you could lose a substantial part or all of your investment.

Our quarterly and annual operating and financial results and our revenue are likely to fluctuate significantly in future periods.

Our quarterly and annual operating and financial results are difficult to predict and may fluctuate significantly from period to period. Our revenues, net income, and results of operations may fluctuate as a result of a variety of factors that are outside our control including, but not limited to, weather phenomena which directly affects the operations of alluvial mining properties, the general global economic condition which affects demand for diamonds, and others.

We do not intend to pay regular future dividends on our common stock and thus stockholders must look to appreciation of our common stock to realize a gain on their investments.

We have never paid a dividend and we do not have any plans to pay dividends in the foreseeable future. Our future dividend policy is within the discretion of our Board of Directors and will depend upon various factors, including future earnings, if any, operations, capital requirements, our general financial condition, and other factors. Accordingly, stockholders must look solely to appreciation of our common stock to realize a gain on their investment. This appreciation may not occur.

We depend upon Marc Fogassa, our Chief Executive Officer and Chairman.

Our success is largely dependent upon the personal efforts of Marc Fogassa. Currently he is our only management team member that is fluent and fully conversant in both Portuguese, the language of Brazil, and English. The loss of the services of Mr. Fogassa would have a material adverse effect on our business and prospects. We maintain key-man life insurance on the life of Mr. Fogassa.

Risks Related to Our Capital Stock

Our Series A Preferred Stock has the effect of concentrating voting control over us in Marc Fogassa, our Chairman and Chief Executive Officer.

As of March 31, 2014 one share of our Series A Preferred Stock was issued, outstanding and held by Marc Fogassa, our Chairman and Chief Executive Officer. The Certificate of Designations, Preferences and Rights of our Series A Convertible Preferred provides that for so long as Series A Preferred Stock is issued and outstanding, the holders of Series A Preferred Stock shall vote together as a single class with the holders of our Common Stock, with the holders of Series A Preferred Stock being entitled to 51% of the total votes on all matters regardless of the actual number of shares of Series A Preferred Stock then outstanding, and the holders of Common Stock being entitled to their proportional share of the remaining 49% of the total votes based on their respective voting power.

Our stock price may be volatile.

The market price of our common stock has been and is likely to continue to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following:

●

our ability to grow and/or maintain revenue;

●

our ability to achieve profitability;

●

our ability to acquire additional mineral properties;

●

our ability to raise capital when needed;

●

sales of our common stock;

●

our ability to execute our business plan;

●

legislative, regulatory, and competitive developments; and

●

economic and other external factors.

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.

Because our common stock trades on the Over-the-Counter Bulletin Board, you may not be able to buy and sell our common stock at optimum prices and you may face liquidity issues.

The Over-the-Counter Bulletin Board ("OTCBB") is a regulated quotation service that displays quotes, last sales prices, and volume in over-the-counter securities. The trading of our stock on the OTCBB imposes, among others, the following risks:

● Availability of quotes and order information – Because OTCBB trades and quotations primarily involve a manual process (over the telephone) rather than automated or electronically linked execution systems, the market information for our common stock cannot be guaranteed. In addition, quote information, or even firm quotes, may not be available. The manual execution process may delay order processing and intervening price fluctuations could result in the failure of a limit order to execute or the execution of a market order at a significantly different price. Execution of trades, execution reporting, and the delivery of trade confirmations may be delayed significantly. Consequently, one may not be able to sell shares of our common stock at the optimum trading prices.

● Liquidity Risks – Liquidity refers to the ability to freely buy and sell securities at given prices and volumes. In general, the more activity in a given security, and the more market makers participating in a security, the greater the liquidity in the security. Because the OTCBB generally has fewer market makers participating in a Bulletin Board security, the liquidity in our common stock may be significantly less than what might be experienced in the NASDAQ or listed markets. As such, you may only receive a partial execution or your order may not be executed at all. Additionally, the price received on a market order may be significantly different from the price quoted at the time of order entry. Additionally, when fewer shares of our common stock are being traded, larger spreads between bid and ask prices and volatile swings in price may result.

● Dealer's Spread – The dealer's spread (the difference between the bid and ask prices) of our common stock may be large and may result in substantial losses to the seller of our common stock on the OTCBB if the common stock must be sold immediately. Further, purchasers of our common stock may incur an immediate "paper" loss due to the price spread. Moreover, dealers trading on the OTCBB may not have a bid price for securities bought and sold through the OTCBB. Due to the foregoing, there may be decreased demand for our common stock traded through the OTCBB.

The significant number of options and warrants and convertible debt securities outstanding may adversely affect the market price for our common stock.

As of March 31, 2014 options and warrants to purchase an aggregate of 5,512,560 shares of our common stock were outstanding. In addition, an aggregate of 5,055,584 shares of our common stock are issuable upon conversion of convertible notes and debentures we have issued. To the extent that outstanding options and warrants are exercised and convertible debt securities are converted into our common stock, existing stockholder percentage ownership will be diluted and any sales in the public market of the common stock underlying such options may adversely affect prevailing market prices for our common stock.

We may seek to raise additional funds, finance acquisitions or develop strategic relationships by issuing capital stock that would dilute your ownership.

We may largely finance our operations by issuing equity securities, which would materially reduce the percentage ownership of our existing stockholders. Furthermore, any newly issued securities could have rights, preferences, and privileges senior to those of our existing common stock. Moreover, any issuances by us of equity securities may be at or below the prevailing market price of our stock and in any event may have a dilutive impact on ownership interest of existing common stockholders, which could cause the market price of stock to decline. We may also raise additional funds through the incurrence of debt or the issuance or sale of other securities or instruments senior to our common shares. The holders of any debt securities or instruments we may issue could have rights superior to the rights of our common stockholders.

Future sales of shares of our common stock may cause the prevailing market price of our shares to decline and could harm our ability to raise additional capital.

As of March 31, 2014 in addition to shares of our common stock which are freely tradable, there were outstanding approximately 53 million shares of common stock, which were subject to restrictions on resale, but which may become eligible for resale under Rule 144 of the Securities Act of 1933, and may become freely tradable. We have also registered 15,000,000 shares of our Common Stock that have been or may be issued under our 2013 Stock Incentive Plan. In addition, if holders of options and warrants choose to exercise their purchase rights and sell shares of common stock in the public market or if holders of currently restricted common stock or registered common stock sell such shares in the public market, or attempt to publicly sell such shares in a short time period, the prevailing market price for our common stock may decline. Such decline in the price of our common stock may also adversely affect our ability to raise additional capital or raise capital on terms acceptable to us.

Our common stock is currently defined as "penny stock" and the rules imposed on the sale of the shares may affect your ability to resell any shares you may purchase, if at all.

Our common stock is defined as a “penny stock” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and rules of the SEC. The Exchange Act and such penny stock rules generally impose additional sales practice and disclosure requirements on broker-dealers who sell our securities to persons other than certain accredited investors who are, generally, institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 jointly with spouse, or in transactions not recommended by the broker-dealer. For transactions covered by the penny stock rules, a broker-dealer must make a suitability determination for each purchaser and receive the purchaser's written agreement prior to the sale. In addition, the broker-dealer must make certain mandated disclosures in penny stock transactions, including the actual sale or purchase price and actual bid and offer quotations, the compensation to be received by the broker-dealer and certain associated persons, and deliver certain disclosures required by the SEC. Consequently, the penny stock rules may affect the ability of broker-dealers to make a market in or trade our common stock and may also affect a stockholder’s ability to resell any of our shares in the public markets.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Our main assets are:

55% ownership interest in MDB, a Brazilian company with diamond and gold revenues and a producing mine located in the state of Minas Gerais, Brazil; and

100% ownership interest in mineral exploration rights for a gold and copper area in the state of Amazonas, Brazil.

These assets are described immediately below.

Mineração Duas Barras Ltda. (state of Minas Gerais, Brazil) – Diamonds and Gold

BMIX, through its 99.99%-owned subsidiary BMIX Participações Ltda. (“BMIXP”), owns title to 55% of the voting shares of Mineração Duas Barras Ltda. (“MDB”), a Brazilian company. A Brazilian resident owns the remaining 45% of MDB.

MDB owns a large alluvial diamond and gold processing and recovery plant, one mining concession (discussed below) and an additional mineral right (discussed below), each of which pertains to property located on the left margin of the Jequitinhonha River in the State of Minas Gerais in Brazil. The Jequitinhonha River valley is a well-known area for diamond and gold production; it has hosted alluvial production on all scales since the 18 ^th century.

MDB’s plant, mining concession, and mineral right are all approximately one and half hour drive from Montes Claros, Brazil, a city of 400,000 people. The first hour of the drive is on asphalt roads followed by a half-hour on dirt roads. Montes Claros has the infrastructure needed by MDB and also benefits from having an airport with regular carrier service to large Brazilian cities, including S ã o Paulo and Belo Horizonte. MDB has an office in Montes Claros staffed with a full-time regional manager.

Montes Claros is located 400 kilometers north of Belo Horizonte, the capital of the State of Minas Gerais. Belo Horizonte is the third largest city in Brazil, with a population over 2,500,000 people and two airports, including one with international flights. In Belo Horizonte, BMIXP has a fully staffed office with three full-time employees. From Belo Horizonte to Montes Claros, it takes one hour by regular carrier flight or five hours by car on asphalt roads.

Synopsis of Operations

Operationally, MDB has two teams: the exploration team and the production team. The exploration team works in open pits with one excavator and three to four trucks. The exploration team loads gravel and transports it to the patio area immediately adjacent to the processing and recovery plant. The production team works at the plant, processing the gravel and recovering rough diamonds and gold.

Mining Claims

MDB has title to both a mining concession and a mineral right, further described below. MDB does not own the land or surface rights atop these claims. In Brazil, the mineral right and the land (surface right) on top of it are commonly held by different owners. Brazilian law protects the rights of the owner of a mineral right to explore such claim, even when a surface owner is opposed to it.

a) MDB’s mining concession: “Concessão de Lavra” number 265 awarded to MDB by “Departamento Nacional de Produção Mineral”, the National Mining Department (“DNPM”) effective on August 25, 2006 with respect to DNPM process number 806.569/1977. This claim award was published in Brazil’s Official Federal Gazette.

“Concessão de Lavra” is the highest level of mining claim achievable in Brazil. MDB’s Concessão de Lavra” permits MDB to mine and sell its production of diamonds and gold. MDB’s mining concession covers an area of 170.89 hectares, or approximately 422 acres.

There are no liens or other encumbrances on MDB’s mining concession. The mining concession is a federal claim in Brazil, as DNPM is a Brazilian federal entity. This mining concession has no ter mination date; it is held in perpetuity by MDB and for as long as MDB is continually mining in this concession area, this claim will be in good standing. The claim can also be in good standing even if there is no continued mining, if MDB were to file with DNPM for a hiatus from mining; such requests are normally granted for periods of up to three years.

“Concessão de Lavra” requires no fees to be paid to maintain such claim. Therefore, MDB has no payments to maintain MDB’s mining concession.

Brazilian law guarantees the owner of the land on top of a mining concession the payment of a royalty of at least 0.1% of all revenues from the concession. However, most Brazilian mining companies negotiate with the landowner and pay a higher royalty rate as an incentive for greater cooperation. MDB has a contract that pays the landowner a 6% royalty rate on any sales, and management of MDB believes that MDB has enjoyed excellent cooperation from the landowner at all times.

MDB pays royalties to Brazil’s “Receita Federal” (the equivalent of the Internal Revenue Service in the U.S.) if and when it sells diamonds and gold. The royalty rates paid are fixed by federal decree and are 0.1% on diamond sales and 1% on gold sales.

MDB is not currently planning to perform any further exploratory research work in the area of its mining concession.

b) MDB’s mineral right: “Alvará de Pesquisa” with respect to DNPM process number 832.052/20006 initially awarded by DNMP on February 18, 2009, and renewed on November 13, 2013 for another two years. It covers an area of 397.42 hectares, or approximately 982 acres.

MDB intends to perform the necessary research to submit an application to upgrade this claim from “Alvará de Pesquisa” to “Concessão de Lavra”, and therefore obtain another mining concession for an open pit operation. MDB expects that the exploration research work needed to submit the necessary request to DNPM will involve drilling for diamonds in a defined sub-area of the mining claim. MDB expects that this work can be completed well ahead of the deadline of December 13, 2015. MDB projects that the total cost in performing the necessary exploratory research work and preparing all of the documents for submission to DNPM will be less than $100,000. MDB owns the drilling equipment and has workers with experience in using it, and therefore field labor and material costs will be reasonably contained. For this project, MDB has two qualified professionals, a licensed geologist and a licensed mining engineer with over 20 years of field experience in projects along the Jequitinhonha River valley.

If by December 13, 2015, MDB has not submitted the necessary research work to DNPM, and has not been granted a valid extension, it will lose this mining claim but it will not be subject to fines or penalties for not completing the research timely.

“Alvará de Pesquisa” requires payment of annual fees to DNPM. Currently the fees are R$3.06 (approximately $1.39) per hectare. Therefore, MDB pays approximately $550 per year to DNPM.

Processing and Recovery Plant

MDB’s diamond and gold processing plant was built in 2006-2007 by a Canadian company called Vaaldiam Resources, Ltd. (“Vaaldiam”), whose stock at that time traded on the Toronto Stock Exchange Venture Board. To the best of our knowledge, the diamond and gold processing plant at MDB is the largest such type of alluvial recovery plant in Latin America. The Company believes that the plant is in very good condition and MDB performs periodic maintenance and repairs on the plant to keep the plant in good condition.

Mineralization

Vaaldiam performed detailed geological studies in MDB’s mining concession leading to the publication of an NI 43-101 technical report in 2007, and an updated NI 43-101 technical report in 2008, as required by the rules of the Canadian securities administrator.Vaaldiam’s NI 43-101 report showed that in the areas drilled within MDB’s mining concession there were inferred and indicated resources totaling 432,000 carats of diamonds and 491 kilograms of gold (approximately 17,334 ounces of gold).

MDB has submitted its “Plano de Aproveitamento Econômico” (the “Feasibility Study”) to DNPM in accordance with the mining regulations of Brazil. In its Feasibility Study, approved by DNPM, MDB discloses under the heading “Dados da Reserva” (the “Reserve Data”) that it has reserves of 366,982 carats of diamonds and 412.855 kilograms of gold (approximately 14,563 ounces).

BMIX does not claim that the NI 43-101 technical report and/or MDB’s Feasibility Study are compliant with the SEC-sanctioned Industry Guide 7. Under the SEC’s Industry Guide 7, no assertion can be made about reserves; moreover, Industry Guide 7 does not recognize the term “resources.”

Source of Water and Power

The water used in MDB’s processing and recovery plant for diamonds and gold, and other installations, comes from lagoons that receive water from the Jequitinhonha River. There is no shortage of water and water is free to MDB.

The power used in MDB’s processing and recovery plant and other installations is provided by diesel generators. Normally, MDB purchases diesel on a weekly to bi-weekly schedule from two local competing distributors, both of which have storage tanks outside of MDB’s plant. There has been no shortage of fuel available for purchase. The Company believes that the existence of two suppliers ensures that competitive pricing and other terms will continue to be available to MDB.

Over the next one to two years, MDB’s intention is to work towards obtaining an industrial-strength electric line extension from the national electric grid, a pathway of approximately 27 kilometers. This would allow MDB to minimize, if not eliminate, any dependence on fossil fuels. To this extent, MDB has had meetings with CEMIG, the State of Minas Gerais electric utility company. Furthermore, MDB has obtained a detailed workplan by which the line extension could be built by a CEMIG authorized contractor in approximately four months and for under $800,000. CEMIG has indicated willingness to contribute 46% of such cost; other portions of this cost might be borne by farmers along the pathway which would be benefitting from electric energy for irrigation equipment use. These conversations are ongoing and at this time MDB has not finalized any commitments. Since energy costs are the largest component of expenses at MDB, and given that electric energy in Brazil is substantially less expensive than energy derived from fossil fuels on an equivalent basis, MDB believes that its cost of building the line extension would be recouped within two years or less.

Equipment at MDB

MDB has a large processing and recovery plant for alluvial diamonds and gold, considered by specialists to be the largest of such type in Latin America. The plant has a well-equipped spare parts and supply room. For mining, MDB has use of the following mechanized equipment which is owned by BMIXP: an excavator, a bulldozer, two trucks, a portable industrial-strength generator and pumps. MDB also leases from independent owners a mechanic shovel and another truck. For transportation of personnel and smaller items, MDB owns a car and a van.

Set forth below is a map of the State of Minas Gerais showing the location of BMIX’s office and plant.

2013 Production

In 2013 MDB produced diamonds with an aggregate weight of 3,994 carats and 212 ounces of gold. Gold is a byproduct of diamond production in alluvial operations along the Jequitinhonha River.

Borba Project (state of Amazonas, Brazil)

The mineral claim for the Borba Project is “ Autorização de Pesquisa” (research permit) with respect to DNPM process number 880.239/2009 initially awarded by DNMP on October 14, 2009, and renewed on December 4, 2012 for another three years. It covers an area of 9,999.11 hectares, or approximately 24,708 acres. The title to this mineral claim is held by BMIXP.

BMIXP is evaluating the potential of the Borba Project. One possibility is for BMIXP to perform the necessary research to submit an application to upgrade this claim from research permit to mining concession by the submission of a research report in accordance with DNPM standards before December 4, 2015. Another possibility is a transaction by which a partner develops or co-develops this project. No decision on this has been made yet.

If by December 4, 2015, BMIXP, or a partner on its behalf, has not submitted the necessary research work to DNPM, and has not been granted a valid extension, BMIXP will lose this mining claim, but it will not be subject to fines or penalties for not completing the research on a timely basis.

In 2013, BMIXP performed a preliminary geological surface assessment of this area and collected samples for geochemical analysis. These samples were analyzed at the SGS-Geosol laboratory in Belo Horizonte, Brazil. Further analytical work continues to date with a senior geologist in Brazil.

Set forth below is a map from DNPM delineating the Borba Project mineral rights area.

ITEM 3. LEGAL PROCEEDINGS.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information and Current Stockholders

Our common stock is traded on the Over-the-Counter Bulletin Board ("OTCBB") under the symbol "BMIX". The following table sets forth, for each of the quarterly periods indicated, the range of high and low sales prices, in U.S. dollars, for our common stock on OTCBB for each quarter since March 7, 2013. Such over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. Prior to March 7, 2013 there were no quotations for our common stock.

	Year Ended
Quarters	December 31, 2013
	High		Low

First (3/7-3/31)	$	1.10	$	0.56
Second (4/1-6/30)	$	0.89	$	0.11
Third (7/1-9/30)	$	0.28	$	0.07
Fourth (10/1-12/31)	$	0.12	$	0.06

As of March 31, 2014, we had 2,754 stockholders of record of our common stock.

Dividends

We have not paid any cash dividends since inception and do not expect to declare any cash dividends in the foreseeable future.

Equity Compensation Plan

On February 19, 2013, our Board of Directors approved our 2013 Stock Incentive Plan under which we can offer eligible employees, consultants, and non-employee directors cash and stock-based compensation and/or incentives to compensate, attract, retain, or reward such individuals. We have no other equity compensation plan. The table below sets forth certain information as of December 31, 2013 with respect to our equity compensation plans.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants, and rights (a)		Weighted-average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column "(a)") (c)

Equity compensation plans approved by security holders		0		0		0

Equity compensation plans not approved by security holders (2013 Stock Incentive Plan)		1,200,000	$	0.33		11,417,148

Total		1,200,000	$	0.33		11,417,148

Sales of Unregistered Securities

On September 30, 2013, we issued and sold to two accredited investors for $100,000 four units of securities, each unit consisting of a $25,000 convertible promissory note and warrants to purchase 50,000 shares of our common stock until December 31, 2019. The notes bear interest at 10% per annum and are due on the earlier of the close of a $100,000 financing or May 31, 2014. The note payable can be converted into common shares at $0.125 per share, a premium of 25% above our common stock price at the time the transaction was entered into. The exercise price of the warrants is $0.15 per share, a premium of 50% above our common stock price at the time. The units were issued in accordance with an exemption from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities Act by virtue of being issued to two purchasers which acquired the units for investment. As of March 31, 2014, 25% of the notes had already been repaid, and the outstanding principal from the unpaid notes was $75,000.

Item 6. Selected Financial Data.

The information to be reported under this Item is not required of smaller reporting companies.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.

The following discussion of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the notes to those financial statements appearing elsewhere in this Report.

This Annual Report contains forward-looking statements. Forward-looking statements for us reflect current expectations, as of the date of this Annual Report, and involve certain risks and uncertainties. Actual results could differ materially from those anticipated in these forward- looking statements as a result of various factors. Factors that could cause future results to materially differ from the recent results or those projected in forward-looking statements include: unprofitable efforts resulting not only from the failure to discover mineral deposits but also from finding mineral deposits that, though present, are insufficient in quantity and quality to return a profit from production; market fluctuations; government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals, and environmental protection; competition; the loss of services of key personnel; unusual or infrequent weather phenomena, sabotage, government or other interference in the maintenance or provision of infrastructure as well as general economic conditions.

Results of Operations

The Company was incorporated on December 15, 2011. It commenced operations on March 1, 2012. Until December 2012, the Company’s operations were limited to developing a business plan, completing sales of common stock, discussing offers by the Company of 3D animation services with potential customers, and the signing and performance of a service agreement with one company.

The Company changed its business model and management in December 2012, and simultaneously discontinued its 3D animation services business. From March 1, 2012 to December 31, 2012 (“FY2012”) we had zero revenues as compared to revenues of $791,780 in the period from January 1, 2013 to December 31, 2013 (“FY2013”). Essentially all of our revenues in FY2013 were derived from the consolidation of the revenues from MDB, a company in which we own a 55% ownership stake. All of the revenues of MDB in FY2013 were from sale of rough diamonds and gold mined at MDB.

Our consolidated cost of goods sold in FY2013, consisting almost entirely of production expenses, was $448,830 or approximately 56.7% of the Company’s total revenues. The Company’s gross profit in FY2013 was $342,950, or approximately 43.3% of total revenues. By comparison, the Company had no revenues, costs of goods sold or gross profit in FY2012.

The Company had an aggregate of $2,073,050 in operating expenses in FY2013 as compared to $152,655 in total operating expenses in FY2012. Exploration and production costs totaling $834,962 and stock based compensation totaling $504,897 comprised the majority of operating expenses in FY2013. No exploration and production costs or stock based compensation expense was incurred in FY2012.

General and administrative expenses increased from $3,885 in FY2012 to $326,908 in FY2013; compensation and related costs increased from $54,112 in FY2012 to $269,168 in FY2013; and professional fees increased from $94,658 in FY2012 to $114,044 in FY2013, in each case primarily as a result of the change in the Company’s business All of these changes were as a result of the growth of our business.

Primarily as a result of the $1,920,395 increase in total operating expenses, the Company’s net loss increased by $1,338,916, from $174,463 in FY2012 to $1,513,379 in FY2013.

Net cash used in operating activities increased from $111,101 in FY2012 to $851,294 in FY2013, primarily as a result of the $1,360,724 increase in net loss from continuing operations, which was partially offset by non-cash items such as $504,897 in stock based compensation and $350,830 in increased inventory in FY2013.

Net cash used in investing activities decreased from $800,000 on FY2012 to $3,413 in FY2013. In December 2012 the Company advanced $800,000 to BMI. This loan was non-interest bearing and had no specified terms of repayment and was an advance related to the exercise of an option agreement held by the Company for a 20% share of the MDB diamond production. On January 2, 2013, the Company exercised the option and the advance was deemed payment of the option. The option granted the Company 20% of the diamond production with respect to BMI’s 55% interest in MDB.

Net cash provided by financing activities decreased from $1,752,802 in FY2012 to $323,003 in FY2013. In FY2012, the Company received net cash from continuing financing activities of $1,746,633 as compared to $323,003 in FY2013. In FY2012, the Company received net proceeds of $2,000,033 from a private placement of its common stock. In FY2013 the primary components of its net cash provided by continuing financing activities were capital contributions received from non-controlling interests ($165,500), proceeds from the sale of notes ($100,000) and cash acquired upon acquisition of a subsidiary ($56,914).

The effect of the foregoing changes in cash flows, as well as a $226,700 negative effect on cash in fiscal 2013 as a result of changes in exchange rates, was a net decrease of $758,404 during FY2013in cash and cash equivalents.

Liquidity and Capital Resources

At December 31, 2013, we had current assets of $340,332 compared to current liabilities of $238,602 for a current ratio of 1.43 to 1. This compares to current assets of $863,189 and current liabilities of $67,462 at December 31, 2012, resulting in a current ratio of approximately 12.8 to 1. The decrease in our current ratio was primarily attributable to a decrease in cash and cash equivalents which were used to fund operations and acquisitions of capital equipment in fiscal 2013

In 2013, our principal sources of liquidity were our revenues from the sale of diamonds and gold as well as cash remaining from the $2,000,033 gross proceeds of a private placement of our common stock from December 2012.

As of December 31, 2013, our working capital was $101,730. As of December 31, 2013, we had accrued expenses and accounts payable of $171,526, and $67,076 in indebtedness for borrowed money.

During the first quarter of 2014, we received an aggregate of $1,048,000 in gross proceeds as a result of various financings and pre-sales of polished diamonds. A description of such transactions is set forth in Item 1 of this Annual Report.

We believe that our current financial resources and funds generated from operations will be adequate to cover anticipated expenditures for debt service, general and administrative expense costs and exploration costs for the foreseeable future.

Our long-term capital requirements are primarily affected by our ongoing acquisition activities. The Company currently, and generally at any time, has acquisition opportunities in various stages of review. We may seek additional financing as necessary to fund such acquisitions and capital expenditures or for general corporate needs as necessary.

Please refer to our risk factors included in Part 1, Item 1A of this Annual Report for a discussion of certain risks that may impact the Company's liquidity and capital resources.

Off-Balance Sheet Arrangements

We currently have no off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Our financial instruments consist of cash and cash equivalents, loans to a related party, accrued expenses, and an amount due to a director. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in our financial statements. If our estimate of the fair value is incorrect at December 31, 2013, it could negatively affect our financial position and liquidity and could result in our having understated our net loss.

Recent Accounting Pronouncements

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles. Our significant accounting policies are described in Note 1 of the financial statements. We have reviewed all recent accounting pronouncements issued to the date of the issuance of these financial statements, and we do not believe any of these pronouncements will have a material impact on us.

Additional Comments

In 2013, we achieved revenues of $791,780 and had losses of $1,513,379. As of December 31, 2013, we had cash and cash equivalents of $104,992. However, as described elsewhere in this Annual Report, we received $1,048,000 in cash during the first quarter of 2014, thereby substantially increasing our liquidity.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The information to be reported under this Item is not required of smaller reporting companies.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Our financial statements, including the notes thereto, together with the report from our independent registered public accounting firm are presented beginning at page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None .

ITEM 9A. CONTROLS AND PROCEDURES.

(a) Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the design, operation, and effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of December 31, 2013. Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding our required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management was required to apply its judgment in evaluating and implementing possible controls and procedures. As described below, material weaknesses were identified in our internal control over financial reporting. The Public Company Accounting Oversight Board’s Auditing Standard No. 212 defines a material weakness as a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. As a result of the material weaknesses, our chief executive officer and chief financial officer has concluded that, as of December 31, 2013, the end of the period covered by this Annual Report, our disclosure controls and procedures were not effective at a reasonable assurance level.

We intend to remedy the material weaknesses in our internal control over financial reporting and thereby make our disclosure controls and procedures effective by the actions described in Item 9A(b).

(b) Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control system is designed to provide reasonable assurance to management and to our Board of Directors regarding the preparation and fair presentation of published financial statements. Our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on his evaluation under the framework in Internal Control—Integrated Framework, he concluded that our internal control over financial reporting was not effective as of December 31, 2013 in certain respects as described below.

As of December 31, 2013, the Company had the following material weaknesses in internal control over financial reporting. While MDB, the source of substantially all of the Company’s consolidated revenues and the vast majority of its transactions, did have adequate segregation of accounting functions, there was less segregation elsewhere due to the Company’s small size. The Company has no dedicated internal accounting staff and relies on outsourced accountants in both Brazil, where the majority of its operations are located, as well as in North America. As a result, financial information has sometimes not been accumulated and communicated to management, including our chief executive officer and chief financial officer, in a timely enough manner for decisions regarding our required disclosure to be made and financial statements to be prepared and delivered to our independent accountants for their audit or review to be conducted in a timely and efficient manner. Additionally, during 2013, the Company performed an analysis of its inventory only at year end.

Management believes that these material weaknesses set forth above did not have a material effect on our financial results. However, in an effort to remediate them and to enhance our internal controls, we plan to initiate the following series of measures: We will seek to identify and hire accountants that are bilingual in English and Portuguese, versed in both US GAAP and Brazil’s International Financial Reporting Standards (IFRS), and experienced in making the necessary transformations between IFRS to GAAP. We will also perform analysis of the fair value of our inventory on a regular basis.

This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Since we are a non-accelerated filer, management’s report is not subject to attestation by our registered public accounting firm pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002. As a result, this Annual Report contains only management’s report on internal controls.

There were no changes in our internal control over financial reporting that occurred in the fourth quarter of 2013 that materially affected, or would be reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The following table sets forth certain information as of March 31, 2014 concerning our directors and executive officers:

Name	Age	Position

Marc Fogassa	47	Director, Chairman, Chief Executive Officer, President, Chief Financial Officer, Treasurer and Secretary

Ambassador Roger Noriega	54	Director

Ambassador Paul Durand	72	Director

Luis Mauricio Ferraiuoli de Azevedo, Esq.	50	Director

Marc Fogassa

Marc Fogassa, age 47, has been a director and our Chairman and Chief Executive Officer since December 2012. He has over 15 years of investment experience in venture capital, and private and public equity investing, and has served on boards of directors of multiple private companies. In particular, in 1999 at age 32, he performed substantial due diligence, became an early venture investor in Achillion Pharmaceuticals, and joined its Board of Directors with a venture round he co-lead by investing $2 million at a post-investment valuation of $6 million; in 2006 this company had an IPO and uplisted to Nasdaq; its current valuation is $750 million. Mr. Fogassa has worked at Goldman Sachs & Co. (1997), Atlas Venture (1998-2000), and Axiom Ventures (2000-2005). He also worked as investment manager with Hedgefort Capital Management LLC from May 2005 to June 2012, and as an investment banker from November 2011 to January 2014 with Hunter Wise Financial Group, LLC). He has been Chairman and CEO of Brazil Mining, Inc. since March 2012. Mr. Fogassa has been invited numerous times to speak about investment issues, particularly as related to Brazil. Mr. Fogassa double majored at the Massachusetts Institute of Technology (M.I.T.), graduating with two Bachelor of Science degrees in 1990. He later graduated from the Harvard Medical School with a Doctor of Medicine degree in 1995, and also from the Harvard Business School with a Master in Business Administration degree in 1999. Mr. Fogassa was born in Brazil and is fluent in Portuguese and English. We appointed Mr. Fogassa as a director and our Chairman of the Board and President because of his substantial management and fundraising skills, prior experience as a director of several private companies, venture capital and private equity experience, judgment and his knowledge of, and contacts in, Brazil.

Ambassador Roger Noriega

Ambassador Roger Noriega, age 54, has been a director since 2012. He has extensive experience in Latin America. Ambassador Noriega was appointed by President George W. Bush and confirmed by the U.S. Congress as U.S. Assistant Secretary of State, and served from July 2003 to October 2005. In that capacity, Ambassador Noriega managed a 3,000-person team of professionals in Washington and in 50 diplomatic posts to design and implement political and economic strategies in Canada, Latin America, and the Caribbean. Prior to this assignment, Ambassador Noriega served as U.S. Ambassador to the Organization of American States (“OAS”) from August 2001 to July 2003. Since February 2009 Ambassador Noriega has been the Managing Director of VisionAmericas, a Latin America-focused consulting group that he founded. Ambassador Noriega has a Bachelor of Arts degree from Washburn University of Topeka, Kansas. We appointed Ambassador Noriega as a director because of his extensive experience in Latin America, business and government contacts, management skills and judgment.

Ambassador Paul Durand

Ambassador Paul Durand, age 72, has been a director since 2012. He has had extensive experience in Latin America. From August 2001 to August 2006, Ambassador Durand was Canada’s Ambassador to the OAS. From August 2000 to July 2001 he was Canada’s Ambassador to Chile, and from August 1992 to August 1995 he was Canada’s Ambassador to Costa Rica, with concurrent accreditation to Honduras, Nicaragua, and Panama. For the past five years, Ambassador Durand has also personally provided consulting services to several businesses and organizations, including the University of Ottawa advising the executive student class on political and economic conditions in Brazil and Chile; the OAS on elections and a referendum in Chile; and Infinito Gold Inc. on negotiations with the government of Costa Rica regarding the development of a gold mine. He has a Bachelor of Arts degree in Political Economy from the University of Toronto, and has pursued further studies in International Relations and Economics at Northwestern University in Chicago and Carleton University in Ottawa. Ambassador Durand joined the Canadian government after working in international banking in Latin America (Colombia, El Salvador), the Caribbean (Bahamas) and the U.S. We appointed Ambassador Durand as a director because of his extensive experience in Latin America, business and government contacts, management skills and judgment.

Luis Mauricio Ferraiuoli de Azevedo, Esq.

On January 7, 2014, our Board of Directors elected Luis Mauricio Ferraiuoli de Azevedo, Esq. as a director. Mr. Azevedo, age 50, is both a licensed lawyer and geologist with 25 years of business and mining experience in Brazil. Since October 1997 he has been the Managing Partner at FFA Legal, a legal firm he founded and based in Rio de Janeiro, Brazil, and which is focused solely on natural resources companies. Mr. Azevedo’s practice is highly active in mergers in acquisitions for companies owning mineral assets and/or operating mining enterprises in Brazil. His experience spans industrial minerals, diamonds, and precious metals, and he continually works in contact with the highest federal levels of all branches of government in Brazil. Prior to his election to our Board of Directors, Mr. Azevedo had served on our Board of Advisors since July 2013. Mr. Azevedo previously worked for Western Mining, Barrick Gold, and Harsco. He assembled land packages that resulted in five initial public offerings of Canadian companies in Brazil (Avanco, Avenue, Carnavale, Rio Verde, and Talon) since 2004. In addition to his directorship in our Board of Directors, he is currently on the Board of Directors of three mining companies: Avanco, Avenue, and Talon Metals. Mr. Azevedo received a Geology degree from UERJ - Universidade do Estado do Rio de Janeiro in 1986, a Law degree from Faculdade Integradas Cândido Mendes in 1992, and a Master of Law degree from PUC-Rio, Pontifícia Universidade Católica of Rio de Janeiro in 1995. We appointed Mr. Azevedo as a director because of his extensive experience in Brazilian geology, Brazilian mining law, mergers and acquisitions of mining companies in Brazil and his experience as a director in publicly traded companies listed in Canada.

Board Composition

Our Board of Directors is currently composed of four members – Marc Fogassa, Ambassador Roger Noriega, Ambassador Paul Durand, and Luis Mauricio Ferraiuoli de Azevedo, Esq.

There are no family relationships among our directors and executive officers. There is no arrangement or understanding between or among our executive officers and directors pursuant to which any director or officer was or is to be selected as a director or officer, and there is no arrangement, plan, or understanding as to whether non-management shareholders will exercise their voting rights to continue to elect the current board of directors.

Our directors and executive officers have not, during the past ten years:

had any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer, either at the time of the bankruptcy or within two years prior to that time,

been convicted in a criminal proceeding and is not subject to a pending criminal proceeding,

been subject to any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any court of competent jurisdiction, permanently, or temporarily enjoining, barring, suspending, or otherwise limiting his involvement in any type of business, securities, futures, commodities, or banking activities; or

been found by a court of competent jurisdiction (in a civil action), the Securities Exchange Commission, or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

We do not have standing audit, nominating, or compensation committees. Currently, our entire Board of Directors is responsible for the functions that would otherwise be handled by these committees.

Code of Ethics

Our Board of Directors will adopt a new code of ethics that applies to all of our directors, officers, and employees, including our principal executive officer, principal financial officer, and principal accounting officer. The new code will address, among other things, honesty and ethical conduct, conflicts of interest, compliance with laws, regulations and policies, including disclosure requirements under the federal securities laws, confidentiality, trading on inside information, and reporting of violations of the code.

Audit Committee Financial Expert

Our Board of Directors currently acts as our audit committee. We do not currently have an independent member of our Board of Directors who qualifies as an “audit committee financial expert” as defined in Item 407(e)(5) of Regulation S-K.

ITEM 11. EXECUTIVE COMPENSATION.

The following table sets forth information concerning cash and non-cash compensation paid by us to our Chief Executive Officer for each of the two years ended December 31, 2012 and December 31, 2013. No other employee or independent contractor received compensation in excess of $100,000 for either of those two years.

Summary Compensation Table

Name and Principal Position	Year Ended		Salary ($)		Bonus ($)		Stock Awards ($)			Option Awards		Non-Equity Incentive Plan Compensation (S)		Non-Qualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Marc Fogassa		12/31/2012		-	$	50,000		-			-		-		-		-	$	50,000
		12/31/2013	$	125,000		-	$	210,234	(A)		-		-		-		-	$	335,234

(A)

On November 30, 2013, the Board of Directors of the Company rescinded and cancelled a grant to Mr. Fogassa of options to purchase 2,000,000 shares of the Company’s Common Stock (which options had a value of $741,766 as of the date of grant of the option), and instead issued to him 2,000,000 shares with a deemed value of $180,000. The value of the options rescinded has been calculated in accordance with FASB ASC Topic 718. See Note 6 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2013 for a discussion of all assumptions made in the calculation of this amount. The value of the 2,000,000 shares issued to Mr. Fogassa is based on the closing price of the Company’s Common Stock of $.09 per share on November 29, 2013.

Employment Agreement with Marc Fogassa

Marc Fogassa was hired by the Company as the Company’s Chief Executive Officer, Chairman, Chief Financial Officer, Treasurer and Secretary under an Employment Agreement dated December 31, 2012 (the “Agreement”). Under the Agreement Mr. Fogassa receives a salary of $150,000 per annum. In addition, Mr. Fogassa is entitled to reimbursement of expenses incurred by him in the performance of his duties, a maximum allowable SEP IRA contribution, four weeks of paid vacation time, and the payment by the Company of certain insurance-related expenses. The agreement further provides that the Company shall pay to Mr. Fogassa severance in case of termination or change in control with demotion.

Director Compensation

The following table sets forth a summary of compensation for the fiscal year ended December 31, 2013 that we paid to each director other than its Chief Executive Officer, whose compensation is fully reflected in the Summary Compensation Table. We do not sponsor a pension benefits plan, a non-qualified deferred compensation plan, or a non-equity incentive plan for directors; therefore, these columns have been omitted from the following table. No other or additional compensation for services were paid to any of the directors.

Director Compensation Table

Name	Fees Earned or Paid in Cash ($)		Option Awards ($) (1)		Total ($)
Roger Noriega		-		85,407		85,407
Paul Durand		-		85,407		85,407
John Bell (2)		-		80,401		80,401

(1)

The amounts in this column reflect the aggregate grant date fair value of stock options granted in 2013 to each director calculated in accordance with FASB ASC Topic 718. See the notes to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2013 for a discussion of all assumptions made in the calculation of this amount.

(2)

Mr. Bell served as a director of the Company from April 23, 2013 to January 7, 2014.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets forth information regarding beneficial ownership of our Common Stock and Series A Preferred Stock as of April 10, 2014 by (i) any person or group with more than 5% of any class of voting securities, (ii) each director, (iii) our chief executive officer and each other executive officer whose cash compensation for the most recent fiscal year exceeded $100,000 and (iv) all executive officers and directors as a group. Except as indicated in the footnotes to this table and subject to applicable community property laws, the persons named in the table to our knowledge have sole voting and investment power with respect to all shares of securities shown as beneficially owned by them. The Certificate of Designations, Preferences and Rights of our Series A Convertible Preferred provides that for so long as Series A Preferred Stock is issued and outstanding, the holders of Series A Preferred Stock shall vote together as a single class with the holders of our Common Stock, with the holders of Series A Preferred Stock being entitled to 51% of the total votes on all matters regardless of the actual number of shares of Series A Preferred Stock then outstanding, and the holders of Common Stock being entitled to their proportional share of the remaining 49% of the total votes based on their respective voting power.

Name and Address (1)	Office		Shares Beneficially Owned (2)			Percent of Class (3)
Common Stock
Marc Fogassa		Director, Chairman, Chief Executive Officer, President, Chief Financial Officer, Secretary and Treasurer		36,567,812	(4)		47.31	%
Brazil Mining, Inc.		-		29,426,849			38.07	%
Ambassador Paul Durand		Director		425,750	(5)		0.55	%
Ambassador Roger Noriega		Director		419,125	(5)		0.54	%
Luis Mauricio Ferraiuoli de Azevedo, Esq.		Director		5,000			0.01	%
All executive officers and directors as a group (4 persons)				37,417,687	(4) (6)		48.41	%

Series A Preferred Stock
Marc Fogassa		Director		1			100	%
All executive officers and directors as a group (4 persons)				1			100	%

(1) Unless otherwise specified, the address of each of the officers and directors set forth below is in care of Brazil Minerals, Inc., 324 South Beverly Drive, Suite 118, Beverly Hills, California 90212.

(2) Beneficial ownership is determined in accordance with rules promulgated by the Commission.

(3) Based on 76,409,116 shares of common stock outstanding and computed in accordance with rules promulgated by the Commission.

(4) Includes 29,426,849 shares of our common stock owned by Brazil Mining, Inc. (“Brazil Mining”), a Delaware corporation of which Mr. Fogassa is a director and officer, shares owned by entities that could be deemed to be controlled by Mr. Fogassa or his immediate family, and options owned by Mr. Fogassa to purchase 79,999 shares of our common stock at $1.00 per share.

(5) Includes options to purchase 200,000 shares of our common stock at $0.58 per share and options to purchase 200,000 shares of our common stock at $0.09 per share.

(6) Includes options to purchase 400,000 shares of our common stock at $0.58 per share, options to purchase 400,000 shares of our common stock at $0.09 per share, and options to purchase 79,999 shares of our common stock at $1.00 per share.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

On January 1, 2013, the Company and Brazil Mining entered into an administrative services agreement under which Brazil Mining provided, at cost to us, personnel and facilities to carry out our business activities in Brazil. We paid Brazil Mining $228,463 pursuant to the agreement. This agreement was terminated in 2013 as we implemented our infrastructure in Brazil. During the period in which the agreement was in effect Brazil Mining owned a majority of the outstanding shares of our common stock, three of its directors were also directors of the Company and Marc Fogassa, our Chairman and Chief Executive Officer was also Chairman and Chief Executive Officer of Brazil Mining.

On December 19, 2012 the Company entered into and consummated a Contribution Agreement with Brazil Mining (the “Contribution Agreement”) pursuant to which Brazil Mining contributed to the Company by way of an Assignment of Mineral Rights, certain mineral exploration rights on an approximately 10,000 hectare property located in the municipality of Borba, State of Amazonas, Brazil. Brazil Mining also entered into an Option Agreement with the Company pursuant to which Brazil Mining granted to the Company an option to purchase for $800,000 a 20% share of the monthly diamond production that Brazil Mining would actually receive in respect of Brazil Mining’s then anticipated acquisition of a 55% equity interest in a Brazilian entity (the “Option Agreement”). Pursuant to the Contribution Agreement, the Company issued to Brazil Mining an aggregate of 1,073,511 shares of the Company’s Common Stock, par value $.001 per share, constituting 51% of the issued and outstanding shares of Common Stock of the Company giving effect to all of the transactions consummated on December 19, 2012. On January 2, 2013, the Company exercised the option granted to the Company pursuant to the Option Agreement and acquired 20% of the diamond production due BMI from BMI’s 55% interest in MDB.

On March 23, 2013, our Board of Directors and the Board of Directors of BMI, each having obtained all necessary authority, celebrated an agreement pursuant to which our Brazilian subsidiary acquired Brazil Mining’s 55% interest in MDB for $660,000 in consideration.

Director Independence

We believe that each of Ambassador Roger Noriega, Ambassador Paul Durand, and Luis Mauricio Ferraiuoli de Azevedo, Esq. are “independent” as such term is defined by the NASDAQ Stock Market Rules.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

Audit Fees

The aggregate fees that have been, or are expected to be, billed by Silberstein Ungar, PLLC ("Silberstein"), our principal accountant, to us for the audit of our financial statements as of December 31, 2012 and as of December 31, 2013 were $16,000 and $21,500, respectively. In addition, Silberstein was paid an aggregate of $3,750 for its reviews of our quarterly financial statements during 2012 and an aggregate of $5,250 for its reviews of our quarterly financial statements during 2013. In 2013, Silberstein was also paid $12,000 for an audit of MDB from January 1, 2011 through December 31, 2012, and $1,500 for the review of a Form 8-K filing.

Audit-Related Fees

During 2012 and 2013 there were no fees paid to Silberstein in connection with our compliance with Section 404 of the Sarbanes-Oxley Act of 2002.

No other fees were billed by Silberstein for the last two years that were reasonably related to the performance of the audit or review of our financial statements and not reported under "Audit Fees" above.

Tax Fees

There were no fees billed by Silberstein during the last two fiscal years for professional services rendered for tax compliance, tax advice, or tax planning. Accordingly, none of such services were approved pursuant to pre-approval procedures or permitted waivers thereof.

All Other Fees

There were no other non-audit-related fees billed to us by Silberstein in 2012 or 2013.

Pre-Approval Policies and Procedures

Engagement of accounting services by us is not made pursuant to any pre-approval policies and procedures. Rather, we believe that our accounting firm is independent because all of its engagements by us are approved by our Board of Directors prior to any such engagement.

Our Board of Directors will meet periodically to review and approve the scope of the services to be provided to us by its independent registered public accounting firm, as well as to review and discuss any issues that may arise during an engagement. The Board is responsible for the prior approval of every engagement of our independent registered public accounting firm to perform audit and permissible non-audit services for us, such as quarterly financial reviews, tax matters, and consultation on new accounting and disclosure standards.

Before the auditors are engaged to provide those services, our Chief Financial Officer and Controller will make a recommendation to the Board of Directors regarding each of the services to be performed, including the fees to be charged for such services. At the request of the Board of Directors, the independent registered public accounting firm and/or management shall periodically report to the Board of Directors regarding the extent of services being provided by the independent registered public accounting firm, and the fees for the services performed to date.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)

Documents filed as part of this report.

(i)

Financial Statements - see Item 8. Financial Statements and Supplementary Data

(ii)

Financial Statement Schedules – None

(Financial statement schedules have been omitted either because they are not applicable, not required, or the information required to be set forth therein is included in the financial statements or notes thereto.)

(iii)

Report of Independent Registered Public Accounting Firm.

(iv)

Notes to Financial Statements.

(b)

Exhibits

The exhibits listed on the accompanying Exhibit Index are filed as part of this Annual Report.

BRAZIL MINERALS, INC.

TABLE OF CONTENTS

DECEMBER 31, 2013

Report of Independent Registered Public Accounting Firm	F-1

Consolidated Balance Sheets as of December 31, 2013 and 2012	F-2

Consolidated Statements of Operations for the Year Ended December 31, 2013
and for the period from March 1, 2012 to December 31, 2012	F-3

Consolidated Statements of Other Comprehensive Income (Loss) for the Year
Ended December 31, 2013 and for the period from March 1, 2012 to
December 31, 2012	F-4

Consolidated Statement of Stockholders’ Equity	F-5

Consolidated Statements of Cash Flows for the Year Ended December 31, 2013
and for the period from March 1, 2012 to December 31, 2012	F-6

Notes to the Consolidated Financial Statements	F-7-F-16

Silberstein Ungar, PLLC CPAs and Business Advisors

Phone (248) 203-0080

Fax (248) 281-0940

30600 Telegraph Road, Suite 2175

Bingham Farms, MI 48025-4586

www.sucpas.com

To the Board of Directors of

Brazil Minerals, Inc.

Beverly Hills, California

We have audited the accompanying consolidated balance sheets of Brazil Minerals, Inc. (the “Company”) as of December 31, 2013 and 2012, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the year ended December 31, 2013 and the period from March 1, 2012 through December 31, 2012. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Brazil Minerals, Inc. as of December 31, 2013 and 2012, and the results of its operations and its cash flows for the year ended December 31, 2013 and the period from March 1, 2012 through December 31, 2012, in conformity with accounting principles generally accepted in the United States of America.

/s/ Silberstein Ungar, PLLC

Bingham Farms, Michigan

April 13, 2014

F- 1

BRAZIL MINERALS, INC.

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2013 AND DECEMBER 31, 2012

	December 31, 2013			December 31, 2012
ASSETS
Current Assets
Cash and cash equivalents	$	104,785		$	863,189
Taxes recoverable		43,224			-
Inventory		146,172			-
Deposits		5,501			-
Loan receivable-related party		40,650			-
Total Current Assets		340,332			863,189

Capital Assets
Property, plant & equipment, net of accumulated depreciation		430,074			-

Other Assets
Intangible assets		139,653			-
Loan receivable-related party		-			800,000

Total Assets	$	910,059		$	1,663,189

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Current Liabilities
Accrued expenses and accounts payable	$	171,526		$	67,362
Convertible notes payable, net of debt discount of $33,563		66,437			-
Loan from director		639			100
Total Liabilities		238,602			67,462

Stockholders’ Equity

Series A Preferred Stock, $0.001 par value, 10,000,000 shares authorized; 1 share issued and outstanding		-			-
Common stock, $0.001 par value, 150,000,000 shares authorized; 74,639,834 shares issued and outstanding (December 31, 2012- 69,963,434)		74,640			69,963
Additional paid-in-capital		38,629,290			37,370,516
Accumulated other comprehensive loss		(226,700	)		-
Stock warrants		129,772			117,765
Deferred stock compensation		(69,611	)		-
Non-controlling interest		409,962			-
Deficit accumulated during the development stage		(38,275,896	)		(35,962,517	)
Parent company shareholders equity		261,495			1,595,727
Non-controlling interest equity		409,962			-
Total Stockholders’ Equity		671,457			1,595,727

Total Liabilities and Stockholders’ Equity	$	910,059		$	1,663,189

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

F- 2

BRAZIL MINERALS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2013 AND

FOR THE PERIOD FROM MARCH 1, 2012 TO DECEMBER 31, 2012

	Year ended December 31, 2013			Period from March 1, 2012 to December 31, 2012

REVENUES	$	791,780		$	-

COST OF GOODS SOLD
Production expenses		445,262			-
Mining tax		3,568
		448,830			-
GROSS PROFIT		342,950			-

OPERATING EXPENSES
Professional fees		114,044			94,658
General and administrative expenses		326,908			3,885
Compensation and related costs		269,168			54,112
Stock based compensation		504,897			-
Exploration and production costs		834,962			-
Interest on promissory notes		2,500			-
Amortization of debt discount		20,138			-
Depreciation		433			-
TOTAL OPERATING EXPENSES		2,073,050			152,655

INTEREST INCOME		470			-

LOSS FROM CONTINUING OPERATIONS		(1,729,630	)		(152,655	)

LOSS FROM DISCONTINUED OPERATIONS		-			(21,808	)

LOSS BEFORE PROVISION FOR INCOME TAXES		(1,729,630	)		(174,463	)

PROVISION FOR CORPORATE INCOME TAXES		0			-

NET LOSS		(1,729,630	)		(174,463	)

LOSS ATTRIBUTABLE TO NON CONTROLLING INTEREST		(216,251	)		-

LOSS ATTRIBUTABLE TO BRAZIL MINERALS, INC.	$	(1,513,379	)	$	(174,463	)

NET LOSS PER SHARE: BASIC AND DILUTED	$	(0.02	)	$	(0.00	)

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED		71,072,232			122,907,180

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

F- 3

BRAZIL MINERALS, INC.

CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE (LOSS)

FOR THE YEAR ENDED DECEMBER 31, 2013 AND

FOR THE PERIOD FROM MARCH 1, 2012 TO DECEMBER 31, 2012

	Year Ended December 31, 2013			Period from March 1, 2012 to December 31, 2012

Net Loss	$	(1,729,630	)	$	(174,463	)

Foreign Currency Translation:
Change in cumulative translation adjustment		226,700			-
Income tax benefit (expense)		-			-
Total Comprehensive Net Loss		1,956,330			-
Total Comprehensive Net Loss attributable to Non Controlling Interest		318,266			-
Total Comprehensive Net Loss attributable to Brazil Minerals, Inc.	$	1,638,064		$	-

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

F- 4

BRAZIL MINERALS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

AS OF DECEMBER 31, 2013

	Preferred Stock				Common Stock
	Shares		Amount		Common shares			Amount			Additional Paid in Capital			Stock Warrants		Non-controlling interest			Other comprehensive income			Deferred compensation			Deficit			Total Stockholders’ Equity
Balance, February 29, 2012		-	$	-		129,332,040		$	3,880		$	18,320		$	-	$	-		$	-		$	-		$	(4,712	)	$	17,488
Common shares voluntarily surrendered		-		-		(99,999,000	)		(3,000	)		3,000			-		-			-			-			-			-
Forgiveness of debt from prior director		-		-		-			-			6,169			-		-			-			-			-			6,169
Common shares issued for mining option and exploration rights		-		-		35,783,342			1,073			35,782,269			-		-			-			-			-			35,783,342
Deemed dividend related to acquisition of mining option and exploration rights		-		-		-			-			-			-		-			-			-			(35,783,342	)		(35,783,342	)
Preferred share issued		1		-		-			-			1			-		-			-			-			-			1
Common shares issued as share offering costs		-		-		2,847,005			85			2,846,920			-		-			-			-			-			2,847,005
Warrants issued as share offering costs		-		-		-			-			-			117,765		-			-			-			-			117,765
Common shares issued for cash		-		-		2,000,047			61			1,999,972			-		-			-			-			-			2,000,033
Share offering costs including cash, stock and warrants		-		-		-			-			(3,218,271	)		-		-			-			-			-			(3,218,271	)
Par value adjustment for stock split (33.333:1)		-		-		-			67,864			(67,864	)		-		-			-			-			-			-
Net loss for the period		-		-		-			-			-			-		-			-			-			(174,463	)		(174,463	)

Balance, December 31, 2012		1		-		69,963,434			69,963			37,370,516			117,765		-			-			-			(35,962,517	)		1,595,727

Shares issued for acquisition of subsidiary		-		-		1,000,000			1,000			659,000			-		-			-			-			-			660,000
Common shares issued for consulting		-		-		1,188,548			1,189			112,061			-		-			-			(69,611	)		-			43,639
Common shares issued for mineral exploration costs		-		-		5,000			5			2,745			-		-			-			-			-			2,750
Shares issued for compensation-directors		-		-		50,000			50			4,450			-		-			-			-			-			4,500
Shares issued for compensation-officer		-		-		2,382,852			2,383			202,617			-		-			-			-			-			205,000
Shares issued in connection with note payable		-		-		50,000			50			5,450			-		-			-			-			-			5,500
Debt discount on issuance of convertible note		-		-		-			-			20,694			-		-			-			-			-			20,694
Warrants issued in connection with convertible note		-		-		-			-			-			12,007		-			-			-			-			12,007
Stock options-director and officer		-		-		-			-			993,523			-		-			-			-			-			993,523
Non-controlling interest on acquisition of subsidiary		-		-		-			-			-			-		466,063			-			-			-			460,663
Additional capital contributions by non-controlling interest		-		-		-			-			-			-		160,150			-			-			-			165,550
Cancellation of stock options-director		-		-		-			-			(741,766	)		-		-			-			-			-			(741,766	)
Deemed dividend related to acquisition of mining option and exploration rights		-		-		-			-			-			-		-			-			-			(800,000	)		(800,000	)
Non controlling interest																	(216,251	)											216,251
Net loss for the period		-		-		-			-			-			-					(226,700	)		-			(1,513,379	)		(1,956,330	)

Balance, December 31, 2013		1	$	-		74,639,834		$	74,640		$	38,629,290		$	129,772	$	409,962		$	(226,700	)	$	(69,611	)	$	(38,275,896	)	$	671,457

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

F- 5

BRAZIL MINERALS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2013 AND

FOR THE PERIOD FROM MARCH 1, 2012 TO DECEMBER 31, 2012

	For the year ended December 31, 2013			For the period from March 1, 2012 to December 31, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss for the period attributable to Brazil Minerals, Inc.	$	(1,513,379	)	$	(174,463	)
Net loss from discontinuing operations		-			21,808
Net loss from continuing operations		(1,513,379	)		(152,655	)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Non-controlling interest in income of subsidiary		(216,251	)		-
Stock issued for mineral property option		2,749
Stock based compensation		504,897			-
Amortization of debt discount		20,138
Depreciation		433			-
Change in assets and liabilities:
(Increase) in taxes recoverable		(43,224	)		-
(Increase) in loan receivable-related party		(40,650	)
(Increase) in deposits		(5,501	)
(Increase) in inventory		350,830			-
Increase in accrued expenses and accounts payable		88,664			66,112
Net Cash Provided (Used) by Continuing Operating Activities		(851,294	)		(86,543	)
Net Cash Used in Discontinued Operations		-			(24,558	)
Net Cash Provided (Used) in Operating Activities		(851,294	)		(111,101	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of capital asset		(3,413	)		-
Advances to related party		-			(800,000	)
Net Cash Used in Investing Activities		(3,413	)		(800,000	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Loan from director		539			100
Net proceeds from sale of common stock		-			2,000,033
Cash paid for share offering costs		-			(253,500	)
Cash acquired on acquisition of subsidiary		56,914			-
Capital contributions received from non-controlling interests		165,550			-
Proceeds from note payable		100,000			-
Net Cash Provided by Continuing Financing Activities		323,003			1,746,633
Net Cash Provided by Discontinued Financing Activities		-			6,169
Net Cash Provided by Financing Activities		323,003			1,752,802

Effect of exchange rate changes on cash		(226,700	)

Net Increase (decrease) in Cash and Cash Equivalents		(758,404	)		841,701

Cash and equivalents, beginning of period		863,189			21,488

Cash and equivalents, end of period	$	104,785		$	863,189

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	0		$	0
Cash paid for income taxes	$	0		$	0

SUPPLEMENTAL NON-CASH INVESTING AND FINANCING INFORMATION:
Loan receivable converted to interest in mineral property rights	$	800,000		$	0
Shares issued for acquisition of 55% of subsidiary	$	660,000		$	35,783,342
Debt discount on convertible notes	$	32,701		$	0
Stock and warrants issued as share offering costs	$	0		$	2,923,345
Forgiveness of shareholder debt recorded as contributed capital	$	0		$	6,169
Stock options issued with convertible notes	$	5,500		$	0

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

F- 6

BRAZIL MINERALS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Description of Business

Brazil Minerals, Inc. (“BMIX” or the “Company”) was incorporated as Flux Technologies, Corp. under the laws of the State of Nevada, U.S. on December 15, 2011. The Company, through subsidiaries, mines and sells diamonds and gold, and owns or has options on other mineral assets in Brazil.

On December 18, 2012, the Company entered into and consummated an acquisition agreement with Brazil Mining, Inc. (“BMI”) whereby BMI agreed to transfer to the Company certain mining and exploration rights, in exchange for 35,783,342 shares of the Company. At the same time, the previous sole director surrendered for voluntary cancellation, 99,999,000 common shares of stock of the Company such that, upon the transaction and a simultaneous private placement by the Company of its common stock, BMI owned 51% of the outstanding common stock of the Company. The Company changed its name to Brazil Minerals, Inc. on December 24, 2012. Also see Note 3.

Principles of Consolidation

These financial statements include the accounts of the Company and its 99.99% subsidiary, BMIX Participações Ltda. (“BMIXP”), which owns 55% of Mineração Duas Barras Ltda. (“MDB”). All material intercompany accounts and transactions have been eliminated in consolidation.

Basis of Presentation

The financial statements of the Company have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles (“GAAP accounting”) in the United States of America and are presented in U.S. dollars. In 2013, the Company elected to change its year end date from February 28 to December 31.

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, loans, and accrued expenses. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. The Company's bank accounts are deposited in insured institutions. The funds held in U.S. banks are insured up to $250,000, and funds held in Brazilian banks are insured up to 250,000 Brazilian reais (approximately $106,719 as of December 31, 2013). As of December 31, 2013 and 2012, the Company’s bank deposits were $104,785 and $863,189, respectively.

Revenue Recognition

The Company recognizes revenues from diamond sales when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.

The Company recognizes revenues from gold sales when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.

Inventory

Inventory consists of diamonds and gold and related production costs, and is stated at lower of cost or market.

F- 7

BRAZIL MINERALS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Mineral Properties

Costs of exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. Mineral property acquisition costs are capitalized including licenses and lease payments. Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Company's rights. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.

Impairment losses are recorded on mineral properties used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount. As of December 31, 2013 and 2012, the Company did not recognize any impairment losses related to mineral properties held.

Capital Assets

Capital assets consisting of the diamond and gold processing plant and other machinery are recorded at cost and depreciated over their estimated useful life of 10 years, on a straight-line basis. Capital assets consisting of computer and other office equipment are recorded at cost and depreciated over their estimated useful life of 3 years, on a straight-line basis. During the year ended December 31, 2013, depreciation expense of $59,077 had been capitalized to inventory and expensed through exploration and production costs and $433 had been expensed through depreciation expenses.

Basic Income (Loss) Per Share

The Company computes loss per share in accordance with FASB ASC 260, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.

Dividends

The Company has not adopted any policy regarding payment of dividends. No dividends have been paid during any of the periods shown.

Income Taxes

The Company follows the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Impairment of Long-Lived Assets

The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.

F- 8

BRAZIL MINERALS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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 the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Stock-Based Compensation

Stock-based compensation is accounted for at fair value in accordance with FASB ASC 718. The Company has adopted a stock plan to attract, retain and motivate its directors, officers, employees, consultants and advisors. The Company’s stock plan provides for the issuance of up to 15,000,000 common shares for employees, consultants, directors, and advisors. The Company issued $504,897 and $Nil in stock based compensation to employees, consultants, directors, and advisors during the years ended December 31, 2013 and 2012, respectively.

Recent Accounting Pronouncements

The Company has reviewed all recent accounting pronouncements issued to the date of the issuance of these financial statements, and the Company does not believe any of these pronouncements will have a material impact on the Company.

NOTE 2 – LOAN RECEIVABLE-RELATED PARTY AND OPTION EXERCISE

In 2012, the Company issued a loan receivable to BMI for $800,000. The loan was non-interest bearing and had no specified terms of repayment and was an advance related to the exercise of an option agreement held by the Company for a 20% share of the MDB diamond production. On January 2, 2013, the Company exercised the option and the advance was deemed payment of the option. The option granted the Company 20% of the diamond production with respect to BMI’s 55% interest in MDB.

NOTE 3 –ACQUISITION OF MDB INTEREST

On March 23, 2013, upon approval by its Board of Directors, the Company entered into an agreement pursuant to which BMI sold to BMIXP the rights to all profits, losses and appreciation or depreciation and all other economic and voting interests of any kind in respect of the BMI’s interest in MDB in exchange for the issuance to BMI of 1,000,000 shares of the Company’s common stock. The shares were valued at their fair market value of $0.66 per share as of March 23, 2013, the date that the agreement was entered into. As a result of the acquisition, a deemed dividend of $800,000 was recorded related to the acquisition of the option as discussed in Note 2. The net assets of MDB at the date of the acquisition of the 55% equity interest in MDB were $1,035,695. The acquisition was accounted for using the purchase method. As a result of the transaction, non-controlling interest of $460,663 was recognized in the financial statements.

The net assets upon the above acquisition consisted of the following:

Cash	$	56,914
Inventory		497,002
Equipment		508,105
Intangible assets		163,918
Liabilities assumed		(190,244	)

Net assets	$	1,035,695

F- 9

BRAZIL MINERALS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013

NOTE 4 – CONVERTIBLE PROMISSORY NOTES PAYABLE

On September 30, 2013, the Company issued and sold to two accredited investors for $100,000 four units of securities, each unit consisting of a $25,000 convertible promissory note and warrants to purchase 50,000 shares of the Company’s common stock until December 31, 2019. The notes bear interest at 10% per annum and are due on the earlier of the close of a $100,000 financing or May 31, 2014. The notes can be converted into common shares of the Company at $0.125 per share. The conversion price of the warrants is $0.15 per share. The Company recorded a debt discount of $53,701 related to the issuance of the convertible notes. As of December 31, 2013, $20,138 of the debt discount has been amortized during the life of the notes.

The total debt discount was comprised of the debt discount related to the warrants, the convertible notes, and stock and cash given in exchange for issuing the convertible notes. The fair value of the debt discount related to the warrants granted was $12,007 and was calculated using the Black-Scholes option pricing model with the following assumptions: the Company’s common stock price on date of grant ($0.11), expected dividend yield of 0%, expected volatility of 76.15%, risk-free interest rate of 1.43%, and expected term of 6.25 years. The fair value of the debt discount related to the convertible notes was $20,694 and was calculated using the Black-Scholes option pricing model with the following assumptions: the Company’s common stock price on the date of grant ($0.11), expected dividend yield of 0%, expected volatility of 87.67%, risk-free interest rate of 0.07%, and expected term of .67 years. The fair value of the stock and cash given in consideration for issuing the convertible notes was $11,000 and $10,000, respectively. The convertible notes called for the payment of one-half of the stock and cash upon issuing the notes and the remainder upon the repayment of the notes. As of December 31, 2013, $5,500 in stock and $5,000 in cash had been satisfied and the remainder due is reflected in accounts payable.

NOTE 5 – LOANS FROM DIRECTORS

During the period ended December 31, 2012, the former director loaned $6,169 to the Company to pay for business expenses. The loan was non-interest bearing, due upon demand and unsecured. The loan was forgiven on December 19, 2012 and the balance has been recorded as an increase in additional paid-in capital.

On December 19, 2012, a director loaned $100 to the Company to facilitate a bank account opening. This loan was non-interest bearing, due upon demand and unsecured. The balance due to the director was $100 as of December 31, 2012. This loan was repaid in 2013.

During the year ended December 31, 2013, a director loaned $80 to the Company to facilitate a bank account opening. During the period, a director paid expenses of $559 on behalf of the Company. These loans are non-interest bearing, due upon demand and unsecured.

NOTE 6 – COMMON STOCK

As of December 31, 2013, the Company had 150,000,000 common shares authorized with a par value of $0.001 per share and 10,000,000 series A preferred stock authorized with a par value of $0.001.

On January 18, 2012, the Company issued 99,999,000 shares of its common stock for total proceeds of $3,000. For the period from January 24, 2012 to February 14, 2012, the Company issued 23,999,760 shares of its common stock for total proceeds of $14,400. For the period from February 21, 2012 to February 29, 2012, the Company issued 5,333,280 shares of its common stock for total proceeds of $4,800.

F- 10

BRAZIL MINERALS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013

NOTE 6 – COMMON STOCK (continued)

On December 18, 2012, a shareholder and former director of the Company surrendered for voluntary cancellation 99,999,000 shares of common stock of the Company.

On December 18, 2012, the Company issued 35,783,342 shares of its common stock in exchange for an assignment of certain exploration rights and a mining property option.

On December 19, 2012, the Company consummated a private placement with 37 accredited investors and the Company issued 2,000,047 shares of the Company’s common stock for total consideration of $2,000,033.

As part of the private placement, 2,847,005 shares of common stock were issued as part of share offering costs.

Pursuant to the issuance of shares in the private placement, the Company incurred costs related to the share issuance of $3,218,171. Of this $253,500 was paid in cash and the balance of $2,964,771 was paid through the issuance of shares and warrants with a deemed value of $2,847,005 and $117,765, respectively.

On December 18, 2012, the Company amended its Articles of Incorporation to authorize 10,000,000 shares of series A convertible preferred stock. On December 18, 2012, the Company issued and sold for $1.00, one share of series A convertible preferred stock.

The Company amended its articles of incorporation to increase the authorized common stock to 150,000,000 shares. On January 22, 2013, the Company declared a 33.333:1 stock dividend (treated as a stock split) payable to shareholders of record as of January 25, 2013. All share and per share data has been retrospectively adjusted for the stock split.

On April 30, 2013, the Company issued 1,000,000 shares of common stock to BMI pursuant to an agreement to purchase BMI’s equity interest in MDB. The shares were valued at $660,000, the fair market value of the shares on the date the agreement was entered into.

On May 28, 2013, the Company issued 5,000 shares of common stock with a deemed value of $2,750 pursuant to an option agreement on a mineral property. The Company has since abandoned the option.

On September 30, 2013, the Company issued 50,000 shares of common stock with a deemed value of $5,500 pursuant to the issuances of convertible notes. An additional 50,000 shares of common stock are to be issued when the debt has been repaid. The deemed value of these shares of $5,500 has been recorded as an accrued liability until they have been issued. See note 5.

On November 25, 2013, the Company issued 300,000 shares of common stock with a deemed value of $27,000 for consulting services. Prepaid stock compensation of $22,500 was recorded to be amortized over the remaining term of the consulting contract.

On November 30, 2013, the Company issued 50,000 shares to non-management directors with a deemed value of $4,500.

F- 11

BRAZIL MINERALS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013

NOTE 6 – COMMON STOCK (continued)

On December 6, 2013, the Company issued 400,000 shares of common stock with a deemed value of $32,000 for consulting services. Prepaid stock compensation of $23,111 was recorded to be amortized over the remaining term of the consulting contract.

On December 9, 2013, the Company issued 400,000 shares of common stock with a deemed value of $36,000 for consulting services. Prepaid stock compensation of $24,000 was recorded to be amortized over the remaining term of the consulting contract.

During the period ended December 31, 2013, the Company issued 2,000,000 shares to an officer and director of the Company pursuant to a stock based compensation with a deemed value of $180,000 In addition the Company issued 382,852 shares of common stock to an officer in lieu of cash compensation of $25,000.

During the period ended December 31, 2013, the Company issued 88,548 shares of common stock with a deemed value of $18,250 for consulting services, mostly related to geological studies and analysis.

Common Stock Options

On April 18, April 23, and November 30, 2013, the Board of Directors of the Company granted options to purchase an aggregate of 2,400,000, 200,000, and 600,000, respectively, shares of common stock to non-management directors and an officer. The options were valued at $890,119 $69,711, and $33,691, respectively, using the Black-Scholes option pricing model with the following assumptions:

	April 18, 2013	April 23, 2013	November 30, 2013
Stock price	$0.60	$0.57	$0.09
Exercise price	$0.58	$0.57	$0.09
Expected life (years)	5 years	5 years	5 years
Risk free interest rate	.71%	.71%	1.37%
Volatility	76%	76%	77%

On November 30, 2013, the Board of Directors of the Company rescinded and cancelled the grant to the Chief Executive Officer of 2,000,000 options with a deemed value of $741,766, and instead issued to him 2,000,000 shares with a deemed value of $180,000. This resulted in a net reversal of stock-based compensation of $561,766.

Common Stock Warrants

During the year ended December 31, 2013, 200,000 warrants were issued in connection with convertible notes. These warrants expire on December 31, 2019 and have an exercise price of $0.15. The fair value of the warrants was $12,007 and was calculated using the Black-Scholes option pricing model with the following assumptions: the Company’s common stock price on date of grant ($0.11), expected dividend yield of 0%, expected volatility of 76.15%, risk-free interest rate of 1.43%, and expected term of 6.25 years.

During the year ended December 31, 2012, 200,000 warrants were issued as part of the private placement that occurred on December 19, 2012. These warrants expire on December 31, 2017 and have an exercise price of $1.00. The fair value of the warrants was $117,765 and was calculated using the Black-Scholes option pricing model with the following assumptions: the Company’s common stock price on date of grant ($1.00), expected dividend yield of 0%, expected volatility of 72.24%, risk-free interest rate of 0.78%, and expected term of 5 years.

F- 12

BRAZIL MINERALS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013

NOTE 7 – COMMITMENTS AND CONTINGENCIES

The Company leases an office in Pasadena, California, and has had use of offices in Belo Horizonte and São Paulo , Brazil, through an agreement with an affiliate. Such costs are immaterial to the financial statements and accordingly are not reflected herein.

NOTE 8 - INCOME TAXES

As of December 31, 2013, the Company had net operating loss carry forwards of approximately $1,729,630 that may be available to reduce future years’ taxable income through 2032. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.

The provision for Federal income tax consists of the following for the periods ended December 31, 2013 and December 31, 2012.

	December 31, 2013			December 31, 2012
Federal income tax benefit attributable to:
Current Operations	$	588,074		$	59,317
Less: valuation allowance		(588,074	)		(59,317	)
Net provision for Federal income taxes	$	0		$	0

The cumulative tax effect at the expected rate of 34% of significant items comprising the Company’s net deferred tax amount is as follows as of December 31, 2013 and December 31, 2012:

	December 31, 2013			December 31, 2012
Deferred tax asset attributable to:
Net operating loss carryover	$	648,993		$	60,919
Less: valuation allowance		(648,993	)		(60,919	)
Net deferred tax asset	$	0		$	0

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of $1,729,630 for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur net operating loss carry forwards may be limited as to use in future years.

F- 13

BRAZIL MINERALS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013

NOTE 9 - RELATED PARTY TRANSACTIONS

On January 18, 2012, the Company issued 99,999,000 shares of its common stock for total proceeds of $3,000. On December 18, 2012, these shares were returned for voluntary cancellation.

On December 19, 2012, a director loaned $100 to the Company to facilitate the bank account opening. The loan is non-interest bearing, due upon demand and unsecured. The balance due to the director was $100 as of December 31, 2012. This loan was repaid in 2013.

Pursuant to the issuance of shares in the 2012 private placement, the Company incurred costs related to the share issuance of $3,218,171. Of this $253,500 was paid in cash and the balance of $2,964,771 was paid through the issuance of shares and warrants with a deemed value of $2,847,005 and $117,765, respectively.

As of December 31, 2012, accrued compensation owing to a director of the Company in the amount of $50,000 was included in accrued expenses.

In December 2012, pursuant to an option purchase agreement between the Company and BMI, the Company advanced $800,000. On January 2, 2013, the Company exercised the option and the advance was deemed payment of the option. The option granted the Company 20% of the diamond production with respect to BMI’s 55% interest in MDB. On March 23, 2013, upon approval by its Board of Directors, the Company entered into an agreement pursuant to which BMI sold to BMIXP the rights to all profits, losses and appreciation or depreciation and all other economic and voting interests of any kind in respect of the BMI’s interest in MDB in exchange for the issuance to BMI of 1,000,000 shares of the Company’s common stock. The shares were valued at their fair market value of $0.66 per share as of March 23, 2013, the date that the agreement was entered into. As a result of the acquisition, a deemed dividend of $800,000 was recorded related to the acquisition of the option. See Note 3.

On January 1, 2013, the Company and BMI entered into an administrative services agreement under which BMI provided, at cost, to the Company personnel and facilities to carry out certain of the Company’s business activities in Brazil. This agreement was terminated in 2013 as the Company implemented its infrastructure in Brazil. The total amount provided to BMI during the year ended December 31, 2013 was $228,463.

During the year ended December 31, 2013, the Board of Directors of the Company authorized it to loan $40,650 to BMI. The total due from BMI as of December 31, 2013 is $40,650, and the Company expects that the entirety of this amount will be received in 2014.

F- 14

BRAZIL MINERALS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013

NOTE 10 - DISCONTINUED OPERATIONS

As a result of the change in control transaction on December 18, 2012, the Company has abandoned its technology related business. A summary of operations related to the discontinued operation is presented in the table below:

	For the year ended December 31, 2013		For the period from March 1, 2012 to December 31, 2012
Revenue from discontinued operations	$	0	$	4,900
Net loss from discontinued operations		0		(21,808	)
Net loss per share attributable to discontinued operations	$	0	$	(0.00	)

NOTE 11 - SUBSEQUENT EVENTS

In accordance with FASB ASC 855-10, the Company has analyzed its operations subsequent to December 31, 2013 to the date these financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these financial statements , except as noted below.

On January 2, 2014, the Company received proceeds of $25,000 from a sale of polished and graded diamonds pursuant to an agreement with a buyer in which the buyer agreed to receive these diamonds over a period of time.

On January 7, 2014, the Company received $244,000 in exchange for a senior secured convertible promissory note in the principal amount of $244,000 and warrants to purchase an aggregate of 488,000 shares of the Company’s common stock through December 26, 2018. The notes bear interest at 12% per annum and may be converted into common stock at $0.125 per share, a premium of 42% above the stock price at the time the transaction was entered into. The exercise price of the warrants is $0.125 per share (subject to adjustment upon the occurrence of certain events), a premium of 79% above the stock price at the time. Interest on the note is payable on September 30, 2014 and on March 31, 2015, the maturity date of the note. The note is secured by certain capital equipment purchased by us with the proceeds received. This equipment is now being used in MDB and is comprised of an excavator, a bulldozer, a truck, a portable motor and generator, and other items. Besides this capital equipment, the note is secured by a pledge of common stock the Company having a value of 200% of the outstanding principal and accrued interest of the note. The note is repaid by depositing $20,000 monthly to a sinking fund. As of April 3, 2014, the Company had deposited $40,000 into the sinking fund, and the Company’s sinking fund obligation was current.

F- 15

BRAZIL MINERALS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013

NOTE 11 - SUBSEQUENT EVENTS (continued)

On January 24, 2014, the Company received proceeds of $25,000 from an investment by an accredited investor in exchange for an unsecured convertible promissory note in the principal amount of $27,500. The note bears interest at the rate of 10% per annum. The note must be converted by the holder (unless repaid by us) by December 31, 2014. The note may also be converted into the Company’s common stock at the option of the holder commencing 180 days after the note was issued. The Company retains the option, but not the obligation, to repay the note in cash. The conversion price is the lesser of (a) $0.07 or (b) 60% of the lowest daily volume weighted average price of the Company’s common stock during the twenty trading days immediately prior the applicable date on which the holder of the note elects to convert all or part of the note .

On February 21, 2014, the Company received proceeds of $200,000 from an investment by St. George Investments, LLC (“St. George”) in exchange for an unsecured convertible promissory note in the principal amount of $222,500. The difference between the face amount of the note and the gross proceeds received was comprised of legal costs and origination discount. The note bears interest at 10% per annum and the conversion price is $0.11 per share, a premium of 38% above the stock price when the transaction was consummated. Principal and accrued interest on the note are due in five consecutive monthly installments of $44,500 plus accrued interest commencing on August 21, 2014. The monthly installments are payable in cash or in common stock, at the option of the Company, or in graded diamonds, upon the request of St. George. All principal and accrued interest on the note is payable on December 21, 2014.

On March 4, 2014, the Company received proceeds of $500,000 from a sale of polished and GIA graded diamonds pursuant to an agreement with two buyers that agreed to receive these diamonds over a period of one year. As part of this transaction, the Company pledged with a third party collateral agent an aggregate of 11,000,000 shares of the Company’s common stock, valued at approximately $990,000 at the time the transaction was consummated, in order to secure the delivery of the diamonds. The number of shares pledged is subject to periodic adjustment as diamonds are delivered and as the market price of the Company’s common stock may change. The Company also issued to the buyers two-year options to purchase an aggregate of 3,000,000 shares of the Company’s common stock at an exercise price (subject to adjustment upon the occurrence of certain events) of $0.12 per share, a premium of 33% above the stock price when the transaction was consummated.

On March 31, 2014, the Company received net proceeds of $54,000, after compensation paid to a broker-dealer, from an investment by an accredited investor in exchange for an unsecured convertible promissory note in the principal amount of $63,000. The note bears interest at the rate of 10% per annum. The note must be converted by the holder (unless repaid by us) by March 31, 2015. The Company retains the option, but not the obligation, to repay the note in cash. The conversion price is the lesser of (a) $0.11 or (b) 60% of the lowest closing price of the Company’s common stock during the twenty trading days prior to the maturity date or the date that a notice of conversion is given by the holder.

F- 16

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BRAZIL MINERALS, INC.

	By:	/s/ Marc Fogassa
		Marc Fogassa
Date: June 30, 2014		Chief Executive Officer

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.

Signature	Title	Date

/s/ Marc Fogassa
Marc Fogassa	Chief Executive Officer	June 30, 2014
	and Director; Chief Financial Officer and Chief Accounting Officer

/s/ Roger Noriega	Director	June 30, 2014
Roger Noriega

/s/ Paul Durand	Director	June 30, 2014
Paul Durand

/s/ Luis Mauricio Ferraiuoli de Azevedo	Director	June 30, 2014
Luis Mauricio Ferraiuoli de Azevedo

EXHIBIT INDEX

Exhibit Number	Description
2.1	Exchange Agreement dated as of March 23, 2013 between the Company and Brazil Mining. Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the “Commission”) on March 28, 2013.
3.1	Articles of Incorporation of the Company filed with the Secretary of State of Nevada on December 15, 2011. Incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 filed by the Company on April 6, 2012 (the “S-1”).
3.2	Certificate of Amendment to the Articles of Incorporation of the Company filed with the Secretary of State of the State of Nevada on December 18, 2012. Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on December 26, 2012 (the “December 2012 8-K”).
3.3	Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock filed with the Secretary of State of the State of Nevada on December 18, 2012. Incorporated by reference to Exhibit 3.2 to the December 2012 8-K.
3.4	Certificate of Amendment to the Articles of Incorporation of the Company filed with the Secretary of State of the State of Nevada on December 24, 2012. Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on January 28, 2013 (the “January 2013 8-K”).
3.5	Certificate of Amendment to the Articles of Incorporation of the Company filed with the Secretary of State of the State of Nevada on January 24, 2013. Incorporated by reference to Exhibit 3.2 to the January 2013 8-K.
3.6	By-laws of the Company. Incorporated by reference to Exhibit 3.2 to the S-1.
4.1	Senior Secured Convertible Promissory Note of the Company dated September 30, 2013 in the principal amount of $75,000 to the order of Heather U. Baines and Lloyd McAdams AB Living Trust dated 8/1/2001.*
4.2	Stock Purchase Warrant to purchase 150,000 Shares of the Company’s Common Stock Issued to Heather U. Baines and Lloyd McAdams AB Living Trust dated 8/1/2001 on September 30, 2013.*
4.3	Stock Purchase Warrant to purchase 50,000 Shares of the Company’s Common Stock Issued to Michael Dimeo on September 30, 2013.*
4.4	Senior Secured Convertible Promissory Note of the Company dated January 8, 2014 in the principal amount of $244,000 to the order of Heather U. Baines and Lloyd McAdams AB Living Trust dated 8/1/2001.*
4.5	Convertible Promissory Note of the Company dated February 21, 2014 in the principal amount of $222,500 to the order of St George Investments, LLC.*
4.6	Option to Purchase 1,500,000 shares of the Company’s Common Stock Issued to the Nazari & Associates International Group, Inc. Defined Benefit Pension Plan on March 4, 2014.*
4.7	Option to Purchase 1,500,000 shares of the Company’s Common Stock Issued to the Suter Family Trust u/t/a April 12, 2002, as amended and restated on March 4, 2014.*

4.8	Warrant to Purchase 488,000 Shares of the Company’s Common Stock Issued to Una Hannah, LP on January 8, 2014.*
4.9	Convertible Debenture of the Company dated March 28, 2014 in the principal amount of $63,000 to the order of Group 10 Holdings LLC.*
10.1	Acquisition Agreement dated as of December 18, 2012 between the Company, Antaniuk and Brazil Mining. Incorporated by reference to Exhibit 10.1 to the December 2012 8-K.
10.2	Assignment of Mineral Rights from Brazil Mining, Inc. to the Company, dated December 18, 2012. Incorporated by reference to Exhibit 10.2 to the December 2012 8-K.
10.3	Option Agreement between the Company and Brazil Mining, Inc., dated December 18, 2012. Incorporated by reference to Exhibit 10.3 to the December 2012 8-K.
10.4	Contribution Agreement dated December 18, 2012 between the Company and Brazil Mining, Inc.*
10.5	Employment Agreement between the Company and Marc Fogassa. Incorporated by reference to Exhibit 10.6 to the 2012 10-K.
10.6	2013 Stock Incentive Plan. Incorporated by reference to Exhibit 10.7 to the 2012 10-K.
10.7	Securities Purchase Agreement dated as of February 21, 2014 between the Company and St George Investments LLC.*
21.1	Subsidiaries of the Company.*
31.1	Certification of the Chief Executive Officer pursuant to Section 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Certification of Chief Financial Officer pursuant to Section 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 135, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101	Interactive Data files pursuant to Rule 405 of Regulation S-T.*

*Filed herewith

Exhibit 4.1

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS

BRAZIL MINERALS, INC.

SENIOR SECURED CONVERTIBLE PROMISSORY NOTE

FOR VALUE RECEIVED, the undersigned, BRAZIL MINERALS, INC. (OTCQB: BMIX), a company organized under the laws of the State of Nevada (the “Company”), promises to pay to the order of Heather U. Baines and Lloyd McAdams AB Living Trust, or their respective assigns (the “Holder”) the principal sum of $75,000, with interest from the date hereof at the rate of 10% per annum on the unpaid balance hereof until paid (the “Note”).

The Note was issued in connection with the Company's private offering (the "Offering") of units of the Company's securities (the "Units"), each Unit consisting of $25,000 par value 10% Senior Secured Convertible Promissory Notes maturing May 31, 2014 and warrants to purchase 50,000 shares of the Company's Common Stock until December 31, 2019 (a "Warrant Share”). Capitalized terms used and not otherwise defined herein will have the respective meanings ascribed to such terms in the Memorandum.

1. Payments; Ranking; Security . (a) If not earlier converted pursuant to Section 3(a) hereof, the principal of this Note shall be payable on May 31, 2014 ("Maturity Date") or from the first $100,000 of proceeds from the closing of any subsequent financing, whichever is the earlier.

(b) This Note will rank senior to all debt of the Company.

(c) This Note shall be secured by intellectual property of the Company such as patents, royalties, and receivables of the Company and all equipment owned by the Company, except for equipment acquired with the proceeds from any future financing that is initially secured by such equipment.

(d) This Note will bear interest at a rate of 10.0% per year. Interest will be paid to the person in whose name the Note is registered at the Maturity Date. Interest on the Note will accrue from the date of the original issuance of the Note.

2. Redemption of this Note before the Maturity Date. All or any portion of the principal amount plus accrued interest on this Note may be prepaid at any time upon 5 days prior written notice, without premium or penalty.

3. Conversion Events and Mechanics of Conversion .

(a) Conversion . The Note-holder may convert the principal and unpaid interest into the Company's common stock at any time (“Conversion Event”). The Note’s initial Conversion Price is $0.125 per share at which price each $25,000 of principal of this Note can be converted into 200,000 common shares.

(b) Mechanics of Conversion . The Company shall not be obligated to issue certificates evidencing the common stock issuable upon a Conversion Event unless this Note is either delivered to the Company, duly endorsed, at the office of the Company, or the Holder notifies the Company that this Note has been lost, stolen or destroyed and executes an agreement satisfactory to the Company to indemnify the Company from any loss incurred by it in connection with this Note. As soon as practicable after delivery of this Note, or delivery of an agreement and indemnification in the case of a lost Note, the Company shall issue and deliver to the Holder a certificate or certificates for the number of shares of common stock to which the Holder shall be entitled (the "Conversion Shares"), and a check payable to the Holder in the amount equal to the cash amounts payable as a result of a conversion into fractional shares of such common stock. Any Conversion Event shall be deemed to have occurred immediately prior to the close of business on the date of the Conversion Event, and the Holder entitled to receive the common stock issuable upon such conversion shall be treated for all purposes as the record holder of such common stock on such date.

(c) Conversion Price Adjustment. The conversion price of the Note (“Conversion Price” or “CP”) is subject to adjustment for stock splits, dividends, and combinations.

Event of Default: An event of Principal Payment Default shall occur if after the Maturity Date, the principal of the Note has been not paid in full. An event of Other Payment Default shall occur if, after the date that any interest payment is due, the respective payment has been not paid in full.

After an Event of Default: If it is an Event of Principal Payment Default, a Note Holder may request in writing that a part or all of the Holder’s Note be converted into the Company’s common stock at an adjusted conversion price of $0.02 cents per share, or equal to 50% of the common stock’s VWAP during the 15 days prior to the date of written conversion request; whichever is equal to the lesser of the two stock prices. Commencing 5 days after the occurrence of any Event of Default which will result in acceleration of the Note, interest on the Note shall accrue at the compounded penalty rate of 30% per annum until the whole of the principal and any unpaid interest is paid in full. In addition, and as a penalty, the Company shall be required to issue to the holder of the Note an additional 50,000 shares of its common stock for each 30 day period or part thereof until the Note and any unpaid interest is paid in full (the “Additional Consideration”).

(d) Rule 144 . Current regulations provide that if on any date of conversion of convertible securities like the Note, these convertible securities have been held for: (i) more than six months by non-affiliates of the Company, the common shares issued by the Company shall be issued with a legal opinion at the Company’s expense from counsel allowing the public resale of these shares pursuant to Rule 144(d)(1)(i), and (ii) more than twelve months by non-affiliates of the Company, the common shares issued by the Company shall be issued free to trade and without restriction as proscribed by Rule 144(b)(1)(i).

If (i) after 10 days from the receipt by the Company of any request for note conversion or unrestricting warrant shares which are restricted and (ii) the shares can validly be issued without a restriction and (iii) the Company fails to issue the unrestricted common shares; the number of shares issuable shall then increase 1% per day until receipt of the unrestricted shares.

(e) Fractional Shares . No fractional shares of common stock shall be issued upon conversion of this Note. In lieu of any fractional shares to which the Holder would otherwise be entitled, the Company shall pay cash equal to such fraction multiplied by the Conversion Price.

4. Transfer Restrictions . The Holder shall not transfer the Note (except to its own affiliate, subsidiary, or shareholders) until (a) it has first given written notice to the Company, describing briefly the manner of any such proposed transfer; and (b) (i) the Company has at its expense received from counsel satisfactory to the Company an opinion that such transfer can be made without compliance with the registration requirements of the Securities Act of 1933, as amended (the "1933 Act"), and applicable state securities laws, or (ii) a registration statement covering the transfer of this Note is filed by the Company under the 1933 Act and applicable state securities laws is declared effective by the Securities and Exchange Commission and state securities commissions having jurisdiction.

5. Currency; Payments . All references herein to "dollars" or "$" are to U.S. dollars, and all payments of principal of, and interest on, this Note shall be made in lawful money of the United States of America in immediately available funds. If the date on which any such payment is required to be made pursuant to the provisions of this Note occurs on a Saturday or Sunday or legal holiday observed in the State of California, such payments shall be due and payable on the immediately succeeding date which is not a Saturday or Sunday or legal holiday so observed.

6. Representations and Warranties of Holder . Holder hereby represents and warrants that:

(a) Securities Not Registered . Holder is acquiring this Note for its own account, not as an agent or nominee, and not with a view to, or for sale in connection with, any distribution thereof in violation of applicable securities laws. By executing this Note, Holder further represents with respect to this Note that Holder does not have any present contract, undertaking, understanding or arrangement with any person to sell, transfer or grant participations to such persons or any third person.

(b) Access to Information . The Company has made available to Holder the opportunity to ask questions of and to receive answers from the Company's officers, directors and other authorized representatives concerning the Company and its business and prospects, and Holder has been permitted to have access to all information which it has requested in order to evaluate the merits and risks of the purchase of the Note.

(c) Investment Experience . Holder is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the purchase of the Note.

(d) Regulation D . Holder is an "accredited investor" as defined in Rule 501 under the 1933 Act. In the normal course of business, Holder invests in or purchases securities similar to the Note and has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of purchasing the Note.

(e) Unregistered . Holder has been advised that (i) neither this Note nor the common stock issuable upon conversion of this Note has been registered under the 1933 Act or other applicable securities laws, (ii) the common stock issuable upon conversion of the Note may need to be held indefinitely, and Holder must continue to bear the economic risk of the investment in the common stock issuable upon conversion of this Note is subsequently registered under the 1933 Act or an exemption from such registration is available, (iii) when and if the common stock issuable upon conversion of this Note may be disposed of without registration in reliance on Rule 144 promulgated under the 1933 Act, such disposition can be made only in limited amounts in accordance with the terms and conditions of such Rule, and the Company at its expense may require an opinion of counsel to the Company and in form substance and scope reasonably acceptable to the Company to the effect that the common stock may be sold or transferred under an exemption from such registration, and (iv) if the Rule 144 exemption is not available, public sale without registration will require compliance with an exemption under the 1933 Act.

(g) Pre-Existing Relationship . Holder has either (1) a pre-existing personal or business relationship with the Company or any of its officers, directors or controlling persons, or (2) has sufficient business or financial experience or (3) have reviewed the Offering with financial advisors, other than Syndicated Capital, who have sufficient business or financial experience and are unaffiliated with and are not compensated by the Company; in such degree that, directly or indirectly, the Holder could be reasonably assumed to have the capacity to protect his/its own interest in connection with the acquisition of the Note and the common stock into which it converts.

(h) No Advertisement . Holder acknowledges that the offer and sale of this Note or the common stock into which it converts was not accomplished by the publication of any advertisement.

(i) No Review . Holder understands that no arbitration board or panel, court or federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, has passed upon or made any recommendation or endorsement of the common stock into which it converts.

(j) Holder understands that the common stock into which this Note may convert shall bear a restrictive legend in substantially the following form:

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS UNLESS OFFERED, SOLD OR TRANSFERRED UNDER AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.

7. Survival of Representation and Warranties . All representations and warranties made by Holder shall survive the earlier of the Maturity Date and shall remain effective and enforceable until the earlier to occur of the Maturity Date or the date on which claims based thereon shall have been barred by the applicable statutes of limitation.

8. Waiver . The Company expressly waives presentment, protest, demand, notice of dishonor, notice of nonpayment, notice of maturity, notice of protest, presentment for the purpose of accelerating maturity, and diligence in collection.

9. Attorneys' Fees and Costs . In the event of any legal proceedings in connection with this Note, all expenses in connection with such legal proceedings of the prevailing party, including reasonable legal fees and applicable costs and expenses, shall be reimbursed by the non-prevailing party upon demand. This provision shall not merge with any enforcement order or judgment on this Note and shall be applicable to any proceeding to enforce or appeal any judgment relating to the Note.

10. Severability . If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provisions hereof shall not be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions hereof.

11. Successors and Assigns . This Note shall inure to the benefit of the Holder and its successors and permitted assigns and shall be binding upon the undersigned and its successors and permitted assigns. As used herein, the term "Holder" shall mean and include the successors and permitted assigns of the Holder.

12. Governing Law . The parties acknowledge and agree that this Note and the rights and obligations of all parties hereunder shall be governed by and construed under the laws of the State of California, without regard to conflict of laws principles.

13. Modification . This Note may not be modified or amended orally, but only by an agreement in writing signed by the party against whom such agreement is sought to be enforced.

14. Entire Agreement . This Note constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes any and all prior written or oral agreements and understandings with respect to the matters covered hereby.

IN WITNESS WHEREOF, the Company has caused this Note to be executed by its officers thereunto duly authorized as of the date first written above, and the Holder has executed this Note through its authorized persons.

	BRAZIL MINERALS, INC.

	By:	/s/ Marc Fogassa
		Marc Fogassa
		Chairman and Chief Executive Officer

	/s/ Lloyd McAdams, Trustee
	Heather U. Baines and Lloyd McAdams AB Living Trust

Exhibit 4.2

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.

BRAZIL MINERALS, INC.

STOCK PURCHASE WARRANT

To Purchase 150,000 Shares of Common Stock

(one hundred fifty thousand shares)

No. 2013-1

Issue Date: September 30, 2013

THIS CERTIFIES that, for value received, Heather U. Baines and Lloyd McAdams AB Living Trust (the "Holder"), is entitled, upon the terms and subject to the conditions hereinafter set forth, at any time on or after the date hereof, to subscribe for and purchase, from BRAZIL MINERALS, INC. a Nevada corporation (the "Company"), one hundred fifty thousand of the fully paid non-assessable shares of the Company's common stock, $0.001 par value per share ("Common Stock") at an initial purchase price of $0.15 per share or a lesser price as described in Section 11(c), provided that such right will terminate, if not terminated earlier in accordance with the provisions hereof, at 5:00 p.m. (Pacific Time) on December 31, 2019 (the "Expiration Date").

The purchase price and the number of shares for which this warrant (the "Warrant") is exercisable are subject to adjustment, as provided herein and specifically in Section 11.

This Warrant was issued in connection with the Company's private offering (the "Offering") of units of the Company's securities (the "Units"), each Unit consisting of $25,000 principal amount of 10% Senior Secured Convertible Promissory Notes maturing May 31, 2014 and warrants to purchase 50,000 shares of the Company's Common Stock until December 31, 2019 (a "Warrant Share”).

As used herein the following terms, unless the context otherwise requires, have the following respective meanings:

(a) The term "Company" shall include BRAZIL MINERALS, INC. and any corporation that shall succeed or assume the obligations of BRAZIL MINERALS, Inc. hereunder.

(b) The term "Warrant Shares" includes (i) the Company's Common Stock and (ii) any other securities into which or for which any of the Common Stock may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise.

(c) The term "Other Securities" refers to any stock (other than Common Stock) and other securities of the Company or any other person (corporate or otherwise) which the holder of the Warrant at any time shall be entitled to receive, or shall have received, on the exercise of this Warrant, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities.

(d) The term "Exercise Price" shall be $0.15 per share or a lesser price per share as described in Section 11(c), subject to adjustment pursuant to the terms hereof.

1.	Number of Shares Issuable upon Exercise.

Unless sooner terminated in accordance herewith, from and after the date hereof through and including the Expiration Date, the Holder shall be entitled to receive, upon exercise of this Warrant in whole or in part, the number of shares of Common Stock of the Company set forth on the first page of this Warrant, subject to adjustment pursuant hereto, by delivery of an original or fax copy of the exercise notice attached hereto as Exhibit A (the "Notice of Exercise") along with payment to the Company of the Exercise Price.

2.	Exercise of Warrant.

(a) The purchase rights represented by this Warrant are exercisable by the registered Holder hereof, in whole at any time or in part from time to time by delivery of the Notice of Exercise duly completed and executed at the office of the Company in California (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder hereof at the address of such Holder appearing on the books of the Company), and upon payment of the Exercise Price of the shares thereby purchased (cash, bank wire transfer, or by certified or official bank check payable to the order of the Company in an amount equal to the Exercise Price of the shares thereby purchased); whereupon the Holder of this Warrant shall be entitled to receive a certificate for the number of Warrant Shares so purchased; provided that the Company will place on each certificate a legend substantially the same as that appearing on this Warrant, in addition to any legend required by any applicable state or federal law. If this Warrant is exercised in part, the Company will issue to the Holder hereof a new Warrant upon the same terms as this Warrant but for the balance of Warrant Shares for which this Warrant remains exercisable. The Company agrees that upon exercise of this Warrant the Holder shall be deemed to be the record owner of the shares issued upon exercise as of the close of business on the date on which this Warrant shall have been exercised as aforesaid. This Warrant will be surrendered at the time of exercise or if lost, stolen, misplaced or destroyed, the Holder will comply with Section 7 below.

(b) Certificates for shares purchased hereunder shall be delivered to the Holder hereof within a reasonable time after the date on which this Warrant shall have been exercised as aforesaid.

(c) The Company covenants that all Warrant Shares which may be issued upon the exercise of rights represented by this Warrant will, upon exercise of the rights represented by this Warrant and payment of the exercise price, be fully paid and non-assessable and free from all preemptive rights, taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue which shall be paid by the Company in accordance with Section 4 below).

3.	No Fractional Shares .

The Company shall not be required to issue fractional Warrant Shares upon the exercise of this Warrant or to deliver Warrant Certificates that evidence fractional Warrant Shares. In the event that a fraction of a Warrant Share would, except for the provisions of this Section 3, be issuable upon the exercise of this Warrant, the Company shall pay to the Holder exercising the Warrant an amount in cash equal to such fraction multiplied by the Per Share Market Value of the Warrant Share.

For purposes of this Warrant, the Per Share Market Value shall be determined as follows: As used herein, "Per Share Market Value" means on any particular date (a) the closing bid price per share of Common Stock on such date on the national securities exchange on which the shares of Common Stock are then listed or quoted, or if there is no such price on such date, then the average of the closing bid and asked prices on the national securities exchange on the date nearest preceding such date, (b) if the shares of Common Stock are not then listed or quoted on a national securities exchange, the average of the closing bid and asked prices for a share of Common Stock in the over-the-counter market, as reported by the otcmarkets.com., or an equivalent generally accepted reporting service, at the close of business on such date, or (c) if the shares of Common Stock are not then publicly traded, the fair market value of a share of Common Stock as determined by an appraiser selected in good faith by the holders of a majority in interest of the Warrants of similar tenor then outstanding.

4.	Charges, Taxes and Expenses.

Issuance of certificates for Warrant Shares upon the exercise of this Warrant shall be made without charge to the Holder hereof for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder of this Warrant, or in such name or names as may be directed by the Holder of this Warrant; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder of this Warrant, this Warrant, when exercised, shall be accompanied by the Assignment Form attached hereto as Exhibit B (the "Assignment Form") duly executed by the Holder hereof; and provided further, that upon any transfer involved in the issuance or delivery of any certificates for Warrant Shares, the Company may require, as a condition thereto, that the transferee execute an appropriate investment representation as may be reasonably required by the Company.

5.	No Rights as Shareholders.

This Warrant does not entitle the Holder hereof to any voting rights or other rights as a Shareholder of the Company prior to the exercise hereof.

6.	Exchange and Registry of Warrant .

This Warrant is exchangeable, upon the surrender hereof by the registered Holder at the above-mentioned office or agency of the Company, for a new Warrant or Warrants aggregating the total Warrant Shares of the surrendered Warrant of like tenor and dated as of such exchange. The Company shall maintain at the above-mentioned office or agency a registry showing the name and address of the registered Holder of this Warrant. This Warrant may be surrendered for exchange, transfer or exercise, in accordance with its terms, at such office or agency of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.

7.	Loss, Theft, Destruction or Mutilation of Warrant.

Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor (but with no additional rights or obligations) and dated as of such cancellation, in lieu of this Warrant.

8.	Saturdays, Sundays, Holidays, etc .

If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday.

9.	Cash Distributions.

No adjustment on account of cash dividends or interest on the Company's Common Stock or Other Securities that may become purchasable hereunder will be made to the Exercise Price under this Warrant.

10.

Consolidation, Merger or Sale of the Company.

If the Company is a party to a consolidation, merger or transfer of assets that reclassifies or changes its outstanding Common Stock, the successor corporation (or corporation controlling the successor corporation or the Company, as the case may be) shall by operation of law assume the Company's obligations under this Warrant. Upon consummation of such transaction the Warrants shall automatically become exercisable for the kind and amount of securities, cash or other assets that the holder of a Warrant would have owned immediately after the consolidation, merger or transfer if the holder had exercised the Warrant immediately before the effective date of such transaction. As a condition to the consummation of such transaction, the Company shall arrange for the person or entity obligated to issue securities or deliver cash or other assets upon exercise of the Warrant to, concurrently with the consummation of such transaction, assume the Company's obligations hereunder by executing an instrument so providing and further providing for adjustments which shall be as nearly equivalent as may be practical to the adjustments provided for in this Section 10.

11.

Adjustments in the Exercise Price

The number of shares and class of capital stock purchasable under this Warrant are subject to adjustment from time to time as set forth in this Section 11.

(a) Adjustment for change in capital stock. If the Company:

(i) pays a dividend or makes a distribution on its Common Stock, in each case, in shares of its Common Stock;

(ii) subdivides its outstanding shares of Common Stock into a greater number of shares;

(iii) combines its outstanding shares of Common Stock into a smaller number of shares;

(iv) makes a distribution on its Common Stock in shares of its capital stock other than Common Stock; or

(v) issues by reclassification of its shares of Common Stock any shares of its capital stock;

then the number and classes of shares purchasable upon exercise of each Warrant in effect immediately prior to such action shall be adjusted so that the holder of any Warrant thereafter exercised may receive the number and classes of shares of capital stock of the Company which such holder would have owned immediately following such action if such holder had exercised the Warrant immediately prior to such action.

For a dividend or distribution the adjustment shall become effective immediately after the record date for the dividend or distribution. For a subdivision, combination or reclassification, the adjustment shall become effective immediately after the effective date of the subdivision, combination or reclassification.

If after an adjustment the Holder, upon exercise of a Warrant, may receive shares of two or more classes of capital stock of the Company, the Board of Directors of the Company shall in good faith determine the allocation of the adjusted Exercise Price between or among the classes of capital stock. After such allocation, that portion of the Exercise Price applicable to each share of each such class of capital stock shall thereafter be subject to adjustment on terms comparable to those applicable to Common Stock in this Warrant. Notwithstanding the allocation of the Exercise Price between or among shares of capital stock as provided by this Section 11(a), a Warrant may only be exercised in full by payment of the entire Exercise Price currently in effect.

(b) The Company will not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Section 11 and in the taking of all such action as may be necessary or appropriate in order to protect the exercise rights of the Holders of this Warrant against impairment.

(c.) Each Warrant shall be non-redeemable and shall expire December 31, 2019 and entitles its holder to purchase one restricted share of the Company's Common Stock at an initial exercise price of $0.15 per share, subject to adjustment for stock splits, dividends and combinations described in the Memorandum and Warrant.

Beginning six-months after the issuance of the Warrants and until the Warrants expire, the Warrant

Exercise Price (“EP”), subject to being no less than the Floor Price, shall at each month-end be adjusted to the lesser of:

The existing Exercise Price, or

An adjusted Exercise Price (“EP”) calculated using the following formula: EP = SP x 110%

Where SP equals the VWAP of the Company’s stock during the most recent six-month period as reported by Bloomberg or its successors.

Where Floor Price is defined as:

Through July 31, 2014: $0.15

During the period August 1, 2014 through August 31, 2015: $0.10

During the period September 1, 2015 through December 31, 2019: $0.05

Whenever an event of either Principal Payment Default or Other Payment Default is occurring: $0.02

Subject to being no less than the Floor Price, if at the end of 2014 and any subsequent or partial calendar year’s VWAP of the Company’s Common Stock as reported by Bloomberg is less than $0.15 per share, the exercise price shall become 80% of the prior month’s exercise price or EP before making the monthly six-month adjustment described above.

12.

Certificate as to Adjustments.

In each case of any adjustment or readjustment in the shares of Common Stock (or Other Securities) issuable on the exercise of the Warrant, the Company at its expense will promptly cause its Chief Financial Officer or other appropriate designee to compute such adjustment or readjustment in accordance with the terms of the Warrant and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock (or Other Securities) issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock (or Other Securities) outstanding or deemed to be outstanding, and (c) the Exercise Price and the number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately prior to such adjustment or readjustment and as adjusted or readjusted as provided in this Warrant. The Company will forthwith mail a copy of each such certificate to the Holder of the Warrant and any Warrant agent of the Company (appointed pursuant to Section 16 hereof).

13.

Reservation of Stock Issuable on Exercise of Warrant.

The Company will at all times reserve and keep available, solely for issuance and delivery on the exercise of the Warrant, shares of Common Stock (or Other Securities) from time to time issuable on the exercise of the Warrant. If the Company has not reserve sufficient shares to accommodate all of its obligations include these Warrants to be converted into authorized common shares and a Warrant holder notifies the Company of this deficiency, then the number of common shares into which this Warrant may be exercised shall increase by 1% per day until the transfer agent has verified in writing that such shares shall have been duly authorized by the Company’s Board of Directors and shareholders if required.

14.

Assignment; Exchange of Warrant.

Subject to compliance with applicable securities laws, this Warrant, and the rights evidenced hereby, may be transferred by any registered Holder hereof (a "Transferor") with respect to any or all of the shares underlying this Warrant. On the surrender for exchange of this Warrant, with the Transferor's duly executed Assignment Form and together with evidence reasonably satisfactory to the Company demonstrating compliance with applicable securities laws, which shall include, without limitation, a legal opinion from the Transferor's counsel that such transfer is exempt from the registration requirements of applicable securities laws, the Company at its expense (but with payment by the Transferor of any applicable transfer taxes) will issue and deliver to or on the order of the Transferor thereof a new Warrant of like tenor, in the name of the Transferor and/or the transferee(s) specified in such Assignment Form (each a "Transferee"), calling in the aggregate on the face or faces thereof for the number of Warrant Shares called for on the face or faces of the Warrant so surrendered by the Transferor; and provided further, that upon any such transfer, the Company may require, as a condition thereto, that the Transferee execute an appropriate investment representation as may be reasonably required by the Company.

15.

Registration Rights.

The Company has agreed to register the Warrant Shares in any subsequent registration statement (other than a Form S-8, S-4 or amendments thereto) filed by the Company with the SEC, so that Holders shall be entitled to sell the same simultaneously with and upon the terms and conditions as the securities sold for the Company's account are being sold pursuant to any such registration statement, subject to such lock-up provisions as may be proposed by the underwriter of said registration statement (the "Piggyback Registration Right"). There is no guarantee as to a time frame for the filing of such a registration statement.

16.

Warrant Agent.

The Company may, by written notice to each Holder of a Warrant, appoint an agent for the purpose of issuing Common Stock (or Other Securities) on the exercise of this Warrant pursuant to Section 2, exchanging this Warrant pursuant to Section 14, and replacing this Warrant pursuant to Section 7, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent.

17.

Notices, etc.

All notices shall be in writing signed by the party giving such notice, and delivered personally or sent by overnight courier or messenger or sent by registered or certified mail (air mail if overseas), return receipt requested, or by telex, facsimile transmission, telegram or similar means of communication. Notices shall be deemed to have been received on the date of personal, telex, facsimile transmission, telegram or similar means of communication, or if sent by overnight courier or messenger, shall be deemed to have been received on the next delivery day after deposit with the courier or messenger, or if sent by certified or registered mail, return receipt requested, shall be deemed to have been received on the third business day after the date of mailing. Notices shall be sent to the addresses set forth below each party's signature on the Subscription Agreement.

18.

Notices of Record Date.

In case,

(a) The Company takes a record of the holders of its Common Stock for the purpose of entitling them to subscribe for or purchase any shares of stock of any class or to receive a dividend, distribution or any other rights; or

(b) There is any capital reorganization of the Company, reclassification of the capital stock of the Company (other than a subdivision or combination of its outstanding shares of Common Stock), or consolidation or merger of the Company with or into another corporation which does not constitute a sale of the Company; or

then, and in any such case, the Company shall cause to be mailed to the Holder, at least 20 business days prior to the date hereinafter specified, a notice stating the date on which (i) a record is to be taken for the purpose of such dividend, distribution or rights, or (ii) such reclassification, reorganization, consolidation, merger, dissolution, liquidation or winding up is to take place and the date, if any is to be fixed, as of which holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, reorganization, consolidation, merger, dissolution, liquidation or winding up.

19.

Amendments and Supplements.

(a) The Company may from time to time supplement or amend this Warrant without the approval of any Holders in order to cure any ambiguity or to be correct or supplement any provision contained herein which may be defective or inconsistent with any other provision, or to make any other provisions in regard to matters or questions herein arising hereunder which the Company may deem necessary or desirable and which shall not materially adversely affect the interest of the Holder. All other supplements or amendments to this Warrant must be signed by the party against whom such supplement or amendment is to be enforced.

(b) Notwithstanding Section 19(a), the Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

20.

Investment Intent.

Holder represents and warrants to the Company that Holder is acquiring the Warrants for investment and with no present intention of distributing or reselling any of the Warrants.

21.

Certificates to Bear Language.

The Warrants and the Warrant Shares issuable upon exercise thereof shall bear the following legend by which Holder shall be bound:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE."

Certificates for Warrants or Warrant Shares without such legend shall be issued if such Warrants or Warrant Shares are sold pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "Act"), or if the Company has received an opinion from counsel reasonably satisfactory to counsel for the Company, that such legend is no longer required under the Act.

22.

Miscellaneous.

(a) This Warrant shall be governed by and construed in accordance with the laws of the State of California without regard to principles of conflicts of laws. The parties submit to the jurisdiction of the Courts of the County of Los Angeles, State of California or a Federal Court empanelled in the State of California for the resolution of all legal disputes arising under the terms of this Warrant, including, but not limited to, enforcement of any arbitration award. The Company and the Holder agree to submit to the jurisdiction of such courts and waive trial by jury.

(b) If any action or proceeding is brought by the Company on the one hand or by the Holder on the other hand to enforce or continue any provision of this Warrant, the prevailing party's costs and expenses, including its reasonable attorney's fees, in connection with such action or proceeding shall be paid by the other party.

(c) In the event that any provision of this Warrant is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision that may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Warrant.

(d) The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officers thereunto duly authorized as of the date first written above, and the Holder has executed this Warrant through its authorized persons.

	BRAZIL MINERALS, INC.

	By:	/s/ Marc Fogassa
		Marc Fogassa
		Chairman and Chief Executive Officer

	/s/ Lloyd McAdams, Trustee
	Heather U. Baines and Lloyd McAdams AB Living Trust

EXHIBIT A

NOTICE OF EXERCISE OF

WARRANT

BRAZIL MINERALS, INC.

The undersigned _______________, pursuant to the provisions of the within Warrant, hereby elects to purchase _____ shares of Common Stock of Brazil Minerals, Inc. covered by the within Warrant.

Dated:			Signature

			Address

EXHIBIT B

ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto __________________ the within Warrant and all rights evidenced thereby and does irrevocably constitute and appoint _____________, attorney, to transfer the said Warrant on the books of the within named corporation.

Dated:			Signature

			Address

PARTIAL ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto __________________ the right to purchase _________ Warrant Shares evidenced by the within Warrant together with all rights therein, and does irrevocably constitute and appoint ___________________, attorney, to transfer that part of the said Warrant on the books of the within named corporation.

Dated:			Signature

			Address

FOR USE BY THE ISSUER ONLY:

This Warrant No. ___ canceled (or transferred or exchanged) this _____ day of ___________, _____, shares of Common Stock issued therefor in the name of _______________, Warrant No. _____ issued for ____ shares of Common Stock in the name of _______________.

Exhibit 4.3

BRAZIL MINERALS, INC.

STOCK PURCHASE WARRANT

To Purchase 50,000 Shares of Common Stock

No. 2013-2

Issue Date: September 30, 2013

THIS CERTIFIES that, for value received, Michael Dimeo (the "Holder"), is entitled, upon the terms and subject to the conditions hereinafter set forth, at any time on or after the date hereof, to subscribe for and purchase, from BRAZIL MINERALS, INC. a Nevada corporation (the "Company"), 50,000 (fifty thousand) of the fully paid non-assessable shares of the Company's common stock, $0.001 par value per share ("Common Stock") at an initial purchase price of $0.15 per share or a lesser price as described in Section 11(c), provided that such right will terminate, if not terminated earlier in accordance with the provisions hereof, at 5:00 p.m. (Pacific Time) on December 31, 2019 (the "Expiration Date").

The purchase price and the number of shares for which this warrant (the "Warrant") is exercisable are subject to adjustment, as provided herein and specifically in Section 11.

As used herein the following terms, unless the context otherwise requires, have the following respective meanings:

(a) The term "Company" shall include BRAZIL MINERALS, INC. and any corporation that shall succeed or assume the obligations of BRAZIL MINERALS, Inc. hereunder.

(d) The term "Exercise Price" shall be $0.15 per share or a lesser price per share as described in Section 11(c), subject to adjustment pursuant to the terms hereof.

Number of Shares Issuable upon Exercise.

Exercise of Warrant.

(b) Certificates for shares purchased hereunder shall be delivered to the Holder hereof within a reasonable time after the date on which this Warrant shall have been exercised as aforesaid.

No Fractional Shares .

Charges, Taxes and Expenses.

No Rights as Shareholders.

This Warrant does not entitle the Holder hereof to any voting rights or other rights as a Shareholder of the Company prior to the exercise hereof.

Exchange and Registry of Warrant .

Loss, Theft, Destruction or Mutilation of Warrant.

Saturdays, Sundays, Holidays, etc .

Cash Distributions.

No adjustment on account of cash dividends or interest on the Company's Common Stock or Other Securities that may become purchasable hereunder will be made to the Exercise Price under this Warrant.

10.

Consolidation, Merger or Sale of the Company.

11.

Adjustments in the Exercise Price

The number of shares and class of capital stock purchasable under this Warrant are subject to adjustment from time to time as set forth in this Section 11.

(a) Adjustment for change in capital stock. If the Company:

(i) pays a dividend or makes a distribution on its Common Stock, in each case, in shares of its Common Stock;

(ii) subdivides its outstanding shares of Common Stock into a greater number of shares;

(iii) combines its outstanding shares of Common Stock into a smaller number of shares;

(iv) makes a distribution on its Common Stock in shares of its capital stock other than Common Stock; or

(v) issues by reclassification of its shares of Common Stock any shares of its capital stock;

Beginning six-months after the issuance of the Warrants and until the Warrants expire, the Warrant Exercise Price (“EP”), subject to being no less than the Floor Price, shall at each month-end be adjusted to the lesser of:

The existing Exercise Price, or

An adjusted Exercise Price (“EP”) calculated using the following formula: EP = SP x 110%

Where SP equals the VWAP of the Company’s stock during the most recent six-month period as reported by Bloomberg or its successors.

Where Floor Price is defined as:

Through July 31, 2014: $0.15

During the period August 1, 2014 through August 31, 2015: $0.10

During the period September 1, 2015 through December 31, 2019: $0.05

Whenever an event of either Principal Payment Default or Other Payment Default is occurring: $0.02

12.

Certificate as to Adjustments.

13.

Reservation of Stock Issuable on Exercise of Warrant.

14.

Assignment; Exchange of Warrant.

15.

Registration Rights.

16.

Warrant Agent.

17.

Notices, etc.

18.

Notices of Record Date.

In case,

19.

Amendments and Supplements.

20.

Investment Intent.

Holder represents and warrants to the Company that Holder is acquiring the Warrants for investment and with no present intention of distributing or reselling any of the Warrants.

21.

Certificates to Bear Language.

The Warrants and the Warrant Shares issuable upon exercise thereof shall bear the following legend by which Holder shall be bound:

22.

Miscellaneous.

(d) The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officers thereunto duly authorized as of the date first written above, and the Holder has also executed this Warrant.

	BRAZIL MINERALS, INC.

	By:	/s/ Marc Fogassa
		Marc Fogassa
		Chairman and Chief Executive Officer

		/s/ Michael Dimeo
		Michael Dimeo

EXHIBIT A

NOTICE OF EXERCISE OF

WARRANT

BRAZIL MINERALS, INC.

The undersigned _______________, pursuant to the provisions of the within Warrant, hereby elects to purchase _____ shares of Common Stock of Brazil Minerals, Inc. covered by the within Warrant.

Dated:			Signature

			Address

EXHIBIT B

ASSIGNMENT

Dated:			Signature

			Address

PARTIAL ASSIGNMENT

Dated:			Signature

			Address

FOR USE BY THE ISSUER ONLY:

Exhibit 4.4

BRAZIL MINERALS, INC.

SENIOR SECURED CONVERTIBLE PROMISSORY NOTE

$244,000

January 8, 2014

FOR VALUE RECEIVED, the undersigned, Brazil Minerals, Inc. (BMIX.OB), a company organized under the laws of the State of Nevada (the "Company"), promises to pay to the order of Heather U. Baines and Lloyd McAdams AB Living Trust dated 8-10-2001 or its registered assigns (the "Note Holder"), the principal sum of two hundred forty four thousand dollars ($244,000), with interest from the date hereof at the rate of 12% per annum on the unpaid balance hereof until paid.

This Note was issued in connection with the Company's private offering (the "Offering") of units of the Company's securities (the "Units"), each Unit consisting of $25,000 par value 12% Senior Secured Convertible Promissory Notes maturing March 31, 2015 and warrants to purchase 50,000 shares of the Company's Common Stock until Expiration Date (a "Warrant Share"), pursuant to a Subscription Agreement (the "Subscription Agreement") incorporated therein to which the initial Note Holder is a party.

1. Principal. If not earlier converted into the common stock of the Company (the “Stock”) as described herein, the principal of this Note shall be payable to the Holder on March 31, 2015 ("Maturity Date"). The Note will rank senior to all debt of the Company.

2. Collateral. The Notes shall be secured by:

(a)

all of the capital equipment (excavator, loading shovel, bulldozer, trucks, motor and pump) to be purchased with the funds from the sale of the Units as described in more detail in Exhibit A of this Note,

(b)

by a pledge of a number of shares of Stock whose value based on the stock bid price is twice (or 200%) the amount in outstanding and unpaid principal and interest of the Notes (the “Stock Coverage”). Stock certificates for the Stock Coverage shall be issued by the Company and deposited in the Company’s account (“Escrow Account”) at Syndicated Capital, Inc. or its successor. The amount of stock in the Stock Coverage shall be increased on the fifth calendar day of each month so that, based on the previous month-end bid price for the stock, the value of the Stock in the account is at least 200% of the aggregate amount of principal and accrued interest as of the previous month-end. The Stock Coverage shall only be returned to the Company upon the full repayment of unpaid principal and interest to the Note Holder, and

(c)

by cash held in the Escrow Account into which on the fifteenth of each calendar month, the Company shall deposit cash collateral in the amount of $20,000 (the “Sinking Fund Payment”). With 60 days’ notice to the Note Holder during which time the Note Holder may convert the Note into Stock, the Company at its option can on the redemption terms described herein use the cash in this account for the full or partial redemption of the Note’s principal and associated accrued interest on the principal to be redeemed.

3. Interest . The Notes will bear interest at a rate of 12.0% per year. Interest accrued will be payable on September 30, 2014 and March 31, 2015 and each six months thereafter. Interest on the Notes will be computed using a 360-day year comprised of twelve 30-day months and will accrue from the date of the original issuance of the Notes. If any interest payment date falls on a date that is not normally a business day, such payment of interest (or principal in the case of the Maturity Date or any earlier repurchase date for the Notes) will be made on the next succeeding business day, and no interest or other amount will be paid as a result of any such delay.

If the Note is not paid in full by the Maturity Date, the interest rate payable on the Note shall be adjusted for interest accruable after the Maturity Date from 12% per annum to the lesser of 30% per annum or the maximum statutory rate pursuant to California law and other applicable jurisdiction based on the opinion of legal counsel selected by a majority of Note Holders.

4. Event of Default . The following Event of Principal Payment Default and Event of Other Payment Default are each defined as “Events of Default.”

(a)

An “Event of Principal Payment Default” shall exist (1) if after the Maturity Date, the principal and interest of the Note continues to have not been paid in full to the Note Holder or (2) whenever the Company has been delinquent at least 30 days in its required filings of all Forms 10-Q and 10-K with the U.S. Securities and Exchange Commission.

(b)

An “Event of Other Payment Default” shall exist after fifteen or more days after the date that any of the following has occurred:

	a.	Interest payment not paid when due,
	b.	Sinking Fund Payment not paid when due,
	c.	Stock Coverage deposit not made when due,
	d.	any other required deposit or payment described herein, or
	e.	non-performance of Company representations in Section 9.

(c)

If there is an ongoing Event of Default, a Note Holder may deliver to the Company a request in writing that a part or all of Note Holder’s Notes be converted into the Company’s common stock at an adjusted conversion price equal to 50% of the common stock’s Volume Weighted Average Price as reported by Bloomberg (“VWAP”) during the 15 days prior to date that the written conversion request was received by the Company.

(d)

If there is an ongoing Event of Default and if requested in writing by the Note Holder; the Company will grant the request of the Note Holder to convert some or all the Notes unpaid interest and then unpaid principal into the Stock held in the Escrow Account at Syndicated Capital, Inc. For each one dollar of principal and/or accrued interest to be redeemed or paid, the value of the Stock transferred will be two dollars based on the most recent average closing bid price of the stock on the five days before the date of the written withdrawal request.

(e)

If there is an ongoing Event of Default and if requested in writing by the Note Holder; the Company will grant the request of the Note Holder to transfer cash from the Escrow Account at Syndicated Capital, Inc. to an account of the Note Holder as payment for some or all the Notes unpaid interest and then unpaid principal.

5. Conversion Events and Mechanics of Conversion .

(a) Conversion . The Note Holder may convert the principal and unpaid interest into the Company's common stock at any time (“Conversion Event”). The Note’s initial Conversion Price is $0.10 per share.

(b) Mechanics of Conversion . The Company shall not be obligated to issue certificates evidencing the common stock issuable upon a Conversion Event unless this Note is either delivered to the Company, duly endorsed, at the California office of the Company, or the Holder notifies the Company that this Note has been lost, stolen or destroyed and executes an agreement satisfactory to the Company to indemnify the Company from any loss incurred by it in connection with this Note. As soon as practicable after delivery of the Note, or delivery of an agreement and indemnification in the case of a lost Note, the Company shall issue and deliver to the Holder a certificate or certificates for the number of shares of common stock to which the Holder shall be entitled (the "Conversion Shares"), and a check payable to the Holder in the amount equal to the cash amounts payable as a result of a conversion into fractional shares of such common stock. Any Conversion Event shall be deemed to have occurred immediately prior to the close of business on the date of the Conversion Event, and the Holder entitled to receive the common stock issuable upon such conversion shall be treated for all purposes as the record holder of such common stock on such date.

(c) Registration of Stock . If the Note Holder converts all or a part of the Note into Stock and the Note has been owned by the Note Holder for more than six months and the Note Holder affirms that it is a non-affiliate of the Company and the Note Holder requests that the shares be issued in unrestricted form; the Company affirms that at its expense it will cause to be issued unrestricted shares of the Company’s common shares to the Note Holder.

If based on any other terms of this Note, the Note Holder has received shares of the Company’s stock and the Note Holder has owned these shares for more than six months and the Note Holder affirms that it is a non-affiliate of the Company and the Note Holder requests in writing that the shares be reissued in unrestricted form; the Company affirms that at its expense it will cause to be issued unrestricted shares of the Company’s common shares to the Note Holder.

If for any reason these unrestricted shares are not issued within 15 days of the written request, the number of shares to be issued shall increase by 1% per day until all such share certificates are sent to the investor via traceable courier such as FedEx.

The Note Holder acknowledges by entering into this transaction that it fully understands that such shares cannot be sold without registration whenever the Company is not current with its required filings with the Securities and Exchange Commission.

(d). Subsequent Issuance of Stock . If prior to the repayment of the Note and accrued interest in full, the Company issues or grants the right to purchase new common shares at a price (the “Issue/Grant Price”), less than the Conversion Price, then the Conversion Price will immediately and permanently become the Issue/Grant Price.

(f) Redemption of the Note before the Maturity Date. On or after six months from the date of the Note, the Company may, at its option, after 60 days prior written notice to the Note Holder (“Redemption Notice”), during which period a Note-holder may elect to convert the Note, redeem via wire transfer all or a portion of the Notes at a call price in cash equal to:

	a.	115% of the principal amount of the notes to be called plus accrued and unpaid interest up to the payment date, if the previous 6 month Average Daily Trading Value as reported by Bloomberg on the date of notice is less than $100,000,
	b.	109% of the principal amount of the notes to be called plus accrued and unpaid interest up to the payment date, if the previous 6 month Average Daily Trading Value as reported by Bloomberg on the date of notice is greater than $100,000 and less than $500,000,
	c.	103% of the principal amount of the notes to be called plus accrued and unpaid interest up to the payment date, if the previous 6 month Average Daily Trading Value as reported by Bloomberg on the date of notice is greater than $500,000

If at any time after the written Redemption Notice, the Company amends any part of the Redemption Notice then the earliest date on which the Note may be redeemed is 60 days after the date of the written amendment notice.

(g) Miscellaneous . The conversion price of the Note (“Conversion Price” or “CP”) is subject to customary adjustment for stock splits, all stock dividends, combinations and all cash dividends.

6. Transfer Restrictions . The Holder shall not transfer the Note (except to its own affiliate, subsidiary, or shareholders) until (a) it has first given written notice to the Company, describing briefly the manner of any such proposed transfer; and (b) (i) the Company has at its expense received from counsel satisfactory to the Company an opinion that such transfer can be made without compliance with the registration requirements of the Securities Act of 1933, as amended (the "1933 Act"), and applicable state securities laws, or (ii) a registration statement filed by the Company under the 1933 Act and applicable state securities laws is declared effective by the Securities and Exchange Commission and state securities commissions having jurisdiction.

7. Currency; Payments . All references herein to "dollars" or "$" are to U.S. dollars, and all payments of principal of, and interest on, this Note shall be made in lawful money of the United States of America in immediately available funds. If the date on which any such payment is required to be made pursuant to the provisions of this Note occurs on a Saturday or Sunday or legal holiday observed in the State of California, such payments shall be due and payable on the immediately succeeding date which is not a Saturday or Sunday or legal holiday so observed.

8. Representations and Warranties of Holder . Holder hereby represents and warrants that:

(a) Securities Not Acquired For Resale . Holder is acquiring the Note for its own account, not as an agent or nominee, and not with a view to, or for sale in connection with, any distribution thereof in violation of applicable securities laws. By executing this Note, Holder further represents with respect to the Note that Holder does not have any present contract, undertaking, understanding or arrangement with any person to sell, transfer or grant participations to such persons or any third person.

(c) Regulation D . Holder is an "accredited investor" as defined in Rule 501 under the 1933 Act. In the normal course of business, Holder invests in or purchases securities similar to the Note and has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of purchasing the Note.

(d) No Advertisement . Holder acknowledges that the offer and sale of the Note or the common stock into which it converts was not accomplished by the publication of any advertisement.

(e) No Review . Holder understands that no arbitration board or panel, court or federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, has passed upon or made any recommendation or endorsement of the common stock into which it converts.

9. Representations and Warranties of Company . Company hereby represents and warrants that:

(a) Use of Proceeds . The Company represents that the proceeds from the issuance of this Note shall be used solely for the purchase of the equipment as presented in Exhibit A to the Note. If any of the proceeds from the issuance of this Note is not used to purchase this equipment prior to the termination of the Company’s right to purchase this equipment as presented in Exhibit A to this Note, any such unused proceeds from the issuance of this Note shall within two weeks be returned to the Note Holder at the face amount with interest. If the Company should sell the equipment prior to the repayment of the Note’s unpaid principal and interest, the proceeds from the sale shall be deposited in the Escrow Account within 5 days of the receipt of proceeds from the sale of the equipment.

(b) Form D and Blue Sky Registration . The Company represents that relative to the issuance of the Units, Notes and Warrants; it will at its expense file and in a timely manner file Form D with the S.E.C. and other required forms with state security regulators.

(c) Corporate Good Standing . The Company represents that it, subsidiaries and affiliates have and will continue to be in corporate good standing in all relevant jurisdictions.

(d) Legal Authority . The Company represents that it has the legal authority to issue the Note and Warrants.

10. Survival of Representation and Warranties . All representations and warranties made by Holder and Company shall survive the earlier of (a) the Maturity Date and shall remain effective and enforceable until the earlier to occur of the Maturity Date or (b) the date on which claims based thereon shall have been barred by the applicable statutes of limitation.

11. Waiver . The Company expressly waives presentment, protest, demand, notice of dishonor, notice of nonpayment, notice of maturity, notice of protest, presentment for the purpose of accelerating maturity, and diligence in collection.

12. Attorneys' Fees and Costs . In the event of any legal proceedings in connection with this Note, all expenses in connection with such legal proceedings of the prevailing party, including reasonable legal fees and applicable costs and expenses shall be reimbursed by the non-prevailing party upon demand. This provision shall not merge with any enforcement order or judgment on this Note and shall be applicable to any proceeding to enforce or appeal any judgment relating to the Note.

13. Severability . If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provisions hereof shall not be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions hereof.

14. Successors and Assigns . This Note shall inure to the benefit of the Holder and its successors and permitted assigns and shall be binding upon the undersigned and its successors and permitted assigns. As used herein, the term "Holder" shall mean and include the successors and permitted assigns of the Holder.

15. Governing Law . The parties acknowledge and agree that this Note and the rights and obligations of all parties hereunder shall be governed by and construed under the laws of the State of California, without regard to conflict of laws principles.

16. Modification . This Note may not be modified or amended orally, but only by an agreement in writing signed by the party against whom such agreement is sought to be enforced.

17. Entire Agreement . This Note constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes any and all prior written or oral agreements and understandings with respect to the matters covered hereby.

	BRAZIL MINERALS, INC.

	a Nevada corporation

	/s/ Marc Fogassa
	By: Marc Fogassa
	Its: Chairman & CEO

Exhibit A

Brazil Minerals Inc.

12% Convertible Note maturing March 31, 2015

USE OF PROCEEDS

We intend to use the proceeds from the Senior Secured Convertible Promissory Note for the purchase of capital equipment for the Duas Barras mine, as follows:

One excavator

Brand Doosan (South Korean), Model 225 LCV, Year 2010

Price in Brazilian Real = R$250,000

Price in USD – US$109,000

Cost of Transport to Mine – US$1000

Total Cost – US$110,000

One Bulldozer

Brand Komatsu (Japanese), Model D65, Year 1984

Price in Brazilian Real = R$105,000

Price in USD – US$45,700

Cost of Transport to Mine – US$1000

Total Cost – US$46,700

One truck

Brand Mercedes Benz (German), Model 1929, Year 1984

Price in Brazilian Real = R$38,000

Price in USD – US$16,600

Cost of Transport to Mine – US$1000

Total Cost – US$17,600

One Portable Generator and One Portable Motor

Brand Caterpillar (American), generator 569 KVA, motor 125 cv

Price in Brazilian Real = R$163,887.50

Price in USD – US$71,300

Cost of Transport to Mine – US$1000

Total Cost – $72,300

Tube and filtering systems (for use with motor above)

Price in Brazilian Real = R$6,112.50

Price in USD – US$2,700

Cost of Transport to Mine – US$200

Total Cost – US$2,900

Other Purchase Costs (wires, etc) = $500 (estimated)

TOTAL COST = US$250,000

PRIVATE CONTRACT

THE PROMISE OF PURCHASE AND SALE

(“AGREEMENT”)

SELLER : RENCO EQUIPMENT S / A Rod BR 381 , km 424.1 Garden Piemont CEP : 32530-000 - Betim - MG - Brazil , herein represented by its attorney baste Fernando Tiago Dias , Mechanical Engineer, Married , CPF 365 606266-87 SSP 647 and RG - M678 MG , resident and domiciled at Rua in Japan # 21 , apt 201 , Bairro Jardim White House , Betim - Minas Gerais

BUYER : BRAZIL MINERALS , INC. . ( " BMIX " ) , a limited liability company duly organized and existing under the laws of the United States of America , with headquarters at 113 Barksdale Professional Center , Newark , Delaware , zip code 19711 , United States of America , and to the Office 324 South Beverly Drive, Suite 118 , Beverly Hills , California , zip code 90212 , United States , enrolled with the CNPJ / MF under No. 17.412.632/0001-65 , represented by his attorney , Mr. Robledo Delatorre Ribeiro , Brazilian , single, administrator , CPF 040746046-20 , domiciled at Avenida Guaicui , No. 330, apt . 302 , Subdivision Luxembourg , Belo Horizonte , MG , CEP 30380-380 ;

By the following terms and conditions freely negotiated and agreed to be bound to respect:

SECTION ONE – OBJECT

SELLER is the owner of Excavator:

Excavator Doosan SOLAR 225 LCV brand model year 2010 DHKHEMXOL80003879 Series with hourmeter scoring 2896.5 hs

First Paragraph: The machine does not suffer from restrictions of any kind, with the same free and clear of any liens, real or personal, judicial or extrajudicial, pledge, attachment or sequestration, forum or board, to date, by declaring the SELLER under civil and criminal liability.

SECTION TWO - PRICE AND PAYMENT

Hereby promises to sell and the BUYER SELLER promises to buy Excavator, understood and agreed by the full and final price of U.S. $ 250,000.00 (two hundred fifty thousand dollars), payable as follows:

a) R $ 1,000.00 (one thousand reais) , as a sign and initial payment to the seller in the current account deposit n.18513 - 2 Agency : 2864-9 , 237 bank ( Bradesco ) in favor of the company RENCO EQUIPMENT SA in Salvador BA , using their signatures to the end of this instrument a receipt for the amount received , after confirmation of said bank deposit .

b) R $ 125,000.00 (one hundred twenty -five thousand reais) to be paid within thirty (30 days), the current account deposit n18513 - 2 Agency: 2864-9, 237 bank (Bradesco) in favor of the company RENCO EQUIPMENT SA in Salvador BA, starting from the signing of this AGREEMENT.

c) R $ 124,000.00 (sit and twenty-four thousand dollars) to be paid within 60 (sixty) days, on deposit in current account n. 18513-2 Agency 2864-9 , 237 bank ( Bradesco ) in favor of the company RENCO EQUIPMENT SA in Salvador BA , starting from the signing of this AGREEMENT.

FIRST PARAGRAPH: The value in item “a" above shall be paid upon the signing of this contract.

SECOND PARAGRAPH: THE SELLER undertakes to make available to the representative EQUIPMENT BUYER within five (05) days from the signing of this contract upon payment confirmation of item “b “above. The availability of the equipment shall be made at the address of the SELLER, described earlier in this document.

SECTION THREE - All taxes , fees , levies and charges of any nature , including the debt outstanding debt that relapse on the machine object of this contract , to the giving of the same is the responsibility of the SELLER and from the transfer of possession borne by the BUYER .

SECTION FOUR - It will be sole responsibility of the SELLER the cost of transfer, issue invoices, and taxes arising from the sale object of this contract.

SECTION FIVE - Failure to comply with any obligation in this contract shall result in termination of the same, independent of, or notification or judicial or extra- judicial notice, as provided in the following paragraphs:

FIRST PARAGRAPH - Being the offender SELLER, shall undertake, it just refund the amounts received, within ten (10) days from the date of termination. In particular , if the machine is sold to a third party by the SELLER upon payment by the BUYER sign £ 1,000 (one thousand reais) , the SELLER shall be responsible to pay a termination fee in the amount of $ 10,000 (ten thousand ) real to the PURCHASER within ten (10 ) days from the date of termination.

SECOND PARAGRAPH - Being the offender BUYER shall undertake it even to non-receipt of the return of the EQUIPMENT or EQUIPMENT if it does not comply with the payment for the item “c “of the Second Clause. SELLER received the equipment back, the buyer, and the amount paid by the BUYER will be refunded with the amount of R $ 21,000.00 discounted by the use of the equipment during the period between the first payment and the anticipated date of the second.

SIXTH CLAUSE - This contract has irrevocably and irreversibly under current legislation , undertaking the Contracting Parties , for themselves , their heirs and successors , to well and faithfully perform all items and conditions agreed and that it is payable regardless of notification or judicial or extra- judicial intervention .

SECTION SEVEN - The Contracting Parties undertake to make the sale always good, strong and valuable, at any time and place, as well as to respond to the eviction rights for themselves, their heirs and successors.

SECTION EIGHT - To resolve any issues arising directly or indirectly from this contract, the parties elect the courts of this judicial district of Belo Horizonte - capital of the state of Minas Gerais, with a waiver of any other by more privileged.

SECTION NINE - The Contracting Parties , having prior knowledge of the text of this agreement and understood its meaning and scope , and are fair and freely contracted , accepting the conditions set forth herein , execute this in three (03 ) counterparts , similarly and content , the presence of the undersigned witnesses , for the intents and purposes of law .

Belo Horizonte, December 9, 2013


RENCO EQUIPMENT S / A
SELLER


BRAZIL MINERALS , INC. .
BUYER

WITNESSES :


Name :
CPF :

.
Name :
CPF :

PRIVATE CONTRACT

THE PROMISE OF PURCHASE AND SALE

(“AGREEMENT”)

SELLER: BETIMAQ TRACTOR PARTS AND SERVICES LTD, CPF No. 05.812.842/0001-61, State Registration No. 067.267399-0045: Rua Boa Viagem , 190 - Mount Lebanon , Betim - MG , CEP : 32553-470 . PHONE 31-3593-3288.

BUYER : BRAZIL MINERALS, INC. . ( " BMIX " ) , a limited liability company duly organized and existing under the laws of the United States of America , with headquarters at 113 Barksdale Professional Center , Newark , Delaware , zip code 19711 , United States of America , and to the Office 324 South Beverly Drive, Suite 118 , Beverly Hills , California , zip code 90212 , United States , enrolled with the CNPJ / MF under No. 17.412.632/0001-65 , represented by his attorney , Mr. Robledo Delatorre Ribeiro , Brazilian , single, administrator CPF 040746046-20 , domiciled Avenida Guaicui , No. 330 apt . 302 , Subdivision Luxembourg , Belo Horizonte , MG , CEP 30380-380 ;

By the following terms and conditions freely negotiated and agreed to be bound to respect:

SECTION ONE - OBJECT

SELLER is the owner of MACHINERY :

Tractor Komatsu D65 model year of manufacture 1984.

First Paragraph : The machine does not suffer from restrictions of any kind, with the same free and clear of any liens, real or personal, judicial or extrajudicial, pledge, attachment or sequestration, forum or board, to date, by declaring the SELLER under civil and criminal liability.

SECTION TWO - PRICE AND PAYMENT

SELLER hereby promises to sell and buy MACHINE BUYER promises , and for the right price and total final set of R $ 105,000.00 (one hundred and five thousand reais ) , payable as follows :

R$ 1,000.00 (one thousand reais) , as a sign and initial payment in favor of the SELLER in deposit in current account No. 18058-5 Agency 6505 , BANK ITAU , in favor of BETIMAQ TRACTOR PARTS AND SERVICES LTD , worth their signatures to the final settlement of this instrument as the amount received upon confirmation of said bank deposit .

R$ 54,000.00 ( fifty-four thousand dollars) to be paid within thirty (30 days) , after the signing of this Agreement, on deposit in current account No. 18058-5 Agency 6505 , BANK ITAU , in favor of BETIMAQ TRACTORS AND PARTS SERVICES LTD , starting from the signing of this AGREEMENT.

R$ 50:000,00 (fifty thousand dollars) to be paid a minimum period of 15 (fifteen days) A AFTER THE DATE OF THE PORTION PAGM1ENTO B. on deposit in current account No. 18058-5 Agency 6505 , BANK ITAU, in favor or on the BETIMAQ TRACTORS AND PARTS SERVICES LTD. starting from the signing of this AGREEMENT.

FIRST PARAGRAPH : The value in item “a" above shall be paid upon the signing of this contract.

SECOND PARAGRAPH : THE SELLER undertakes to provide to the representative TRUCK BUYER within thirty (30) days from the signing of this contract upon confirmation of payment.

SECTION THREE - All taxes , fees , levies and charges of any nature , including the debt outstanding debt that relapse on the machine object of this contract , to the giving of the same is the responsibility of the SELLER and from the transfer of possession borne by the BUYER .

SECTION FOUR - It will be sole responsibility of the SELLER the cost of transfer, issue invoices, and taxes arising from the sale object of this contract.

SECTION FIVE - Failure to comply with any obligation in this contract shall result in termination of the same, independent of, or notification or judicial or extra- judicial notice, as provided in the following paragraphs:

FIRST PARAGRAPH - Being the offender SELLER , shall undertake, it just refund the amounts received, within ten (10) days from the date of termination. In particular , if the machine is sold to a third party by the SELLER upon payment by the BUYER sign £ 1,000 (one thousand reais) , the SELLER shall be responsible to pay a termination fee in the amount of $ 10,000 (ten thousand ) real to the PURCHASER within ten (10 ) days from the date of termination.

SECOND PARAGRAPH - Being the offender BUYER shall undertake it even to non-receipt or return MACHINE , without further charge.

SIXTH CLAUSE - This contract has irrevocably and irreversibly under current legislation, undertaking the Contracting Parties, for themselves, their heirs and successors, firmly.

SECTION SEVEN - The Contracting Parties undertake to make the sale always good, strong and valuable, at any time and place, as well as to respond to the eviction rights for themselves, their heirs and successors.

SECTION EIGHT - To resolve any issues arising directly or indirectly from this contract, the parties elect the courts of this judicial district of Belo Horizonte - capital of the state of Minas Gerais, with a waiver of any other by more privileged.

SECTION NINE - The Contracting Parties , having prior knowledge of the text of this agreement and understood its meaning and scope , and are fair and freely contracted , accepting the conditions set forth herein , execute this in three (03 ) counterparts , similarly and content , the presence of the undersigned witnesses , for the intents and purposes of law .

Belo Horizonte, December 11, 2013

BETIMAQ TRACTOR PARTS AND SERVICES LTD

SELLER

BRAZIL MINERALS , INC. .

BUYER

WITNESSES : ____________________________________

Name :

CPF

_______________________________

Name :

CPF

PRIVATE CONTRACT

THE PROMISE OF PURCHASE AND SALE

(“AGREEMENT”)

SELLER :. Muguidjana FARMING LTD , entrepreneurial company based in New Farm Alliance , Neighborhood Caximba , Vicinal - Glicério Juritis Road , Km 6.3 , in the Municipality of Glicério covered by Penápolis County , State of São Paulo , enrolled with CNPJ / MF under number 04.908.221/0001-13 , with its acts registered in the Commercial Registry of the State of São Paulo - JUCESP NIRE 35217257045 , herein represented by its legal representative Mr. Helder Ram, resident and domiciled in New Farm Alliance , Caximba neighborhood Glicério , SP

BUYER : BRAZIL MINERALS , INC. . ( " BMIX " ) , a limited liability company duly organized and existing under the laws of the United States of America , with headquarters at 113 Barksdale Professional Center , Newark , Delaware , zip code 19711 , United States of America , and to the Office 324 South Beverly Drive, Suite 118 , Beverly Hills , California , zip code 90212 , United States , enrolled with the CNPJ / MF under No. 17.412.632/0001-65 , represented by his attorney , Mr. Robledo Delatorre Ribeiro , Brazilian , single, administrator , CPF 040746046-20 , domiciled at Avenida Guaicui , No. 330, apt . 302 , Subdivision Luxembourg , Belo Horizonte , MG , CEP 30380-380 ;

By the following terms and conditions freely negotiated and agreed to be bound to respect:

SECTION ONE - OBJECT

SELLER owns the equipment:

Caterpillar Generator Set - 569 KVA and set Motor - pump motor 125 hp - KSB Pump 1 the “PP cable 3 x 70 mm (approx. 20m) and electronic billboards, in conjunction EQUIPMENT, EQUIPMENT on set.

First Paragraph : The equipment does not suffer from restrictions of any kind, with the same free and clear of any liens, real or personal, judicial or extrajudicial, pledge, attachment or sequestration, forum or board, to date, by declaring the SELLER under civil and criminal liability.

Second Paragraph : The equipment’s are the premises of the SELLER farm Lavrinha , Senator Mourao , MG and will be sold as is , where is and without any warranties . BUYER declares to have inspected the equipment and accept their present state of conservation and use.

SECTION TWO - PRICE AND PAYMENT

SELLER hereby promises to sell and purchase EQUIPMENT BUYER promises , and for the right price and total final set of R $ 163,887.50 ( One hundred and sixty-three thousand eight hundred eighty-seven reais and fifty cents ) , payable in follows:

a ) R $ 10,000.00 (ten thousand reais ) , as a sign and initial payment in favor of the SELLER in deposit in the Current Account 256-70 , Agency 1139, HSBC Bank - . 399 , on behalf of Muguidjana Agropecuaria Ltda , serving the proof of deposit of their banks as discharge receipt .

b ) R $ 153,887.50 ( One hundred and fifty-three thousand eight hundred eighty-seven reais and fifty cents ) to be paid within thirty (30 days) , on deposit in the Current Account 256-70 , Agency 1139, Bank HSBC - 399 , on behalf of Muguidjana Agropecuaria Ltda , starting from the signing of this AGREEMENT. .

FIRST PARAGRAPH : The value in item " a" above shall be paid upon the signing of this contract .

SECOND PARAGRAPH : THE SELLER is only obliged to provide the representative 's EQUIPMENT BUYER at its premises on the farm Lavrinha after receipt of full payment of the value of this contract that , according to the second clause , b ) be made within 30 (thirty ) days from the signing of this contract.

SECTION THREE - All taxes , fees , levies and charges of any nature , including the debt outstanding debt that relapse on the machine object of this contract , to the giving of the same is the responsibility of the SELLER and from the transfer of possession borne by the BUYER .

SECTION FOUR - It will be sole responsibility of the SELLER the cost of transfer, issue invoices, and taxes arising from the sale object of this contract.

FIRST PARAGRAPH - Being the offender SELLER , shall undertake, it just refund the amounts received, within 1O (ten) days from the date of termination.

SECOND PARAGRAPH - Being the offender BUYER shall undertake it even to non-receipt of the return of the EQUIPMENT or EQUIPMENT and the loss of any amounts already deposited in the account of the SELLER .

SIXTH CLAUSE - This contract has irrevocably and irreversibly under current legislation , undertaking the Contracting Parties , for themselves , their heirs and successors , to well and faithfully perform all items and conditions agreed and that it is payable regardless of notification or judicial or extra- judicial intervention .

Belo Horizonte, December 16, 2013

Muguidjana FARMING LTD

SELLER

BRAZIL MINERALS , INC. .

BUYER

WITNESSES :

Name :

CPF :

Name :

CPF :

PRIVATE CONTRACT

THE PROMISE OF PURCHASE AND SALE

(“AGREEMENT”)

SELLER: Geraldo LORENZZATO SILVA, CPF under No. 041249956-87, Rua Joaquim Pacifico, 77 - center, Santa Barbara - MG, CEP: 35960-000

BUYER: BRAZIL MINERALS , INC. . ( " BMIX " ) , a limited liability company duly organized and existing under the laws of the United States of America , with headquarters at 113 Barksdale Professional Center , Newark , Delaware , zip code 19711 , United States of America , and to the Office 324 South Beverly Drive, Suite 118 , Beverly Hills , California , zip code 90212 , United States , enrolled with the CNPJ / MF under No. 17.412.632/0001-65 , represented by his attorney , Mr. Robledo Delatorre Ribeiro , Brazilian , single, administrator , CPF 040746046-20 , domiciled at Avenida Guaicui , No. 330, apt . 302 , Subdivision Luxembourg , Belo Horizonte , MG , CEP 30380-380 ;

By the following terms and conditions freely negotiated and agreed to be bound to respect:

SECTION ONE - OBJECT

SELLER owns VEHICLE TRUCK

Mercedes Benz truck brand 1929 model 1984. Renavam Code 00243800401

First Paragraph: The vehicle does not suffer from restrictions of any kind, with the same free and clear of any liens, real or personal, judicial or extrajudicial, pledge, attachment or sequestration, forum or board, to date, by declaring the SELLER under civil and criminal liability.

SECTION TWO - PRICE AND PAYMENT

Hereby promises to sell and the BUYER SELLER promises to buy VEHICLE TRUCK , understood and agreed by the full and final price of R $ 38,000.00 (thirty eight thousand Reais ) , payable as follows :

a) R$ 1,000.00 (one thousand reais) , as a sign and initial payment in favor of the SELLER in deposit in current account No. 13138-5 Agency 2570-4 , Bank of Brazil in favor of Lorenzzato Geraldo Silva , worth their signatures to the final settlement of this instrument as the amount received upon confirmation of said bank deposit .

b ) R$ 37,000.00 ( thirty-seven thousand dollars) to be paid within thirty (30 days) , on deposit in current account No. 13138-5 Agency 2570-4 , Bank of Brazil , on behalf of Gerard Lorenzzato Silva , starting from the signing of this AGREEMENT.

FIRST PARAGRAPH: The value in item “a" above shall be paid upon the signing of this contract.

SECOND PARAGRAPH: THE SELLER undertakes to make available to the representative VEHICLE TRUCK BUYER within thirty (30) days from the signing of this contract upon confirmation of payment.

SECTION THREE - All taxes , fees , levies and charges of any nature , including the debt outstanding debt that relapse over the vehicle object of this contract , to the giving of the same is the responsibility of the SELLER and from the transmission of possession borne by the BUYER.

SECTION FOUR - It will be sole responsibility of the SELLER the cost of transfer, issue invoices, and taxes arising from the sale object of this contract.

FIRST PARAGRAPH - Being the offender SELLER, shall undertake, it just refund the amounts received, within ten (10) days from the date of termination. In particular , if the truck vehicle is sold to a third party by the SELLER upon payment by the BUYER sign £ 1,000 (one thousand reais) , the SELLER shall be responsible to pay a termination fee in the amount of $ 10,000 (ten thousand ) real to the BUYER within maximum of ten (10 ) days from the date of termination.

SECOND PARAGRAPH - Being the offender BUYER shall undertake it even to non-receipt of or return VEHICLE TRUCK TRUCK VEHICLE, no more burden.

Belo Horizonte, December 9, 2013

Geraldo Lorenzato SILVA

SELLER

BRAZIL MINERALS , INC. .

BUYER

WITNESSES :

_____________________________

Name :

CPF :

_____________________________

Name :

CPF :

Exhibit 4.5

Brazil Minerals, Inc.
Convertible Promissory Note

Issuance Date: February 21, 2014

U.S. $222,500.00

FOR VALUE RECEIVED , Brazil Minerals, Inc. , a Nevada corporation (the “ Company ”), hereby promises to pay to the order of St George Investments LLC , an Illinois limited liability company, or its registered assigns (the “ Holder ”), the initial principal sum of $222,500.00 (the “ Original Principal Amount ”), and any additional advances and other amounts that may accrue or become due under the terms of this Convertible Promissory Note (this “ Note ”) when due, whether upon the Maturity Date, on any Installment Date with respect to the Installment Amount due on such Installment Date (each as defined below), acceleration, redemption or otherwise (in each case in accordance with the terms hereof), and to pay interest (“ Interest ”) on any Outstanding Balance (defined below) at the applicable interest rate as set forth herein, whether upon any Installment Date, the Maturity Date or acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). Certain capitalized terms used herein are defined in Attachment 1 attached hereto and incorporated herein by this reference. For purposes hereof, the term “ Outstanding Balance ” means the Original Principal Amount, as reduced or increased, as the case may be, pursuant to the terms hereof for redemption, conversion or otherwise, plus any accrued but unpaid Interest, collection and enforcements costs, and any other fees or charges (including without limitation Late Charges (defined below)) incurred under this Note or under the Agreement (defined below).

This Note is issued pursuant to that certain Securities Purchase Agreement dated February 21, 2014, as the same may be amended from time to time (the “ Agreement ”), by and between the Company and the Holder.

1. PAYMENTS OF PRINCIPAL; PREPAYMENT . On each Installment Date (which includes the Maturity Date), the Company shall pay to the Holder an amount equal to the Installment Amount due on such Installment Date in accordance with Section 8. Additionally, so long as no Event of Default (defined below) shall have occurred, the Company may, in its sole and absolute discretion and upon giving the Holder not less than five (5) Trading Days written notice (a “ Prepayment Notice ”), pay in cash all or any portion of the Outstanding Balance at any time prior to the Maturity Date; provided that in the event the Company elects to prepay all or any portion of the Outstanding Balance, it shall pay to the Holder 125% of the portion of the Outstanding Balance the Company elects to prepay (the “ Prepayment Premium ”).

2. INTEREST; INTEREST RATE . The Company acknowledges that the Original Principal Amount of this Note as of the date set forth above as the Issuance Date (the “ Issuance Date ”) exceeds the Purchase Price (as defined in the Agreement) and that such excess consists of (a) the OID (as defined in the Agreement) in the amount of $20,000.00 and (b) the Carried Transaction Expense Amount (as defined in the Agreement) in the amount of $2,500.00, both of which shall be fully earned and charged to the Company as of the Issuance Date and paid to the Holder as part of the Original Principal Amount as set forth in this Note. Interest on the Outstanding Balance shall accrue from the Issuance Date at the rate of ten percent (10%) per annum, provided that upon the occurrence of an Event of Default, Interest shall accrue on the Outstanding Balance both before and after judgment at the rate of twenty-two percent (22%) per annum, as set forth in Section 4.3(d) hereof. All Interest calculations hereunder shall be computed on the basis of a 360-day year comprised of twelve (12) thirty (30) day months, shall compound daily and shall be payable in accordance with the terms of this Note. Notwithstanding any provision to the contrary herein, in no event shall the applicable interest rate at any time exceed the maximum interest rate allowed under applicable law. All payments owing hereunder shall be in lawful money of the United States of America or Conversion Shares, as provided for herein, and delivered to Holder at the address furnished to the Company for that purpose. All payments shall be applied first to (a) costs of collection, if any, then to (b) fees and charges, if any, then to (c) accrued and unpaid Interest, and thereafter to (d) principal.

3. CONVERSION OF NOTE . At the option of the Holder, this Note is convertible into validly issued, fully paid and non-assessable shares of Common Stock, on the terms and conditions set forth in this Section 3.

3.1. Conversion Right .

(a) Subject to the provisions of Section 3.4, at any time or times on or after the Issuance Date, the Holder shall be entitled to convert any portion of the Outstanding Balance into validly issued, fully paid and non-assessable shares of Common Stock (the “ Section 3 Conversion Shares ”) in accordance with Section 3.3, calculated using the Conversion Rate (defined below).

(b) The Company shall not issue any fraction of a share of Common Stock upon any conversion. All shares issuable upon each conversion of this Note shall be aggregated for purposes of determining whether such conversion would result in the issuance of a fractional share. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer, stamp, issuance and similar taxes that may be payable with respect to the issuance and delivery of Section 3 Conversion Shares.

3.2. Conversion Rate . The number of Section 3 Conversion Shares issuable upon conversion of any portion of the Outstanding Balance pursuant to Section 3.1(a) shall be determined by dividing (x) the applicable Conversion Amount by (y) the Conversion Price (such formula is referred to herein as the “ Conversion Rate ”).

(a) “ Conversion Amount ” means the portion of the Outstanding Balance to be converted.

(b) “ Conversion Price ” means, as of any Conversion Date or other date of determination, $0.11, subject to adjustment as provided herein.

3.3. Mechanics of Conversion .

(a) Conversion by the Holder . To convert any Conversion Amount into shares of Common Stock on any date, the Holder shall deliver (whether via email, facsimile or otherwise), for receipt on or prior to 11:59 p.m., New York time, on such date (a “ Conversion Date ”), a copy of an executed notice of conversion substantially in the form attached hereto as Exhibit A (the “ Conversion Notice ”) to the Company. If required by Section 3.3(c), within five (5) Trading Days following a conversion of this Note as aforesaid, the Holder shall surrender this Note to a reputable overnight courier for delivery to the Company (or an indemnification undertaking with respect to this Note in the case of its loss, theft or destruction as contemplated by Section 15.2). On or before the first (1 ^st ) Trading Day following the date of receipt of a Conversion Notice, the Company shall transmit by facsimile or email an acknowledgment of confirmation, in the form attached hereto as Exhibit B , of receipt of such Conversion Notice to the Holder and the Company’s transfer agent (the “ Transfer Agent ”). On or before the close of business on the third (3 ^rd ) Trading Day following the date of receipt of a Conversion Notice (the “ Delivery Date ”), the Company shall, provided that all DWAC Eligible Conditions are then satisfied, credit the aggregate number of Section 3 Conversion Shares to which the Holder shall be entitled to the account specified on the Conversion Notice via the DWAC system. If all DWAC Eligible Conditions are not then satisfied, the Company shall instead issue and deliver (via reputable overnight courier) to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of Section 3 Conversion Shares to which the Holder shall be entitled; provided, however , that, in addition to any other rights or remedies that Holder may have under this Note, such number of shares issued by certificate rather than via the DWAC system shall be increased by 5% for each conversion that occurs more than six (6) months after the Issuance Date. For the avoidance of doubt, the Company has not met its obligation to deliver Section 3 Conversion Shares by the Delivery Date unless the Holder or its broker, as applicable, has actually received the shares electronically into the applicable account, or if the DWAC Eligible Conditions are not then satisfied, has actually received the certificate representing the applicable Section 3 Conversion Shares no later than the close of business on the relevant Delivery Date pursuant to the terms set forth above. If this Note is physically surrendered for conversion pursuant to Section 3.3(c) and the Outstanding Balance of this Note is greater than the principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Trading Days after receipt of this Note and at its own expense, issue and deliver to the Holder (or its designee) a new Note (in accordance with Section 15.4)) representing the Outstanding Balance not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date. In the event of a partial conversion of this Note pursuant hereto, the principal amount converted shall be deducted from the Installment Amount(s) relating to the Installment Date(s) as set forth in the applicable Conversion Notice.

(b) Company’s Failure to Timely Deliver . Failure for any reason whatsoever to issue any portion of the Common Stock by the applicable due date in the manner required under any section of this Note shall be a “ Conversion Failure ”. Upon the occurrence of a Conversion Failure, in addition to all other remedies available to the Holder, (1) the Company shall pay in cash to the Holder on each day after such third (3 ^rd ) Trading Day that the issuance of such shares of Common Stock is not timely effected (not to exceed the highest of (i) $10,000, (ii) 50% of the Conversion Amount, and (iii) 10% of the Original Principal Amount) an amount equal to the greater of (A) $2,000.00 per day and (B) 2% of the product of (i) the sum of the number of shares of Common Stock not issued to the Holder on a timely basis and to which the Holder is entitled, multiplied by (ii) the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the last possible date which the Company could have issued such shares of Common Stock to the Holder without violating the provisions of this Note; and (2) with respect to Section 3 Conversion Shares, the Holder, upon written notice to the Company, may void its Conversion Notice with respect to, and retain or have returned (as the case may be) any portion of this Note that has not been converted pursuant to the applicable Conversion Notice, provided that the voiding of a Conversion Notice shall not affect the Company’s obligations to make any payments which have accrued or are owed to the Holder prior to the date of such notice pursuant to this Section 3.3(b) or otherwise. Notwithstanding the foregoing, a Conversion Failure shall not exist to the extent shares of Common Stock are not issued by the Company in order to comply with the limitations set forth in Section 3.4 hereof. Upon the occurrence of a Conversion Failure (unless Holder elects to void the Conversion Notice), in addition to such failure being considered an Event of Default hereunder, for purposes of Section 7.1 the Company shall also be deemed to have issued the applicable shares of Common Stock on the latest possible permitted date and pursuant to the terms set forth herein, with Holder entitled to all the rights and privileges associated with such deemed issued shares (the “ Deemed Conversion Issuance ”).

(c) Registration; Book-Entry . The Company shall maintain a register (the “ Register ”) for the recordation of the name and address of the holders of all or any portion of this Note and the principal amount of this Note held by such holder (the “ Registered Note ”). The entries in the Register shall be conclusive and binding for all purposes absent manifest error. The Company and the holder shall treat each Person whose name is recorded in the Register as the owner of this Note for all purposes (including, without limitation, the right to receive payments of principal and Interest hereunder) notwithstanding notice to the contrary. The Registered Note may be assigned, transferred or sold in whole or in part only by registration of such assignment or sale on the Register. Upon its receipt of a request to assign, transfer or sell all or part of the Registered Note by the holder thereof, the Company shall record the information contained therein in the Register and issue one or more new Registered Notes in the same aggregate principal amount as the principal amount of the surrendered Registered Note to the designated assignee or transferee pursuant to Section 15. Notwithstanding anything to the contrary in this Section 3.3(c), the Holder may assign this Note or any portion thereof to its Affiliate without delivering a request to assign or sell this Note to the Company and the recordation of such assignment or sale in the Register (a “ Related Party Assignment ”); provided , that (A) the Company may continue to deal solely with such assigning or selling Holder unless and until such Holder has delivered a request to assign or sell this Note or portion thereof to the Company for recordation in the Register; (B) the failure of such assigning or selling Holder to deliver a request to assign or sell such Note or portion thereof to the Company shall not affect the legality, validity, or binding effect of such assignment or sale; and (C) such assigning or selling Holder shall, acting solely for this purpose as a non-fiduciary agent of the Company, maintain a register (the “ Related Party Register ”) comparable to the Register on behalf of the Company, and any such assignment or sale shall be effective upon recordation of such assignment or sale in the Related Party Register. Notwithstanding anything to the contrary set forth in this Section 3, upon conversion of any portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the entire Outstanding Balance of this Note is being converted (in which event this Note shall be delivered to the Company as contemplated by Section 3.3(a)) or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note. The Holder and the Company shall maintain records showing the Outstanding Balance and Late Charges converted and/or paid (as the case may be) and the dates of such conversions and/or payments (as the case may be) or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon conversion.

3.4. Limitations on Conversions .

(a) Notwithstanding anything to the contrary contained in this Note or the other Transaction Documents, if at any time the Holder shall or would be issued shares of Common Stock under any of the Transaction Documents, but such issuance would cause the Holder (together with its Affiliates) to beneficially own a number of shares exceeding 4.99% of the number of shares of Common Stock outstanding on such date (including for such purpose the shares of Common Stock issuable upon such issuance) (the “ Maximum Percentage ”), then the Company must not issue to the Holder shares of the Common Stock which would exceed the Maximum Percentage. For purposes of this Section, beneficial ownership of Common Stock will be determined under the 1934 Act. The shares of Common Stock issuable to the Holder that would cause the Maximum Percentage to be exceeded are referred to herein as the " Ownership Limitation Shares ". The Company will reserve the Ownership Limitation Shares for the exclusive benefit of the Holder. From time to time, the Holder may notify the Company in writing of the number of the Ownership Limitation Shares that may be issued to the Holder without causing the Holder to exceed the Maximum Percentage. Upon receipt of such notice, the Company shall be unconditionally obligated to immediately issue such designated shares to the Holder, with a corresponding reduction in the number of the Ownership Limitation Shares. Notwithstanding the forgoing, the term “4.99%” above shall be replaced with “9.99%” at such time as the Market Capitalization of the Common Stock is less than $10,000,000.00. Notwithstanding any other provision contained herein, if the term “4.99%” is replaced with “9.99%” pursuant to the preceding sentence, such increase to “9.99%” shall remain at 9.99% until increased, decreased or waived by the Holder as set forth below. For purposes of this Note, the term “ Market Capitalization of the Common Stock ” shall mean the product equal to (A) the average VWAP of the Common Stock for the immediately preceding fifteen (15) Trading Days, multiplied by (B) the aggregate number of outstanding shares of Common Stock as reported on the Company’s most recently filed Form 10-Q or Form 10-K. By written notice to the Company, the Holder may increase, decrease or waive the Maximum Percentage as to itself but any such waiver will not be effective until the 61st day after delivery thereof. The foregoing 61-day notice requirement is enforceable, unconditional and non-waivable and shall apply to all Affiliates and assigns of the Holder.

(b) To the extent the limitation set forth in subsection (a) immediately above applies, the determination of whether this Note shall be convertible (vis-à-vis other convertible, exercisable or exchangeable securities owned by the Holder or any of its Affiliates) and of which such securities shall be convertible, exercisable or exchangeable (as among all such securities owned by the Holder and its Affiliates) shall, subject to such Maximum Percentage limitation, be determined on the basis of the first submission to the Company for conversion, exercise or exchange (as the case may be). No prior inability to convert this Note, or to issue shares of Common Stock, pursuant to this Section 3.4 shall have any effect on the applicability of the provisions of this Section 3.4 with respect to any subsequent determination of convertibility. For purposes of this Section 3.4, beneficial ownership and all determinations and calculations (including, without limitation, with respect to calculations of percentage ownership) shall be determined in accordance with Section 13(e) of the 1934 Act (as defined in the Agreement) and the rules and regulations promulgated thereunder. The provisions of this Section 3.4 shall be implemented in a manner otherwise than in strict conformity with the terms of this Section 3.4 to correct this Section 3.4 (or any portion hereof) which may be defective or inconsistent with the intended Maximum Percentage beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such Maximum Percentage limitation. The limitations contained in this Section 3.4 shall apply to a successor Holder of this Note. The holders of Common Stock shall be third party beneficiaries of this Section 3.4 and the Company may not waive this Section 3.4 without the consent of holders of a majority of its Common Stock. For any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1) Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding, including by virtue of any prior conversion or exercise of convertible or exercisable securities into Common Stock, including, without limitation, pursuant to this Note.

4. RIGHTS UPON EVENT OF DEFAULT .

4.1. Event of Default . Each of the following events shall constitute an “ Event of Default ” as of the date such event first occurred:

(a) Failure to Pay . The Company shall fail to make any payment when due and payable under the terms of this Note including, without limitation, any payment of costs, fees, interest, principal (including, without limitation, the Company’s failure to deliver any Installment Amount when due or to pay any redemption payments or amounts hereunder), or other amount due hereunder or under any other Transaction Document (as defined in the Agreement).

(b) Failure to Deliver or Process Shares . The Company (or its Transfer Agent, as applicable) (i) fails to issue Section 3 Conversion Shares by the Delivery Date; (ii) fails to issue any Installment Conversion Shares, True-Up Conversion Shares, Installment Certificated Shares, or True-Up Certificated Shares, as applicable, within the time periods required by Section 8; (iii) announces (or threatens in writing) that it will not honor its obligation to issue Conversion Shares to Holder in accordance with Section 3 and/or Section 8 of this Note; (iv) fails to transfer or cause its Transfer Agent to transfer or issue (electronically or in certificated form, as applicable) any Conversion Shares to the Holder as and when required by this Note; (v) directs its Transfer Agent not to transfer, or delays, impairs, and/or hinders its Transfer Agent in transferring or issuing (electronically or in certificated form, as applicable) any Conversion Shares to the Holder as and when required by this Note; or (vi) as applicable, fails to remove (or directs its Transfer Agent not to remove or impairs, delays, and/or hinders its Transfer Agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any Section 3 Conversion Shares, Installment Certificated Shares or True-Up Certificated Shares as and when required by this Note (or makes any written announcement, statement or threat that it does not intend to honor any such obligations).

(c) Judgment . A final judgment or judgments for the payment of money aggregating in excess of $100,000 are rendered against the Company and/or any of its Subsidiaries and which judgments are not, within thirty (30) calendar days after the entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within thirty (30) calendar days after the expiration of such stay; provided, however , any judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $100,000 amount set forth above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company or such Subsidiary (as the case may be) will receive the proceeds of such insurance or indemnity within thirty (30) calendar days of the issuance of such judgment.

(d) Breach of Obligations; Covenants . The Company or its Subsidiaries, if any, shall fail to observe or perform any other covenant, obligation, condition or agreement contained in this Note or any of the other Transaction Documents, including without limitation (i) all reporting covenants and covenants to timely file all required quarterly and annual reports and any other filings required pursuant to Rule 144, and (ii) strict compliance with all provisions of Sections 3, 8, and 10 of this Note.

(e) Breach of Representations and Warranties . Any representation, warranty, certificate, or other statement (financial or otherwise) made or furnished by or on behalf of the Company to the Holder in writing included in this Note or in connection with any of the Transaction Documents, or as an inducement to the Holder to enter into this Note or any of the other Transaction Documents, shall be false, incorrect, incomplete or misleading in any material respect when made or furnished or becomes false thereafter.

(f) Receiver or Trustee . The Company shall make an assignment for the benefit of creditors, or apply for, or consent to, or otherwise be subject to, the appointment of a receiver, trustee, liquidator, assignee, custodian, sequestrator, or other similar official for a substantial part of its property or business.

(g) Failure to Pay Debts . If any of the Company’s assets are assigned to its creditors, or upon the occurrence of any default under, redemption of or acceleration prior to maturity of any Indebtedness of the Company or any of its Subsidiaries in an amount equal to $100,000 or more.

(h) Bankruptcy . Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Company, and, in the case of an involuntary bankruptcy, not discharged within sixty (60) days.

(i) Delisting of Common Stock . The suspension from trading or the failure of the Common Stock to be trading on an Eligible Market for a period of five (5) consecutive Trading Days or for more than an aggregate of ten (10) Trading Days in any 365-day period.

(j) Liquidation . Any dissolution, liquidation, or winding up of the Company or any substantial portion of its business.

(k) Cessation of Operations . Any cessation of operations by the Company or the Company admits it is otherwise generally unable to pay its debts as such debts become due; provided, however , that any disclosure of the Company’s ability to continue as a “going concern” shall not be an admission that the Company cannot pay its debts as they become due.

(l) Maintenance of Assets . The failure by the Company to maintain any material intellectual property rights, personal, real property or other assets which are necessary to conduct its business (whether now or in the future).

(m) Financial Statement Restatement . The restatement of any financial statements filed by the Company with the SEC for any date or period from two years prior to the date of this Note and until this Note is no longer outstanding, if the result of such restatement would, by comparison to the unrestated financial statement, have constituted a material adverse effect on the rights of the Company with respect to this Note or the Agreement.

(n) Reverse Split . The Company effectuates a reverse split of its Common Stock without twenty (20) Trading Days prior written notice to the Holder.

(o) Replacement of Transfer Agent . In the event that the Company proposes to replace its Transfer Agent, the Company fails to provide, prior to the effective date of such replacement, a fully executed Transfer Agent Letter (as defined by the Agreement) in a form as required to be initially delivered pursuant to the Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock for the Share Reserve) signed by the successor transfer agent and delivered to the Company and the Holder.

(p) Governmental Action . If any governmental or regulatory authority takes or institutes any action against the Company, a Subsidiary, or an executive officer or director of the Company, that will materially affect the Company’s financial condition, operations or ability to pay or perform the Company’s obligations under this Note.

(q) Transfer Agent Reserve; Share Reserve . The Company’s failure at any time following the Issuance Date to maintain the Transfer Agent Reserve (as defined in the Agreement) or the Share Reserve (as defined in the Agreement).

(r) Certification of Equity Conditions . A false or inaccurate certification (including, without limitation, a false or inaccurate deemed certification) by the Company that the Equity Conditions are satisfied, that there has been no Equity Conditions Failure or as to whether any Event of Default has occurred.

(s) DWAC Eligibility . The failure of any of the DWAC Eligible Conditions to be satisfied at any time after April 8, 2014 during which the Company has obligations under this Note.

(t) Cross Default . Notwithstanding anything to the contrary contained in this Note or the other Transaction Documents, a breach or default by the Company of any covenant or other term or condition contained in (i) any of the other Transaction Documents, or (ii) any Other Agreements (defined below); shall, at the option of the Holder, be considered a default under this Note, in which event the Holder shall be entitled (but in no event required) to apply all rights and remedies of the Holder under the terms of this Note. The Company hereby agrees to notify the Holder in writing within three (3) Trading Days after any such default; provided, however , any filing of an 8-K that identifies any such default shall not be deemed notice under this Section 4.1(t). “ Other Agreements ” means, collectively, (1) all existing and future agreements and instruments between, among or by the Company (or a Subsidiary), on the one hand, and the Holder (or an Affiliate of Holder), on the other hand, and (2) any financing agreement or a material agreement that affects the Company’s ongoing business operations. For the avoidance of doubt, all existing and future loan transactions between the Company and the Holder and its Affiliates will be cross-defaulted with each other loan transaction and with all other existing and future debt of the Company to the Holder.

Each subsection of this Section 4.1 shall be interpreted and applied independently, and no such subsection shall be deemed to limit or qualify any other subsection in any manner whatsoever.

4.2. Notice of an Event of Default .

(a) Company’s Obligation to Provide Default Notice . If the Company become aware of the occurrence of an Event of Default, the Company shall within one (1) Trading Day deliver written notice thereof via email, facsimile or reputable overnight courier (with next day delivery specified) (an “ Event of Default Notice ”) to the Holder.

(b) Holder’s Right to Provide Default Notice . If Holder becomes aware of the occurrence of an Event of Default, Holder may at any time thereafter (but shall not be obligated to) provide an Event of Default Notice to the Holder via email, facsimile or reputable overnight courier (with next day delivery specified). Any remedies set forth in an Event of Default Notice provided by Holder to the Company will not waive Holder’s rights to assert any other remedies available under the Transaction Documents.

(c) Default Date . For each Event of Default, the “ Default Date ” shall mean the date of the first occurrence of such Event of Default, regardless of the date that an Event of Default Notice is actually given by one party to the other.

4.3. Remedies; Redemption Right After Default .

(a) At any time and from time to time after the earlier of the Holder’s receipt of an Event of Default Notice and the Holder becoming aware of an Event of Default, the Holder may, at Holder’s option, require the Outstanding Balance to be increased to an amount equal to the Outstanding Balance multiplied by the Default Premium (the “ Default Adjustment ”); provided, however , that a Default Adjustment may only be applied to two separate Events of Default under this Note, and not to any additional Events of Default. A Default Adjustment will be calculated as of the applicable Default Date and the entire amount of such increase shall be added to the Outstanding Balance. Holder’s election to apply a Default Adjustment does not preclude Holder from applying any other remedies that may be available under the Transaction Documents.

(b) At any time and from time to time after the earlier of the Holder’s receipt of an Event of Default Notice and the Holder becoming aware of an Event of Default, the Holder may require the Company to redeem (regardless of whether such Event of Default has been cured) all or any portion of this Note by delivering written notice thereof (the “ Event of Default Redemption Notice ”) to the Company. An Event of Default Redemption Notice shall automatically trigger a Default Adjustment, subject to the limitations set forth in Section 4.3(a) hereof. The Event of Default Redemption Notice shall indicate the portion of the Outstanding Balance the Holder is electing to redeem (the “ Default Redemption Amount ”). Redemptions required by this Section 4.3(b) shall be made in accordance with the provisions of Section 10. Notwithstanding anything to the contrary in this Section 4, but subject to Section 3.4, until the Default Redemption Amount (together with Late Charges thereon) is paid in full pursuant to and in accordance with the terms set forth in Section 10, the Outstanding Balance (together with any Late Charges thereon), may be converted, in whole or in part from time to time, by the Holder into Common Stock pursuant to the other terms of this Note. In the event of a partial redemption of this Note pursuant hereto, the applicable Default Redemption Amount shall be deducted from the Installment Amount(s) relating to the applicable Installment Date(s) as set forth in the Event of Default Redemption Notice. Notwithstanding the foregoing, this Section 4.3(b) shall not apply to an Event of Default arising under Section 4.1(h) (Bankruptcy).

(c) Upon the occurrence of an Event of Default occurring under Section 4.1(h) due to the institution by or against the Company of any bankruptcy proceeding for relief under any bankruptcy law or any law for the relief of debtors, (i) the Outstanding Balance shall automatically increase to an amount equal to the Outstanding Balance immediately prior to such Event of Default multiplied by the Default Premium, and (ii) all amounts owed under this Note shall accelerate and be immediately due and payable, all without the need for any further notice to or action by any party hereunder.

(d) As of the first Default Date, if any, this Note shall thereafter accrue interest at the rate of 1.83% per month (or 22% per annum) until such time as each applicable Event of Default is cured, compounding daily, whether before or after judgment; provided, however , that notwithstanding any provision to the contrary herein, in no event shall the applicable interest rate at any time exceed the maximum interest rate allowed under applicable law. Following the cure of an Event of Default, Interest on the Outstanding Balance shall accrue at the pre-Event of Default rate of ten percent (10%) per annum.

(e) After any Event of Default arising under Section 4.1(b), Holder will be entitled to the remedies set forth in Section 3.3(b) hereof.

(f) Notwithstanding and in addition to any other provision contained herein, if Section 3 Conversion Shares are delivered to Holder in certificated form rather than electronic form, the Outstanding Balance shall automatically increase by an amount equal to the decline in Value (defined below), if any, of such shares between the time the certificate representing such shares was required to be delivered to the Holder hereunder, and the date such shares become Free Trading. The Company agrees to use its best efforts to cause such shares to become Free Trading. “ Value ”, as used in this subsection, shall mean the five (5) Trading Day trailing average VWAP for the applicable shares.

5. RIGHTS UPON FUNDAMENTAL TRANSACTION .

5.1. Assumption . The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity assumes in writing all of the obligations of the Company under this Note and the other Transaction Documents in accordance with the provisions of this Section 5.1 pursuant to written agreements in form and substance satisfactory to the Holder and approved by the Holder, in its sole discretion, prior to such Fundamental Transaction, including agreements to deliver to the Holder in exchange for this Note a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Note, including, without limitation, having a principal amount and interest rate equal to the principal amounts then outstanding and the interest rates of this Note, having similar conversion rights as this Note and having similar ranking to this Note, and being satisfactory to the Holder in its sole discretion, (ii) the Successor Entity is a publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible Market, and (iii) the Company has received the Holder’s prior written consent to enter into such Fundamental Transaction. Upon the occurrence of any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Note and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Note and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein. Upon consummation of a Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be issued upon conversion or redemption of this Note at any time after the consummation of such Fundamental Transaction, in lieu of the shares of the Company’s Common Stock (or other securities, cash, assets or other property (except such items still issuable under Section 6, which shall continue to be receivable thereafter) issuable upon the conversion or redemption of this Note prior to such Fundamental Transaction), such shares of the publicly traded common stock (or their equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the happening of such Fundamental Transaction had this Note been converted immediately prior to such Fundamental Transaction (without regard to any limitations on the conversion of this Note), as adjusted in accordance with the provisions of this Note. The provisions of this Section 5 shall apply similarly and equally to successive Fundamental Transactions and shall be applied without regard to any limitations on the conversion of this Note.

5.2. Notice of a Fundamental Transaction; Redemption Right . No sooner than twenty (20) Trading Days nor later than ten (10) Trading Days prior to the consummation of a Fundamental Transaction, but not prior to the public announcement of such Fundamental Transaction, the Company shall deliver written notice thereof via facsimile and reputable overnight courier to the Holder (a “ Fundamental Transaction Notice ”). At any time during the period beginning after the Holder’s receipt of a Fundamental Transaction Notice or the Holder becoming aware of a Fundamental Transaction if a Fundamental Transaction Notice is not delivered to the Holder in accordance with the immediately preceding sentence (as applicable) and ending on the later of twenty (20) Trading Days after (i) consummation of such Fundamental Transaction and (ii) the date of receipt of such Fundamental Transaction Notice, the Holder may require the Company to redeem all or any portion of this Note by delivering written notice thereof (“ Fundamental Transaction Redemption Notice ”) to the Company, which Fundamental Transaction Redemption Notice shall indicate the portion of the Outstanding Balance the Holder is electing to redeem (the “ Fundamental Transaction Redemption Amount ”). The Fundamental Transaction Redemption Amount shall be redeemed by the Company in cash pursuant to and in accordance with Section 10 and shall have priority to payments to stockholders in connection with such Fundamental Transaction. Notwithstanding anything to the contrary in this Section 5, but subject to Section 3.4, until the Fundamental Transaction Redemption Amount (together with any Late Charges thereon) is paid in full pursuant to and in accordance with the terms set forth in Section 10, the Outstanding Balance (together with any Late Charges thereon), may be converted, in whole or in part from time to time, by the Holder into Common Stock pursuant to Section 3. In the event of a partial redemption of this Note pursuant hereto, the applicable Fundamental Transaction Redemption Amount shall be deducted from the Installment Amount(s) relating to the applicable Installment Date(s) as set forth in the Fundamental Transaction Redemption Notice.

5.3. Paid in Full . Notwithstanding anything to the contrary in this Section 5, in no case shall any Fundamental Transaction be consummated prior to the prepayment in full of the Outstanding Balance of this Note, with such prepayment subject to the Prepayment Premium for the entire Outstanding Balance.

6. DISTRIBUTION OF ASSETS; RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS .

6.1. Distribution of Assets . Without the prior written consent of Holder, the Company agrees not to declare or make any dividend or other distributions of its assets (or rights to acquire its assets) to any or all holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction).

6.2. Other Corporate Events . In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “ Corporate Event ”), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon a conversion of this Note (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which the Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of this Note) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Note initially been issued with conversion rights for the form of such consideration (as opposed to shares of Common Stock) using a conversion rate for such consideration commensurate with the Conversion Rate. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Holder. The provisions of this Section 6 shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion or redemption of this Note.

7. RIGHTS UPON ISSUANCE OF SECURITIES .

7.1. Adjustment of Conversion Price upon Issuance of Common Stock . Except with respect to Excluded Securities, if and whenever on or after the Issuance Date the Company issues or sells Common Stock, Options, Convertible Securities, or upon any conversion or Deemed Issuance, or in accordance with subsections (a) through (f) below is deemed to have issued or sold, any shares of Common Stock (including without limitation the issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding any Excluded Securities issued or sold or deemed to have been issued or sold) for a consideration per share (the “ New Issuance Price ”) less than a price equal to the Conversion Price in effect immediately prior to such issue, conversion, or sale or deemed issuance or sale (such Conversion Price then in effect is referred to herein as the “ Applicable Price ”) (the foregoing a “ Dilutive Issuance ”), then, immediately after such Dilutive Issuance, the Conversion Price then in effect shall be reduced to an amount equal to the New Issuance Price. For the avoidance of doubt, if the New Issuance Price is greater than the Applicable Price, there shall be no adjustment to the Conversion Price. For purposes of determining the adjusted Conversion Price under this Section 7.1, the following shall be applicable:

(a) Issuance of Options . If the Company in any manner grants or sells any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section 7.1(a), the “lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option and (y) the lowest exercise price set forth in such Option for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option minus (2) the sum of all amounts paid or payable to the holder of such Option (or any other Person) upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Option (or any other Person). Except as contemplated below, no further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such share of Common Stock upon conversion, exercise or exchange of such Convertible Securities.

(b) Issuance of Convertible Securities . If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section 7.1(b), the “lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security and (y) the lowest conversion price set forth in such Convertible Security for which one share of Common Stock is issuable upon conversion, exercise or exchange thereof minus (2) the sum of all amounts paid or payable to the holder of such Convertible Security (or any other Person) upon the issuance or sale of such Convertible Security plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Convertible Security (or any other Person). Except as contemplated below, no further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock upon conversion, exercise or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Conversion Price has been or is to be made pursuant to other provisions of this Section 7.1, except as contemplated below, no further adjustment of the Conversion Price shall be made by reason of such issue or sale.

(c) Change in Option Price or Rate of Conversion . If the purchase or exercise price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time, the Conversion Price in effect at the time of such increase or decrease shall be adjusted to the Conversion Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion rate (as the case may be) at the time initially granted, issued or sold. For purposes of this Section 7.1(c), if the terms of any Option or Convertible Security that was outstanding as of the Issuance Date are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 7.1 shall be made if such adjustment would result in an increase of the Conversion Price then in effect.

(d) Calculation of Consideration Received . If any Option or Convertible Security is issued or deemed issued in connection with the issuance or sale or deemed issuance or sale of any other securities of the Company, together comprising one integrated transaction, (x) such Option or Convertible Security (as applicable) will be deemed to have been issued for consideration equal to the Black Scholes Consideration Value thereof and (y) the other securities issued or sold or deemed to have been issued or sold in such integrated transaction shall be deemed to have been issued for consideration equal to the difference of (I) the aggregate consideration received by the Company minus (II) the Black Scholes Consideration Value of each such Option or Convertible Security (as applicable). If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the average VWAP of such security for the five (5) Trading Day period immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities (as the case may be). The fair value of any consideration other than cash or publicly traded securities will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) Trading Days after the occurrence of an event requiring valuation (the “ Valuation Event ”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10 ^th ) day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

(e) Deemed Installment Issuance . If the Company (or its Transfer Agent) fails to deliver shares as required by any portion of Section 8 or Section 8.5, in addition to such failure to act being considered an Event of Default hereunder, for purposes of this Section 7.1, the Company shall also be deemed to have issued the Installment Conversion Shares, True-Up Conversion Shares, Installment Certificated Shares, or True-Up Certificated Shares, as applicable, to Holder on the latest possible permitted date pursuant to the terms set forth in Section 8 or Section 8.5, as applicable, with Holder entitled to all the rights and privileges associated with such deemed issued shares (the “ Deemed Installment Issuance ”).

(f) Record Date . If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase (as the case may be).

7.2. Adjustment of Conversion Price upon Subdivision or Combination of Common Stock . Without limiting any provision of Section 5 or Section 7.1, if the Company at any time on or after the Issuance Date subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. Without limiting any provision of Section 5 or Section 7.1, if the Company at any time on or after the Issuance Date combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased. Any adjustment pursuant to this Section 7.2 shall become effective immediately after the effective date of such subdivision or combination. If any event requiring an adjustment under this Section 7.2 occurs during the period that a Conversion Price is calculated hereunder, then the calculation of such Conversion Price shall be adjusted appropriately to reflect such event.

7.3. Other Events . In the event that the Company (or any Subsidiary) shall take any action to which the provisions hereof are not strictly applicable, or, if applicable, would not operate to protect the Holder from dilution or if any event occurs of the type contemplated by the provisions of this Section 7 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s board of directors shall in good faith determine and implement an appropriate adjustment in the Conversion Price so as to protect the rights of the Holder, provided that no such adjustment pursuant to this Section 7.3 will increase the Conversion Price as otherwise determined pursuant to this Section 7, provided further that if the Holder does not accept such adjustments as appropriately protecting its interests hereunder against such dilution, then the Company’s board of directors and the Holder shall agree, in good faith, upon an independent investment bank of nationally recognized standing to make such appropriate adjustments, whose determination shall be final and binding and whose fees and expenses shall be borne by the Company.

8. COMPANY INSTALLMENT CONVERSION OR REDEMPTION . Beginning on the date that is six (6) months after the later of (i) the Issuance Date, and (ii) the date the Purchase Price is paid to the Company (the “ Initial Installment Date ”), and on each applicable Installment Date thereafter, the Company shall pay to the Holder of this Note the applicable Installment Amount due on such date, subject to the provisions of this Section 8. Payments of the Installment Amount may be made (a) in cash (a “ Company Redemption ”), (b) by converting such Installment Amount into shares of Common Stock in accordance with this Section 8 (a “ Company Conversion ”), or (c) by any combination of a Company Conversion and a Company Redemption so long as the entire amount of such Installment Amount due shall be converted and/or redeemed by the Company on the applicable Installment Date. Notwithstanding the foregoing, the Company will not be entitled to elect a Company Conversion with respect to any portion of such Installment Amount and shall be required to pay the entire amount of such Installment Amount in cash pursuant to a Company Redemption if on the applicable Installment Notice Due Date (defined below) there is an Equity Conditions Failure, and such failure is not waived by the Holder as permitted herein. The portion of the Installment Amount designated hereunder as a Company Redemption is referred to herein as the “ Company Redemption Amount ” and the portion of the Installment Amount designated for a Company Conversion is referred to herein as the “ Company Conversion Amount ”. With respect to the payment of any particular Installment Amount, the Company may, with the written consent of the Holder, which consent may be withheld in the sole and absolute discretion of the Holder, make such Installment Payment in graded diamonds.

8.1. Installment Notice . Subject to Section 8.5, on or prior to the date which is the third (3 ^rd ) Trading Day prior to each Installment Date (each, an “ Installment Notice Due Date ”), the Holder will propose an allocation between the Company Redemption Amount and the Company Conversion Amount by delivery of a notice to the Company by email or fax substantially in the form attached hereto as Exhibit C-1 (each, an “ Installment Notice ”); provided, however , that the Company may, at its option, elect to change such allocation by written notice to the Holder by email or fax on or before 12:00 p.m. New York time on the applicable Installment Date so long as the sum of the Company Redemption Amount and the Company Conversion Amount equals the applicable Installment Amount and so long as the Company Redemption Amount, and the Company Conversion Amount, as applicable, are transferred to the Holder no later than the Installment Date. If the Company does not provide written notice to the Holder of a different allocation as permitted under this Section, then the Company will be deemed to have agreed to the allocation set forth on the applicable Installment Notice prepared by the Holder. If the applicable Installment Amount is to be paid, in whole or in part, pursuant to a Company Conversion, the Company must certify by 12:00 p.m. New York time on the Installment Date that there is not an Equity Conditions Failure as of the Installment Notice Due Date. If the Company does not modify or prepare a replacement Installment Notice on or prior to 12:00 p.m. New York time on the applicable Installment Date, then the Company shall be deemed to have ratified and confirmed such notice and, unless otherwise stated, certified that there is not an Equity Conditions Failure as of the Installment Notice Due Date. If an Equity Conditions Failure has occurred or exists as of the applicable Installment Notice Due Date, then the Company shall identify each such Equity Conditions Failure in a revised Installment Notice delivered to the Holder no later than 12:00 p.m. New York time on the applicable Installment Date and request a waiver thereof from the Holder pursuant to Section 8.4 hereof. Notwithstanding anything herein to the contrary, if such Equity Conditions Failure arises from a Non-Waivable Equity Condition, then the applicable Installment Amount must be paid on the Installment Date as a Company Redemption under Section 8.2 hereof. Subject to the preceding sentence, unless and until the Holder delivers written notice to the Company that it will not waive such Equity Conditions Failure, then the Company will proceed to complete a Company Conversion under Section 8.3. If the Holder elects in writing delivered to the Company by fax or email not to waive such Equity Conditions Failure, then any Conversion Shares previously received for such Company Conversion will be promptly returned to the Company and the Company will immediately after receipt of such returned Conversion Shares pay the applicable Company Redemption Amount to the Holder.

8.2. Mechanics of Company Redemption . On or before each Installment Date, the Company must pay to the Holder in cash the applicable Company Redemption Amount by wire transfer of immediately available funds. If the Company fails to pay the applicable Company Redemption Amount by the applicable Installment Date, then the Holder may from time to time by written notice to the Company elect to convert any of the unpaid Company Redemption Amount (together with any Late Charges thereon) pursuant to Section 3.3; provided, however , that the Default Conversion Price will apply to any such conversion rather than the Conversion Price described in Section 3.2(b) hereof.

8.3. Mechanics of Company Conversion .

(a) Installment Date . Subject to Section 3.4, no later than the applicable Installment Date, the Company must deliver to the Holder’s account the applicable Installment Conversion Shares set forth in the applicable Installment Notice. The Holder shall be deemed the owner of such shares as of the applicable Installment Date.

(b) True-Up Date . Twenty (20) Trading Days after the applicable Installment Conversion Shares delivered to the Holder under Section 8.3(a) above become Free Trading (such date is referred to herein as the “ True-Up Date ”), the Company shall deliver to the Holder’s account a number of shares of Common Stock equal to the amount, if any, by which the True-Up Conversion Shares exceed the applicable Installment Conversion Shares previously delivered to the Holder, registered in the name of the Holder or its designee. So long as no Payment Default has occurred, if the Installment Conversion Shares exceed the True-Up Shares, then the excess will be applied towards the next Installment Conversion Shares to be issued by the Company hereunder (unless the Outstanding Balance has been reduced to zero, in which case the Holder will return such excess shares to the Company). If a Payment Default has occurred and the Installment Conversion Shares for the applicable Installment Date exceed the True-Up Conversion Shares, then the Holder shall not be required to return to the Company any of the excess shares or apply such excess shares to any future issuance or conversion of shares hereunder. For each True-Up Date, the Company agrees to deliver to the Holder by fax or email such information and calculations required under this Section 8.3(b) substantially in the form attached hereto as Exhibit C-2 .

(c) Failure to Delivery Shares . If the Company fails to deliver the shares required under Section 8.3(b) by the True-Up Date, then in addition to such failure being an Event of Default under Section 4.1(b), the Company will be required to deliver an additional number of shares equal to ten percent (10%) of the total undelivered shares. The addition of 10-percent of the total undelivered shares shall continue to be applied on the same day of each successive calendar month if the Company fails to deliver the shares required under Section 8.3(b) and this Section 8.3(c).

(d) Company Conversion Measuring Period . The period beginning on the applicable Installment Notice Due Date and ending on the applicable True-Up Date is referred to herein as the “ Company Conversion Measuring Period ”.

(e) Event of Default . If an Event of Default occurs during a Company Conversion Measuring Period, then the Holder may elect during such time period to either (i) return any Installment Conversion Shares delivered for such period and adjust the Outstanding Balance as if such shares had never been issued, or (ii) retain such Installment Conversion Shares and cause the adjustment to the Outstanding Balance in connection therewith to equal the retained Installment Conversion Shares multiplied by the lower of (a) the Installment Conversion Price, and (b) the True-Up Conversion Price.

(f) Equity Conditions Failure. If no Equity Conditions Failure existed as of the Installment Notice Due Date, but an Equity Conditions Failure exists as of the applicable True-Up Date, and such is not waived as permitted herein, then, at the option of the Holder designated in writing to the Company, the Holder may require the Company to do any one or more of the following:

(i) the Company must redeem all or any part designated by the Holder of the Company Conversion Amount for which shares have not yet been delivered to Holder (such designated amount is referred to as the “ Designated Redemption Amount ”). The Company must pay the Designated Redemption Amount to the Holder on the later of (1) the applicable True-Up Date, and (2) three (3) Trading Days after the Holder notifies the Company of the Designated Redemption Amount required to be paid under this Section. The Designated Redemption Amount must be paid by wire transfer of immediately available funds. If the Company fails to pay the Designated Redemption Amount within the time period required by this Section, then in addition to any other remedies set forth herein, the Designated Redemption Amount shall automatically increase to an amount equal to the Designated Redemption Amount multiplied by the Default Premium (with such corresponding increase added to the Outstanding Balance); or

(ii) the Company Conversion shall be null and void with respect to the Company Conversion Amount for which shares have not yet been delivered to the Holder; the Outstanding Balance will be reduced by an amount equal to the retained Installment Conversion Shares multiplied by the lower of (1) the Installment Conversion Price, and (2) the True-Up Conversion Price; and the Holder shall be entitled to all the rights of a holder of this Note with respect to such remaining Company Conversion Amount, including without limitation, requiring such remaining Company Conversion to occur after one or more subsequent written notices (each a “ Subsequent Notice ”) are delivered by the Holder to the Company; provided, however , the Conversion Price for such remaining Company Conversion Amount shall thereafter be adjusted to equal the lesser of (Y) the Default Conversion Price as in effect on the date on which the Holder voided the Company Conversion and (Z) the Default Conversion Price that would be in effect on the date on which the Holder delivers the Subsequent Notice to the Company electing to proceed with all or a portion of the remaining Company Conversion Amount (such date to be treated as if it were an Installment Date for the designated Company Conversion Amount).

(g) Method of Delivery of Shares . All Common Stock to be delivered to the Holder under this Section 8.3 shall be transferred via the DWAC system. Failure to do so within the required time period shall constitute an Event of Default under Section 4.1(b) hereof. Subject to the foregoing, if the Company is unable to deliver shares via the DWAC system, then the Company must deliver to the Holder or its broker, via nationally recognized overnight courier, the original Installment Certificated Shares and original True-Up Certificated Shares, with such mailing to occur no later than the Installment Date and the True-Up Date, respectively, registered in the name of the Holder or its designee. So long as no Payment Default has occurred, if the Installment Certificated Shares for the applicable True-Up Date exceed the True-Up Certificated Shares, then the excess will be applied towards the next Conversion Shares to be issued by the Company (unless the Outstanding Balance has been reduced to zero, in which case Holder will return such excess shares to the Company). If a Payment Default has occurred and the Installment Certificated Shares for the applicable True-Up Date exceed the True-Up Certificated Shares, then the Holder shall not be required to return to the Company any of the excess shares or apply such excess shares to any future issuance or conversion of shares hereunder.

8.4. Waiver of Equity Conditions Failure . Notwithstanding anything in this Note to the Contrary, the Holder may waive in writing any Equity Conditions Failure, except for the Non-Waivable Equity Conditions. Any such waiver shall only be made for the purposes of permitting a Company Conversion to occur under this Section 8 and shall not be deemed a waiver of the underlying default or a continuing waiver of a future Equity Conditions Failure. Any such waiver shall not excuse the Company from the performance of any of its current or future obligations under this Note.

8.5. Payment Default . After the occurrence of a Payment Default, the Holder may at any time thereafter make an election by written notice to the Company to require all subsequent Installment Dates and subsequent Installment Amounts to be determined under this Section 8.5 (a “ Section 8 Election ”). After a Section 8 Election is made, the Installment Dates and the Installment Amounts will be determined by the Holder in the Holder’s sole discretion, notwithstanding any scheduled dates or amounts otherwise described in this Note. After a Section 8 Election, the Holder may at any time thereafter submit one or more Installment Notices using the form attached hereto as Exhibit C-1 , provided, however , that the Holder shall be permitted to designate all or any portion of the Outstanding Balance as the Installment Amount. The date that any such Installment Notice is delivered by the Holder to the Company shall be deemed the Installment Notice Due Date, with the Installment Date deemed to be three (3) Trading Days thereafter. Except for the Holder’s right to determine the Installment Amount and the Installment Date, all other terms in this Section 8 shall remain the same. The purpose of this Section 8.5 is to allow the Holder to make a Section 8 Election rather than declaring an Event of Default hereunder; provided, however , that a Section 8 Election will in no event be deemed a waiver of any of the Holder’s other rights or remedies available under this Note and thus the Holder may at any time thereafter declare an Event of Default and seek those remedies available under Section 4.3 hereof.

9. TRANSFER FEES . The Company shall pay any and all transfer, stamp, issuance and similar taxes, transfer agent fees, postage, expedite fees, and other actual costs and fees necessary to cause the Conversion Shares to be issued to Holder and cleared for trading as contemplated hereunder. Any such fees or costs paid by the Holder will be promptly reimbursed by the Company or added to the Outstanding Balance.

10. HOLDER’S REDEMPTIONS . If the Holder has submitted to Company an Event of Default Redemption Notice in accordance with Section 4.3(b), then the Company shall pay to Holder in cash within ten (10) Trading Days after the Company’s receipt of such Event of Default Redemption Notice an amount equal to the Default Redemption Amount. If the Holder has submitted to Company a Fundamental Transaction Redemption Notice in accordance with Section 5.2, then the Company shall pay to Holder in cash an amount equal to the Fundamental Transaction Redemption Amount multiplied by the Default Premium (the “ Fundamental Transaction Redemption Price ”) on the earlier of (i) the closing of such Fundamental Transaction, and (ii) ten (10) Trading Days after the Company’s receipt of such notice. Notwithstanding anything in this Note to the contrary, the failure of the Company to pay the Default Redemption Amount under this Section 10 shall not be considered a separate Event of Default hereunder. At any time prior to the payment of the applicable Default Redemption Amount by the Company, the Holder shall have the option, in lieu of redemption, to cancel the Event of Default Redemption Notice or the Fundamental Transaction Redemption Notice, as applicable, by written notice to the Company (the “ Redemption Cancellation Notice ”). Upon the Company’s receipt of a Redemption Cancellation Notice, (x) this Note shall thereafter be due and payable upon demand in whole or in part, with payment of the designated Outstanding Balance being due ten (10) Trading Days after written demand therefor from the Holder; (y) for each conversion thereafter under Section 3 of this Note, the Conversion Price of this Note shall be automatically adjusted with respect to each conversion under this Note effected thereafter by the Holder to the lowest of (A) 75% of the lowest Closing Bid Price of the Common Stock during the period beginning on and including the date on which the applicable Redemption Notice is delivered to the Company and ending on and including the date of the Redemption Cancellation Notice, (B) the Market Price as of the date of the Redemption Cancellation Notice, (C) the then current Market Price, and (D) the then current Conversion Price; and (z) for each conversion thereafter under Section 3 of this Note, twenty-three (23) Trading Days following Company’s delivery to the Holder of Conversion Shares (the “ Section 10 True-Up Date ”), there shall be a true-up where the number of Conversion Shares delivered shall be multiplied by the Market Price as of the Section 10 True-Up Date and if the product thereof is less than the Conversion Amount applicable to such conversion, the difference shall be added to the Outstanding Balance of this Note as of the Section 10 True-Up Date. The Holder’s delivery of a Redemption Cancellation Notice and exercise of its rights following such notice shall not affect the Company’s obligations to make any payments of Late Charges which have accrued prior to the date of such Redemption Cancellation Notice and shall not be deemed a waiver of any Event of Default identified in the applicable Event of Default Redemption Notice.

11. NONCIRCUMVENTION . The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation (as defined in the Agreement), bylaws, or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will at all times in good faith carry out all of the provisions of this Note and take all action as may be required to protect the rights of the Holder of this Note. Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon conversion of this Note above the Conversion Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock upon the conversion of this Note, and (iii) shall, so long as this Note is outstanding, take all action necessary to maintain the Share Reserve.

12. VOTING RIGHTS . The Holder shall have no voting rights as the holder of this Note, except as required by law and as expressly provided in this Note.

13. AMENDING THE TERMS OF THIS NOTE . The prior written consent of the Holder shall be required for any change or amendment to this Note.

14. TRANSFER . This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned or transferred by the Holder without the consent of the Company.

15. REISSUANCE OF THIS NOTE .

15.1. Transfer . If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with Section 15.4), registered as the Holder may request, representing the Outstanding Balance being transferred by the Holder and, if less than the entire Outstanding Balance is being transferred, a new Note (in accordance with Section 15.4) to the Holder representing the Outstanding Balance not being transferred.

15.2. Lost, Stolen or Mutilated Note . Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note (as to which a written certification and the indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note (in accordance with Section 15.4) representing the Outstanding Balance.

15.3. Note Exchangeable for Different Denominations . This Note is exchangeable, upon the surrender hereof by the Holder by delivery to the principal office of the Company, for a new Note or Notes (in accordance with Section 15.4 and in principal amounts of at least $1,000) representing in the aggregate the Outstanding Balance of this Note, and each such new Note will represent such portion of such Outstanding Balance as is designated by the Holder at the time of such surrender.

15.4. Issuance of New Notes . Subject to Section 10, whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Outstanding Balance (or in the case of a new Note being issued pursuant to Section 15.1 or Section 15.3, the portion of the Outstanding Balance designated by the Holder which, when added to the outstanding balance represented by the other new Notes issued in connection with such issuance, does not exceed the Outstanding Balance under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest and Late Charges and other increases to the Outstanding Balance as permitted hereunder from the Issuance Date.

16. REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS AND BREACHES . The remedies, including without limitation the Default Premium, Prepayment Premium, and all other charges, fees, and collection costs provided for in this Note, shall be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents. The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company shall provide all information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this Note (including, without limitation, compliance with Section 7).

17. PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS . If (a) this Note is placed in the hands of an attorney for collection or enforcement prior to commencing legal proceedings, or is collected or enforced through any legal proceeding, or the Holder otherwise takes action to collect amounts due under this Note or to enforce the provisions of this Note; or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings affecting Company creditors’ rights and involving a claim under this Note; then, if the Holder prevails in a collection proceeding, the Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements. The Company expressly acknowledges and agrees that no amounts due under this Note shall be affected, or limited, by the fact that the Purchase Price paid for this Note was less than the Original Principal Amount.

18. CONSTRUCTION; HEADINGS . This Note shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect the interpretation of, this Note. Terms used in this Note but defined in the other Transaction Documents shall have the meanings ascribed to such terms on the Issuance Date in such other Transaction Documents unless otherwise consented to in writing by the Holder.

19. FAILURE OR INDULGENCE NOT WAIVER . No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.

20. DISPUTE RESOLUTION . In the case of a dispute as to the determination of the Conversion Price, Default Conversion Price, Installment Conversion Price, Conversion Rate, the Closing Bid Price, the Closing Sale Price, VWAP or fair market value (as the case may be) or the arithmetic calculation of Conversion Shares or the applicable Redemption Price (as the case may be), the Company or the Holder (as the case may be) shall submit the disputed determinations or arithmetic calculations (as the case may be) via facsimile (i) within two (2) Trading Days after receipt of the applicable notice giving rise to such dispute to the Company or the Holder (as the case may be) or (ii) if no notice gave rise to such dispute, at any time after the Holder learned of the circumstances giving rise to such dispute (including, without limitation, as to whether any issuance or sale or deemed issuance or sale was an issuance or sale or deemed issuance or sale of Excluded Securities). If the Holder and the Company are unable to agree upon such determination or calculation within two (2) Trading Days of such disputed determination or arithmetic calculation (as the case may be) being submitted to the Company or the Holder (as the case may be), then the Company shall, within two (2) Trading Days, submit via facsimile (a) the disputed determination of the Conversion Price, Default Conversion Price, Installment Conversion Price, Conversion Rate, the Closing Bid Price, the Closing Sale Price, VWAP or fair market value (as the case may be) to an independent, reputable investment bank selected by the Holder or (b) the disputed arithmetic calculation of the Conversion Shares or any Redemption Price (as the case may be) to the Company’s independent, outside accountant. The Company shall cause at its expense the investment bank or the accountant (as the case may be) to perform the determinations or calculations (as the case may be) and notify the Company and the Holder of the results no later than ten (10) Trading Days from the time it receives such disputed determinations or calculations (as the case may be). Such investment bank’s or accountant’s determination or calculation with respect to the disputes set forth in this Section 20 (as the case may be) shall be binding upon all parties absent demonstrable error.

21. NOTICES; PAYMENTS .

21.1. Notices . Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with the subsection of the Agreement titled “Notices.” The Company shall provide the Holder with prompt written notice as may be required hereunder, including without limitation the following actions (such notice to include in reasonable detail a description of such action and the reason therefore): (i) immediately upon any adjustment of the Conversion Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least fifteen (15) Trading Days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any grant, issuances, or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property to all holders of shares of Common Stock, or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder.

21.2. Currency . All dollar amounts referred to in this Note are in United States Dollars (“ U.S. Dollars ”), and all amounts owing under this Note shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “ Exchange Rate ” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Note, the U.S. Dollar exchange rate as published in The Wall Street Journal on the relevant date of calculation (it being understood and agreed that where an amount is calculated with reference to, or over, a period of time, the date of calculation shall be the final date of such period of time).

21.3. Payments . Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, unless otherwise expressly set forth herein, such payment shall be made in lawful money of the United States of America by wire transfer of immediately available funds pursuant to wire transfer instructions delivered to Company by Holder from time to time. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Trading Day, the same shall instead be due on the next succeeding day which is a Trading Day. Any amount due under the Transaction Documents which is not paid when due shall result in a late charge being incurred and payable by the Company in an amount equal to interest on such amount at the rate of twenty-two percent (22%) per annum from the date such amount was due until the same is paid in full (“ Late Charge ”).

22. CANCELLATION . After repayment or conversion of the entire Outstanding Balance, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.

23. WAIVER OF NOTICE . To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Agreement.

24. GOVERNING LAW . This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Illinois. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Chicago for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Note. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company or any of its Subsidiaries in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.

25. SEVERABILITY . If any provision of this Note is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Note so long as this Note as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with one or more valid provisions, the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

26. FEES AND CHARGES . The parties acknowledge and agree that upon Company’s failure to comply with the provisions of this Note, the Holder’s damages would be uncertain and difficult (if not impossible) to accurately estimate because of the parties’ inability to predict future interest rates, the Holder’s increased risk, and the uncertainty of the availability of a suitable substitute investment opportunity for the Holder, among other reasons. Accordingly, any fees, charges, and interest due under this Note, including without limitation the Prepayment Premium and the Default Premium, are intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment opportunity and not a penalty.

27. UNCONDITIONAL OBLIGATION . Subject to the terms of the Agreement, no provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and rate, and in the coin or currency or where contemplated herein in shares of its Common Stock, as applicable, as herein prescribed. This Note is the direct obligation of the Company and not subject to offsets, counterclaims, defenses, credits or deductions.

28. DISCLOSURE . Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, non-public information relating to the Company or any of its Subsidiaries, the Company shall within one (1) Trading Day after any such receipt or delivery, publicly disclose such material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains material, non-public information relating to the Company or any of its Subsidiaries, the Company so shall indicate to such Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed to presume that all matters relating to such notice do not constitute material, non-public information relating to the Company or its Subsidiaries.

29. TIME OF THE ESSENCE . Time is expressly made of the essence of each and every provision of this Note. If the last day of any time period stated herein shall fall on a Saturday, Sunday or non-Trading Day, then such time period shall be extended to the next succeeding day Trading Day.

30. MAXIMUM PAYMENTS . Nothing contained in this Note shall, or shall be deemed to, establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges under this Note exceeds the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Company to the Holder and thus refunded to the Company.

[ Remainder of page intentionally left blank ]

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the Issuance Date set forth above.

	COMPANY:

	Brazil Minerals, Inc.

	By:	/s/ Marc Fogassa
	Name:	Marc Fogassa
	Title:	Chairman & CEO

ACKNOWLEDGED, ACCEPTED AND AGREED:

St George Investments LLC

By: Fife Trading, Inc., its Manager

	By:	/s/ John M. Fife
		John M. Fife, President

[Signature page to Convertible Promissory Note]

ATTACHMENT 1

DEFINITIONS

For purposes of this Note, the following terms shall have the following meanings:

A1. “ Affiliate ” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person, it being understood for purposes of this definition that “control” of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

A2. “ Agreement ” means that certain Securities Purchase Agreement, dated as of February 21, 2014, as may be amended from time to time, by and between the Company and the Holder, pursuant to which the Company issued this Note.

A3. “ Approved Stock Plan ” means any stock option plan or similar incentive plan which has been approved by the Board of Directors of the Company, pursuant to which the Company’s securities may be issued to any employee, officer, director or consultant for services provided to the Company.

A4. “ Black Scholes Consideration Value ” means the value of the applicable Option or Convertible Security (as the case may be) as of the date of issuance thereof calculated using the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the public announcement of the execution of definitive documents with respect to the issuance of such Option or Convertible Security (as the case may be), (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of such Option or Convertible Security (as the case may be) as of the date of issuance of such Option or Convertible Security (as the case may be), and (iii) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the date of issuance of such Option or Convertible Security (as the case may be).

A5. “ Bloomberg ” means Bloomberg, L.P.

A6. “ Closing Bid Price ” and “ Closing Sale Price ” means, for any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price (as the case may be) then the last bid price or last trade price, respectively, of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in “OTC Pink” by Pink OTC Markets Inc. (formerly Pink Sheets LLC), and any successor thereto. If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price (as the case may be) of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 20. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.

A7. “ Common Stock ” means (i) the Company’s shares of common stock, $0.001 par value per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.

A8. “ Contingent Obligation ” means as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any Indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.

Page 1 | Attachment 1 to Convertible Promissory Note (Definitions)

A9. “ Conversion Shares ” means shares of Common Stock issuable by the Company upon any conversion of this Note, including without limitation, Section 3 Conversion Shares, Installment Conversion Shares, True-Up Conversion Shares, Installment Certificated Shares, and True-Up Certificated Shares.

A10. “ Convertible Securities ” means any stock, preferred stock, stock appreciation rights, phantom stock, equity related rights, equity linked rights, or other security (other than Options) that is at any time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any shares of Common Stock.

A11. “ Current Subsidiary ” means any Person in which the Company on the Issuance Date, directly or indirectly, (i) owns any of the outstanding capital stock or holds any equity or similar interest of such Person or (ii) controls or operates all or any part of the business, operations or administration of such Person, and all of the foregoing, collectively, “ Current Subsidiaries .”

A12. “ Deemed Issuance ” means (i) a Deemed Conversion Issuance as defined in Section 3.3(b) hereof and (ii) a Deemed Installment Issuance as defined in Section 7.1(e) hereof.

A13. “ Default Conversion Price ” means, with respect to a particular date of determination, the lower of (i) the Conversion Price then in effect and (ii) the Market Price as of the specified Installment Notice Due Date or the Installment Date, as applicable. All such determinations to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction during any applicable Measuring Period.

A14. “ Default Premium ” means 125%.

A15. “ DTC ” means the Depository Trust Company.

A16. “ DTC/FAST Program ” means the DTC’s Fast Automated Securities Transfer Program.

A17. “ DWAC ” means Deposit Withdrawal at Custodian as defined by the DTC.

A18. “ DWAC Eligible Conditions ” means that (i) the Common Stock is eligible at DTC for full services pursuant to DTC’s operational arrangements, including without limitation transfer through DTC’s DWAC system, (ii) the Company has been approved (without revocation) by the DTC’s underwriting department, (iii) the Transfer Agent is approved as an agent in the DTC/FAST Program, (iv) after the date which is six months after the date of this Note, the Conversion Shares are otherwise eligible for delivery via DWAC; (v) the Transfer Agent does not have a policy prohibiting or limiting delivery of the Conversion Shares via DWAC; and (vi) the Common Stock required to be delivered to the Holder hereunder is actually delivered to the Holder using the DWAC system.

A19. “ Eligible Market ” means The New York Stock Exchange, NYSE Amex, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, the OTC Bulletin Board, the OTCQX or the OTCQB, or the Principal Market. In no event shall quotations provided in OTC Pink by Pink OTC Markets Inc., or its successor, be considered an Eligible Market.

A20. “ Equity Conditions ” means: (i) with respect to the applicable date of determination all of the Conversion Shares are Free Trading; (ii) on each day during the period beginning one month prior to the applicable date of determination and ending on and including the applicable date of determination (the “ Equity Conditions Measuring Period ”), the Common Stock is listed or designated for quotation (as applicable) on an Eligible Market and shall not have been suspended from trading on an Eligible Market (other than suspensions of not more than two (2) Trading Days and occurring prior to the applicable date of determination due to business announcements by the Company); (iii) on each day during the Equity Conditions Measuring Period, the Company shall have delivered all shares of Common Stock issuable upon conversion of this Note on a timely basis as set forth in Section 3 hereof and all other shares of capital stock required to be delivered by the Company on a timely basis as set forth in the other Transaction Documents; (iv) any shares of Common Stock to be issued in connection with the event requiring determination may be issued in full without violating Section 3.4 hereof (the Holder acknowledges that the Company shall be entitled to assume that this condition has been met for all purposes hereunder absent written notice from the Holder); (v) any shares of Common Stock to be issued in connection with the event requiring determination may be issued in full without violating the rules or regulations of the Eligible Market on which the Common Stock is then listed or designated for quotation (as applicable); (vi) on each day during the Equity Conditions Measuring Period, no public announcement of a pending, proposed or intended Fundamental Transaction shall have occurred which has not been abandoned, terminated or consummated; (vii) the Company shall have no knowledge of any fact that would reasonably be expected to cause any of the Conversion Shares to not be freely tradable without the need for registration under any applicable state securities laws (in each case, disregarding any limitation on conversion of this Note); (viii) on each day during the Equity Conditions Measuring Period, the Company otherwise shall have been in material compliance with each, and shall not have breached any, term, provision, covenant, representation or warranty of any Transaction Document; (ix) without limiting clause (viii) above, on each day during the Equity Conditions Measuring Period, there shall not have occurred an Event of Default or an event that with the passage of time or giving of notice would constitute an Event of Default; (x) all DWAC Eligible Conditions shall be satisfied as of each applicable Installment Date and True-Up Date; (xi) on each Installment Notice Due Date and each Installment Date, the average and median daily dollar volume of the Common Stock on its Principal Market for the previous twenty-three (23) Trading Days shall be greater than $10,000.00; and (xii) the ten (10) day average VWAP of the Common Stock is greater than $0.01.

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A21. “ Equity Conditions Failure ” means, with respect to a particular date of determination, that on any day during the Equity Conditions Measuring Period, the Equity Conditions have not been satisfied (or waived in writing by the Holder).

A22. “ Excluded Securities ” means any shares of Common Stock, options, or convertible securities issued or issuable (i) in connection with any Approved Stock Plan; provided that the option term, exercise price or similar provisions of any issuances pursuant to such Approved Stock Plan are not amended, modified or changed on or after the Issuance Date; and (ii) in connection with mergers, acquisitions, strategic licensing arrangements, strategic business partnerships or joint ventures, the purpose of which is not to raise additional capital; provided, that such third parties are not granted any registration rights. Notwithstanding the foregoing, any Common Stock issued or issuable to raise capital for the Company or its Subsidiaries, directly or indirectly, in connection with any transaction contemplated by clause (ii) above, including, without limitation, securities issued in one or more related transactions or that result in similar economic consequences, shall not be deemed to be Excluded Securities.

A23. “ Free Trading ” means that (i) the shares or certificate(s) representing the applicable shares of Common Stock have been cleared and approved for public resale by the compliance departments of Holder’s brokerage firm and the clearing firm servicing such brokerage, and (ii) such shares are held in the name of the clearing firm servicing Holder’s brokerage firm and have been deposited into such clearing firm’s account for the benefit of Holder.

A24. “ Fundamental Transaction ” means that (i) (1) the Company or any of its Subsidiaries shall, directly or indirectly, in one or more related transactions, consolidate or merge with or into (whether or not the Company or any of its Subsidiaries is the surviving corporation) any other Person, or (2) the Company or any of its Significant Subsidiaries shall, directly or indirectly, in one or more related transactions, sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of its respective properties or assets to any other Person, or (3) the Company or any of its Subsidiaries shall, directly or indirectly, in one or more related transactions, allow any other Person to make a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of Voting Stock of the Company (not including any shares of Voting Stock of the Company held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (4) the Company or any of its Subsidiaries shall, directly or indirectly, in one or more related transactions, consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with any other Person whereby such other Person acquires more than 50% of the outstanding shares of Voting Stock of the Company (not including any shares of Voting Stock of the Company held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination), or (5) the Company or any of its Subsidiaries shall, directly or indirectly, in one or more related transactions, reorganize, recapitalize or reclassify the Common Stock, other than an increase in the number of authorized shares of the Company’s Common Stock, or (ii) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act and the rules and regulations promulgated thereunder) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding Voting Stock of the Company.

A25. “ GAAP ” means United States generally accepted accounting principles, consistently applied.

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A26. “ Indebtedness ” of any Person means, without duplication (i) all indebtedness for borrowed money, (ii) all obligations issued, undertaken or assumed as the deferred purchase price of property or services, including, without limitation, “capital leases” in accordance with GAAP (other than trade payables entered into in the ordinary course of business), (iii) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (iv) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (v) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (vi) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby, is classified as a capital lease, (vii) all indebtedness referred to in clauses (i) through (vi) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (viii) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (i) through (vii) above.

A27. “ Installment Amount ” means the greater of (i) $44,500 ($222,500.00 ÷ 5), plus the sum of any accrued and unpaid Interest as of the applicable Installment Date and accrued, and unpaid Late Charges, if any, under this Note as of the applicable Installment Date, and any other amounts accruing or owing to Holder under this Note as of such Installment Date, and (ii) the then Outstanding Balance divided by the number of Installment Dates remaining prior to the Maturity Date. In the event the Holder shall sell or otherwise transfer any portion of this Note, the transferee shall be allocated a pro rata portion (based on the portion of this Note transferred compared with the Outstanding Balance of this Note as of the transfer date) of each unpaid Installment Amount hereunder. Notwithstanding any other provision contained herein, if any Installment Amount is greater than the then Outstanding Balance of this Note, such Installment Amount shall be reduced to equal such then Outstanding Balance. Notwithstanding anything in this subsection to the contrary, if the Holder makes a Section 8 Election, then the Installment Amount will thereafter be determined by the Holder as described in Section 8.5.

A28. “ Installment Certificated Shares ” means the shares of Common Stock to be delivered by certificated shares pursuant to Section 8.3(g). The number of Installment Certificated Shares to be delivered to the Holder pursuant to Section 8.3(g) is equal to two (2) times the number of Installment Conversion Shares that would otherwise be required to be delivered to the Holder via the DWAC system in connection with the applicable Installment Notice.

A29. “ Installment Conversion Price ” means, with respect to a particular date of determination, the lower of (i) the Conversion Price then in effect and (ii) the Market Price for the applicable Installment Notice Due Date. All such determinations to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction during any applicable Measuring Period.

A30. “ Installment Conversion Shares ” means the number of shares of Common Stock to be delivered pursuant to Section 8.3(a). The Installment Conversion Shares are equal to the quotient of (i) the Company Conversion Amount divided by (ii) the Installment Conversion Price as of the applicable Installment Notice Due Date.

A31. “ Installment Date ” means the Initial Installment Date and the same day on each of the calendar months following the Initial Installment Date, regardless of the occurrence of any Event of Default (or the issuance of any Redemption Cancellation Notice), until the Outstanding Balance is reduced to zero. If the Outstanding Balance is not paid or converted in full on the Maturity Date, then in addition to any remedies available under the Transaction Documents, the Installment Dates will continue on the same day of each calendar month until the Outstanding Balance is paid or converted in full (thus requiring the Company to continue to provide Installment Notices to the Holder pursuant to Section 8 hereof). If the Initial Installment Date is on the 29 ^th , 30 ^th , or 31 ^st of a calendar month, then Installment Dates for shorter subsequent calendar months shall be deemed to be on the last day of such applicable calendar month. Notwithstanding anything in this subsection to the contrary, if the Holder makes a Section 8 Election, then subsequent Installment Dates will be determined by the Holder as described in Section 8.5.

Page 4 | Attachment 1 to Convertible Promissory Note (Definitions)

A32. “ Market Price ” means 75% of the arithmetic average of the three (3) lowest VWAPs of the shares of Common Stock during the Measuring Period; provided, however , that if the arithmetic average of the three (3) lowest VWAPs of the shares of Common Stock during any twenty (20) consecutive Trading Day Period is less than $0.05, then “75%” above shall thereafter be permanently replaced with “65%” in this definition of Market Price. All such determinations are to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction during such Measuring Period.

A33. “ Maturity Date ” shall mean the date that is ten (10) months after the Issuance Date.

A34. “ Measuring Period ” shall mean, unless otherwise stated herein, the twenty (20) consecutive Trading Day period immediately preceding the date of determination.

A35. “ Non-Waivable Equity Conditions ” means (i) the Equity Condition set forth in Section A20(iv) (indicating that Holder may not own more than the Maximum Percentage set forth in Section 3.4 of this Note), and (ii) the Equity Condition set forth in Section A20(v) (Common Stock may be issued without violating the rules of the Eligible Market).

A36. “ Options ” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

A37. “ Parent Entity ” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.

A38. “ Payment Default ” means any Event of Default arising under Section 4.1(a) (failure to pay) or Section 4.1(b) (failure to deliver shares) hereof.

A39. “ Person ” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.

A40. “ Principal Market ” means the OTCQB.

A41. “ Redemption Notices ” means, collectively, Event of Default Redemption Notices and Fundamental Transaction Redemption Notices, and each of the foregoing, individually, a “ Redemption Notice .”

A42. “ Redemption Price ” means either the Event of Default Redemption Price or the Fundamental Transaction Redemption Price, as the context requires or permits.

A43. “ SEC ” means the United States Securities and Exchange Commission or the successor thereto.

A44. “ Significant Subsidiaries ” means, as of any date of determination, collectively, all Subsidiaries that would constitute a “significant subsidiary” under Rule 1-02 of Regulation S-X promulgated by the SEC, and each of the foregoing, individually, a “ Significant Subsidiary .”

A45. “ Subsidiaries ” means, as of any date of determination, collectively, all Current Subsidiaries and all New Subsidiaries, and each of the foregoing, individually, a “ Subsidiary .”

A46. “ Successor Entity ” means the Person, which may be the Company, formed by, resulting from or surviving any Fundamental Transaction or the Person with which such Fundamental Transaction shall have been made, provided that if such Person is not a publicly traded entity whose common stock or equivalent equity security is quoted or listed for trading on an Eligible Market, Successor Entity shall mean such Person's Parent Entity.

A47. “ Trading Day ” means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise designated as a Trading Day in writing by the Holder.

Page 5 | Attachment 1 to Convertible Promissory Note (Definitions)

A48. “ True-Up Certificated Shares ” means a number of shares of Common Stock equal to one (1) times the greater of (i) the True-Up Conversion Shares calculated using the applicable Installment Date, and (ii) the True-Up Conversion Shares calculated using the True-Up Date.

A49. “ True-Up Conversion Price ” means, with respect to a particular date of determination, the lower of (i) the Conversion Price then in effect and (ii) the Market Price. All such determinations to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction during any applicable Measuring Period.

A50. “ True-Up Conversion Shares ” means that number of shares of Common Stock that would be required to be delivered pursuant to Section 8 on an applicable True-Up Date without taking into account the delivery of any Installment Conversion Shares. The True-Up Conversion Shares are equal to the quotient of (i) the Company Conversion Amount divided by (ii) the True-Up Conversion Price as of the applicable True-Up Date.

A51. “ Voting Stock ” of a Person means capital stock of such Person of the class or classes pursuant to which the holders thereof have the general voting power to elect, or the general power to appoint, at least a majority of the board of directors, managers, trustees or other similar governing body of such Person (irrespective of whether or not at the time capital stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

A52. “ VWAP ” means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market on which such security is then traded) during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “Volume at Price” function or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in “OTC Pink” by Pink OTC Markets Inc. (formerly Pink Sheets LLC), and any successor thereto. If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 20. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.

Page 6 | Attachment 1 to Convertible Promissory Note (Definitions)

EXHIBIT A

St George Investments LLC

303 East Wacker Drive, Suite 1200

Chicago, Illinois 60601

Brazil Minerals, Inc.

Date: __________________

Attn: _________________

324 South Beverly Drive, Suite 118

Beverly Hills, CA 90212

CONVERSION NOTICE

The above-captioned Holder hereby gives notice to Brazil Minerals, Inc., a Nevada corporation (the “ Company ”), pursuant to that certain Convertible Promissory Note made by the Company in favor of the Holder on February 21, 2014 (the “ Note ”), that the Holder elects to convert the portion of the Note balance set forth below into fully paid and non-assessable shares of Common Stock of the Company as of the date of conversion specified below. Said conversion shall be based on the Conversion Price set forth below. In the event of a conflict between this Conversion Notice and the Note, the Note shall govern, or, in the alternative, at the election of the Holder in its sole discretion, the Holder may provide a new form of Conversion Notice to conform to the Note. Capitalized terms used in this notice without definition shall have the meanings given to them in the Note.

Date of conversion: ____________

Conversion #: ____________

Conversion Amount: ____________

Conversion Price: _______________

Section 3 Conversion Shares: _______________ (C divided by D)

Remaining Outstanding Balance of Note: ____________*

* Subject to adjustments for corrections, defaults, interest and other adjustments permitted by the Transaction Documents (as defined in the Agreement).

$_________________ of the Conversion Amount converted hereunder shall be deducted from the Installment Amount(s) relating to the following Installment Date(s): __________________________________________.

Please transfer the Section 3 Conversion Shares electronically (via DWAC) to the following account :

Broker: ___________________	Address:
DTC#: ____________________
Account #: _________________
Account Name: _____________

To the extent the Section 3 Conversion Shares are not able to be delivered to the Holder electronically via the DWAC system, please add additional certificated Common Stock equal to five percent (5%) of the number of Section 3 Conversion Shares so converted (per Section 3.3(a) of the Note), and deliver all such certificated shares to the Holder via reputable overnight courier after receipt of this Conversion Notice (by facsimile transmission or otherwise) to:

Sincerely,

Holder: St George Investments LLC

By: Fife Trading, Inc., Manager

	By:
		John M. Fife, President

EXHIBIT B
ACKNOWLEDGMENT

The Company hereby acknowledges this Conversion Notice and hereby directs _______________ to issue the above indicated number of shares of Common Stock in accordance with the Irrevocable Instructions to Transfer Agent dated February 21, 2014 from the Company and acknowledged and agreed to by ___________________.

Brazil Minerals, Inc.

By:
Name:
Title:

EXHIBIT C-1

Brazil Minerals, Inc.

324 South Beverly Drive, Suite 118

Beverly Hills, CA 90212

St George Investments LLC	Date: _____________
Attn: John Fife
303 E. Wacker Dr., Suite 1200
Chicago, IL 60657

INSTALLMENT NOTICE

The above-captioned Company hereby gives notice to St George Investments LLC, an Illinois limited liability company (the “ Holder ”), pursuant to that certain Convertible Promissory Note made by the Company in favor of the Holder on February 21, 2014 (the “ Note ”), of certain Company elections and certifications related to payment of the Installment Amount of $_________________ due on ___________, 201_ (the “ Installment Date ”). In the event of a conflict between this Installment Notice and the Note, the Note shall govern, or, in the alternative, at the election of the Holder in its sole discretion, the Holder may provide a new form of Installment Notice to conform to the Note. Capitalized terms used in this notice without definition shall have the meanings given to them in the Note.

INSTALLMENT ELECTIONS AND CERTIFICATIONS

AS OF THE INSTALLMENT NOTICE DUE DATE

A. COMPANY ELECTIONS

The Company elects to pay the Installment Amount as follows (check one):

______(i)

Redeeming the Installment Amount in cash in accordance with Section 8 of the Note (“ Company Redemption ”) (if selected, no other sections of this Notice need to be completed)

______(ii)

Converting the Installment Amount in accordance with Section 8 of the Note (“ Company Conversion ”) (if selected, complete Section B(1) and Section (C) of this Notice)

______(iii)

Combination of Company Redemption and Company Conversion (if selected, complete Section B(2) and Section (C) of this Notice)

B. COMPANY CONVERSION (if applicable)

Company Conversion:

Installment Notice Due Date: ____________, 201_

Company Conversion Amount: _____________

Installment Conversion Price: _______________ (lower of (i) Conversion Price in effect and (ii) Market Price as of Installment Notice Due Date)

Installment Conversion Shares: _______________ (B divided by C)

Excess shares to be applied from previous installment (if any): _____________

Installment shares to be delivered: ________________ (D minus E)

Remaining Outstanding Balance of Note: ____________ *

Combination of Company Redemption and Company Conversion (if elected above):

Installment Notice Due Date: ____________, 201_

Installment Amount: ____________

Company Redemption Amount: _____________

Company Conversion Amount: _____________ (B minus C)

Installment Conversion Price: _______________ (lower of (i) Conversion Price in effect and (ii) Market Price as of Installment Notice Due Date)

Installment Conversion Shares: _______________ (D divided by E)

Excess shares to be applied from previous installment (if any): _____________

Installment shares to be delivered: ________________ (F minus G)

Remaining Outstanding Balance of Note: ____________ *

* Subject to adjustments for corrections, defaults, interest and other adjustments permitted by the Transaction Documents (as defined in the Agreement).

C. EQUITY CONDITIONS CERTIFICATION (if applicable)

Market Capitalization of the Common Stock:________________

(Check One)

_________The Company herby certifies that no Equity Conditions Failure exists as of the Installment Notice Due Date.

_________The Company hereby gives notice that an Equity Conditions Failure has occurred and requests a waiver from the Holder with respect thereto. The Equity Conditions Failure is as follows:

_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Sincerely,

Company: Brazil Minerals, Inc.

By:

Name:

Title:

EXHIBIT C-2

Brazil Minerals, Inc.

324 South Beverly Drive, Suite 118

Beverly Hills, CA 90212

St George Investments LLC	Date: _____________
Attn: John Fife
303 E. Wacker Dr., Suite 1200
Chicago, IL 60657

TRUE-UP NOTICE

The above-captioned Company hereby gives notice to St George Investments LLC, an Illinois limited liability company (the “ Holder ”), pursuant to that certain Convertible Promissory Note made by the Company in favor of the Holder on February 21, 2014 (the “ Note ”), of True-Up Conversion Shares and Equity Conditions Certifications related to _____________, 201_ (the “ Installment Date ”). In the event of a conflict between this Installment Date Notice and the Note, the Note shall govern, or, in the alternative, at the election of the Holder in its sole discretion, the Holder may provide a new form of Installment Date Notice to conform to the Note. Capitalized terms used in this notice without definition shall have the meanings given to them in the Note.

TRUE-UP CONVERSION SHARES AND CERTIFICATIONS

AS OF THE TRUE-UP DATE

TRUE-UP CONVERSION SHARES

Installment Notice Due Date: ____________, 201_

Company Conversion Amount: _____________

True-Up Conversion Price: _______________ (lower of (i) Conversion Price in effect and (ii) Market Price as of Installment Date)

True-Up Conversion Shares: _______________ (B divided by C)

Installment Conversion Shares delivered: ________________

True-Up Conversion Shares to be delivered: ________________ (only applicable if D minus E is greater than zero)

Installment Conversion Shares to be applied to next installment or returned:_________________ (only applicable if D minus E is less than zero and no Payment Default has occurred)

Installment Conversion Shares to be retained by the Holder because of a Payment Default: _________________ (only applicable if D minus E is less than zero and a Payment Default has occurred)

EQUITY CONDITIONS CERTIFICATION

Market Capitalization of the Common Stock:________________

(Check One)

_________The Company herby certifies that no Equity Conditions Failure exists as of the applicable Installment Date.

_________The Company hereby gives notice that an Equity Conditions Failure has occurred and requests a waiver from the Holder with respect thereto. The Equity Conditions Failure is as follows:

Sincerely,

Company: Brazil Minerals, Inc.

By:

Name:

Title:

Exhibit 4.6

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

OPTION TO PURCHASE

SHARES OF COMMON STOCK

BRAZIL MINERALS, INC.

Expires March 4, 2016

	Number of Shares: 1,500,000
Date of Issuance: March 4, 2014

FOR VALUE RECEIVED, the undersigned, Brazil Minerals, Inc., a Nevada corporation (together with its successors and assigns, the “ Issuer ”), hereby certifies that THE NAZARI & ASSOCIATES INTERNATIONAL GROUP, INC. DEFINED BENEFIT PENSION PLAN (the “Holder”) or its registered assigns is entitled to subscribe for and purchase, during the Term (as hereinafter defined), One Million Five Hundred Thousand Shares (1,500,000) shares (subject to adjustment as hereinafter provided) of the duly authorized, validly issued, fully paid and non-assessable Common Stock of the Issuer, at an exercise price per share equal to the Option Price then in effect, subject, however, to the provisions and upon the terms and conditions hereinafter set forth. Capitalized terms used in this Option and not otherwise defined herein shall have the respective meanings specified in Section 9 hereof.

1. Term . The term of this Option shall commence on March 4, 2014 and shall expire at 5:00 p.m., Pacific Time, on March 4, 2016 (such period being the “ Term ” and such date, the “ Termination Date ”).

2. Method of Exercise; Payment; Issuance of New Option; Transfer and Exchange .

(a) Time of Exercise . The purchase rights represented by this Option may be exercised in whole or in part during the Term for such number of shares of Common Stock set forth above.

(b) Method of Exercise . The Holder hereof may exercise this Option, in whole or in part, by the surrender of this Option (with the exercise form attached hereto duly executed (“ Notice of Exercise ”)) at the principal office of the Issuer, and by the payment to the Issuer of an amount of consideration therefor equal to the Option Price in effect on the date of such exercise multiplied by the number of shares of Option Stock with respect to which this Option is then being exercised, payable at such Holder’s election by certified or official bank check or by wire transfer to an account designated by the Issuer.

(c) Issuance of Stock Certificates . In the event of any exercise of this Option in accordance with and subject to the terms and conditions hereof, certificates for the shares of Option Stock so purchased shall be dated the date of such exercise and delivered to the Holder hereof within a reasonable time, not exceeding five (5) Trading Days after such exercise (the “ Delivery Date ”) or, at the request of the Holder (provided that a registration statement under the Securities Act providing for the resale of the Option Stock is then in effect or that the resale of all shares of Option Stock are otherwise exempt from registration), issued and delivered to the Depository Trust Company (“ DTC ”) account on the Holder’s behalf via the Deposit Withdrawal Agent Commission System (“ DWAC ”) within a reasonable time, not exceeding five (5) Trading Days after such exercise, and the Holder hereof shall be deemed for all purposes to be the holder of the shares of Option Stock so purchased as of the date of such exercise. Notwithstanding the foregoing to the contrary, the Issuer or its transfer agent shall only be obligated to issue and deliver the shares to the DTC on a holder’s behalf via DWAC if such exercise is in connection with a sale or other exemption from registration by which the shares may be issued without a restrictive legend. The Holder shall deliver this original Option, or an indemnification undertaking with respect to such Option in the case of its loss, theft or destruction, at such time that this Option is fully exercised. With respect to partial exercises of this Option, the Issuer shall keep written records for the Holder of the number of shares of Option Stock exercised as of each date of exercise.

(d) Transferability of Option . Subject to Section 2(f) hereof, this Option may be transferred by a Holder, in whole or in part, to an “accredited investor” as defined in Regulation D under the Securities Act without the consent of the Issuer. If transferred pursuant to this paragraph, this Option may be transferred on the books of the Issuer by the Holder hereof in person or by duly authorized attorney, upon surrender of this Option at the principal office of the Issuer, properly endorsed (by the Holder executing an assignment in the form attached hereto) and upon payment of any necessary transfer tax or other governmental charge imposed upon such transfer. This Option is exchangeable at the principal office of the Issuer for Options to purchase the same aggregate number of shares of Option Stock, each new Option to represent the right to purchase such number of shares of Option Stock as the Holder hereof shall designate at the time of such exchange. All Options issued on transfers or exchanges shall be dated the Original Issue Date and shall be identical with this Option, except as to the number of shares of Option Stock issuable pursuant thereto.

(e) Continuing Rights of Holder . The Issuer will, at the time of or at any time after each exercise of this Option, upon the request of the Holder hereof, acknowledge in writing the extent, if any, of its continuing obligation to afford to such Holder all rights to which such Holder shall continue to be entitled after such exercise in accordance with the terms of this Option, provided that if any such Holder shall fail to make any such request, the failure shall not affect the continuing obligation of the Issuer to afford such rights to such Holder.

(f) Compliance with Securities Laws .

(i) The Holder of this Option, by acceptance hereof, acknowledges that this Option and the shares of Option Stock to be issued upon exercise hereof are being acquired solely for the Holder’s own account and not as a nominee for any other party, and for investment, and that the Holder will not offer, sell or otherwise dispose of this Option or any shares of Option Stock to be issued upon exercise hereof except pursuant to an effective registration statement, or an exemption from registration, under the Securities Act and any applicable state securities laws.

(ii) Except as provided in paragraph (iii) below, this Option and all certificates representing shares of Option Stock issued upon exercise hereof shall be stamped or imprinted with a legend in substantially the following form:

THIS OPTION AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

(iii) The Issuer agrees to reissue this Option or certificates representing any of the Option Stock, without the legend set forth above if at such time, prior to making any transfer of any such securities, the Holder shall give written notice to the Issuer describing the manner and terms of such transfer. Such proposed transfer will not be effected until: (a) either (i) the Issuer has received an unqualified opinion of counsel reasonably satisfactory to the Issuer, to the effect that the registration of such securities under the Securities Act is not required in connection with such proposed transfer, (ii) a registration statement under the Securities Act covering such proposed disposition has been filed by the Issuer with the United States Securities and Exchange Commission and has become effective under the Securities Act, or (iii) the Issuer has received other evidence reasonably satisfactory to the Issuer that such registration and qualification under the Securities Act and state securities laws are not required; and (b) either (i) the Issuer has received an opinion of counsel reasonably satisfactory to the Issuer, to the effect that registration or qualification under the securities or “blue sky” laws of any state is not required in connection with such proposed disposition, or (ii) compliance with applicable state securities or “blue sky” laws has been effected or a valid exemption exists with respect thereto. The Issuer will respond to any such notice from a holder within five (5) Trading Days. In the case of any proposed transfer under this Section 2(h), the Issuer will use reasonable efforts to comply with any such applicable state securities or “blue sky” laws, but shall in no event be required, (x) to qualify to do business in any state where it is not then qualified, (y) to take any action that would subject it to tax or to the general service of process in any state where it is not then subject, or (z) to comply with state securities or “blue sky” laws of any state for which registration by coordination is unavailable to the Issuer. The restrictions on transfer contained in this Section 2(g) shall be in addition to, and not by way of limitation of, any other restrictions on transfer contained in any other section of this Option. Whenever a certificate representing the Option Stock is required to be issued to the Holder without a legend, in lieu of delivering physical certificates representing the Option Stock, the Issuer shall cause its transfer agent to electronically transmit the Option Stock to the Holder by crediting the account of the Holder or Holder’s Prime Broker with DTC through its DWAC system (to the extent not inconsistent with any provisions of this Option).

(h) Accredited Investor Status . In no event may the Holder exercise this Option in whole or in part unless the Holder is an “accredited investor” as defined in Regulation D under the Securities Act.

3. Stock Fully Paid; Reservation and Listing of Shares; Covenants .

(a) Stock Fully Paid . The Issuer represents, warrants, covenants and agrees that all shares of Option Stock which may be issued upon the exercise of this Option or otherwise hereunder will, when issued in accordance with the terms of this Option, be duly authorized, validly issued, fully paid and non-assessable and free from all taxes, liens and charges created by or through the Issuer. The Issuer further covenants and agrees that during the period within which this Option may be exercised, the Issuer will at all times have authorized and reserved for the purpose of the issuance upon exercise of this Option a number of authorized but unissued shares of Common Stock equal to at least the number of shares of Common Stock issuable upon exercise of this Option without regard to any limitations on exercise.

(b) Reservation . If any shares of Common Stock required to be reserved for issuance upon exercise of this Option or as otherwise provided hereunder require registration or qualification with any Governmental Authority under any federal or state law before such shares may be so issued, the Issuer will in good faith use its best efforts as expeditiously as possible at its expense to cause such shares to be duly registered or qualified. If the Issuer shall list any shares of Common Stock on any securities exchange or market it will, at its expense, list thereon, and maintain and increase when necessary such listing, of, all shares of Option Stock from time to time issued upon exercise of this Option or as otherwise provided hereunder ( provided that such Option Stock has been registered pursuant to a registration statement under the Securities Act then in effect), and, to the extent permissible under the applicable securities exchange rules, all unissued shares of Option Stock which are at any time issuable hereunder, so long as any shares of Common Stock shall be so listed. The Issuer will also so list on each securities exchange or market, and will maintain such listing of, any other securities which the Holder of this Option shall be entitled to receive upon the exercise of this Option if at the time any securities of the same class shall be listed on such securities exchange or market by the Issuer.

(c) Covenants . The Issuer shall not by any action including, without limitation, amending the Certificate of Incorporation or the by-laws of the Issuer, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other action, avoid or seek to avoid the observance or performance of any of the terms of this Option, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of the Holder hereof against dilution (to the extent specifically provided herein) or impairment. Without limiting the generality of the foregoing, the Issuer will (i) not permit the par value, if any, of its Common Stock to exceed the then effective Option Price, (ii) not amend or modify any provision of the Certificate of Incorporation or by-laws of the Issuer in any manner that would adversely affect the rights of the Holders of the Options, (iii) take all such action as may be reasonably necessary in order that the Issuer may validly and legally issue fully paid and nonassessable shares of Common Stock, free and clear of any liens, claims, encumbrances and restrictions (other than as provided herein) upon the exercise of this Option, and (iv) use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be reasonably necessary to enable the Issuer to perform its obligations under this Option.

(d) Loss, Theft, Destruction of Options . Upon receipt of evidence satisfactory to the Issuer of the ownership of and the loss, theft, destruction or mutilation of any Option and, in the case of any such loss, theft or destruction, upon receipt of indemnity or security satisfactory to the Issuer or, in the case of any such mutilation, upon surrender and cancellation of such Option, the Issuer will make and deliver, in lieu of such lost, stolen, destroyed or mutilated Option, a new Option of like tenor and representing the right to purchase the same number of shares of Common Stock.

(e) Payment of Taxes . The Issuer will pay any documentary stamp taxes attributable to the initial issuance of the Option Stock issuable upon exercise of this Option; provided , however , that the Issuer shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance or delivery of any certificates representing Option Stock in a name other than that of the Holder in respect to which such shares are issued.

4. Adjustment of Option Price . The price at which such shares of Option Stock may be purchased upon exercise of this Option shall be subject to adjustment from time to time as set forth in this Section 4. The Issuer shall give the Holder notice of any event described below which requires an adjustment pursuant to this Section 4 in accordance with the notice provisions set forth in Section 5.

(a) Recapitalization, Reorganization, Reclassification, Consolidation, Merger or Sale .

(i) In case the Issuer after the Original Issue Date shall do any of the following (each, a “ Triggering Event ”): (a) consolidate or merge with or into any other Person and the Issuer shall not be the continuing or surviving corporation of such consolidation or merger, or (b) permit any other Person to consolidate with or merge into the Issuer and the Issuer shall be the continuing or surviving Person but, in connection with such consolidation or merger, any Capital Stock of the Issuer shall be changed into or exchanged for Securities of any other Person or cash or any other property, or (c) transfer all or substantially all of its properties or assets to any other Person, or (d) effect a capital reorganization or reclassification of its Capital Stock, then, and in the case of each such Triggering Event, proper provision shall be made to the Option Price and the number of shares of Option Stock that may be purchased upon exercise of this Option so that, upon the basis and the terms and in the manner provided in this Option, the Holder of this Option shall be entitled upon the exercise hereof at any time after the consummation of such Triggering Event, to the extent this Option is not exercised prior to such Triggering Event, to receive at the Option Price in effect at the time immediately prior to the consummation of such Triggering Event, in lieu of the Common Stock issuable upon such exercise of this Option prior to such Triggering Event, the Securities, cash and property to which such Holder would have been entitled upon the consummation of such Triggering Event if such Holder had exercised the rights represented by this Option immediately prior thereto (including the right of a shareholder to elect the type of consideration it will receive upon a Triggering Event), subject to adjustments (subsequent to such corporate action) as nearly equivalent as possible to the adjustments provided for elsewhere in this Section 4. Immediately upon the occurrence of a Triggering Event, the Issuer shall notify the Holder in writing of such Triggering Event and provide the calculations in determining the number of shares of Option Stock issuable upon exercise of the new warrant and the adjusted Option Price. Upon the Holder’s request, the continuing or surviving corporation as a result of such Triggering Event shall issue to the Holder a new warrant of like tenor evidencing the right to purchase the adjusted number of shares of Option Stock and the adjusted Option Price pursuant to the terms and provisions of this Section 4(a)(i).

(ii) In the event that the Holder has elected not to exercise this Option prior to the consummation of a Triggering Event, so long as the surviving entity pursuant to any Triggering Event is a company that has a class of equity securities registered pursuant to the Exchange Act and its common stock is listed or quoted on a national securities exchange, national automated quotation system or the OTC Bulletin Board, the surviving entity and/or each Person (other than the Issuer) which may be required to deliver any Securities, cash or property upon the exercise of this Option as provided herein shall assume, by written instrument delivered to, and reasonably satisfactory to, the Holder of this Option, (A) the obligations of the Issuer under this Option (and if the Issuer shall survive the consummation of such Triggering Event, such assumption shall be in addition to, and shall not release the Issuer from, any continuing obligations of the Issuer under this Option) and (B) the obligation to deliver to such Holder such Securities, cash or property as, in accordance with the foregoing provisions of this subsection (a), such Holder shall be entitled to receive, and the surviving entity and/or each such Person shall have similarly delivered to such Holder an opinion of counsel for the surviving entity and/or each such Person, which counsel shall be reasonably satisfactory to such Holder, or in the alternative, a written acknowledgement executed by the President or Chief Financial Officer of the Issuer, stating that this Option shall thereafter continue in full force and effect and the terms hereof (including, without limitation, all of the provisions of this subsection (a)) shall be applicable to the Securities, cash or property which the surviving entity and/or each such Person may be required to deliver upon any exercise of this Option or the exercise of any rights pursuant hereto.

(b) Stock Dividends, Subdivisions and Combinations . If at any time the Issuer shall:

(i) make or issue or set a record date for the holders of the Common Stock for the purpose of entitling them to receive a dividend payable in, or other distribution of, shares of Common Stock,

(ii) subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, or

(iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock,

then (1) the number of shares of Common Stock for which this Option is exercisable immediately after the occurrence of any such event shall be adjusted to equal the number of shares of Common Stock which a record holder of the same number of shares of Common Stock for which this Option is exercisable immediately prior to the occurrence of such event would own or be entitled to receive after the happening of such event, and (2) the Option Price then in effect shall be adjusted to equal (A) the Option Price then in effect multiplied by the number of shares of Common Stock for which this Option is exercisable immediately prior to the adjustment divided by (B) the number of shares of Common Stock for which this Option is exercisable immediately after such adjustment.

(c) Certain Other Distributions . If at any time the Issuer shall make or issue or set a record date for the holders of the Common Stock for the purpose of entitling them to receive any dividend or other distribution of:

(i) cash,

(ii) any evidences of its indebtedness, any shares of stock of any class or any other securities or property of any nature whatsoever (other than cash), or

(iii) any warrants or other rights to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property of any nature whatsoever (other than cash),

then (1) the number of shares of Common Stock for which this Option is exercisable shall be adjusted to equal the product of the number of shares of Common Stock for which this Option is exercisable immediately prior to such adjustment multiplied by a fraction (A) the numerator of which shall be the Per Share Market Value of Common Stock at the date of taking such record and (B) the denominator of which shall be such Per Share Market Value minus the amount allocable to one share of Common Stock of any such cash so distributable and of the fair value (as determined in good faith by the Board of Directors of the Issuer and supported by an opinion from an investment banking firm mutually agreed upon by the Issuer and the Holder) of any and all such evidences of indebtedness, shares of stock, other securities or property or warrants or other subscription or purchase rights so distributable, and (2) the Option Price then in effect shall be adjusted to equal (A) the Option Price then in effect multiplied by the number of shares of Common Stock for which this Option is exercisable immediately prior to the adjustment divided by (B) the number of shares of Common Stock for which this Option is exercisable immediately after such adjustment. A reclassification of the Common Stock (other than a change in par value, or from par value to no par value or from no par value to par value) into shares of Common Stock and shares of any other class of stock shall be deemed a distribution by the Issuer to the holders of its Common Stock of such shares of such other class of stock within the meaning of this Section 4(c) and, if the outstanding shares of Common Stock shall be changed into a larger or smaller number of shares of Common Stock as a part of such reclassification, such change shall be deemed a subdivision or combination, as the case may be, of the outstanding shares of Common Stock within the meaning of Section 4(b).

(d) Other Provisions Applicable to Adjustments under this Section . The following provisions shall be applicable to the making of adjustments of the number of shares of Common Stock for which this Option is exercisable and the Option Price then in effect provided for in this Section 4:

(i) When Adjustments to Be Made . The adjustments required by this Section 4 shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that any adjustment of the number of shares of Common Stock for which this Option is exercisable that would otherwise be required may be postponed (except in the case of a subdivision or combination of shares of the Common Stock, as provided for in Section 4(b)) up to, but not beyond the date of exercise if such adjustment either by itself or with other adjustments not previously made adds or subtracts less than one percent (1%) of the shares of Common Stock for which this Option is exercisable immediately prior to the making of such adjustment. Any adjustment representing a change of less than such minimum amount (except as aforesaid) which is postponed shall be carried forward and made as soon as such adjustment, together with other adjustments required by this Section 4 and not previously made, would result in a minimum adjustment or on the date of exercise. For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence.

(ii) Fractional Interests . In computing adjustments under this Section 4, fractional interests in Common Stock shall be taken into account to the nearest one one-hundredth (1/100th) of a share.

(iii) When Adjustment Not Required . If the Issuer shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or distribution or subscription or purchase rights and shall, thereafter and before the distribution to stockholders thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights, then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled.

(e) Form of Option after Adjustments . The form of this Option need not be changed because of any adjustments in the Option Price or the number and kind of Securities purchasable upon the exercise of this Option.

(f) Escrow of Option Stock . If after any property becomes distributable pursuant to this Section 4 by reason of the taking of any record of the holders of Common Stock, but prior to the occurrence of the event for which such record is taken, and the Holder exercises this Option, any shares of Common Stock issuable upon exercise by reason of such adjustment shall be deemed the last shares of Common Stock for which this Option is exercised (notwithstanding any other provision to the contrary herein) and such shares or other property shall be held in escrow for the Holder by the Issuer to be issued to the Holder upon and to the extent that the event actually takes place, upon payment of the current Option Price. Notwithstanding any other provision to the contrary herein, if the event for which such record was taken fails to occur or is rescinded, then such escrowed shares shall be cancelled by the Issuer and escrowed property returned.

5. Notice of Adjustments . Whenever the Option Price or Option Share Number shall be adjusted pursuant to Section 4 hereof (for purposes of this Section 5, each an “ adjustment ”), the Issuer shall cause its Chief Financial Officer or other authorized officer, as the case may be, to prepare and execute a certificate setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which the Board made any determination hereunder), and the Option Price and Option Share Number after giving effect to such adjustment, and shall cause copies of such certificate to be delivered to the Holder of this Option promptly after each adjustment. Any dispute between the Issuer and the Holder of this Option with respect to the matters set forth in such certificate may at the option of the Holder of this Option be submitted to an Independent Appraiser, provided that the Issuer shall have ten (10) days after receipt of notice from such Holder of its selection of such firm to object thereto, in which case such Holder shall select another such firm and the Issuer shall have no such right of objection. The Independent Appraiser selected by the Holder of this Option as provided in the preceding sentence shall be instructed to deliver a written opinion as to such matters to the Issuer and such Holder within thirty (30) days after submission to it of such dispute. Such opinion shall be final and binding on the parties hereto. The reasonable costs and expenses of the Independent Appraiser in making such determination shall be paid by the Issuer, in the event the Holder's calculation was correct, or by the Holder, in the event the Issuer’s calculation was correct, or equally by the Issuer and the Holder in the event that neither the Issuer's or the Holder's calculation was correct.

6. Fractional Shares . No fractional shares of Option Stock will be issued in connection with any exercise hereof, but in lieu of such fractional shares, the Issuer shall, at its option, (a) pay an amount in cash equal to the Option Price multiplied by such fraction or (b) round the number of shares to be issued upon exercise up to the nearest whole number of shares.

7. Definitions . For the purposes of this Option, the following terms have the following meanings:

“ Board ” shall mean the Board of Directors of the Issuer.

“ Capital Stock ” means and includes (i) any and all shares, interests, participations or other equivalents of or interests in (however designated) corporate stock, including, without limitation, shares of preferred or preference stock, (ii) all partnership interests (whether general or limited) in any Person which is a partnership, (iii) all membership interests or limited liability company interests in any limited liability company, and (iv) all equity or ownership interests in any Person of any other type.

“ Certificate of Incorporation ” means the Certificate of Incorporation of the Issuer as in effect on the Original Issue Date, and as hereafter from time to time amended, modified, supplemented or restated in accordance with the terms hereof and thereof and pursuant to applicable law.

“ Common Stock ” means the Common Stock, $0.001 par value per share, of the Issuer and any other Capital Stock into which such stock may hereafter be changed.

“ Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar federal statute then in effect.

“ Governmental Authority ” means any governmental, regulatory or self-regulatory entity, department, body, official, authority, commission, board, agency or instrumentality, whether federal, state or local, and whether domestic or foreign.

“ Holder ” mean the Person who shall from time to time own this Option.

“ Independent Appraiser ” means a nationally recognized or major regional investment banking firm or firm of independent certified public accountants of recognized standing (which may be the firm that regularly examines the financial statements of the Issuer) that is regularly engaged in the business of appraising the Capital Stock or assets of corporations or other entities as going concerns, and which is not affiliated with either the Issuer or the Holder of any Option.

“ Issuer ” means Brazil Minerals, Inc.., a Nevada corporation and its successors.

“ Options ” means this Option, and any other warrants of like tenor issued in substitution or exchange therefore.

“ Option Price ” initially means $.12 per share, as such price may be adjusted from time to time as shall result from the adjustments specified in this Option, including Section 4 hereto.

“ Option Share Number ” means at any time the aggregate number of shares of Option Stock which may at such time be purchased upon exercise of this Option, after giving effect to all prior adjustments and increases to such number made or required to be made under the terms hereof.

“ Option Stock ” means the Common Stock issuable upon exercise of any Option or Options or otherwise issuable pursuant to any Option or Options.

“ Original Issue Date ” means March 4, 2014.

“ OTC Bulletin Board ” means the over-the-counter electronic bulletin board.

“ Person ” means an individual, corporation, limited liability company, partnership, joint stock company, trust, unincorporated organization, joint venture, Governmental Authority or other entity of whatever nature.

“ Per Share Market Value ” means on any particular date (a) the last closing price per share of the Common Stock on such date on the Trading Market or another registered national stock exchange on which the Common Stock is then listed, or if there is no closing price on such date, then the closing bid price on such date, or if there is no closing bid price on such date, then the closing price on such exchange or quotation system on the date nearest preceding such date, or (b) if the Common Stock is not listed then on a Trading Market or any registered national stock exchange, the last closing price for a share of Common Stock in the over-the-counter market, as reported by the Trading Market or any registered national stock exchange or in the National Quotation Bureau Incorporated or similar organization or agency succeeding to its functions of reporting prices) at the close of business on such date, or if there is no closing price on such date, then the closing bid price on such date, or (c) if the Common Stock is not then reported by the Trading Market or any registered national stock exchange or in the National Quotation Bureau Incorporated (or similar organization or agency succeeding to its functions of reporting prices), then the average of the Otcmarkets.com quotes for the five (5) Trading Days preceding such date of determination, or (d) if the Common Stock is not then publicly traded the fair market value of a share of Common Stock as determined by an Independent Appraiser selected in good faith by the Holder; provided , however , that the Issuer, after receipt of the determination by such Independent Appraiser, shall have the right to select an additional Independent Appraiser, in which case, the fair market value shall be equal to the average of the determinations by each such Independent Appraiser; and provided , further , that all determinations of the Per Share Market Value shall be appropriately adjusted for any stock dividends, stock splits or other similar transactions during such period. The determination of fair market value by an Independent Appraiser shall be based upon the fair market value of the Issuer determined on a going concern basis as between a willing buyer and a willing seller and taking into account all relevant factors determinative of value, and shall be final and binding on all parties. In determining the fair market value of any shares of Common Stock, no consideration shall be given to any restrictions on transfer of the Common Stock imposed by agreement or by federal or state securities laws, or to the existence or absence of, or any limitations on, voting rights.

“ Securities ” means any debt or equity securities of the Issuer, whether now or hereafter authorized, any instrument convertible into or exchangeable for Securities or a Security, and any option, warrant or other right to purchase or acquire any Security. “Security” means one of the Securities.

“ Securities Act ” means the Securities Act of 1933, as amended, or any similar federal statute then in effect.

“ Subsidiary ” means any corporation at least 50% of whose outstanding Voting Stock shall at the time be owned directly or indirectly by the Issuer or by one or more of its Subsidiaries, or by the Issuer and one or more of its Subsidiaries.

“ Term ” has the meaning specified in Section 1 hereof.

“ Trading Day ” means (a) a day on which the Common Stock is traded on a Trading Market, or (b) if the Common Stock is not traded on a Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices); provided , however , that in the event that the Common Stock is not listed or quoted as set forth in (a) or (b) hereof, then Trading Day shall mean any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other government action to close.

“ Trading Market ” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board.

“ Voting Stock ” means, as applied to the Capital Stock of any corporation, Capital Stock of any class or classes (however designated) having ordinary voting power for the election of a majority of the members of the Board of Directors (or other governing body) of such corporation, other than Capital Stock having such power only by reason of the happening of a contingency.

8. Other Notices . In case at any time:

(a) the Issuer shall make any distributions to the holders of Common Stock; or

(b) the Issuer shall authorize the granting to all holders of its Common Stock of rights to subscribe for or purchase any shares of Capital Stock of any class or other rights; or

(d) there shall be any capital reorganization by the Issuer; or

(e) there shall be any (i) consolidation or merger involving the Issuer or (ii) sale, transfer or other disposition of all or substantially all of the Issuer’s property, assets or business (except a merger or other reorganization in which the Issuer shall be the surviving corporation and its shares of Capital Stock shall continue to be outstanding and unchanged and except a consolidation, merger, sale, transfer or other disposition involving a wholly-owned Subsidiary); or

(f) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Issuer or any partial liquidation of the Issuer or distribution to holders of Common Stock;

then, in each of such cases, the Issuer shall give written notice to the Holder of the date on which (i) the books of the Issuer shall close or a record shall be taken for such dividend, distribution or subscription rights or (ii) such reorganization, reclassification, consolidation, merger, disposition, dissolution, liquidation or winding-up, as the case may be, shall take place. Such notice also shall specify the date as of which the holders of Common Stock of record shall participate in such dividend, distribution or subscription rights, or shall be entitled to exchange their certificates for Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, disposition, dissolution, liquidation or winding-up, as the case may be. Such notice shall be given at least twenty (20) days prior to the action in question and not less than ten (10) days prior to the record date or the date on which the Issuer’s transfer books are closed in respect thereto. This Option entitles the Holder to receive copies of all financial and other information distributed or required to be distributed to the holders of the Common Stock.

9. Amendment and Waiver . Any term, covenant, agreement or condition in this Option may be amended, or compliance therewith may be waived (either generally or in a particular instance and either retroactively or prospectively), by a written instrument or written instruments executed by the Issuer and the Holder; provided , however , that no such amendment or waiver shall reduce the Option Share Number, increase the Option Price, shorten the period during which this Option may be exercised or modify any provision of this Section 9 without the consent of the Holder of this Option. No consideration shall be offered or paid to any person to amend or consent to a waiver or modification of any provision of this Option unless the same consideration is also offered to all holders of the Options.

10. Governing Law; Jurisdiction . This Option shall be governed by and construed in accordance with the internal laws of the State of California, without giving effect to any of the conflicts of law principles which would result in the application of the substantive law of another jurisdiction. This Option shall not be interpreted or construed with any presumption against the party causing this Option to be drafted. The Issuer and the Holder agree that venue for any dispute arising under this Option will lie exclusively in the state or federal courts located in California, in Los Angeles and Orange Counties, and the parties irrevocably waive any right to raise forum non conveniens or any other argument that New York is not the proper venue. The Issuer and the Holder irrevocably consent to personal jurisdiction in the state and federal courts of the state of California, in Los Angeles and Orange Counties. The Issuer and the Holder consent to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Option and agree that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 10 shall affect or limit any right to serve process in any other manner permitted by law. The Issuer and the Holder hereby agree that the prevailing party in any suit, action or proceeding arising out of or relating to this Option or the Subscription Agreement, shall be entitled to reimbursement for reasonable legal fees from the non-prevailing party. The parties hereby waive all rights to a trial by jury.

12. Notices . Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) immediately upon hand delivery, telecopy or facsimile at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

If to the Issuer:	Brazil Minerals, Inc. Attn: Marc Fogassa, CEO 324 South Beverly Drive, Suite 118 Beverly Hills, California 90212 U.S.A.

with copies (which copies shall not constitute notice) to:	Jay Weil, Esq. 27 Viewpoint Road Wayne, New Jersey 07470 e-mail:jay.weil@brazil-minerals.com and jayweil235@gmail.com

If to any Holder:	At the address or facsimile number of such Holder appearing on the books of the Issuer.

Any party hereto may from time to time change its address for notices by giving at least ten (10) days written notice of such changed address to the other party hereto.

12. Option Agent . The Issuer may, by written notice to the Holder of this Option, appoint an agent having an office in New York, New York for the purpose of issuing shares of Option Stock on the exercise of this Option pursuant to subsection (b) of Section 2 hereof, exchanging this Option pursuant to subsection (d) of Section 2 hereof or replacing this Option pursuant to subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent.

13. Remedies . The Issuer stipulates that the remedies at law of the Holder of this Option in the event of any default or threatened default by the Issuer in the performance of or compliance with any of the terms of this Option are not and will not be adequate and that, to the fullest extent permitted by law, such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise.

14. Successors and Assigns . This Option and the rights evidenced hereby shall inure to the benefit of and be binding upon the successors and assigns of the Issuer, the Holder hereof and (to the extent provided herein) the Holders of Option Stock issued pursuant hereto, and shall be enforceable by any such Holder or Holder of Option Stock.

15. Modification and Severability . If, in any action before any court or agency legally empowered to enforce any provision contained herein, any provision hereof is found to be unenforceable, then such provision shall be deemed modified to the extent necessary to make it enforceable by such court or agency. If any such provision is not enforceable as set forth in the preceding sentence, the unenforceability of such provision shall not affect the other provisions of this Option, but this Option shall be construed as if such unenforceable provision had never been contained herein.

16. No Rights as Stockholders . Prior to the exercise of this Option, the Holder shall not have or exercise any rights as a stockholder of the Issuer by virtue of its ownership of this Option.

17. Headings . The headings of the Sections of this Option are for convenience of reference only and shall not, for any purpose, be deemed a part of this Option.

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IN WITNESS WHEREOF, the Issuer has executed this Option as of the day and year first above written.

	BRAZIL MINERALS, INC.

	By:	/s/ Marc Fogassa
		Name: Marc Fogassa
		Title: Chief Executive Officer

EXERCISE FORM

OPTION

BRAZIL MINERALS, INC.

The undersigned _______________, pursuant to the provisions of the within Option, hereby elects to purchase _____ shares of Common Stock of Brazil Minerals, Inc. covered by the within Option.

Dated:			Signature

			Address

Number of shares of Common Stock beneficially owned or deemed beneficially owned by the Holder on the date of Exercise: _________________________

The undersigned is an “accredited investor” as defined in Regulation D under the Securities Act of 1933, as amended.

The Holder shall pay the sum of $________ by certified or official bank check (or via wire transfer) to the Issuer in accordance with the terms of the Option.

ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto __________________ the within Option and all rights evidenced thereby and does irrevocably constitute and appoint _____________, attorney, to transfer the said Option on the books of the within named corporation.

Dated:			Signature

			Address

PARTIAL ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto __________________ the right to purchase _________ shares of Option Stock evidenced by the within Option together with all rights therein, and does irrevocably constitute and appoint ___________________, attorney, to transfer that part of the said Option on the books of the within named corporation.

Dated:			Signature

			Address

FOR USE BY THE ISSUER ONLY:

This Option No. ___ canceled (or transferred or exchanged) this _____ day of ___________, _____, shares of Common Stock issued therefor in the name of _______________, Option No. _____ issued for ____ shares of Common Stock in the name of _______________.

Exhibit 4.7

OPTION TO PURCHASE

SHARES OF COMMON STOCK

BRAZIL MINERALS, INC.

Expires March 4, 2016

	Number of Shares: 1,500,000
Date of Issuance: March 4, 2014

FOR VALUE RECEIVED, the undersigned, Brazil Minerals, Inc., a Nevada corporation (together with its successors and assigns, the “ Issuer ”), hereby certifies that THE SUTER FAMILY TRUST U/T/A DATED APRIL 12, 2002, AS AMENDED AND RESTATED (the “Holder”) or its registered assigns is entitled to subscribe for and purchase, during the Term (as hereinafter defined), One Million Five Hundred Thousand Shares (1,500,000) shares (subject to adjustment as hereinafter provided) of the duly authorized, validly issued, fully paid and non-assessable Common Stock of the Issuer, at an exercise price per share equal to the Option Price then in effect, subject, however, to the provisions and upon the terms and conditions hereinafter set forth. Capitalized terms used in this Option and not otherwise defined herein shall have the respective meanings specified in Section 9 hereof.

2. Method of Exercise; Payment; Issuance of New Option; Transfer and Exchange .

(a) Time of Exercise . The purchase rights represented by this Option may be exercised in whole or in part during the Term for such number of shares of Common Stock set forth above.

(f) Compliance with Securities Laws .

3. Stock Fully Paid; Reservation and Listing of Shares; Covenants .

(a) Recapitalization, Reorganization, Reclassification, Consolidation, Merger or Sale .

(b) Stock Dividends, Subdivisions and Combinations . If at any time the Issuer shall:

(i) make or issue or set a record date for the holders of the Common Stock for the purpose of entitling them to receive a dividend payable in, or other distribution of, shares of Common Stock,

(ii) subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, or

(iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock,

(i) cash,

(ii) any evidences of its indebtedness, any shares of stock of any class or any other securities or property of any nature whatsoever (other than cash), or

(ii) Fractional Interests . In computing adjustments under this Section 4, fractional interests in Common Stock shall be taken into account to the nearest one one-hundredth (1/100th) of a share.

7. Definitions . For the purposes of this Option, the following terms have the following meanings:

“ Board ” shall mean the Board of Directors of the Issuer.

“ Common Stock ” means the Common Stock, $0.001 par value per share, of the Issuer and any other Capital Stock into which such stock may hereafter be changed.

“ Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar federal statute then in effect.

“ Holder ” mean the Person who shall from time to time own this Option.

“ Issuer ” means Brazil Minerals, Inc.., a Nevada corporation and its successors.

“ Options ” means this Option, and any other warrants of like tenor issued in substitution or exchange therefore.

“ Option Price ” initially means $.12 per share, as such price may be adjusted from time to time as shall result from the adjustments specified in this Option, including Section 4 hereto.

“ Option Stock ” means the Common Stock issuable upon exercise of any Option or Options or otherwise issuable pursuant to any Option or Options.

“ Original Issue Date ” means March 4, 2014.

“ OTC Bulletin Board ” means the over-the-counter electronic bulletin board.

“ Securities Act ” means the Securities Act of 1933, as amended, or any similar federal statute then in effect.

“ Term ” has the meaning specified in Section 1 hereof.

8. Other Notices . In case at any time:

(a) the Issuer shall make any distributions to the holders of Common Stock; or

(b) the Issuer shall authorize the granting to all holders of its Common Stock of rights to subscribe for or purchase any shares of Capital Stock of any class or other rights; or

(d) there shall be any capital reorganization by the Issuer; or

(f) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Issuer or any partial liquidation of the Issuer or distribution to holders of Common Stock;

If to the Issuer:	Brazil Minerals, Inc. Attn: Marc Fogassa, CEO 324 South Beverly Drive, Suite 118 Beverly Hills, California 90212 U.S.A.

with copies (which copies shall not constitute notice) to:	Jay Weil, Esq. 27 Viewpoint Road Wayne, New Jersey 07470 e-mail:jay.weil@brazil-minerals.com and jayweil235@gmail.com

If to any Holder:	At the address or facsimile number of such Holder appearing on the books of the Issuer.

Any party hereto may from time to time change its address for notices by giving at least ten (10) days written notice of such changed address to the other party hereto.

16. No Rights as Stockholders . Prior to the exercise of this Option, the Holder shall not have or exercise any rights as a stockholder of the Issuer by virtue of its ownership of this Option.

17. Headings . The headings of the Sections of this Option are for convenience of reference only and shall not, for any purpose, be deemed a part of this Option.

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IN WITNESS WHEREOF, the Issuer has executed this Option as of the day and year first above written.

	BRAZIL MINERALS, INC.

	By:	/s/ Marc Fogassa
		Name: Marc Fogassa
		Title: Chief Executive Officer

EXERCISE FORM

OPTION

BRAZIL MINERALS, INC.

The undersigned _______________, pursuant to the provisions of the within Option, hereby elects to purchase _____ shares of Common Stock of Brazil Minerals, Inc. covered by the within Option.

Dated:			Signature

			Address

Number of shares of Common Stock beneficially owned or deemed beneficially owned by the Holder on the date of Exercise: _________________________

The undersigned is an “accredited investor” as defined in Regulation D under the Securities Act of 1933, as amended.

The Holder shall pay the sum of $________ by certified or official bank check (or via wire transfer) to the Issuer in accordance with the terms of the Option.

ASSIGNMENT

Dated:			Signature

			Address

PARTIAL ASSIGNMENT

Dated:			Signature

			Address

FOR USE BY THE ISSUER ONLY:

Exhibit 4.8

BRAZIL MINERALS, INC.

STOCK PURCHASE WARRANT

To Purchase 488.000 Shares of Common Stock

No. 2014-1

Issue Date: January 8, 2014

THIS CERTIFIES that, for value received, Una Hannah LP (the "Holder"), is entitled, upon the terms and subject to the conditions hereinafter set forth, at any time on or after the date hereof, to subscribe for and purchase, from BRAZIL MINERALS, INC. a Nevada corporation (the "Company"), four hundred eighty eight thousand (488,000) of the fully paid non-assessable shares of the Company's common stock, $0.001 par value per share ("Common Stock") at an initial purchase price of $0.125 per share or a lesser price as described in Section 11(c), provided that such right will terminate, if not terminated earlier in accordance with the provisions hereof, at 5:00 p.m. (Pacific Time) on December 26, 2018 (the "Expiration Date").

The purchase price and the number of shares for which this warrant (the "Warrant") is exercisable are subject to adjustment, as provided herein and specifically in Section 11.

This Warrant was issued in connection with the Company's private offering (the "Offering") of units of the Company's securities (the "Units"), each Unit consisting of $25,000 principal amount of 12% Senior Secured Convertible Promissory Notes maturing March 31, 2015 (the “Notes”) and warrants to purchase 50,000 shares of the Company's Common Stock until December 26, 2018 (a "Warrant Share”).

As used herein the following terms, unless the context otherwise requires, have the following respective meanings:

(a) The term "Company" shall include BRAZIL MINERALS, INC. and any corporation that shall succeed or assume the obligations of BRAZIL MINERALS, Inc. hereunder.

(d) The term "Exercise Price" shall be $0.125 per share or a lesser price per share as described in Section 11(c), subject to adjustment pursuant to the terms hereof.

1.	Number of Shares Issuable upon Exercise.

2.	Exercise of Warrant.

(b) Certificates for shares purchased hereunder shall be delivered to the Holder hereof within a reasonable time after the date on which this Warrant shall have been exercised as aforesaid.

If Holder has received shares of the Warrant Shares and has owned these Warrant Shares for more than six months and the Holder affirms that it is a non-affiliate of the Company and the Holder requests in writing that the shares be reissued in unrestricted form; the Company affirms that at its expense it will cause to be issued unrestricted shares of the Company’s common shares to the Holder.

The Holder acknowledges by entering into this transaction that it fully understands that whenever the Company is not current with its required filings with the Securities and Exchange Commission such Warrant Shares cannot be sold without registration.

3.	No Fractional Shares .

4.	Charges, Taxes and Expenses.

5.	No Rights as Shareholders.

This Warrant does not entitle the Holder hereof to any voting rights or other rights as a Shareholder of the Company prior to the exercise hereof.

6.	Exchange and Registry of Warrant .

7.	Loss, Theft, Destruction or Mutilation of Warrant.

8.	Saturdays, Sundays, Holidays, etc .

9.	Cash Distributions.

No adjustment on account of cash dividends or interest on the Company's Common Stock or Other Securities that may become purchasable hereunder will be made to the Exercise Price under this Warrant.

10.

Consolidation, Merger or Sale of the Company.

11.

Adjustments in the Exercise Price

The number of shares and class of capital stock purchasable under this Warrant are subject to adjustment from time to time as set forth in this Section 11.

(a) Adjustment for change in capital stock. If the Company:

(i) pays a dividend or makes a distribution on its Common Stock, in each case, in shares of its Common Stock;

(ii) subdivides its outstanding shares of Common Stock into a greater number of shares;

(iii) combines its outstanding shares of Common Stock into a smaller number of shares;

(iv) makes a distribution on its Common Stock in shares of its capital stock other than Common Stock; or

(v) issues by reclassification of its shares of Common Stock any shares of its capital stock;

(c.) Each Warrant shall be non-redeemable and shall expire December 26, 2018 and entitles its holder to purchase one restricted share of the Company's Common Stock at an initial exercise price of $0.125 per share, subject to adjustment for stock splits, dividends and combinations described in the Memorandum and Warrant.

The existing Exercise Price, or

An adjusted Exercise Price (“EP”) calculated using the following formula: EP = SP x 110%

Where SP equals the VWAP of the Company’s stock during the most recent six-month period as reported by Bloomberg or its successors.

Where Floor Price is defined as:

Through June 30, 2014:	$	0.10
During the period July 1, 2014 through June 30, 2015:	$	0.08
During the period July 1, 2015 through December 26, 2018:	$	0.04
Whenever, relative to the Notes, an Event of Default is occurring:	$	0.01

Subject to being no less than the Floor Price, if at the end of 2014 and any subsequent or partial calendar year’s VWAP of the Company’s Common Stock as reported by Bloomberg is less than $0.125 per share, the exercise price shall become 80% of the prior month’s exercise price or EP before making the monthly six-month adjustment described above.

12.

Certificate as to Adjustments.

13.

Reservation of Stock Issuable on Exercise of Warrant.

14.

Assignment; Exchange of Warrant.

15.

Registration Rights.

16.

Warrant Agent.

17.

Notices, etc.

18.

Notices of Record Date.

In case,

19.

Amendments and Supplements.

20.

Investment Intent.

Holder represents and warrants to the Company that Holder is acquiring the Warrants for investment and with no present intention of distributing or reselling any of the Warrants.

21.

Certificates to Bear Language.

The Warrants and the Warrant Shares issuable upon exercise thereof shall bear the following legend by which Holder shall be bound:

22.

Miscellaneous.

(d) The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officers thereunto duly authorized as of the date first written above.

	BRAZIL MINERALS, INC.

	By:	/s/ Marc Fogassa
		Marc Fogassa
		Chairman and Chief Executive Officer

EXHIBIT A

NOTICE OF EXERCISE OF

WARRANT

BRAZIL MINERALS, INC.

The undersigned _______________, pursuant to the provisions of the within Warrant, hereby elects to purchase _____ shares of Common Stock of Brazil Minerals, Inc. covered by the within Warrant.

Dated:			Signature

			Address

EXHIBIT B

ASSIGNMENT

Dated:			Signature

			Address

PARTIAL ASSIGNMENT

Dated:			Signature

			Address

FOR USE BY THE ISSUER ONLY:

Exhibit 4.9

THESE SECURITIES, I. E., THIS DEBENTURE AND THE CONVERSION SHARES, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THIS DEBENTURE AND THE CONVERSION SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS DEBENTURE OR THE CONVERSION SHARES UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER AND BE REASONABLY ACCEPTABLE TO THE BORROWER), IN A GENERALLY ACCEPTABLE FORM THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.

CONVERTIBLE DEBENTURE

FOR VALUE RECEIVED, Brazil Minerals, Inc., a Nevada corporation (the “Borrower”), promises to pay to Group 10 Holdings LLC (the “Holder”) or its registered assigns or successors in interest, the sum of Sixty Three Thousand Dollars ($63,000), together with all accrued interest thereon, on the first anniversary from the Effective Date, as hereinafter defined (the “Maturity Date”), if not sooner paid.

The following terms and conditions shall apply to this Convertible Debenture (the “Debenture”):

ARTICLE I

INTEREST & AMORTIZATION

1.1 Contract Rate . Subject to Sections 4.1 and 5.7 hereof, interest payable on this Debenture shall accrue at a rate per annum equal to 10% (Ten Percent) and shall be computed on the basis of a 365-day year.

1.2 Consideration. The principal sum of this Debenture is Sixty-Three Thousand Dollars ($63,000). The purchase price paid by Holder for the Debenture, which is the consideration received by Borrower for the Debenture, is Sixty Thousand dollars ($60,000) payable by wire transfer or other immediately available funds. Thus, as of the Effective Date, there exists a Three Thousand Dollar ($3,000) Original Issue Discount (the “OID”). Interest shall accrue and be payable on the full outstanding principal amount of the Debenture, inclusive of the OID, and payment of the full principal amount (inclusive of OID) shall be required regardless of time and manner of payment or prepayment by Borrower. Upon conversion, Holder shall receive credit for the full principal amount converted (inclusive of the OID).

1.3 Payments . Payment of the aggregate principal amount outstanding under this Debenture (the “Principal Amount”), together with all accrued interest thereon, shall be made by mandatory conversion of the principal plus accrued interest and any other fees by the Maturity Date, unless prepaid otherwise.

1.4 Prepayment Option . The Borrower may prepay in cash all or any portion of the Principal Amount of this Debenture and accrued interest thereon, with a premium, as set forth below (each a “Prepayment Premium”), upon ten (10) days prior written notice to the Holder. The Holder shall have the right to convert all or any portion of the Principal Amount and accrued interest thereon in accordance with Article II hereof during such ten (10) day notice period. The amount of such prepayment premium shall be determined by multiplying that portion of the Principal Amount and accrued interest to be converted, if any, by the then applicable prepayment percentage (the “Prepayment Percentage”). The Prepayment Percentage shall be as follows: (i) 10% (ten percent), if there is a prepayment at any time from the Effective Date until 90 (ninety) days after the Effective Date; and (ii) 25% (twenty-five percent) if there is a prepayment at any time from 91 days after the Effective Date until the Maturity Date.

ARTICLE II

CONVERSION REPAYMENT

2.1. Mandatory Conversion . Subject to the terms of this Article II, the Holder has the obligation, at any time after 180 (One Hundred Eighty) days from the Effective Date and until the Maturity Date, or after an Event of Default, to convert the outstanding Principal Amount and accrued interest and fees due and payable thereon into fully paid and non-assessable shares of Common Stock of the Borrower (the “Common Stock”) at the Conversion Price (as defined below). The shares of Common Stock to be issued upon such conversion are herein referred to as the “Conversion Shares.”

2.2. Calculation of Conversion Price . The conversion price (the “Conversion Price”) shall be subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations, recapitalization and reclassifications, of the Borrower’s common stock. Subject to Section 4.6 hereof, the Conversion Price shall mean the lesser of (a) sixty percent (60%) of the lowest Closing Price of the Borrower’s common stock during the twenty (20) trading days prior to the date a Notice of Conversion is given (which represents a discount rate of forty percent (40%)) or (b) eleven cents ($0.11). For purposes of this Section 2.2, the term ”Closing Price” means the closing price on the Over-the-Counter Bulletin Board or applicable trading market (the “OTC Market”) as reported by a reliable reporting service (“Reporting Service”) designated by the Holder (i.e., Bloomberg) or, if the OTC Market is not the principal trading market for such security, the closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded.

2.3. Conversion Limitation . Notwithstanding anything contained herein to the contrary, the number of Conversion Shares that may be acquired by the Holder upon conversion of this Debenture (or otherwise in respect hereof) shall be limited to the extent necessary to ensure that, following such conversion (or other issuance), the total number of shares of Common Stock then beneficially owned by such Holder and its affiliates and any other persons whose beneficial ownership of Common Stock would be aggregated with the Holder's for purposes of Section 13(d) of the Securities and Exchange Act of 1934, as amended (the “ Exchange Act ”), does not exceed 4.99% of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such conversion). For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. By written notice to the Company, the Holder may increase, decrease or waive the provisions of this Section 2.3 as to itself, but any such waiver will not be effective until the 61 ^st (Sixty first) day after delivery thereof.

2.4. Mechanics of Holder’s Conversion . Subject to Section 2.3 hereof, this Debenture will be converted by the Holder in part from time to time after the Effective Date, by submitting to the Borrower and/or the Borrower’s transfer agent of record a notice of conversion (“Notice of Conversion”) (whether by facsimile, as a Portable Document (PDF) file sent by electronic mail or other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time). On each Conversion Date (as hereinafter defined) and in accordance with its Notice of Conversion, the Holder shall make the appropriate reduction to the Principal Amount, and accrued interest and fees as entered in its records and shall provide written notice thereof to the Borrower on the Conversion Date. Each date on which a Notice of Conversion is delivered or telecopied in accordance with the provisions hereof shall be deemed a Conversion Date (the “Conversion Date”). A form of Notice of Conversion to be employed by the Holder is annexed hereto as Exhibit A . Pursuant to the terms of the Notice of Conversion, Borrower shall issue instructions to the transfer agent within two (2) business days from the receipt of the Notice of Conversion and shall cause the transfer agent to transmit the certificates representing the Conversion Shares to the Holder by physical delivery or crediting the account of the Holder’s designated broker with the Depository Trust Corporation (“DTC”) through its Deposit Withdrawal Agent Commission (“DWAC”) system within two (2) business days after receipt by Borrower of the Notice of Conversion (the “Delivery Date”). In the case of the exercise of the conversion rights set forth herein, the conversion privilege shall be deemed to have been exercised, and the Conversion Shares issuable upon such conversion shall be deemed to have been issued, upon the date of receipt by Borrower of the Notice of Conversion. The Holder shall be treated for all purposes as the record holder of such Common Stock, unless the Holder provides Borrower written instructions to the contrary.

2.5. Late Payments . The Borrower understands that a delay in the delivery of the shares of Common Stock in the form required pursuant to this Article II beyond the Delivery Date could result in economic loss to the Holder. Subject to Section 5.11, as compensation to the Holder for such loss the Borrower agrees to pay late fees to the Holder for late issuance of such shares in the form required pursuant to this Article II upon conversion of the Debenture, in the amount equal to Seven Hundred Fifty U.S Dollars ($750) per business day after the Delivery Date. The Borrower shall pay any fees incurred under this Section in immediately available funds upon demand and such fees shall also be eligible to be converted into Conversion Shares as set forth in this Article II.

2.6 Conversion Mechanics . The number of shares of Common Stock to be issued upon each conversion of this Debenture shall be determined by dividing that portion of the Principal Amount and interest and fees to be converted, if any, by the then applicable Conversion Price.

2.7 Authorized and Reserved Shares . The Borrower represents and warrants and covenants and agrees that upon issuance, the Conversion Shares will be duly and validly issued, fully paid and non-assessable. The Borrower agrees that its issuance of this Debenture shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance with the terms and conditions of this Debenture. At all times during which this Debenture is outstanding, the Borrower shall reserve from its authorized and unissued shares of Common Stock a sufficient number of shares to provide for the issuance of the Conversion Shares. The Borrower agrees that it will take all such reasonable actions as may be necessary to assure that the Conversion Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the applicable trading market upon which the Common Stock may be listed. The Borrower agrees to initially reserve 3 Million (3,000,000) shares of Common Stock from its authorized and unissued shares within 3 business days from the Effective Date. Should any of the following events happen then the number of shares to be reserved shall be increased: (i) in the event Borrower’s common stock trades below five cents (.05) closing price for three consecutive days, then the reserve amount shall be increased to 6,000,000 shares; (ii) in the event Borrower’s common stock trades below three cents (.03) closing price for three consecutive days, then the reserve amount shall be increased to 10,000,000 shares; (iii) in the event Borrower’s issued and outstanding common shares become greater then 100,000,000, then the reserve amount will increase to 6,000,000 shares; and (iv) in the event Borrower’s issued and outstanding common shares become greater then 125,000,000 then the reserve amount will increase to 10,000,000 shares. Should any of the above events enumerated in clauses (1) through (iv) occur, Borrower will then have three business days to increase the reserve amount with the Transfer Agent or this will constitute an Event of Default.

2.8 Issuance of New Debenture . Upon any partial conversion of this Debenture, a new Debenture containing the same date and provisions of this Debenture shall, at the request of the Holder, be issued by the Borrower to the Holder for the principal balance of this Debenture and interest which shall not have been converted or paid. Subject to the provisions of Article III, the Borrower will pay no costs, fees or any other consideration to the Holder for the production and issuance of a new Debenture.

2.9 Fractional Shares . No fractional shares shall be issued upon the conversion of this Debenture. As to any fraction of a share which Holder would otherwise be entitled to upon such conversion, the Borrower shall round up to the next whole share.

2.10 Par Value; Further Assurances .

(a) The Borrower covenants that during the period that the Principal Amount of the Debenture and any accrued interest and fees thereon remain outstanding, it will ensure that the par value of any Conversion Shares shall not exceed the amount payable therefor upon such exercise immediately prior to such exercise. The Borrower further covenants that it shall take all appropriate actions, including, without limitation, amending its articles or certificate of incorporation and any other voluntary action, such as calling a meeting of shareholders to approve any such amendment, to ensure that the amount payable for any Conversion Shares shall at all times exceed the par value thereof. by at least Four Hundred Percent (400%).

(b) Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its articles or certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Debenture, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Debenture against impairment. Without limiting the generality of the foregoing, the Borrower will (a) not increase the par value of any Conversion Shares above the amount payable therefor upon such exercise immediately prior to such exercise, (b) take all such action as may be necessary or appropriate in order that the Borrower may validly and legally issue fully paid and nonassessable Conversion Shares upon the exercise of this Debenture and (c) use its commercially best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Borrower to perform its obligations under this Debenture.

ARTICLE III

EVENTS OF DEFAULT

The occurrence of any of the following events, while this Debenture is outstanding, set forth in Article III, inclusive, shall be an “Event of Default;” provided that any Event of Default may be cured within a three (3) business day period, except as otherwise provided herein:

3.1 Reserved

3.2 Breach of Covenant . Borrower breaches any covenant or other term or condition of this Debenture in any material respect and such breach, if subject to cure, continues for a period of five (5) business days after the occurrence thereof.

3.3 Breach of Representations and Warranties . Any representation or warranty of Borrower made herein shall be false or misleading in any material respect.

3.4 SEC Filings . At any point while this Debenture is outstanding, the Company is not current with its reporting responsibilities under Section 13 of the Securities Exchange Act of 1934. Furthermore, Borrower fails to timely file, when due, any SEC report, including any required XBRL file along with such report (e.g., Forms 8- K, 10-Q or 10-K, or Schedules 14A, 14C or 14(f)), or, if the filing date of such report is properly extended pursuant to SEC Rule 12b-25, when the date of any such filing extension lapses, or any post-effective amendment to any SEC Registration Statement.

3.5 Stop Trade . An SEC stop trade order or Principal Market trading suspension of the Common Stock shall be in effect for five (5) consecutive days or five (5) days during a period of 10 consecutive trading days, provided that Borrower shall not have been able to cure such trading suspension within 30 days of the notice thereof or list the Common Stock on another Principal Market within 60 days of such notice. The “Principal Market” for the Common Stock shall include the OTC Bulletin Board, NASDAQ Capital Market, NASDAQ Global Market, NYSE Amex, or New York Stock Exchange (whichever of the foregoing is at the time the principal trading exchange or market for the Common Stock), or any securities exchange or other securities market on which the Common Stock is then being listed or traded.

3.6 SEC Reporting Status Matters .

(a) Borrower indicates by check mark on the cover page of an SEC report filing that it has not (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

(b) Borrower indicates by check mark on the cover page of an SEC report filing that it has not submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

(c) Borrower indicates by check mark on the cover page of an SEC report filing that it is a shell company (as defined in Rule 12b-2 of the Exchange Act); or

(d) Borrower files a Form 15 with the SEC to deregister its Common Stock. In such an event, Borrower shall file current reports with attorney opinions on not less than a quarterly basis on www.otcmarkets.com until such time as Borrower re- registers its Common Stock with the SEC.

3.7 Receiver or Trustee . The Borrower or a significant majority owned subsidiary of the Borrowers (a “Subsidiary”), if any, shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business; or such a receiver or trustee shall otherwise be appointed; or shall become insolvent or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any.

3.8 Judgments . Any money judgment, writ or similar final process shall be entered or filed against the Borrower or any of its Subsidiaries or any of their respective property or other assets for more than $100,000 in the aggregate, and shall remain unvacated, unbonded or unstayed for a period of thirty (30) days.

3.9 Bankruptcy . Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings or relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any of its Subsidiaries (Federal law or applicable state law) which has not been dismissed within 60 days after its filing.

3.10 DTC Eligibility . The Borrower shall lose its status as “DTC Eligible” or the Borrower’s shareholders shall lose the ability to deposit (either electronically or by physical certificates, or otherwise) shares into the DTC System through a “deposit chill” or otherwise that is not cured within sixty (60) days.

3.11 Reservation of Shares . The Borrower shall fail timely to reserve shares of Common Stock from its authorized and unissued shares pursuant to Section 2.7

ARTICLE IV

DEFAULT RELATED PROVISIONS AND OTHER PRIVILEGES

4.1 Default Interest Rate . Following the occurrence and during the continuance of an Event of Default, interest on this Debenture shall automatically be increased to a rate of 18% per annum, as of the date Effective Date of this Debenture, which interest shall be payable in Common Stock.

4.2 Default Penalty Payment. Following the occurrence and during the continuance of an Event of Default, the Borrower agrees to pay a Penalty Payment to the Holder in the amount equal to One Thousand U.S. Dollars ($1,000) per business day commencing on the Third (3rd) day after the Event of Default occurs. The Borrower shall pay any fees incurred under this Section in immediately available funds upon demand and such fees shall also be eligible to be converted into Conversion Shares as set forth in this Article II.

4.3 Conversion Privileges . The conversion privileges set forth in Article II shall remain in full force and effect immediately from the date hereof and until this Debenture is paid in full.

4.4 Cumulative Remedies . The remedies under this Debenture shall be cumulative.

4.5 Immediately Due and Payable . Upon the occurrence of an Event of Default, this Debenture shall become immediately due and payable at the option of Holder in Common Stock upon written notice of acceleration delivered to Borrower; provided that such notice shall not be required for an Event of Default under Section 3.9 and, in such event, this Debenture shall become automatically due and payable in Common Stock without the need for Holder to give notice.

ARTICLE V

MISCELLANEOUS

5.1 Failure or Indulgence Not Waiver . No failure or delay on the part of the Holder hereof in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.

5.2 Notices . All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by FedEx or other reputable express courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, e-mail or facsimile, addressed as set forth below (v) sent via Email whereby a return Email confirming receipt has been delivered. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the next business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

If to the Borrower, to:

Brazil Minerals, Inc.

324 South Beverly Drive Suite 118

Beverly Hills, CA 90212

e-mail: mf@ brazil-minerals.com If to the

Holder:

Group 10 Holdings LLC Attn:
Adam Wasserman 11 Island
Ave. #1108 Miami Beach, FL
33139 EIN # 32-0409845

e-mail:adam@group10llc.com

No change in any of such addresses shall be effective insofar as notices under this Section 5.2 are concerned unless such changed address is located in the United States of America and notice of such change shall have been given to such other party hereto as provided in this Section 5.2.

5.3 Amendment Provision . Any term of this Debenture may be amended only with the written consent of the Holder and the Borrower. .The term “Debenture” and all reference thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented, and any successor instrument as it may be amended or supplemented.

5.4 Assignability . This Debenture shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of the Holder and its successors and assigns, and may not be assigned by the Borrower without the prior written consent of the Holder, which consent may not be unreasonably withheld.

5.5 Prevailing Party and Costs . In the event any attorney is employed by any party with regard to any legal or equitable action, arbitration or other proceeding brought by such party for the enforcement of this Debenture or because of an alleged dispute, breach, default or misrepresentation in connection with any of the provisions of this Debenture, the prevailing party in such proceeding will be entitled to recover from the other party reasonable attorneys' fees and other costs and expenses incurred, in addition to any other relief to which the prevailing party may be entitled.

5.6 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial . This Debenture shall be governed by, and construed in accordance with, the internal laws of the State of Nevada, without regard to principles of conflicts of law. HOLDER AND BORROWER WAIVE ANY RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS DEBENTURE OR ANY TRANSACTION CONTEMPLATED HEREIN, INCLUDING CLAIMS BASED ON CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER COMMON LAW OR STATUTORY BASES. Each party hereby submits to the exclusive jurisdiction of the state and federal courts located in Nevada. If the jury waiver set forth in this Section is not enforceable, then any dispute, controversy or claim arising out of or relating to this Debenture or any of the transactions contemplated herein will be finally settled by binding arbitration in Nevada, in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association by one arbitrator appointed in accordance with said rules. The arbitrator shall apply Nevada law to the resolution of any dispute, without reference to rules of conflicts of law or rules of statutory arbitration. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Notwithstanding the foregoing, the parties may apply to any court of competent jurisdiction for preliminary or interim equitable relief, or to compel arbitration in accordance with this paragraph. The expenses of the arbitration, including the arbitrator’s fees and expert witness fees, incurred by the parties to the arbitration, may be awarded to the prevailing party, in the discretion of the arbitrator, or may be apportioned between the parties in any manner deemed appropriate by the arbitrator. Unless and until the arbitrator decides that one party is to pay for all (or a share) of such expenses, both parties shall share equally in the payment of the arbitrator’s fees as and when billed by the arbitrator.

5.7 Maximum Payments . Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by Borrower to the Holder and thus refunded to the Borrower.

5.8 Construction . Borrower acknowledges that its legal counsel participated in the preparation of this Debenture and, therefore, stipulates that the rule of construction that ambiguities are to be resolved against the drafting party shall not be applied in the interpretation of this Debenture to favor any party against the other.

5.9 Absolute Obligation . Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligation of the Borrower, which is absolute and unconditional, to pay the principal of, interest and liquidated damages (if any) on, this Debenture at the time, place, and rate, and in the coin or currency, herein prescribed. This Debenture is a direct debt obligation of Borrower.

5.10 Lost or Mutilated Debenture . If this Debenture shall be mutilated, lost, stolen or destroyed, Borrower shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Debenture, or in lieu of or in substitution for a lost, stolen or destroyed Debenture, a new Debenture for the principal amount of this Debenture so mutilated, lost, stolen or destroyed.

5.11 Force Majeure. Any delay or failure in the performance by either Party hereunder shall be excused if and to the extent caused by the occurrence of a Force Majeure. For purposes of this Agreement, Force Majeure shall mean a cause or event that is not reasonably foreseeable or otherwise caused by or under the control of the Party claiming Force Majeure, including acts of God, fires, floods, explosions, riots, wars, hurricane, sabotage terrorism, vandalism. accident, restraint of government, governmental acts, injunctions, or labor strikes, and other like events that are beyond the reasonable anticipation and control of the Party affected thereby, despite such Party's reasonable efforts to prevent, avoid, delay, or mitigate the effect of such acts, events or occurrences, and which events or the effects thereof are not attributable to a Party's failure to perform its obligations under this Agreement.

5.12 Opinion of Counsel . An opinion of Bauman & Associates, Nevada counsel, shall be deemed reasonably acceptable to Borrower.

[signature page follows]

IN WITNESS WHEREOF, Borrower has caused this Convertible Debenture to be signed in its name effective as of the 28th day of March 2014 (the “Effective Date”).

BORROWER:
Brazil Minerals, Inc.

By:	/s/ Marc Fogassa

Name: Marc Fogassa

Title: CEO

HOLDER:

Group 10 Holdings, LLC

By:	/s/ Adam Wasserman

Name: Adam Wasserman

Title: Managing Member

EXHIBIT A NOTICE
OF CONVERSION

(To be executed by the Holder in order to convert all or part of the amounts owed under the Convertible Debenture into Common Stock)

[NAME OF HOLDER] [ADDRESS]

The undersigned hereby converts $ due under the Convertible Debenture issued by , Inc. (“Borrower”) dated as of , 2014 by delivery of shares of Common Stock of Borrower on and subject to the conditions set forth in Article II of the Convertible Debenture.

1.	Date of Conversion


2.	Shares To Be Delivered:


	[NAME OF BORROWER]

By:

Name:

Title:

EXHIBIT 10.4

CONTRIBUTION AGREEMENT

THIS AGREEMENT is made as of this 18 ^th day of December, 2012, by and among BRAZIL MINING, INC., a Delaware corporation (“BMI”), and FLUX TECHNOLOGIES, CORP., a Nevada corporation (“Flux” and collectively with BMI, the “Parties”).

WHEREAS, as of the date of this Agreement, BMI is (a) the beneficial owner of the mineral rights described on Exhibit A attached hereto (the “Mineral Rights”) and (b) a party to an option agreement pursuant to which Flux has been granted an option to acquire a 55% share of the monthly diamond production from a certain property located in Brazil (the “Diamond Rights”); and.

WHEREAS, the Parties believe that it is desirable and in their mutual best interests that, upon the terms and conditions set forth herein, BMI contribute to Flux by way of assignment all of the Mineral Rights and enter into an Option Agreement with Flux in the form of Exhibit B attached hereto (the “Option Agreement”), pursuant to which BMI shall grant to Flux an option to acquire 20% of the Diamond Rights (equivalent to an 11.0% share of the monthly diamond production) upon the terms and conditions set forth therein, in exchange for a number of shares of Common Stock, par value $.001 per share, of Flux (“Common Stock”) such that upon issuance of such shares BMI shall own 51% of the outstanding shares of Common Stock after giving effect to the consummation of a private placement of shares of Common Stock to certain investors (the “Private Placement”) and the cancellation of 3,000,000 shares of Common Stock held by Iryna Antaniuk pursuant to an Acquisition Agreement, dated the date hereof among Flux, BMI and Antaniuk (the “Acquisition Agreement”).

NOW, THEREFORE, in consideration of the foregoing and the following mutual covenants and agreements the “Parties” agree as follows:

ARTICLE I

THE TRANSACTION

1.1 The Contribution . On the Closing Date, and at the Closing Time, as defined herein, subject in all instances to each of the terms, conditions, provisions and limitations contained in this Agreement, BMI shall (a) contribute to Flux by way of an Assignment in the form of Exhibit C attached hereto, and enter into the Option Agreement with Flux in exchange for the number of shares of Common Stock equal to 51% of the outstanding shares of Common Stock giving effect to the consummation of the Private Placement and the cancellation of 3,000,000 shares of Common Stock held by Iryna Antaniuk pursuant to the Acquisition Agreement. The events set forth in this Section 1.1 shall be referred to herein as the “Contribution.”

1.2 Closing . The Closing hereunder shall take place at the offices of Ofsink, PLLC, 900 Third Avenue, 5 ^th Floor, New York, New York 10022 or at such other place as the Parties may agree upon, no later than December 19, 2012, on a date to be set by the Parties. The date and time on which the closing occurs shall be the Closing Date and Closing Time, respectively.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF FLUX

Flux represents and warrants to BMI, as follows:

2.1 Due Authorization . This Agreement has been duly and validly executed and delivered by Flux and constitutes a valid and binding Agreement of Flux enforceable in accordance with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to or affecting creditors generally. Flux has all requisite entity power and authority to enter into and carry out this Agreement and to accept the Contribution.

2.2 Absence of Breach; No Consents . The execution, delivery, and performance of this Agreement, and the performance by Flux of its obligations hereunder, do not, nor will with the giving of notice or passage of time or both:

2.2.1 conflict with or result in a breach of any of the provisions of the Articles of Incorporation of Flux, as amended to date or the Nevada Revised Statutes;

2.2.2 contravene any law, ordinance, rule, or regulation of any State or Commonwealth or political subdivision of either or of the United States, or contravene any order, writ, judgment, injunction, decree, determination, or award of any court or other authority having jurisdiction, or cause the suspension or revocation of any authorization, consent, approval, or license, presently in effect, which affects or binds, Flux or any of its material properties;

2.2.3 conflict with, result in termination of, contravene, constitute a default under, give to others any rights of termination or cancellation of, or accelerate the performance required by or maturity of, result in the creation of any lien or loss of any rights, or result in a material breach of, or default under, any material indenture, loan, credit agreement, mortgage, deed of trust, note, bond, franchise, lease, contract or any other agreement or instrument binding upon Flux, or to which Flux is subject; or

2.4.4 require the authorization, consent, approval, or license of, or the submission of any notice, report or other filing with, any third party, including any governmental agency.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF BMI

BMI represents and warrants to Flux, as follows:

3.1 Due Authorization . This Agreement has been duly and validly executed and delivered by BMI and constitutes a valid and binding Agreement enforceable in accordance with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to or affecting creditors generally.

3.2 Absence of Breach; No Consents . The execution, delivery, and performance of this Agreement, and the performance by BMI of its obligations hereunder, does not nor will with the giving of notice or passage of time or both:

3.2.1 contravene any law, ordinance, rule, or regulation of any State or Commonwealth or political subdivision of either or of the United States, or contravene any order, writ, judgment, injunction, decree, determination, or award of any court or other authority having jurisdiction, or cause the suspension or revocation of any authorization, consent, approval, or license, presently in effect, which affects or binds, BMI;

3.2.2 conflict with, result in termination of, contravene, constitute a default under, give to others any rights of termination or cancellation of, or accelerate the performance required by or maturity of, result in the creation of any lien or loss of any rights, or result in a material breach of or default under any material indenture, loan, credit agreement, mortgage, deed of trust, note, bond, franchise, lease, contract or any other agreement or instrument binding upon BMI; or

3.2.3 require the authorization, consent, approval, or license of, or the submission of any notice, report or other filing with, any third party, including any governmental agency.

3.3 Investment Representations .

3.3.1 Acquisition for Own Account . The shares of Common Stock to be received by BMI hereunder (the “Flux Shares”), will be acquired for investment for BMI’s own account, not as a nominee or agent, and not with a view to the public resale or distribution thereof, and BMI has no present intention of selling, granting any participation in, or otherwise distributing the same.

3.3.2 Restricted Securities . BMI understands that the Flux Shares being issued to it are characterized as “restricted securities” under the Securities Act of 1933, as amended (the “1933 Act”), inasmuch as they is being acquired from Flux in a transaction not involving a public offering and that under the 1933 Act and applicable regulations thereunder such securities may be resold without registration under the 1933 Act only in certain limited circumstances. In this connection, BMI represents that BMI is familiar with Rule 144 promulgated under the 1933 Act, and understand the resale limitations imposed thereby and by the 1933 Act.

ARTICLE IV

CONDITIONS TO CLOSING

4.1 Conditions to Obligations of the Parties . The obligations of the Parties to effect the Contribution shall be subject to the fulfillment at or prior to the Closing of the following conditions, unless waived by the appropriate Party:

4.1.1 There shall not be in effect a preliminary or permanent injunction or other order by any federal or state court which prohibits the consummation of the Contribution;

4.1.2 Each of the Parties to this Agreement shall have performed in all material respects each of its agreements and obligations contained in this Agreement and required to be performed on or prior to the Closing and shall have complied with all material requirements, rules, and regulations of all regulatory authorities having jurisdiction relating to the Contribution;

4.1.3 The representations and warranties of each of the other Parties to this Agreement set forth in this Agreement shall be true in all material respects as of the date of this Agreement and as if made as of such time;

4.1.4 Flux shall have received, on and as of the Closing Date, such closing documents and instruments as Flux shall reasonably request, in each case reasonably satisfactory in form and substance to Flux and its counsel; and

4.1.5 BMI shall have received, free and clear of all liens, pledges or encumbrances, a certificate representing all of the Flux Shares to which it shall be entitled to receive.

ARTICLE V

GENERAL PROVISIONS

5.1 Interpretation . The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

5.2 Miscellaneous . This Agreement:

5.2.1 and the other agreements and instruments executed and delivered in connection herewith constitute the entire agreement and supersede all other prior agreements and understandings, both written and oral, between the Parties, with respect to the subject matter hereof, except as specifically provided otherwise or referred to herein, so that no such external or separate agreements relating to the subject matter of this Agreement shall have any effect or be binding, unless the same is referred to specifically in this Agreement or is executed by the Parties after the date hereof;

5.2.2 is not intended to confer upon any other person, other than to the Parties hereto and their respective heirs, successors and permitted assigns, any rights or remedies hereunder;

5.2.3 shall not be assigned by operation of law or otherwise;

5.2.4 shall be governed in all respects, including validity, interpretation and effect, by the internal laws of the State of New York, without regard to the principles of conflict of laws thereof, provided, the corporate laws of the State of Nevada shall govern all issues concerning the relative rights of Flux and its shareholders; and

5.2.5 shall be binding upon and shall inure to the benefit of the Parties hereto and their respective successors, assigns, heirs and legal representatives;

5.3 Counterparts . This Agreement may be executed in two or more counterparts which together shall constitute a single agreement.

5.4 Severability . If any provision, including any phrase, sentence, clause, section or subsection of this Agreement is invalid, inoperative or unenforceable for any reason, such provision shall be valid and enforceable to the fullest extent permitted by law and such circumstances shall not have the effect of rendering such provision in question invalid, inoperative or unenforceable in any other case or circumstance, or of rendering any other provision herein contained invalid, inoperative or unenforceable to any extent whatsoever.

IN WITNESS WHEREOF, the undersigned parties have caused this Agreement to be signed on the date first written above by their respective officers thereunto duly authorized.

FLUX TECHNOLOGIES, CORP.

By:	/s/ Marc Fogassa
	Name: Marc Fogassa
	Title: Chief Executive Officer

BRAZIL MINING, INC.

By:	/s/ Marc Fogassa
	Name: Marc Fogassa
	Title: Chief Executive Officer

EXHIBIT A

DESCRIPTION OF MINERAL RIGHTS

Brazilian Department for Mineral Production (“DNPM”) Exploration Permit number 11638 published in the Federal Official Gazette of October 14th, 2009, and pertaining to DNPM Process number 880.239/2009.

The primary mineral indicated in the DNPM Process number 880.239/2009 is gold. These mineral rights are for an area of size 9,999.11 hectares, in the municipality of Borba, state of Amazonas, in Brazil, in the shape of a square, with the following geographical coordinates:

latitude -06°30'00''657 to -06°35'26''186

longitude -59°27'52''267 to -59°33'17''738

The unique identifier for this area in the DNPM database is 9DDF897B-8D3A-4F88-AAC4-42D9FCE0939A.

EXHIBIT B

FORM OF OPTION AGREEMENT

This Option Agreement (“Agreement”), dated as of December __, 2012 by and among Brazil Mining, Inc., a Delaware corporation (“BMI” or the “Optionor”), and Flux Technologies, Corp., a Nevada corporation (“Flux” or the “Optionee”).

As used in this Agreement, the parties hereto are each referred to individually as a “Party” and collectively as “Parties.”

WHEREAS,

1.	BMI is a party to an agreement pursuant to which BMI has been granted an option to acquire a 55% share (the “Majority Stake”) of the equity of a Brazilian entity (“Target 1”) which will generate monthly diamond production from a certain mining property located in Brazil.

2.	BMI represents that it can grant to Flux 20% of BMI’s share of the monthly diamond production of Target 1 (the “20% Interest”), payable in cash or in kind, upon the terms and conditions set forth herein.

Flux is herewith advancing to BMI $800,000 (the “Advance”) to be held by BMI until BMI exercises its option to acquire the Majority Stake in Target 1. The Advance shall be used for the acquisition cost as well as legal and regulatory filing costs and initial operating costs directly related to Target 1.

NOW, THEREFORE, the Parties to this Agreement hereby agree as follows:

1.	Option to Purchase 20% Interest.

Section 1.1

Option to Purchase

BMI hereby grants to Flux an irrevocable and exclusive option (“ Purchase Option ”) to purchase the 20% Interest on the terms specified in this Agreement. During the term of the Purchase Option, BMI shall not grant or transfer to any person any equity interest in Target 1 or any interest in the 20% Interest. The Purchase Option shall become exercisable on the date BMI gives written notice to Flux that BMI has exercised its option to acquire the Majority Stake in Target 1), which notice shall include all documentation with respect to the exercise of the option. The term of the Purchase Option shall expire 90 days after the acquisition of the Majority Stake in Target 1 by BMI. Upon exercise of the Purchase Option, so long as Flux holds the 20% Interest, BMI shall on a monthly basis in perpetuity, pay over to Flux 20% of the monthly diamond production actually received by BMI from Target 1, and such payment shall be made in cash or in kind. If Flux does not exercise the Purchase Option within 90 days after the acquisition of the Majority Stake in Target 1 by BMI, then BMI shall promptly return to Flux the Advance.

Section 1.2

Purchase Price

The exercise price for the Purchase Option shall be $800,000 (the “ Purchase Price ”). The Purchase Price shall be paid by Flux giving written notice to BMI that the Advance shall be applied to the Purchase Price. A sufficient portion of the Purchase Price shall be used by BMI to exercise BMI’s option to acquire the Majority Stake in Target 1 and to perform BMI’s other obligations in connection with its acquisition of the Majority Stake and initial operations of Target 1. If at any time Flux determines not to exercise the Purchase Option, then by written notice to BMI, Flux may require BMI to return to Flux without interest, the Advance.

Section 1.3

Transaction Announcement

After the exercise of the Purchase Option by Flux and completion of the acquisition by BMI of the Majority Stake, and not later than January 25 ^th , 2013, Flux shall issue a press release in which it describes the diamond producing properties of Target 1 with details such as location, history, and other characteristics.

Section 1.4

Redemption of Flux’s 20% Interest

(a) At such time, if any, that Flux has received aggregate payments (in cash or in kind) of an amount equal to the sum of $800,000 plus simple interest thereon at the rate of 10% per annum from the date the Purchase Option is exercised, BMI shall have the right (but not the obligation), to be exercised upon written notice to Flux, to repurchase all or a portion of the 20% Interest, for a cash payment equal to the Redemption Value (as hereinafter defined) upon the occurrence of any of the following events (each a “Triggering Event”): (i) if any of BMI’s securities are listed or qualified for trading on a securities exchange in any jurisdiction, (ii) if BMI receives an offer from a bona fide purchaser to sell to such purchaser all or substantially all of BMI’s equity interest in Target 1 (including the 20% Interest), which offer contains a written appraisal of the value of the 20% Interest issued by Roscoe Postle Associates or Coffey Mining, both bona fide independent mining consultancies, and BMI accepts such offer, (iii) if BMI receives an offer from a bona fide purchaser to sell to such purchaser all or substantially all of the assets of BMI (including all or substantially all of its equity interest in Target 1) and BMI accepts such offer, (iv) BMI or the holders of a majority of the outstanding shares of common stock of BMI receive an offer from a bona fide purchaser to sell to such purchaser a majority of the outstanding shares of common stock of BMI and BMI or such holders accept such offer or (v) BMI makes a Qualified Offering (as hereinafter defined).

(b) For purposes of this Agreement, the term “Redemption Value” shall mean the then current value of the 20% Interest or portion thereof being redeemed as shall be determined as follows: (i) if the Triggering Event is a Qualified Offering, then the Redemption Value shall be determined by the sole underwriter or lead underwriter for such Qualified Offering or (ii) if the Triggering Event is any of the other events specified in clauses (i), (ii), (iii) or (iv) of Section 1.4, then the Redemption Value shall be determined by Roscoe Postle Associates or Coffey Mining,; provided, however , if neither of these firms agree to be retained as an appraiser, then the independent directors of the Parties shall jointly select another appraisal firm to make such determination. The cost of any appraisal hereunder shall be borne equally by the Parties.

(c) For purposes of this Agreement, the term “Qualified Offering” shall mean the issuance and sale of at least $5,000,000 of securities of either BMI or Flux in an underwritten public offering or in an underwritten secondary offering.

2.	Representations and Warranties

As of the date hereof, each Party hereby represents and warrants to the other Party as follows:

(a)

The Party has all requisite power and legal capacity to enter into and deliver this Agreement and to perform its obligations under this Agreement. This Agreement constitutes, a legal, valid and binding obligation of the Party enforceable against it in accordance with its terms;

(b)

The execution, delivery of this Agreement and the performance by the Party, of its obligations hereunder do not: (i) cause any violation of applicable laws; (ii) result in any breach of any Agreement or instruments to which the Party is a party or has binding obligations thereunder, or cause the Party to breach any contract or instruments to which it is a party or has binding obligations thereunder; (iii) cause such Party to violate any relevant authorization or consent or approval held by it and/or any continuing valid condition; or (iv) cause any consent or approval to be suspended, removed, or modified, such as by adding additional conditions to the effectiveness of such consent or approval;

(c)

No litigation, arbitration or administrative or bankruptcy procedure relating to any assets of the Party is underway or to be decided or, to the knowledge of the Party, threatened.

Prior to the expiration of the period during which the option hereunder may be exercised, neither Party shall take any action or intentionally refrain from taking any action would have the effect of causing any of the foregoing representations to not be true as of the date the 20% Interest is transferred to Flux upon the Flux’s exercise of the Purchase Option.

3.	Undertakings

(a)

Without the prior written consent by Flux, BMI shall not sell, transfer, mortgage, dispose, pledge, encumbrance, grant any option, rights, liens or other interests with respect to all or any portion of its Majority Stake in Target 1 or to approve any other security interest therein;

(b)

Each Party shall immediately notify the other of the occurrence or the probable occurrence of the litigation, arbitration, administrative or bankruptcy procedure related to the Party or any of its assets;

(c)

Each Party shall perform all of its respective obligations under this Agreement and not to take any action that would affect the validity or enforceability of this Agreement.

4.	Applicable Law and Dispute Resolution

This Agreement is to be construed in accordance with and governed by the internal laws of the State of New York without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of New York to the rights and duties of the parties.

Notices

Except as may be otherwise provided herein, all notices, requests, waivers and other communications made pursuant to this Agreement shall be in writing and shall be conclusively deemed to have been duly given (a) when hand delivered to the other party; (b) when a printed confirmation sheet verifying successful transmission of the facsimile is generated by the sender’s machine, when sent by facsimile to the number set forth below; (c) five (5) business days after deposit in the mail with first class or certified mail receipt requested postage prepaid and addressed to the other party at the address set forth below; or (d) two (2) business days after deposit with internationally recognized overnight delivery service, postage prepaid, addressed to the parties as set forth below with next business day delivery guaranteed, provided that the sending party receives a confirmation of delivery from the delivery service provider. A party may change or supplement the addresses given below, or designate additional addresses, for purposes of this Section 5 by giving the other party written notice of the new address in the manner set forth above.

To:	Flux Technologies, Corp.

Attention:	Mr. Marc Fogassa
Address:	324 South Beverly Drive, Suite 118
	Beverly Hills, California 90212

To:	Brazil Mining, Inc.

Attention:	Mr. Marc Fogassa
Address:	324 South Beverly Drive, Suite 118
	Beverly Hills, California 90212

6.	Miscellaneous

Section 6.1

Amendments and Waivers

This Agreement can only be amended by a writing signed by each of the Parties hereto. The observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the party making the waiver.

Section 6.2

Severability

If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

Section 6.3

Further Assurances

The Parties shall from time to time and at all times hereafter make, do, execute, or cause or procure to be made, done and executed such further acts, deeds, conveyances, consents and assurances without further consideration, which may reasonably be required to effect the transactions contemplated by this Agreement.

Section 6.4

Entire Agreement

This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein.

IN WITNESS WHEREOF, the parties hereof have caused the Agreement to be executed by their duly authorized representatives as of the date first written above.

	COMPANY:

	BRAZIL MINING, INC.

	By:
	Name: Marc Fogassa
	Title: Chief Executive Officer

	FLUX TECHNOLOGIES, CORP.

	By:
	Name: Marc Fogassa
	Title: Chief Executive Officer

EXHIBIT C

FORM OF ASSIGNMENT

This ASSIGNMENT, dated as of December ___, 2012 (“ Assignment ”), by BRAZIL MINING, INC., a Delaware corporation (“ Assignor ”), with an office at 324 South Beverly Drive, Suite 118, Beverly Hills, California 90212 in favor of FLUX TECHNOLOGIES, CORP., a Nevada corporation (“ Assignee ”), with an office at 324 South Beverly Drive, Suite 118, Beverly Hills, California 90212.

WITNESSETH

WHEREAS , Assignor is the owner of the mineral rights described in Exhibit A attached hereto (the “Mineral Rights”); and

WHEREAS , Assignor has agreed to sell to Assignee and Assignee has agreed to purchase from Assignor the Mineral Rights.

NOW , THEREFORE , for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor does hereby assign, transfer, set over, and deliver to Assignee (ii) all of Assignor's right, title, and interest in and to the Mineral Rights and (ii) all rights corresponding thereto throughout the world.

Assignor further agrees, without further consideration, to cause to be performed such lawful acts and to be executed such further assignments and other lawful documents as Assignee may reasonably request to effectuate fully this Assignment and to permit Assignee to be duly recorded as the registered owner of the Mineral Rights and of the rights hereby conveyed.

Assignee represents and warrants to Assignor as follows:

(1) Assignee is a corporation duly organized, validly existing and in good standing under the laws of the state of Nevada.

(2) Assignee has full corporate power and authority to execute and deliver this Assignment and to consummate the transactions contemplated hereby. This Assignment has been duly and validly executed and delivered by Assignee and, assuming due and valid authorization, execution and delivery hereof by Assignor, is a valid and binding obligation of Assignee, enforceable against Assignee in accordance with its terms. Neither the execution and delivery of this Assignment nor the consummation by Assignee of any of the transactions contemplated hereby will conflict with, or require any consent under, any contract to which Assignee is a party or any judgment, order or decree of any court or other governmental entity to which Assignee or its any of its assets is subject or bound.

(3) Assignee has full corporate power and authority to carry on its business as it is now being conducted and to own the properties and assets it now owns, including the Mineral Rights. Assignee is duly qualified or licensed to do business as a foreign corporation in good standing in every jurisdiction in which such qualification is required. Assignee has heretofore delivered to Assignor complete and correct copies of Assignee’s Articles of Organization as presently in effect.

Assignor hereby makes the following representations and warranties to the Assignee: (i) Assignor has the full, absolute and entire power and legal right to execute, deliver and perform this Assignment and (ii) the Mineral Rights are owned of record and beneficially by Assignor, to its best knowledge free and clear of any contract, commitment, demand, lien, charge, security interest or encumbrance whatsoever. Assignor hereby agrees to defend, indemnify, defend and hold harmless Assignee from and against and in respect of: (i) any and all losses or Damages resulting from, relating or incident to, or arising out of, or otherwise in connection with any third party claim, suit, action or proceeding asserting (i) any misrepresentation or breach of representation, warranty or acknowledgment made or contained in this Agreement; and (ii) any and all actions, suits, proceedings, claims, demands, judgments, costs and expenses (including reasonable legal fees and expenses) incident to the foregoing, whether between the parties or between Assignee and any third party or otherwise. Assignee (the “ Indemnified Party ”) shall promptly notify Assignor (the “ Indemnifying Party ”) in writing of any claim for indemnification, provided, that failure to give such notice shall not relieve the Indemnifying Party of any liability hereunder (except to the extent the Indemnifying Party has suffered actual material prejudice by such failure). The Indemnifying Party shall tender sole defense and control of such claim to the Indemnified Party. The Indemnifying Party shall at its expense, if requested by the Indemnified Party, give reasonable assistance to the Indemnified Party in defense of any claim. As used herein, “ Damages ” means all losses, awards, causes of action, claims, obligations, demands, assessments, fines and penalties (civil or criminal), liabilities, expenses and costs (including litigation costs and reasonable attorneys’ fees), bodily or other personal injuries, damage to tangible Mineral Rights, and any other damages, of any kind or nature actually suffered by an entity.

IN WITNESS WHEREOF , the undersigned has caused this Assignment to be executed by the signature of its duly authorized officer as of the date above first written.

	ASSIGNOR :
	BRAZIL MINING, INC.

	By:
		Marc Fogassa, Chief Executive Officer

	ASSIGNEE:
	FLUX TECHNOLOGIES, CORP.

	By:
		Marc Fogassa, Chief Executive Officer

Exhibit 10.7

Securities Purchase Agreement

This Securities Purchase Agreement , dated as of February 21, 2014 (this “ Agreement ”), is entered into by and between Brazil Minerals, Inc. , a Nevada corporation (the “ Company ”), and St George Investments LLC , an Illinois limited liability company, its successors and/or assigns (“ Buyer ”).

RECITALS:

A. The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration for offers and sales to accredited investors afforded, inter alia, under Regulation D (“ Regulation D ”) as promulgated by the United States Securities and Exchange Commission (the “ SEC ”) under the Securities Act of 1933, as amended (the “ 1933 Act ”), and/or Section 4(2) of the 1933 Act.

B. The Buyer wishes to acquire from the Company, and the Company desires to issue and sell to the Buyer, the Note (as defined below), which Note will be convertible into shares of common stock of the Company, par value $0.001 per share (the “ Common Stock ”), upon the terms and subject to the conditions of the Note, this Agreement and the other Transaction Documents (as defined below).

AGREEMENT:

NOW THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. CERTAIN DEFINITIONS . As used herein, each of the following terms has the meaning set forth below, unless the context otherwise requires:

“ Affiliate ” means, with respect to a specific Person referred to in the relevant provision, another Person who or which controls or is controlled by or is under common control with such specified Person.

“ Buyer’s Counsel ” means Hansen Black Anderson Ashcraft PLLC.

“ Buyer Control Person ” means each manager, executive officer, promoter, and such other Persons as may be deemed in control of the Buyer pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934 Act (as defined below).

“ Certificate of Incorporation ” means the certificate of incorporation, articles of incorporation or other charter document (howsoever denominated) of the Company, as amended to date.

“ Closing Date ” means the date of the closing of the purchase and sale of the Securities.

“ Company Control Person ” means each director, executive officer, promoter, and such other Persons as may be deemed in control of the Company pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934 Act.

“ Company Counsel ” means the Company’s securities or corporate counsel from time to time.

“ Company’s SEC Documents ” means the Company’s filings on the SEC’s EDGAR system.

“ Conversion Date ” means the date a Holder submits a Conversion Notice, as provided in the Note.

“ Conversion Notice ” has the meaning ascribed to it in the Note.

“ Conversion Price ” has the meaning ascribed to it in the Note.

“ Conversion Shares ” has the meaning ascribed to it in the Note.

“ Delivery Date ” means the date that Conversion Shares are required to be delivered to Holder under Section 3 or Section 8 of the Note, as applicable.

“ DTC ” means the Depository Trust Company.

“ DTC/FAST Program ” means DTC’s Fast Automated Securities Transfer Program.

“ DWAC ” means Deposit Withdrawal at Custodian as defined by DTC.

“ DWAC Eligible Conditions ” means that (i) the Common Stock is eligible at DTC for full services pursuant to DTC’s Operational Arrangements, including, without limitation, transfer through DTC’s DWAC system, (ii) the Company has been approved (without revocation) by the DTC’s underwriting department, and (iii) the Transfer Agent is approved as an agent in the DTC/FAST Program, (iv) after the date which is six months after the date of the Note, the Conversion Shares are otherwise eligible for delivery via DWAC; and (v) the Transfer Agent does not have a policy prohibiting or limiting delivery of the Conversion Shares via DWAC.

“ Holder ” means the Person holding the relevant Securities at the relevant time.

“ Last Audited Date ” means December 31, 2012.

“ Market Price ” has the meaning ascribed to it in the Note.

“ Material Adverse Effect ” means an event or combination of events, which individually or in the aggregate, would reasonably be expected to (a) adversely affect the legality, validity or enforceability of the Note or any of the other Transaction Documents, (b) have or result in a material adverse effect on the results of operations, assets, or financial condition of the Company and its Subsidiaries, taken as a whole, or (c) adversely impair the Company’s ability to perform fully on a timely basis its material obligations under any of the Transaction Documents or the transactions contemplated thereby.

“ Maturity Date ” has the meaning ascribed to it in the Note.

“ Outstanding Balance ” has the meaning ascribed to it in the Note.

“ Permitted Liens ” means (a) any Lien (as defined herein) for taxes not yet due or delinquent or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (b) any statutory Lien arising in the ordinary course of business by operation of law with respect to a liability that is not yet due or delinquent, and (c) any Lien created by operation of law, such as materialmen’s liens, mechanics’ liens and other similar liens, arising in the ordinary course of business with respect to a liability that is not yet due or delinquent or that are being contested in good faith by appropriate proceedings.

“ Person ” means any living person or any entity, such as, but not necessarily limited to, a corporation, partnership or trust.

“ Principal Trading Market ” means (a) the NYSE Amex, (b) the New York Stock Exchange, (c) the Nasdaq Global Market, (d) the Nasdaq Capital Market, (e) the OTC Bulletin Board, (f) the OTCQX or OTCQB, or (g) such other market on which the Common Stock is principally traded at the relevant time, but shall not include OTC Pink (a.k.a., “pink sheets”).

“ Purchase Price ” is defined in Section 2.1(a) hereof.

“ Registration Statement ” means a registration statement of the Company under the 1933 Act covering securities of the Company (including Common Stock) on Form S-3, if the Company is then eligible to file using such form, and if not eligible, on Form S-1 or other appropriate form.

“ Rule 144 ” means (a) Rule 144 promulgated under the 1933 Act or (b) any other similar rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration under the 1933 Act.

“ Securities ” means the Note and the Shares.

“ Shares ” means the shares of Common Stock representing any or all of the Conversion Shares.

“ State of Incorporation ” means Nevada.

“ Subsidiary ” or “ Subsidiaries ” means, as of the relevant date, any entity or entities of which 50% or more of the voting securities are owned by the Company or any Subsidiary of the Company (whether or not included in the Company’s SEC Documents) whether now existing or hereafter acquired or created.

“ Trading Day ” means any day during which the Principal Trading Market shall be open for business.

“ Transaction Documents ” means this Agreement, the Note, the Transfer Agent Letter (defined below), and all other certificates (including, without limitation, the Secretary’s Certificate (defined below), documents, agreements, resolutions and instruments delivered to any party under or in connection with this Agreement, as the same may be amended from time to time.

“ Transfer Agent ” means, at any time, the transfer agent for the Common Stock.

“ Wire Instructions ” means the wire instructions for the Purchase Price, as provided by the Company, set forth on ANNEX I .

2. AGREEMENT TO PURCHASE; PURCHASE PRICE .

2.1. Purchase .

(a) Subject to the terms and conditions of this Agreement and the other Transaction Documents, the undersigned Buyer hereby agrees to purchase from the Company a Convertible Promissory Note in the principal amount of $222,500.00 substantially in the form attached hereto as ANNEX II (the “ Note ”). In consideration thereof, the Buyer shall pay $200,000.00 (the “ Purchase Price ”) to the Company. The Purchase Price shall be paid to the Company at Closing (defined below) in accordance with the Wire Instructions.

(b) In consideration for the Purchase Price, the Company shall, at the Closing (defined below):

(i) execute and deliver to the Transfer Agent, and the Transfer Agent shall execute to indicate its acceptance thereof, the irrevocable letter of instructions to transfer agent substantially in the form attached hereto as ANNEX III (the “ Transfer Agent Letter ”);

(ii) cause to be executed and delivered to the Buyer a fully executed secretary’s certificate and written consent of directors evidencing the Company’s approval of the Transaction Documents substantially in the forms attached hereto as ANNEX IV (together, the “ Secretary’s Certificate ”); and

(iii) cause to be executed and delivered to the Buyer a fully executed share issuance resolution to be delivered to the Transfer Agent substantially in the form attached hereto as ANNEX V (the “ Share Issuance Resolution ”).

2.2. Form of Payment; Delivery of Securities . The purchase and sale of the Securities shall take place at a closing (the “ Closing ”) to be held at the offices of the Buyer, or such other place as agreed to by the parties on the Closing Date. At the Closing, the Company will deliver the Transaction Documents to the Buyer against delivery by the Buyer to the Company of the Purchase Price.

2.3. Purchase Price . The Note carries an original issue discount of $20,000.00 (the “ OID ”). In addition, the Company agrees to pay $5,000.00 to the Buyer to cover the Buyer’s legal fees, accounting costs, due diligence, monitoring and other transaction costs incurred in connection with the purchase and sale of the Securities (the “ Transaction Expense Amount ”), $2,500.00 of which has been previously paid to the Buyer and the remaining $2,500.00 of which is included in the initial principal balance of the Note (the “ Carried Transaction Expense Amount ”). The Purchase Price, therefore, shall be $200,000.00, computed as follows: $222,500.00 original principal balance, less the OID, less the Carried Transaction Expense Amount.

3. BUYER REPRESENTATIONS AND WARRANTIES . The Buyer represents and warrants to, and covenants and agrees with, the Company, as of the date hereof and as of the Closing Date, as follows:

3.1. Binding Obligation . The Transaction Documents to which the Buyer is a party, and the transactions contemplated hereby and thereby, have been duly and validly authorized by the Buyer. This Agreement has been executed and delivered by the Buyer, and this Agreement is, and each of the other Transaction Documents to which the Buyer is a party, when executed and delivered by the Buyer (if necessary), will be valid and binding obligations of the Buyer enforceable in accordance with their respective terms, subject as to enforceability only to general principles of equity and to bankruptcy, insolvency, moratorium and other similar laws affecting the enforcement of creditors’ rights generally.

3.2. Accredited Investor Status . The Buyer is an “accredited investor” as that term is defined in Regulation D.

4. COMPANY REPRESENTATIONS AND WARRANTIES . The Company represents and warrants to the Buyer as of the date hereof and as of the Closing Date that:

4.1. Rights of Others Affecting the Transactions . There are no preemptive rights of any stockholder of the Company, as such, to acquire the Securities. No other party has a currently exercisable right of first refusal which would be applicable to any or all of the transactions contemplated by the Transaction Documents.

4.2. Status . The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Incorporation and has the requisite corporate power to own its properties and to carry on its business as now being conducted. The Company is duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction where the nature of the business conducted or property owned by it makes such qualification necessary, other than those jurisdictions in which the failure to so qualify would not have or result in a Material Adverse Effect. The Company is obligated to file reports pursuant to Section 15(d) of the Securities Exchange Act of 1934, as amended (the “ 1934 Act ”). The Company has not taken and will not take any action designed to terminate or suspend its obligations to file periodic reports under the 1934 Act, nor has the Company received any notification that the SEC is contemplating terminating or suspending such obligation. The Common Stock is quoted on the Principal Trading Market. The Company has received no notice, either oral or written, with respect to the continued eligibility of the Common Stock for quotation on the Principal Trading Market, and the Company has maintained all requirements on its part for the continuation of such quotation. The Company has not, in the twelve (12) months preceding the date hereof, received notice from the Principal Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Principal Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.

4.3. Authorized Shares .

(a) The authorized capital stock of the Company consists of 10,000,000 shares of preferred stock, $0.001 par value per share, of which approximately 1 share is outstanding, and 150,000,000 shares of Common Stock, $0.001 par value per share, of which approximately 70,963,434 are outstanding. Of the outstanding shares of Common Stock, approximately 37,922,115 shares are beneficially owned by Affiliates of the Company. Of the authorized shares of Common Stock that are not currently outstanding, approximately 2,800,000 of such shares are reserved.

(b) Other than as set forth in the Company’s SEC Documents, there are no outstanding securities which are convertible into or exchangeable for shares of Common Stock, whether such conversion is currently exercisable or exercisable only upon some future date or the occurrence of some event in the future.

(c) All issued and outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid and non-assessable. After considering all other commitments that may require the issuance of Common Stock, the Company has sufficient authorized and unissued shares of Common Stock as may be necessary to effect the issuance of the Shares on the Closing Date, were the Note issued and fully converted on that date.

(d) The Shares have been duly authorized by all necessary corporate action on the part of the Company as of or prior to the Closing in accordance with the terms of this Agreement, and, when issued on conversion of, or in payment of interest on the Note in accordance with the terms thereof, will have been duly and validly issued, fully paid and non-assessable, free from all taxes, liens, claims, pledges, mortgages, restrictions, obligations, security interests and encumbrances of any kind, nature and description, and will not subject the Holder thereof to personal liability by reason of being a Holder.

(e) The Conversion Shares, will upon issuance be validly issued, fully paid and non-assessable and the Company presently has no claims or defenses of any nature whatsoever with respect to the Conversion Shares.

4.4. Transaction Documents and Stock . This Agreement and each of the other Transaction Documents, and the transactions contemplated hereby and thereby, have been duly and validly authorized by the Company. This Agreement has been duly executed and delivered by the Company and this Agreement is, and the Note, and each of the other Transaction Documents, when executed and delivered by the Company, will be, valid and binding obligations of the Company enforceable in accordance with their respective terms, subject as to enforceability only to general principles of equity and to bankruptcy, insolvency, moratorium, and other similar laws affecting the enforcement of creditors’ rights generally.

4.5. Non-contravention . The execution and delivery of this Agreement and each of the other Transaction Documents by the Company, the issuance of the Securities in accordance with the terms hereof and thereof, and the consummation by the Company of the other transactions contemplated by this Agreement, the Note, and the other Transaction Documents do not and will not conflict with or result in a breach by the Company of any of the terms or provisions of, or constitute a default under (a) the Certificate of Incorporation or bylaws of the Company, each as currently in effect, (b) any indenture, mortgage, deed of trust, or other material agreement or instrument to which the Company is a party or by which it or any of its properties or assets are bound, including any listing agreement for the Common Stock except as herein set forth, or (c) to the Company’s knowledge, any existing applicable law, rule, or regulation or any applicable decree, judgment, or order of any court, United States federal or state regulatory body, administrative agency, or other governmental body having jurisdiction over the Company or any of the Company’s properties or assets, except such conflict, breach or default which would not have or result in a Material Adverse Effect.

4.6. Approvals . No authorization, approval or consent of any court, governmental body, regulatory agency, self-regulatory organization, or stock exchange or market or the stockholders or any lender of the Company is required to be obtained by the Company for the issuance and sale of the Securities to the Buyer as contemplated by this Agreement, except such authorizations, approvals and consents that have been obtained.

4.7. Filings; Financial Statements . None of the Company’s SEC Documents contained, at the time they were filed, any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company with the SEC under the 1934 Act on a timely basis or has received a valid extension of such time of filing and has filed any such report, schedule, form, statement or other document prior to the expiration of any such extension. As of their respective dates, the financial statements of the Company included in the Company’s SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles, consistently applied, during the periods involved (except (a) as may be otherwise indicated in such financial statements or the notes thereto, or (b) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). No other information provided by or on behalf of the Company to the Buyer which is not included in the Company’s SEC Documents, including, without limitation, information referred to in this Agreement, contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstance under which they are or were made, not misleading.

4.8. Absence of Certain Changes . Since the Last Audited Date, there has been no Material Adverse Effect. Since the Last Audited Date, the Company has not (a) incurred or become subject to any material liabilities (absolute or contingent), except liabilities incurred in the ordinary course of business consistent with past practices; (b) discharged or satisfied any material lien or encumbrance or paid any material obligation or liability (absolute or contingent), other than current liabilities paid in the ordinary course of business consistent with past practices; (c) declared or made any payment or distribution of cash or other property to stockholders with respect to its capital stock, or purchased or redeemed, or made any agreements to purchase or redeem, any shares of its capital stock; (d) sold, assigned or transferred any other material tangible assets, or canceled any material debts owed to the Company by any third party or material claims of the Company against any third party, except in the ordinary course of business consistent with past practices; (e) waived any rights of material value, whether or not in the ordinary course of business, or suffered the loss of any material amount of existing business; (f) made any increases in employee compensation, except in the ordinary course of business consistent with past practices; or (g) experienced any material problems with labor or management in connection with the terms and conditions of their employment.

4.9. Full Disclosure . There is no fact known to the Company or that the Company should know after having made all reasonable inquiries (other than conditions known to the public generally or as disclosed in the Company’s SEC Documents since the Last Audited Date) that has not been disclosed in writing to the Buyer that would reasonably be expected to have or result in a Material Adverse Effect.

4.10. Absence of Litigation . There is no action, suit, proceeding, inquiry or investigation before or by any court, public board or body pending or, to the knowledge of the Company, threatened against or affecting the Company before or by any governmental authority or non-governmental department, commission, board, bureau, agency or instrumentality or any other person, wherein an unfavorable decision, ruling or finding would have a Material Adverse Effect or which would adversely affect the validity or enforceability of, or the authority or ability of the Company to perform its obligations under, any of the Transaction Documents. The Company is not aware of any valid basis for any such claim that (either individually or in the aggregate with all other such events and circumstances) could reasonably be expected to have a Material Adverse Effect. There are no outstanding or unsatisfied judgments, orders, decrees, writs, injunctions or stipulations to which the Company is a party or by which the Company or any of its properties is bound, that involve the transactions contemplated herein or that, alone or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

4.11. Absence of Events of Default . Neither the Company nor any of its Subsidiaries is in violation of or in default with respect to (a) its Certificate of Incorporation or bylaws or other organizational documents, each as currently in effect, or any material judgment, order, writ, decree, statute, rule or regulation applicable to such entity; or (b) any material mortgage, indenture, agreement, instrument or contract to which such entity is a party or by which it or any of its properties or assets are bound (nor is there any waiver in effect which, if not in effect, would result in such a violation or default), except such breach or default which would not have or result in a Material Adverse Effect.

4.12. Absence of Certain Company Control Person Actions or Events . None of the following has occurred during the past five (5) years with respect to a Company Control Person:

(a) A petition under the federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such Company Control Person, or any partnership in which he or she was a general partner at or within two (2) years before the time of such filing, or any corporation or business association of which he or she was an executive officer at or within two (2) years before the time of such filing;

(b) Such Company Control Person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);

(c) Such Company Control Person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from, or otherwise limiting, the following activities:

(i) acting, as an investment advisor, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, any other Person regulated by the Commodity Futures Trading Commission (“ CFTC ”) or engaging in or continuing any conduct or practice in connection with such activity;

(ii) engaging in any type of business practice; or

(iii) engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws;

(d) Such Company Control Person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal or state authority barring, suspending or otherwise limiting for more than sixty (60) calendar days the right of such Company Control Person to engage in any activity described in Section 4.12(c) above, or to be associated with Persons engaged in any such activity; or

(e) Such Company Control Person was found by a court of competent jurisdiction in a civil action or by the CFTC or SEC to have violated any federal or state securities law, and the judgment in such civil action or finding by the CFTC or SEC has not been subsequently reversed, suspended, or vacated.

4.13. No Undisclosed Liabilities or Events . The Company has no liabilities or obligations other than those disclosed in the Transaction Documents or the Company’s most recently filed SEC Documents (Form 10-K or 10-Q) or those incurred in the ordinary course of the Company’s business since the Last Audited Date, or which individually or in the aggregate, do not or would not have a Material Adverse Effect. No event or circumstance has occurred or exists with respect to the Company or its properties, business, operations, condition (financial or otherwise), or results of operations, which, under applicable laws, rules or regulations, requires public disclosure or announcement prior to the date hereof by the Company, but which has not been so publicly announced or disclosed. There are no proposals currently under consideration or currently anticipated to be under consideration by the Board of Directors or the executive officers of the Company which proposal would (a) change the Certificate of Incorporation or bylaws of the Company, each as currently in effect, with or without stockholder approval, which change would reduce or otherwise adversely affect the rights and powers of the stockholders of the Common Stock, or (b) materially or substantially change the business, assets or capital of the Company, including its interests in Subsidiaries.

4.14. No Integrated Offering . Neither the Company nor any of its Affiliates nor any Person acting on its or their behalf has, directly or indirectly, made any offer or sale of any security of the Company or solicited any offer to buy any such security under circumstances that would eliminate the availability of the exemption from registration under Regulation D in connection with the offer and sale of the Securities as contemplated hereby.

4.15. Dilution . Each of the Company and its executive officers and directors is aware that the number of shares of Common Stock issuable upon the execution of this Agreement, the conversion of the Note, or pursuant to the other terms of the Transaction Documents may have a dilutive effect on the ownership interests of the other stockholders (and Persons having the right to become stockholders) of the Company. The Company specifically acknowledges that its obligation to issue the Conversion Shares upon a conversion of the Note is binding upon the Company and enforceable regardless of the dilution such issuance may have on the ownership interests of other stockholders of the Company, and the Company will honor such obligation, including honoring every Conversion Notice, unless the Company is subject to an injunction (which injunction was not sought by the Company or any of its directors or executive officers) prohibiting the Company from doing so.

4.16. Fees to Brokers, Placement Agents and Others . With respect to any brokerage commissions, placement agent or finder’s fees or similar payments that will or would become due and owing by the Company to any Person as a result of this Agreement or the transactions contemplated hereby (“ Broker Fees ”), any such Broker Fees will be made in full compliance with all applicable laws and regulations and only to a Person that is a registered investment adviser or registered broker-dealer. The Buyer shall have no obligation with respect to any such Broker Fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this subsection that may be due in connection with the transactions contemplated hereby. The Company shall indemnify and hold harmless each of the Buyer, the Buyer’s employees, officers, directors, stockholders, managers, agents, and partners, and their respective Affiliates, from and against all claims, losses, damages, costs (including the costs of preparation and attorneys’ fees) and expenses suffered in respect of any such claimed or existing fees.

4.17. Disclosure . All information relating to or concerning the Company or its Subsidiaries set forth in the Transaction Documents or in the Company’s SEC Documents or other public filings provided by or on behalf of the Company to the Buyer is true and correct in all material respects and the Company has not omitted to state any material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading. No event or circumstance has occurred or exists with respect to the Company or its Subsidiaries or any of their business, properties, prospects, operations or financial conditions, which under applicable laws, rules or regulations, requires public disclosure or announcement by the Company or any such Subsidiary.

4.18. Confirmation . The Company agrees that, if, to the knowledge of the Company, any events occur or circumstances exist prior to the payment of the Purchase Price by the Buyer to the Company which would make any of the Company’s representations or warranties set forth herein materially untrue or materially inaccurate as of such date, the Company shall immediately notify the Buyer in writing prior to such date of such events or circumstances, specifying which representations or warranties are affected and the reasons therefor.

4.19. Title . The Company and the Subsidiaries, if applicable, own and have good and marketable title in fee simple absolute to, or a valid leasehold interest in, all their respective real properties and good title to their other respective assets and properties, subject to no liens, claims or encumbrances, except as have been disclosed to the Buyer.

4.20. Intellectual Property .

(a) Ownership . The Company owns or possesses or can obtain on commercially reasonable terms sufficient legal rights to all patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses (software or otherwise), information, know-how, inventions, discoveries, published and unpublished works of authorship, processes and any and all other proprietary rights (“ Intellectual Property ”) necessary to the business of the Company as presently conducted, the lack of which could reasonably be expected to have a Material Adverse Effect. Except for agreements with its own employees or consultants, standard end-user license agreements, support/maintenance agreements and agreements entered in the ordinary course of the Company’s business, all of which have been made available for review by the Buyer, there are no outstanding options, licenses or agreements relating to the Intellectual Property of the Company, and the Company is not bound by or a party to any options, licenses or agreements with respect to the Intellectual Property of any other person or entity. The Company has not received any written communication alleging that the Company has violated or, by conducting its business as currently conducted, would violate any of the Intellectual Property of any other person or entity, nor is the Company aware of any basis therefor. The Company is not obligated to make any payments by way of royalties, fees or otherwise to any owner or licensor of or claimant to any Intellectual Property with respect to the use thereof in connection with the present conduct of its business other than in the ordinary course of its business. There are no agreements, understandings, instruments, contracts, judgments, orders or decrees to which the Company is a party or by which it is bound which involve indemnification by the Company with respect to infringements of Intellectual Property, other than in the ordinary course of its business.

(b) No Breach by Employees . The Company is not aware that any of its employees is obligated under any contract or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would materially interfere with the use of his or her efforts to promote the interests of the Company or that would conflict with the Company’s business as presently conducted. Neither the execution nor delivery of this Agreement, nor the carrying on of the Company’s business by the employees of the Company, nor the conduct of the Company’s business as presently conducted, will, to the Company’s knowledge, conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any such employee is now obligated. The Company does not believe it is or will be necessary to use any inventions of any of its employees made prior to their employment by the Company of which it is aware.

4.21. Environmental Matters .

(a) No Violation . There are, to the Company’s knowledge, with respect to the Company or any of its Subsidiaries or any predecessor of the Company, no past or present violations of Environmental Laws (as defined below), releases of any material into the environment, actions, activities, circumstances, conditions, events, incidents, or contractual obligations which may give rise to any common law environmental liability or any liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 or similar federal, state, local or foreign laws and neither the Company nor any of its Subsidiaries has received any notice with respect to any of the foregoing, nor is any action pending or, to the Company’s knowledge, threatened in connection with any of the foregoing. The term “ Environmental Laws ” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants contaminants, or toxic or hazardous substances or wastes (collectively, “ Hazardous Materials ”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.

(b) No Hazardous Materials . Other than those that are or were stored, used or disposed of in compliance with applicable law, no Hazardous Materials are contained on or about any real property currently owned, leased or used by the Company or any of its Subsidiaries, and no Hazardous Materials were released on or about any real property previously owned, leased or used by the Company or any of its Subsidiaries during the period the property was owned, leased or used by the Company or any of its Subsidiaries, except in the normal course of the Company’s or any of its Subsidiaries’ business.

(c) No Storage Tanks . There are no underground storage tanks on or under any real property owned, leased or used by the Company or any of its Subsidiaries that are not in compliance with applicable law.

5. CERTAIN COVENANTS AND ACKNOWLEDGMENTS .

5.1. Covenants and Acknowledgements of the Buyer .

(a) Transfer Restrictions . The Buyer acknowledges that (i) the Securities have not been and are not being registered under the provisions of the 1933 Act and may not be transferred unless (A) subsequently registered thereunder, or (B) the Buyer shall have delivered to the Company an opinion of counsel, reasonably satisfactory in form, scope and substance to the Company, to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from registration under the 1933 Act; (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of such Rule and further, if such Rule is not applicable, any resale of such Securities under circumstances in which the seller, or the Person through whom the sale is made, may be deemed to be an underwriter, as that term is used in the 1933 Act, may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) except as otherwise provided herein, neither the Company nor any other Person is under any obligation to register the Securities under the 1933 Act or to comply with the terms and conditions of any exemption thereunder.

(b) Restrictive Legend . The Buyer acknowledges and agrees that, until such time as the relevant Securities have been registered under the 1933 Act, and may be sold in accordance with an effective Registration Statement, or until such Securities can otherwise be sold without restriction, whichever is earlier, the certificates and other instruments representing any of the Securities shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of any such Securities):

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED, OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.

5.2. Covenants, Acknowledgements and Agreements of the Company . As a condition to the Buyer’s obligation to purchase the Securities contemplated by this Agreement, and as a material inducement for the Buyer to enter into this Agreement and the other Transaction Documents, until all of the Company’s obligations hereunder and the Note are paid and performed in full, or within the timeframes otherwise specifically set forth below, the Company shall comply with the following covenants:

(a) Filings . From the date hereof until the date that is six (6) months after all the Conversion Shares either have been sold by the Buyer, or may permanently be sold by the Buyer without any restrictions pursuant to Rule 144 (the “ Registration Period ”), the Company shall timely make all filings required to be made by it under the 1933 Act, the 1934 Act, Rule 144 or any United States state securities laws and regulations thereof applicable to the Company or by the rules and regulations of the Principal Trading Market, and such filings shall conform to the requirements of applicable laws, regulations and government agencies, and, unless such filings are publicly available on the SEC’s EDGAR system (via the SEC’s web site at no additional charge), the Company shall provide a copy thereof to the Buyer promptly after such filings. Without limiting the foregoing, the Company agrees to file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof to the Buyer promptly after such filing. Additionally, within four (4) Trading Days following the date of this Agreement, the Company shall file a Current Report on Form 8-K describing the terms of the transactions contemplated by the Transaction Documents in the form required by the 1934 Act and approved by the Buyer and attaching the material Transaction Documents as exhibits to such filing. Additionally, the Company shall furnish to the Buyer, so long as the Buyer owns any Securities, promptly upon request, but no more than four times per year, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the Company, unless such filings are publicly available on the SEC’s EDGAR system (via the SEC’s web site at no additional charge, and (iii) such other information as may be reasonably requested to permit the Buyer to sell such Securities pursuant to Rule 144 without registration.

(b) Reporting Status . So long as the Buyer beneficially owns Securities and for at least twenty (20) Trading Days thereafter, the Company shall file all reports required to be filed with the SEC pursuant to Sections 13 or 15(d) of the 1934 Act, and shall take all reasonable action under its control to ensure that adequate current public information with respect to the Company, as required in accordance with Rule 144, is publicly available, and shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would permit such termination.

(c) Listing . The Common Stock shall be listed or quoted for trading on any of (i) the NYSE Amex, (ii) the New York Stock Exchange, (iii) the Nasdaq Global Market, (iv) the Nasdaq Capital Market, (v) the OTC Bulletin Board, (vi) the OTCQX or (vii) the OTCQB. The Company shall promptly secure the listing or eligibility for quotation of all of the Conversion Shares upon each national securities exchange and automated quotation system, if any, upon which the Common Stock is then listed (subject to official notice of issuance) and shall maintain such listing of all securities from time to time issuable under the terms of the Transaction Documents. The Company shall comply in all material respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Principal Trading Market and/or the Financial Industry Regulatory Authority, Inc. (“ FINRA ”) or any successor thereto, as the case may be, applicable to it at least through the date which is sixty (60) calendar days after the date on which the Note has been converted or paid in full.

(d) Anti-Dilution Certification . For so long as any portion of the Note remains outstanding, the Company shall deliver to the Buyer, within two (2) Trading Days of a written request by the Buyer, a certificate in the form attached hereto as ANNEX VI (“ Anti-Dilution Certificate ”) whereby the Company shall notify the Buyer of a Dilutive Issuance (as defined in the Note) or any other event(s) that occurred since the later of the Closing Date or the delivery of the most recent Anti-Dilution Certificate that triggers anti-dilution protection or other adjustments to the applicable Conversion Price (each an “ Anti-Dilution Event ”), or, if no Anti-Dilution Event occurred, certifying to the Buyer that no Anti-Dilution Event occurred since the Closing Date that has not been disclosed on a previous Anti-Dilution Certificate.

(e) Use of Proceeds . The Company shall use the net proceeds received hereunder for working capital and general corporate purposes only. The Company shall not use such proceeds to pay (i) any Broker Fees that are not in compliance with Section 4.16, or (ii) any fees to any other party relating to any financing transaction effected prior to the Closing Date.

(f) FINRA Rule 5110 . In the event that the Corporate Financing Rule 5110 of FINRA is or becomes applicable to the transactions contemplated by the Transaction Documents or to the sale by a Holder of any of the Securities, then the Company shall, to the extent required by such rule, timely make any filings and cooperate with any broker or selling stockholder in respect of any consents, authorizations or approvals that may be necessary for FINRA to timely and expeditiously permit the Holder to sell the Securities.

(g) Keeping of Records and Books of Account . The Company shall keep and cause each Subsidiary to keep adequate records and books of account, in which complete entries shall be made in accordance with GAAP consistently applied, reflecting all financial transactions of the Company and such Subsidiaries, and in which, for each fiscal year, all proper reserves for depreciation, depletion, obsolescence, amortization, taxes, bad debts and other purposes in connection with its business shall be made.

(h) Corporate Existence . The Company shall (i) do all things necessary to remain duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary; (ii) preserve and keep in full force and effect all licenses or similar qualifications required by it to engage in its business in all jurisdictions in which it is at the time so engaged; (iii) continue to engage in business of the same general type as conducted as of the date hereof; and (iv) continue to conduct its business substantially as now conducted or as otherwise permitted hereunder.

(i) Taxes . The Company shall pay and discharge promptly when due all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or in respect of its property before the same shall become delinquent or in default, which, if unpaid, might reasonably be expected to give rise to liens or charges upon such properties or any part thereof, unless, in each case, the validity or amount thereof is being contested in good faith by appropriate proceedings and the Company has maintained adequate reserves with respect thereto in accordance with GAAP.

(j) Compliance . The Company shall comply in all material respects with all federal, state and local laws and regulations, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations and requirements (collectively, “ Requirements ”) of all governmental bodies, insurers, departments, commissions, boards, courts, authorities, officials or officers which are applicable to the Company, its business, operations, or any of its properties, except where the failure to so comply would not have a Material Adverse Effect; provided, however , that nothing provided herein shall prevent the Company from contesting in good faith the validity or the application of any Requirements.

(k) Litigation . From and after the date hereof and until all of the Company’s obligations hereunder and the Note are paid and performed in full, the Company shall notify the Buyer in writing, promptly upon learning thereof, of any litigation or administrative proceeding commenced or threatened against the Company involving a claim in excess of $100,000.00.

(l) Performance of Obligations . The Company shall promptly and in a timely fashion perform and honor all demands, notices, requests and obligations that exist or may arise under the Transaction Documents.

(m) Timely Filings . The Company shall timely file on the SEC’s EDGAR system any information required to be filed by it, whether on a Form 10-K, Form 10-Q, Form 8-K, Proxy Statement or otherwise so as to be deemed a “ reporting issuer ” with current public information under the 1934 Act.

(n) Share Reserve . In order to allow for, as of the relevant date of determination, the conversion of the entire Outstanding Balance into Common Stock, the Company shall take all action necessary from time to time to reserve for the benefit of the Holder the number of authorized, but unissued shares of Common Stock equal to the amount calculated as follows (such calculated amount is referred to as the “ Share Reserve ”): 250% of the higher of (A) the Outstanding Balance divided by the Conversion Price, and (B) the Outstanding Balance divided by the Market Price. If at any time the Share Reserve is less than required herein, the Company shall immediately increase the Share Reserve in an amount equal to no less than the deficiency. If the Company does not have sufficient authorized and unissued shares of Common Stock available to increase the Share Reserve, the Company shall either cause stockholders holding a sufficient number of shares of common stock to effectuate such action by signing a majority written consent of stockholders or call a special meeting of the stockholders as soon as practicable after such occurrence, but in no event later than thirty (30) calendar days after such occurrence, and hold such meeting as soon as practicable thereafter, but in no event later than sixty (60) calendar days after such occurrence, for the sole purpose of increasing the number of authorized shares of Common Stock. In the case of a meeting of stockholders, the Company’s management shall recommend to the Company’s stockholders to vote in favor of increasing the number of authorized shares of Common Stock and management shall also vote all of its shares in favor of increasing the number of authorized shares of Common Stock. The Company shall use its best efforts to cause such additional shares of Common Stock to be authorized so as to comply with the requirements of this subsection. All calculations with respect to determining the Share Reserve shall be made without regard to any limitations on conversion of the Note.

(o) DWAC Eligibility . At all times during which any portion of the Note remains outstanding, the Company shall cause all DWAC Eligible Conditions to be satisfied.

(p) Change in Nature of Business . The Company shall not directly or indirectly engage in any material line of business substantially different from those lines of business conducted by or publicly contemplated to be conducted by the Company on the date of this Agreement or any business substantially related or incidental thereto. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, modify its or their corporate structure or purpose if such modification may have a material adverse effect on any rights of, or benefits to, the Holder under any of the Transaction Documents.

(q) Maintenance of Properties, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties which are necessary or useful in the proper conduct of its business, in good working order and condition, ordinary wear and tear excepted, and comply, and cause each of its Subsidiaries to comply, at all times with the provisions of all leases to which it is a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture thereof or thereunder.

(r) Maintenance of Insurance . The Company shall maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations (including, without limitation, comprehensive general liability, hazard, rent and business interruption insurance) with respect to its properties (including all real properties leased or owned by it) and business, in such amounts and covering such risks as is required by any governmental authority having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated.

(s) Restriction on Redemption . The Company shall not, directly or indirectly, redeem or repurchase its capital stock without the prior express written consent of the Holder.

(t) Restriction on Transfer of Assets . The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, sell, lease, license, assign, transfer, convey or otherwise dispose of any assets or rights of the Company or any Subsidiary owned or hereafter acquired, whether in a single transaction or a series of related transactions, other than (i) sales, leases, licenses, assignments, transfers, conveyances and other dispositions of such assets or rights supported by fair market value consideration as determined in the reasonable discretion of the board of directors or the Chief Executive Officer of the Company or its Subsidiary, as the case may be, or (ii) sales of inventory in the ordinary course of business.

(u) Intellectual Property . The Company shall not, and the Company shall not permit any of its Subsidiaries, directly or indirectly, to encumber or allow any Liens on, any of its copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work, whether published or unpublished, any patents, patent applications and like protections, including improvements, divisions, continuations, renewals, reissues, extensions, and continuations-in-part of the same, trademarks, service marks and, to the extent permitted under applicable law, any applications therefor, whether registered or not, and the goodwill of the business of the Company and its Subsidiaries connected with and symbolized thereby, know-how, operating manuals, trade secret rights, rights to unpatented inventions, and any claims for damage by way of any past, present, or future infringement of any of the foregoing, other than Permitted Liens.

(v) Certain Negative Covenants of the Company . From and after the date hereof and until all of the Company’s obligations hereunder and the Note are paid and performed in full, the Company shall not enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service, with any Affiliate of the Company, or amend or modify any agreement related to any of the foregoing, except on terms that are no less favorable, in any material respect, than those obtainable from any person or entity who is not an Affiliate of the Company.

(w) Rule 144 Opinion . Either counsel to the Company has delivered to the Buyer an opinion letter, or the Company shall accept, in its reasonable discretion, an opinion letter prepared by legal counsel of Buyer’s choosing (in either case, the “ Opinion Letter ”), stating that (i) the Company is not then a shell company or the type of “issuer” defined in Rule 144(i)(1) under the 1933 Act (a “ Shell Company ”). The Company shall give instructions to its Transfer Agent to issue shares of Common Stock upon conversion of the Note based upon or otherwise consistent with such Opinion Letter.

(x) Transfer Agent Reserve . From and after the date hereof and until all of the Company’s obligations hereunder and the Note are paid and performed in full:

(i) the Company shall at all times require its Transfer Agent to establish a reserve of shares of authorized, but unissued Common Stock in an amount not less than the Share Reserve or such other amount as the Holder may authorize from time to time in writing (the “ Transfer Agent Reserve ”);

(ii) the Company shall require its Transfer Agent to hold the Transfer Agent Reserve for the exclusive benefit of the Holder and shall authorize the Transfer Agent to issue the shares of Common Stock held in the Transfer Agent Reserve to the Holder only (subject to subsection (iii) immediately below);

(iii) the Company shall cause the Transfer Agent to agree that when the Transfer Agent issues shares of Common Stock to the Holder pursuant to the Transaction Documents, the Transfer Agent will not issue such shares from the Transfer Agent Reserve, unless such issuance is pre-approved in writing by the Holder;

(iv) the Company shall cause the Transfer Agent to agree that it will not reduce the Transfer Agent Reserve under any circumstances, unless such reduction is pre-approved in writing by the Holder;

(v) upon Holder’s written request, but no less frequently than at the end of each calendar quarter, the Company shall increase (or decrease if authorized by Holder in writing) the Transfer Agent Reserve as of such time to equal the Share Reserve (each a “ Transfer Agent Reserve Calculation ”), and if additional shares of Common Stock are required to be added to the Transfer Agent Reserve pursuant to subsection (i) above, the Company shall immediately give written instructions to the Transfer Agent to cause the Transfer Agent to set aside and increase the Transfer Agent Reserve by the necessary number of shares in increments of 100,000 shares of Common Stock; and

(vi) within three (3) Trading Days of a written request from the Buyer, the Company shall certify in writing to the Holder (A) the correctness of the Company’s Transfer Agent Reserve Calculation and (B) that either (1) the Company has instructed the Transfer Agent to increase the Transfer Agent Reserve in accordance with the terms hereof, or (2) there was no need to increase the Transfer Agent Reserve, in either case consistent with the Transfer Agent Reserve Calculation. If the Company has not instructed the Transfer Agent to so increase the Transfer Agent Reserve, then Holder is hereby authorized to send such written request to the Transfer Agent.

For the avoidance of any doubt, the requirements of this Section 5.2 are material to this Agreement and any violation or breach thereof by the Company shall constitute a default under this Agreement.

6. TRANSFER AGENT .

6.1. Instructions . The Company covenants that, with respect to the Securities, other than the stop transfer instructions to give effect to Section 5.1(a) hereof, the Company will give the Transfer Agent no instructions inconsistent with the Transfer Agent Letter. Except as required by Sections 5.1(a) and 5.1(b) of this Agreement and the Transfer Agent Letter, the Shares shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the other Transaction Documents. Nothing in this subsection shall affect in any way the Buyer’s obligations and agreement to comply with all applicable securities laws upon resale of the Securities. If the Buyer provides the Company with an opinion of counsel reasonably satisfactory to the Company that registration of a resale by the Buyer of any of the Securities in accordance with clause (i)(B) of Section 5.1(a) of this Agreement is not required under the 1933 Act or upon request from a Holder while an applicable Registration Statement is effective, the Company shall (except as provided in clause (ii) of Section 5.1(a) of this Agreement) permit the transfer of the Securities and, in the case of the Conversion Shares, use its best efforts to cause the Transfer Agent to promptly deliver to the Holder or the Holder’s broker, as applicable, such Conversion Shares by way of the DWAC system.

6.2. DWAC Eligible . The Company specifically covenants that, as of April 28, 2014 and at all times thereafter until the Note is repaid in full, all DWAC Eligible Conditions will be satisfied. The Company shall notify the Buyer in writing if the Company at any time while the Holder holds Securities becomes aware of any plans of the Transfer Agent to voluntarily or involuntarily terminate its participation in the DTC/FAST Program. While Holder holds Securities, the Company shall at all times after the Closing Date maintain a transfer agent which participates in the DTC/FAST Program, and the Company shall not appoint any transfer agent which does not participate in the DTC/FAST Program. Nevertheless, if at any time the Company receives a Conversion Notice and all DWAC Eligible Conditions are not then satisfied (including without limitation because the Transfer Agent is not then participating in the DTC/FAST Program or the Conversion Shares are not otherwise transferable via the DWAC system), then the Company shall instruct the Transfer Agent to immediately issue one or more certificates for Common Stock without legend in such name and in such denominations as specified by the Holder and consistent with the terms and conditions of the Transaction Documents.

6.3. Transfer Fees . The Company shall assume any fees or charges of the Transfer Agent or Company Counsel regarding (a) the removal of a legend or stop transfer instructions with respect to the Securities, and (b) the issuance of certificates or DWAC registration to or in the name of the Holder or the Holder’s designee or to a transferee as contemplated by an effective Registration Statement.

7. DELIVERY OF SHARES .

7.1. [ RESERVED].

7.2. Bankruptcy . The Holder of the Note shall be entitled to exercise the Holder’s conversion privilege with respect to such Note, notwithstanding the commencement of any case under 11 U.S.C. §101 et seq. (the “ Bankruptcy Code ”). In the event the Company is a debtor under the Bankruptcy Code, the Company hereby waives, to the fullest extent permitted, any rights to relief it may have under 11 U.S.C. §362 in respect of such Holder’s exercise privileges. The Company hereby waives, to the fullest extent permitted, any rights to relief it may have under 11 U.S.C. §362 in respect of the conversion of the Note. The Company agrees, without cost or expense to such Holder, to take or to consent to any and all action necessary to effectuate relief under 11 U.S.C. §362.

8. CLOSING DATE .

8.1. The Closing Date shall occur on the date which is the first Trading Day after each of the conditions contemplated by Sections 9 and 10 hereof shall have either been satisfied or been waived by the party in whose favor such conditions run.

8.2. Closing of the purchase and sale of the Securities, which the parties anticipate shall occur concurrently with the execution of this Agreement, shall occur at the offices of the Buyer and shall take place no later than 3:00 P.M., Eastern Time, or on such day or such other time as is mutually agreed upon by the Company and the Buyer.

9. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL . The Company’s obligation to sell the Securities to the Buyer pursuant to this Agreement on the Closing Date is conditioned upon and subject to the fulfillment, on or prior to the Closing Date, of all of the following conditions, any of which may be waived in whole or in part by the Company:

9.1. The execution and delivery of this Agreement and, as applicable, the other Transaction Documents by the Buyer.

9.2. Delivery by the Buyer of good funds as payment in full of an amount equal to the Purchase Price in accordance with this Agreement.

9.3. The accuracy on the Closing Date of the representations and warranties of the Buyer contained in this Agreement, each as if made on such date, and the performance by the Buyer on or before such date of all covenants and agreements of the Buyer required to be performed on or before such date.

9.4. There shall not be in effect any law, rule or regulation prohibiting or restricting the transactions contemplated hereby, or requiring any consent or approval which shall not have been obtained.

10. CONDITIONS TO THE BUYER’S OBLIGATION TO PURCHASE . The Buyer’s obligation to purchase the Securities from the Company pursuant to this Agreement on the Closing Date is conditioned upon and subject to the fulfillment, on or prior to the Closing Date, of all of the following conditions, any of which may be waived in whole or in part by the Buyer:

10.1. The execution and delivery of this Agreement, the Transfer Agent Letter, the Secretary’s Certificate, the Share Issuance Resolution, and, as applicable, the other Transaction Documents by the Company.

10.2. The delivery by the Company to the Buyer of the Note in original form, duly executed by the Company, in accordance with this Agreement.

10.3. On the Closing Date, each of the Transaction Documents executed by the Company on or before such date shall be in full force and effect and the Company shall not be in default thereunder.

10.4. The Company shall have authorized and reserved for the purpose of issuance under the Transaction Documents shares of Common Stock in an amount no less than the Share Reserve as of the Closing Date.

10.5. The accuracy in all material respects on the Closing Date of the representations and warranties of the Company contained in this Agreement and the other Transaction Documents, each as if made on such date, and the performance by the Company on or before such date of all covenants and agreements of the Company required to be performed on or before such date.

10.6. There shall not be in effect any law, rule or regulation prohibiting or restricting the transactions contemplated hereby, or requiring any consent or approval which shall not have been obtained.

10.7. From and after the date hereof up to and including the Closing Date, each of the following conditions will remain in effect: (a) the trading of the Common Stock shall not have been suspended by the SEC or on the Principal Trading Market; (b) trading in securities generally on the Principal Trading Market shall not have been suspended or limited; (c) no minimum prices shall have been established for securities traded on the Principal Trading Market; (d) there shall not have been any material adverse change in any financial market; and (e) there shall not have occurred any Material Adverse Effect.

10.8. Except for any notices required or permitted to be filed after the Closing Date with certain federal and state securities commissions, the Company shall have obtained (a) all governmental approvals required in connection with the lawful sale and issuance of the Securities, and (b) all third party approvals required to be obtained by the Company in connection with the execution and delivery of the Transaction Documents by the Company or the performance of the Company’s obligations thereunder.

10.9. All corporate and other proceedings in connection with the transactions contemplated at the Closing and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to the Buyer.

11. INDEMNIFICATION .

11.1. The Company agrees to defend, indemnify and forever hold harmless the Buyer and the Buyer’s stockholders, directors, officers, managers, members, partners, Affiliates, employees, attorneys, and agents, and each Buyer Control Person (collectively, the “ Buyer Parties ”) from and against any losses, claims, damages, liabilities or expenses incurred (collectively, “ Damages ”), joint or several, and any action in respect thereof to which the Buyer or any of the other Buyer Parties becomes subject, resulting from, arising out of or relating to any misrepresentation, breach of warranty or nonfulfillment of or failure to perform any covenant or agreement on the part of the Company contained in this Agreement or any of the other Transaction Documents, as such Damages are incurred. The Buyer Parties with the right to be indemnified under this subsection (the “ Indemnified Parties ”) shall have the right to defend any such action or proceeding with attorneys of their own selection, subject to approval thereof by the Company, such approval not to be unreasonably withheld, and the Company shall be solely responsible for all reasonable costs and expenses related thereto. If the Indemnified Parties opt not to retain their own counsel, the Company shall defend any such action or proceeding with attorneys of its choosing at its sole cost and expense, provided that such attorneys have been pre-approved by the Indemnified Parties, which approval shall not be unreasonably withheld, and provided further that the Company may not settle any such action or proceeding without first obtaining the written consent of the Indemnified Parties.

11.2. The indemnity contained in this Agreement shall be in addition to (a) any cause of action or similar rights of the Buyer Parties against the Company or others, and (b) any other liabilities the Company may be subject to.

12. OWNERSHIP LIMITATION . Notwithstanding anything to the contrary contained in this Agreement or the other Transaction Documents, if at any time the Holder shall or would be issued shares of Common Stock under any of the Transaction Documents, but such issuance would cause the Holder (together with its Affiliates) to beneficially own a number of shares exceeding the Maximum Percentage (as defined in the Note), then the Company must not issue to the Holder the excess Ownership Limitation Shares (as defined in the Note). For purposes of this Section, beneficial ownership of Common Stock will be determined under the 1934 Act. The Company will reserve the Ownership Limitation Shares for the exclusive benefit of the Holder. From time to time, the Holder may notify the Company in writing of the number of Ownership Limitation Shares that may be issued to the Holder without causing the Holder to exceed the Maximum Percentage. Upon receipt of such notice, the Company shall be unconditionally obligated to immediately issue such designated shares to the Holder, with a corresponding reduction in the number of the Ownership Limitation Shares. By written notice to the Company, the Holder may increase, decrease or waive the Maximum Percentage as to itself but any such waiver will not be effective until the 61st day after delivery thereof. The foregoing 61-day notice requirement is enforceable, unconditional and non-waivable and shall apply to all Affiliates and assigns of the Holder. Additionally, if at any time after the Closing the Market Capitalization of the Common Stock (as defined in the Note) falls below $5,000,000, then from that point on, for so long as the Holder or the Holder’s Affiliate owns Common Stock or rights to acquire Common Stock, the Company shall post (or cause to be posted), no less frequently than every thirty (30) calendar days, the then-current number of issued and outstanding shares of its capital stock to the Company’s web page located at OTCmarkets.com (or such other web page approved by the Holder). Additionally, within three (3) Trading Days of a written request from Buyer, the Company (or the Company’s Transfer Agent) will provide the Buyer the then-current number of authorized, but unissued and unreserved shares of its capital stock. The Company understands that its failure to so post its shares outstanding or to provide the number of unissued and unreserved shares could result in economic loss to the Holder.

13. [RESERVED].

14. BUYER’S RIGHT OF FIRST REFUSAL TO NEW ISSUANCES . From and after the date hereof and until all of the Company’s obligations hereunder and the Note are paid and performed in full(or unless all of the Company’s obligations hereunder and the Note are paid and performed in full simultaneously therewith with the proceeds of a Variable Security Issuance), the Company shall not enter into any Variable Security Issuance, without first offering the Buyer a right of first refusal with respect to the same pursuant to this Section 14. For purposes of this Agreement, the term “ Variable Security Issuance” means any transaction that involves issuing Company securities (including, without limitation, debt, warrants, or convertible preferred stock) that are convertible by the holder into, or exercisable by the holder for, Common Stock at a conversion or exercise price that varies with the market price of the Common Stock, unless there is a floor on such conversion or exercise price, in which case such transaction shall not be deemed to be a Variable Security Issuance.

14.1. Notice of Proposed Issuance . Prior to the Company undertaking or effectuating any Variable Security Issuance, the Company shall deliver to the Buyer a written notice (the “ ROFR Issuance Notice ”) stating: (a) the Company’s bona fide desire to undertake or effectuate the Variable Security Issuance; (b) the name, address and phone number of each proposed creditor, recipient, purchaser or other transferee (“ Proposed Transferee ”); (c) details regarding the Company securities to be issued, sold or otherwise transferred (including the aggregate number of shares of Common Stock proposed to be issued to each Proposed Transferee, as applicable) (the “ Offered Securities ”); (d) the bona fide cash price or, in reasonable detail, other consideration for which the Company proposes to issue, sell or otherwise transfer the Offered Securities (the “ Offered Price ”); and (e) notice of the Buyer’s right to exercise its Right of First Refusal (defined below) with respect to the Offered Securities. The Buyer shall have a period of fifteen (15) Trading Days (the “ Response Period ”) after the date on which the ROFR Issuance Notice is, pursuant to this subsection, deemed to have been delivered to the Buyer, to notify the Company whether the Buyer elects to exercise its Right of First Refusal with respect to the applicable Offered Securities. If the Buyer fails to notify the Company of its desire to exercise its Right of First Refusal with respect to the applicable Offered Securities prior to the conclusion of the Response Period, the Buyer shall be deemed not to have exercised its Right of First Refusal in such specific circumstance. If the Buyer elects not to exercise its Right of First Refusal or is deemed to have elected to not exercise its Right of First Refusal, the Company and the proposed parties shall have a period of sixty (60) calendar days to consummate the proposed Variable Security Issuance on the terms set forth in the ROFR Issuance Notice. In such case, if the Right of Frist Refusal Issuance is not consummated within such period or if the terms of the applicable Variable Security Issuance are changed prior to the consummation of the Variable Security Issuance, the Company shall again submit the Variable Security Issuance to the Buyer so that Buyer may once again exercise its Right of First Refusal in accordance with the terms of this Section 14 prior to effectuating such Variable Security Issuance. Nothing in this or any other section of this Agreement shall modify or limit Buyer’s consent right set forth in Section 12 above.

14.2. Exercising the Right of First Refusal . The Buyer shall have the right to purchase all or any part of the Offered Securities on the terms and conditions set forth in this Section 14 (the “ Right of First Refusal ”). In order to exercise its Rights of First Refusal hereunder, the Buyer must deliver written notice to Company within the Response Period stating the Buyer’s intent to exercise its right hereunder and the Offered Securities it desires to purchase pursuant to such right (“ Election to Purchase ”).

14.3. Purchase Price . The purchase price for the Offered Securities to be purchased by the Buyer under its Right of First Refusal (the “ Right of First Refusal Purchase Price ”) will be the Offered Price, and will be payable as set forth in Section 14 below. If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration will be determined by the Buyer in its sole discretion, which determination will be binding upon the Company, absent fraud or error.

14.4. Closing; Payment . Subject to compliance with applicable state and federal securities laws, the Buyer and the Company shall effect the purchase of all or any portion of the Offered Securities, including the payment of the Right of First Refusal Purchase Price therefor, within ten (10) Trading Days after the delivery of the Election to Purchase (the “ Right of First Refusal Closing ”). Payment of the Right of First Refusal Purchase Price will be made, at the option of the Buyer in writing, (a) in cash (by cashiers or bank certified check), (b) by wire transfer, (c) by offset of all or a portion of any outstanding indebtedness owed by the Company to the Buyer, or (d) by any combination of the foregoing. The Buyer may elect to transfer the Right of First Refusal Purchase Price into an escrow account pending issuance of such purchased securities. The date that the Right of First Refusal Purchase Price is delivered to the Company, or the escrow agent, as applicable, or the date that the Buyer elects to offset the Right of First Refusal Purchase Price by outstanding indebtedness, shall be considered the date of the Right of First Refusal Closing. To the extent the Offered Securities purchased by the Buyer hereunder constitute shares of Common Stock, the Company shall deliver to the Buyer such purchased Common Stock in accordance with Section 7 regarding Conversion Shares, and should the Company fail to so deliver such shares of Common Stock at or before the Right of First Refusal Closing as required hereunder, the Company shall be subject to the penalties for non-delivery of Common Stock set forth in Section 3.3(b) of the Note.

15. MISCELLANEOUS .

15.1. Governing Law; Venue . This Agreement shall be governed by and interpreted in accordance with the laws of the State of Illinois for contracts to be wholly performed in such state and without giving effect to the principles thereof regarding the conflict of laws. Each party hereto hereby (a) consents to and expressly submits to the exclusive personal jurisdiction of any state or federal court sitting in Cook County, Illinois in connection with any dispute or proceeding arising out of or relating to this Agreement, (b) agrees that all claims in respect of any such dispute or proceeding may only be heard and determined in any such court, (c) expressly submits to the venue of any such court for the purposes hereof, and (d) waives any claim of improper venue and any claim or objection that such courts are an inconvenient forum or any other claim or objection to the bringing of any such proceeding in such jurisdictions or to any claim that such venue of the suit, action or proceeding is improper. Each party hereto hereby irrevocably consents to the service of process of any of the aforementioned courts in any such proceeding by the mailing of copies thereof by reputable overnight courier (e.g., FedEx) or certified mail, postage prepaid, to such party’s address as set forth herein, such service to become effective ten (10) calendar days after such mailing.

15.2. Successors and Assigns; Third Party Beneficiaries . This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of the parties hereto. Except as otherwise expressly provided herein, no Person other than the parties hereto and their successors and permitted assigns is intended to be a beneficiary of this Agreement.

15.3. Pronouns . All pronouns and any variations thereof in this Agreement refer to the masculine, feminine or neuter, singular or plural, as the context may permit or require.

15.4. Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. The parties hereto confirm that any electronic copy of another party’s executed counterpart of this Agreement (or such party’s signature page thereof) will be deemed to be an executed original thereof.

15.5. Headings . The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

15.6. Severability . Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such provision shall be modified to achieve the objective of the parties to the fullest extent permitted and such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or enforceability of this Agreement in any other jurisdiction.

15.7. Entire Agreement . This Agreement, together with the other Transaction Documents, constitutes and contains the entire agreement and understanding between the parties hereto, and supersedes all prior oral or written agreements and understandings between Buyer, Company, their Affiliates and Persons acting on their behalf with respect to the matters discussed herein and therein, and, except as specifically set forth herein or therein, neither Company nor Buyer makes any representation, warranty, covenant or undertaking with respect to such matters.

15.8. Amendment . Any amendment, supplement or modification of or to any provision of this Agreement, shall be effective only if it is made or given by an instrument in writing (excluding any email message) and signed by Company and Buyer.

15.9. No Waiver . No forbearance, failure or delay on the part of a party hereto in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. Any waiver of any provision of this Agreement shall be effective (a) only if it is made or given in writing (including an email message) and (b) only in the specific instance and for the specific purpose for which made or given.

15.10. Currency . All dollar amounts referred to or contemplated by this Agreement or any other Transaction Documents shall be deemed to refer to U.S. Dollars, unless otherwise explicitly stated to the contrary.

15.11. Assignment . Notwithstanding anything to the contrary herein, the rights, interests or obligations of the Company hereunder may not be assigned, by operation of law or otherwise, in whole or in part, by the Company without the prior written consent of the Buyer, which consent may be withheld at the sole discretion of the Buyer. This Agreement or any of the severable rights and obligations inuring to the benefit of or to be performed by Buyer hereunder may be assigned by Buyer to a third party, including the Buyer’s financing sources, in whole or in part, without the need to obtain the Company’s consent thereto.

15.12. Advice of Counsel . In connection with the preparation of this Agreement and all other Transaction Documents, the Company, for itself and on behalf of its stockholders, officers, agents, and representatives acknowledges and agrees that Buyer’s Counsel prepared initial drafts of this Agreement and all of the other Transaction Documents and acted as legal counsel to the Buyer only. The Company, for itself and on behalf of its stockholders, officers, agents, and representatives, (a) hereby acknowledges that he/she/it has been, and hereby is, advised to seek legal counsel and to review this Agreement and all of the other Transaction Documents with legal counsel of his/her/its choice, and (b) either has sought such legal counsel or hereby waives the right to do so.

15.13. No Strict Construction . The language used in this Agreement is the language chosen mutually by the parties hereto and no doctrine of construction shall be applied for or against any party.

15.14. Attorney’s Fees . In the event of any action at law or in equity to enforce or interpret the terms of this Agreement or any of the other Transaction Documents, the prevailing party shall be entitled to reimbursement of the full amount of the attorneys’ fees and expenses paid by such prevailing party in connection with the litigation and/or dispute without reduction or apportionment based upon the individual claims or defenses giving rise to the fees and expenses. Nothing herein shall restrict or impair a court’s power to award fees and expenses for frivolous or bad faith pleading.

15.15. Waiver of Jury Trial . EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES ANY AND ALL RIGHTS SUCH PARTY MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY APPLICABLE STATUTE, LAW, RULE OR REGULATION. FURTHER, EACH PARTY HERETO ACKNOWLEDGES THAT SUCH PARTY IS KNOWINGLY AND VOLUNTARILY WAIVING SUCH PARTY’S RIGHT TO DEMAND TRIAL BY JURY .

15.16. Rights and Remedies Cumulative . All rights, remedies, and powers conferred in this Agreement and the Transaction Documents are cumulative and not exclusive of any other rights or remedies granted in this Agreement or any other Transaction Document, and any and all such rights and remedies may be exercised from time to time and as often and in such order as the Buyer may deem expedient.

15.17. Further Assurances . Each party shall do and perform or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

15.18. Notices . Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be deemed effectively given on the earliest of:

(a) the date delivered, if delivered by personal delivery as against written receipt therefor or by email to an executive officer, or by facsimile (with successful transmission confirmation),

(b) the fifth Trading Day after deposit, postage prepaid, in the United States Postal Service (with USPS tracking or by certified mail), or

(c) the second Trading Day after mailing by domestic or international express courier (e.g., FedEx), with delivery costs and fees prepaid,

in each case, addressed to each of the other parties thereunto entitled at the following addresses (or at such other addresses as such party may designate by five (5) Trading Days’ advance written notice similarly given to each of the other parties hereto):

If to the Company:

Brazil Minerals, Inc.

Attn: Marc Fogassa

324 South Beverly Drive, Suite 118

Beverly Hills, CA 90212

with a copy to (which shall not constitute notice):

Jay Weil, Esq.

27 Viewpoint Road

Wayne, New Jersey 07470

If to the Buyer:

St George Investments LLC

Attn: John M. Fife

303 East Wacker Drive, Suite 1200

Chicago, Illinois 60601

with a copy to (which shall not constitute notice):

Hansen Black Anderson Ashcraft PLLC

Attn: Jonathan K. Hansen

2940 West Maple Loop Drive, Suite 103

Lehi, Utah 84043

Telephone: 801.922.5000

Email: jhansen@hbaalaw.com

15.19. Cross Default . Any Event of Default (as defined in the Note) shall be deemed a default under this Agreement. Upon such a default of this Agreement by the Company, the Buyer shall have all those rights and remedies available in the Transaction Documents.

15.20. Expenses . Except as provided in Section 15.14, and except for the Transaction Expense Amount required to be paid by the Company to the Buyer pursuant to Section 2.3, the Company and the Buyer shall be responsible for paying such party’s own fees and expenses (including legal expenses) incurred in connection with the preparation and negotiation of this Agreement and the other Transaction Documents and the closing of the transactions contemplated hereby and thereby.

15.21. Replacement of the Note . Subject to any restrictions on or conditions to transfer set forth in the Note, the Holder of the Note, at such Holder’s option, may in person or by duly authorized attorney surrender the same for exchange at the Company’s principal corporate office, and promptly thereafter and at the Company’s expense, except as provided below, receive in exchange therefor one or more new convertible promissory note(s), each in the principal amount requested by such Holder, dated the date to which interest shall have been paid on the Note so surrendered or, if no interest shall have yet been so paid, dated the date of the Note so surrendered and registered in the name of such person or persons as shall have been designated in writing by such Holder or such Holder’s attorney for the same principal amount as the then unpaid principal amount of the Note so surrendered. As applicable, upon receipt by the Company of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of the Note and (a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it; or (b) in the case of mutilation, upon surrender thereof, the Company, at its expense, will execute and deliver in lieu thereof a new convertible promissory note executed in the same manner as the Note being replaced, in the same principal amount as the unpaid principal amount of such Note and dated the date to which interest shall have been paid on the Note or, if no interest shall have yet been so paid, dated the date of the Note.

15.22. Time of the Essence . Time is expressly made of the essence of each and every provision of this Agreement and the other Transaction Documents.

16. SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES . The Company’s and the Buyer’s covenants, agreements, representations and warranties contained herein shall survive the execution and delivery of this Agreement and the other Transaction Documents and the Closing hereunder for the maximum time allowed by applicable law, and shall inure to the benefit of the Buyer and the Company and their respective successors and permitted assigns.

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IN WITNESS WHEREOF, each of the undersigned parties represents that the foregoing statements made by such party above are true and correct and that such party has caused this Agreement to be duly executed (if an entity, on such party’s behalf by one of its officers thereunto duly authorized) as of the date first above written.

PURCHASE PRICE :	$200,000.00

	BUYER:

	St George Investments LLC

	By: Fife Trading, Inc., its Manager

		By:	/s/ John M. Fife
			John M. Fife, President

	COMPANY:

	Brazil Minerals, Inc.

	By:	/s/ Marc Fogassa
	Printed Name:	Marc Fogassa
	Title:	Chairman & CEO

ATTACHMENTS:

ANNEX I	WIRE INSTRUCTIONS
ANNEX II	NOTE
ANNEX III	TRANSFER AGENT LETTER
ANNEX IV	SECRETARY’S CERTIFICATE
ANNEX V	SHARE ISSUANCE RESOLUTION
ANNEX VI	FORM OF ANTI-DILUTION CERTIFICATION

ANNEX I

WIRE INSTRUCTIONS

Account Name: BRAZIL MINERALS, INC.

Account Number: 169003150

Bank Name: JP MORGAN CHASE, NA

ABA: 322271627

ANNEX II

Brazil Minerals, Inc.
Convertible Promissory Note

Issuance Date: February 21, 2014

U.S. $222,500.00

3.1. Conversion Right .

(a) “ Conversion Amount ” means the portion of the Outstanding Balance to be converted.

(b) “ Conversion Price ” means, as of any Conversion Date or other date of determination, $0.11, subject to adjustment as provided herein.

3.3. Mechanics of Conversion .

3.4. Limitations on Conversions .

4. RIGHTS UPON EVENT OF DEFAULT .

4.1. Event of Default . Each of the following events shall constitute an “ Event of Default ” as of the date such event first occurred:

(j) Liquidation . Any dissolution, liquidation, or winding up of the Company or any substantial portion of its business.

(n) Reverse Split . The Company effectuates a reverse split of its Common Stock without twenty (20) Trading Days prior written notice to the Holder.

(s) DWAC Eligibility . The failure of any of the DWAC Eligible Conditions to be satisfied at any time after April 8, 2014 during which the Company has obligations under this Note.

Each subsection of this Section 4.1 shall be interpreted and applied independently, and no such subsection shall be deemed to limit or qualify any other subsection in any manner whatsoever.

4.2. Notice of an Event of Default .

4.3. Remedies; Redemption Right After Default .

(e) After any Event of Default arising under Section 4.1(b), Holder will be entitled to the remedies set forth in Section 3.3(b) hereof.

5. RIGHTS UPON FUNDAMENTAL TRANSACTION .

6. DISTRIBUTION OF ASSETS; RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS .

7. RIGHTS UPON ISSUANCE OF SECURITIES .

8.3. Mechanics of Company Conversion .

12. VOTING RIGHTS . The Holder shall have no voting rights as the holder of this Note, except as required by law and as expressly provided in this Note.

13. AMENDING THE TERMS OF THIS NOTE . The prior written consent of the Holder shall be required for any change or amendment to this Note.

14. TRANSFER . This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned or transferred by the Holder without the consent of the Company.

15. REISSUANCE OF THIS NOTE .

21. NOTICES; PAYMENTS .

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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the Issuance Date set forth above.

	COMPANY:

	Brazil Minerals, Inc.

	By:	/s/ Marc Fogassa
	Name:	Marc Fogassa
	Title:	Chairman & CEO

ACKNOWLEDGED, ACCEPTED AND AGREED:

St George Investments LLC

By: Fife Trading, Inc., its Manager

	By:	/s/ John M. Fife
		John M. Fife, President