U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

  

(Mark One)

¨

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

 

For the Fiscal Year Ended __________________

 

þ

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

 

For the transition period from March 1, 2012 to  December 31, 2012

 

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: None 

 

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  

¨

 

Non-accelerated filer 

¨

 

 

 

 

 

Accelerated Filer  

¨

 

Smaller reporting company

þ

 

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 March 25, 2013, the aggregate market value of the shares of the registrant’s common stock held by non-affiliates (based upon the closing stock price of $.69 on such date as reported on otcmarkets.com) was approximately $23,505,759. 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. No market value for the registrant’s common stock as of the last day of the registrant’s second fiscal quarter has been computed because no active trading market had been established as of such date.

 

As of March 28, 2013, there were outstanding 69,963,463 shares of the registrant’s common stock, $.001 par value.

 

Documents incorporated by reference: None.

 

 


 
 

 

 

FORWARD LOOKING STATEMENTS

 

            This 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. Description of Business.

 

            Brazil Minerals, Inc. (formerly called Flux Technologies, Corp. and hereafter referred to as the “Company”) was incorporated under the laws of the State of Nevada 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, discussing offers by the Company of 3D animation services 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 the business of producing raw diamonds in one property and exploring for gold in another, with both properties located in the Federative Republic of Brazil (“Brazil”), the largest country in Latin America . The Company’s local execution is led by an experienced team of Brazilians and the Company’s management team has expertise in mining operations, regulations, commercialization, business development, and financing.

 

Recent Transactions

 

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.  

 

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On December 19, 2012, the Company consummated Subscription Agreements with 37 investors pursuant to which the Company issued and sold to the 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 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, 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 actually receives in respect of Brazil Mining’s 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. Brazil Mining has the right to redeem the Company’s 20% share for a consideration and upon the occurrence of certain events specified in 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.

 

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            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 an Exchange Agreement (the “Exchange Agreement”) pursuant to which Brazil Mining has agreed to sell to a 99.99% owned Brazilian subsidiary of the Company (“BMIX Subsidiary”), 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 (“Duas Barras”) in exchange for the issuance to Brazil Mining of 1,000,000 shares of the Company’s Common Stock. Brazil Mining also agreed that if the Exchange Agreement is consummated, Brazil Mining will in accordance with the applicable laws and regulations of Brazil and state and municipal codes, perform all that is necessary to transfer to BMIX Subsidiary the record title ownership of the 55% interest in Duas Barras upon the Company’s request.

 

Mineral Rights

 

            As of March 29, 2013 the Company had the following described interests in mineral properties:

 

Duas Barras

 

On January 2, 2013, the Company exercised an option to purchase for $800,000 a 20% share of the monthly diamond production that Brazil Mining actually receives in respect of Brazil Mining’s 55% equity interest in Duas Barras. Duas Barras owns the mining right called “Portaria de Lavra” (mining concession) number 265, published in Brazil’s Official Federal Gazette on August 25th, 2006, and awarded by DNPM (“ Departamento Nacional de Produção Mineral”, the National Mining Department, a Brazilian federal government entity) with respect to DNPM Process number 806.569/1977. The mining concession area is 170.89 hectares or approximately 422 acres. “Portaria de Lavra” is the highest level of mining right achievable; this mining concession permits mining of diamond and gold in the property. In addition to the “Portaria de Lavra”, Duas Barras has current operating and environmental licenses issued by state authorities to operate its plant. The main office of Duas Barras is located at Fazenda Duas Barras, in the municipality of Olhos D’Agua, state of Minas Gerais, CEP 39398-000, Brazil. The CNPJ (Brazilian corporate tax identification) number of Duas Barras is 07.950.123/0001-32.

 

The Duas Barras mining concession with its diamond and gold processing plant is located on the left bank of the Jequitinhonha River in the state of Minas Gerais, Brazil, approximately 250 kilometers north of Belo Horizonte, the state capital. The diamond processing plant at Duas Barras is accessible by dirt road which connects to asphalt highways. A major city, Montes Claros, the regional hub for northern Minas Gerais, with a population of over 400,000 people and a busy regional airport, is located within an hour and a half drive of Duas Barras. The Jequitinhonha River is a well-known area for diamond and gold production; it has hosted alluvial mining operations on all scales since the 18 th century.

 

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The Duas Barras diamond and gold processing plant was built by the previous owner of the mining concession, a Canadian listed company called Vaaldiam Resources Ltd. (“Vaaldiam”). Kenneth Johnson, the past president of Vaaldiam do Brasil Ltda., the Brazilian arm of Vaaldiam, is a member of the Board of Advisors of Brazil Mining, a shareholder of the Company. To the best of the Company’s knowledge, the diamond and gold processing plant at Duas Barras is the largest such type of alluvial recovery plant in Latin America. To the best of the Company’s knowledge, the cost of construction was approximately $2.5 million.

 

The Company has not performed any geological studies in Duas Barras. The Company has relied on the report entitled “Technical Report Duas Barras Diamond Project, Brazil, Presenting Details of Diamond Resources Compliant with Canadian National Instrument 43-101” (henceforth simply “Duas Barras NI 43-101”), issued by Qualified Person and Professional Geologist Paul J. Daigle, Senior Project Geologist at Vaaldiam, on March 30th, 2007. The Duas Barras NI 43-101 contains in its page 9 the following table of resources:

 

 

Mineral Resource

Volume (m 3 )

Diamond Grade (cts/m 3 )

Diamond Content (carats)

Fine Gold Grade (mg/m 3 )

Fine Gold Content (kg)

Indicated

1,843,000

0.16

295,000

182

335

Inferred

856,000

0.16

137,000

182

156

 

 

 

 

 

 

TOTAL

2,699,000

0.16

432,000

182

491

 

            The Company does not anticipate performing any geological work to confirm or deny the data above. The complete report is on file with Canada’s securities commission at www.sedar.com by searching under “Vaaldiam” and thereafter navigating to the entry entitled “Technical Report (NI 43-101)-English dated April 12, 2007.”

 

During the first quarter of 2013, one of the three main generators of the Duas Barras plant needed repairs and the plant stopped production for approximately one month. The generator has been fully repaired by Cummins, its manufacturer, and is working as of the date of this Annual Report. Additionally, being that December to March is the season of high rains, alluvial mining operations in the State of Minas Gerais (where Duas Barras is located) normally stop production during which period equipment is refurbished and gravel fronts are prepared for processing during the dry season. That was the focus of our efforts this quarter as well. During the first quarter, Duas Barras purchased a large used dredge, transported and has started to reassemble it. The dredge shall be deployed in one of the most promising locations within the mining concession. We expect Duas Barras to start using this dredge in the later part of the second quarter of 2013.

 

On March 23, 2013, the Company and Brazil Mining entered into the Exchange Agreement pursuant to which Brazil Mining has agreed to sell to BMIX subsidiary of the Company, 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 Duas Barras in exchange for the issuance to Brazil Mining of 1,000,000 shares of the Company’s Common Stock.

 

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Exploration Rights on Borba Property

 

            On December 19, 2012, pursuant to an Assignment of Mineral Rights, the Company acquired mineral exploration rights on a property located in the municipality of Borba, State of Amazonas, Brazil.

 

The Borba Project is based on the process DNPM 880.239/2009; the mineral rights cover an area of 9,999.11 hectares (approximately 24,708 acres). The geographical coordinates of the Borba Project are latitude of -06°30'00''657 and longitude of -59°27'52''267. Company management believes that Borba has promising indications for gold, but no formal geological studies have been conducted.

 

Map from DNPM delineating the Borba Project mineral rights area.

 

 

Superficial or near superficial gold pebbles have been found in the Borba Project area. The Company intends to enter into a focused research phase program in the higher likelihood target areas. 

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            Employees and Independent Contractors

 

            As of March 18, 2013, the Company had 1 full-time employee and a service agreement with Brazil Mining pursuant to which Brazil Mining performs administrative services for the Company. Brazil Mining has 5 employees engaged in different capacities.

 

            Raw Materials

 

            The Company primarily has invested in a company which is in the  business of producing raw minerals, including diamonds. The Company does not directly utilize any significant amount of raw materials. All of the raw materials needed for the Company’s business model are readily available from numerous different suppliers and at market driven prices.

 

            Seasonality 

 

            The business of the Company is seasonal. The period of high rains in the northern Minas Gerais region, from December to March, makes operations of the alluvial plant at Duas Barras inefficient. Therefore, it is customary to stop operating the plant or operating it at a much lower rate during such season.

 

            Intellectual Property

 

            The Company does not own any trademarks, service marks or patents.

 

            Competition 

 

            The Company’s existing business – diamond production – is relatively hard to penetrate due not only to regulatory and cost issues but also to lack of diamond resource areas. There are a limited number of mining locations in the world that produce diamonds or that may hold viable economic potential to do so. In Brazil, the procedures to license, explore, and eventually build a diamond processing operation could take many years and millions of dollars. The Company is aware of only two other companies in Brazil that produce alluvial diamonds in quality and quantity similar to what the Company expects to produce from Duas Barras. Therefore, the Company believes that its position as a diamond producer is quite significant. The Company believes that it has a competitive product – raw diamonds – to offer and it will be able to sell its entire production of diamonds to either domestic or foreign buyers.

 

            Diamond Sales

 

            The Company plans to focus on qualifying a few strong buyers for its production and essentially pre-selling its output, provided some parameters of size and clarity of gems are observed. The Company has set up a portal window on its website (www.brazil-minerals.com) called “Diamond Sales” that allows its qualified buyers to begin to access information about the Company’s production and special gems. Special gems would normally be diamonds that are greater than  a certain size or that are colored. Additionally, the Company has secured commitments from other smaller local diamond producers in Brazil that would like to offer their gems, including colored diamonds, online through the Diamond Sales portal. The Company will initiate such intermediation in the future and will charge a commission on such sales.  

 

 

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Item 1A. Risk Factors.

 

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

 

Item 1B. Unresolved Staff Comments.

 

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

 

Item 2. Properties.

 

            The Company receives shareholder and other official correspondence at its headquarters location in Beverly Hills, California, which is covered by the service agreement between the Company and Brazil Mining and is on a month-to-month basis. The Company’s main operational office in Brazil is at a modern office building in the city of Belo Horizonte, the capital of the state of Minas Gerais with a population of approximately 2.5 million people. The Company sub-leases its office for $1,100 Brazilian reais (or approximately USD$550) from an affiliate on a month-to-month basis; the lessor is BM Participações Ltda., which is a 99.99% owned subsidiary of Brazil Mining. The Company utilizes an office in São Paulo, the financial center of Brazil with a population of approximately 12 million people, where consultants and secretarial staff work from, which it also sub-leases from an affiliate on a monthly basis for a cost of approximately US$150. 

 

Item 3. Legal Proceedings.

 

            We know of no material, active, pending or threatened proceeding against the Company nor are we involved as a plaintiff in any material proceeding or pending litigation.

 

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.

 

            We have two classes of equity securities:  (i) Common Stock, par value $.001 per share (“Common Stock”), 69,963,463 shares of which are outstanding as of March 29, 2013, held by approximately 55 shareholders of record and (ii) Series A Convertible Preferred Stock, par value $.001 per share, (“Series A Stock”), 1 share of which is outstanding as of March 29, 2013, held by one person. Our Common Stock is quoted on the Over-the-Counter Bulletin Board ("OTCBB") under the symbol "BMIX". There is a limited public market for our common shares.   Trading in stocks quoted on the OTC Bulletin Board is often thin and is characterized by wide fluctuations in trading prices due to many factors that may be unrelated to a company’s operations or business prospects.  We cannot assure you that there will be a market in the future for our Common Stock.

 

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            OTC Bulletin Board securities are not listed or traded on the floor of an organized national or regional stock exchange.  Instead, OTC Bulletin Board securities transactions are conducted through a telephone and computer network connecting dealers in stocks.  OTC Bulletin Board issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.

 

            Prior to March 7, 2013 there were no quotations for the Common Stock. During the period from March 7, 2013 to March 28, 2013 the Common Stock has traded at prices ranging from $.60 to $1.10 per share. The last trade of the Common Stock on March 28, 2013 was at $.62 per share.

 

            The Company has not paid any cash dividends since its inception and we do not foresee declaring any cash dividends on our Common Stock in the foreseeable future. 

 

            As of December 31, 2012, the Company had no equity compensation plans under which equity securities of the Company were authorized for issuance.

 

Penny Stock Regulations

 

            The Commission has adopted regulations which generally define "penny stock" to be an equity security that has a market price of less than $5.00 per share.  Our Common Stock, when and if a trading market develops, may fall within the definition of penny stock and be subject to rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000, or annual incomes exceeding $200,000 individually, or $300,000, together with their spouse).

 

            For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser's prior written consent to the transaction. Additionally, for any transaction, other than exempt transactions, involving a penny stock, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the Commission relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the "penny stock" rules may restrict the ability of broker-dealers to sell our Common Stock and may affect the ability of investors to sell their Common Stock in the secondary market.

 

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Sales of Unregistered Securities

 

On December 19, 2012, the Company consummated Subscription Agreements with 37 investors pursuant to which the Company issued and sold to the 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. Such Common Stock was issued in accordance with an exemption from the registration requirements of 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. In connection with such sales, the Company issued to the placement agent and its designees as partial compensation to the placement agent for its services in the transaction described in this paragraph 85,411 shares of Common Stock and five year warrants to purchase for $33.333 per share an aggregate of 6,000 shares of Common Stock. The warrants were also issued under an exemption provided by Section 4(2) of the Securities Act. (The number of shares of Common Stock and the purchase prices and exercise prices set forth in this paragraph have not been adjusted to give effect to the 33.333-1 stock dividend paid to holders of record of the Company’s Common Stock as of January 22, 2013.)

 

On December 19, 2012, the Company issued and sold to Marc Fogassa, the Company’s Chief Executive Officer, for $1.00 one share of the Company’s Series A Stock. The Series A was issued in accordance with an exemption from the registration requirements of 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.

 

             

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.

 

 

Results of Operations

 

            The Company was incorporated on December 15, 2011 and changed its business plan in December 2012. No meaningful comparison of the Company’s financial condition as of December 31, 2012 and loss for the period ended December 31, 2012 can be made to any other date or period.

 

Liquidity and Capital Resources

 

            In 2012 the Company’s principal source of liquidity was from the $2,000,000 gross proceeds of a private placement of common stock in December 2012. As of December 31, 2012, the working capital of the Company was $795,727. As of December 31, 2012, the Company had accrued expenses of $67,362 and $100 indebtedness for money advanced by an officer.

 

            The Company believes that it has sufficient capital to fund its operations for at least the next twelve months. However, the Company may need additional capital to fund some or all of the purchase price for future acquisitions or investments may seek equity or debt financing for such purpose.

 

 

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Off-Balance Sheet Arrangements

 

            The Company currently has no off-balance sheet arrangements.

 

Critical accounting policies and estimates

 

            The Company’s 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 the Company’s financial statements. If our estimate of the fair value is incorrect at December 31, 2012, 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 the Company.

 

 

Plan of Operation

 

            Over the long term, in a number of years, the Company intends to control and operate a number of productive mines. The Company also intends to participate in a larger number of other mines as a significant partner, bringing its expertise in capital raising and global contacts to bear. In yet a larger number of other opportunities, the Company intends to be a passive participant, collecting payment, rent, royalties, dividends or other distributions from the sale or exploration of mineral areas that it acquires or licenses. We believe that this business model will significantly diversify revenues across minerals, regions, and operations, and provide an attractive means for investors to participate in the investment in the natural resources sector of Brazil. The Company believes that based on the example of other companies in  the industry it may be able to achieve a significant capitalization without the necessity of a large employee base.

 

            In order to achieve the strategic goals set about above, the Company will need to improve its capital structure over time by means of equity or debt financings. Management believes that through its contacts in the industry, the Company will be able to review a significant number of potential acquisitions of mineral properties in Brazil.

 

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            The Company’s goal for 2013 with respect to its Duas Barras's stake is to ensure that Duas Barras provides to the Company a source of quality diamonds from which the Company can expand its beginning network of buyers. The Company has set up a page on its website called "Diamond Sales" in which registered buyers will access relevant information and photographs of production and specific gems from the Company and other affiliated sellers, from which the Company would receive a sales commission.

 

            The Company’s goal for 2013 with respect to its Borba Project is to complete an initial assessment of the viability of the area for a drilling program and, if warranted, to embark upon such drilling program in the future. The results of this drilling program would dictate the next phase of business development for this project, as to whether the Company would raise capital to study it further and take it all the way to a producing mine on its own, or to partner along the way.

  

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  

The Company’s management, with the participation of the Company’s Principal Executive Officer and Principal Financial Officer, has evaluated the design, operation, and effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of December 31, 2012. On the basis of that evaluation, management concluded that the Company’s disclosure controls and procedures are designed, and are effective, to provide reasonable assurance that the information required to be disclosed in reports filed or submitted pursuant to the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Commission, and that such information is accumulated and communicated to management, including its Principal Executive Officer and Principal Financial Officer as appropriate, to allow timely decisions regarding required disclosure.

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(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).  The Company’s internal control system is designed to provide reasonable assurance to management and to the Company’s Board of Directors regarding the preparation and fair presentation of published financial statements. Under the supervision and with the participation of management, including the Company’s Principal Executive Officer and Principal Financial Officer, management conducted an evaluation of the effectiveness of the Company’s 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 management’s evaluation under the framework in Internal Control—Integrated Framework, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2012.

            This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.  Since the Company is a non-accelerated filer, management’s report is not subject to attestation by the Company's 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.

(c)   Changes in Internal Control over Financial Reporting

            There were no changes in the Company’s internal control over financial reporting that occurred in the fourth quarter of 2012 that materially affected, or would be reasonably likely to materially affect, the Company’s internal control over financial reporting.

(d)   Limitations of the Effectiveness of Internal Controls

The effectiveness of the Company’s system of disclosure controls and procedures and internal control over financial reporting is subject to certain limitations, including the exercise of judgment in designing, implementing and evaluating the control system, the assumptions used in identifying the likelihood of future events, and the inability to eliminate fraud and misconduct completely. As a result, there can be no assurance that the Company’s disclosure controls and procedures and internal control over financial reporting will detect all errors or fraud. However, the Company’s control systems have been designed to provide reasonable assurance of achieving their objectives, and the Company’s Principal Executive Officer and Principal Financial Officer have concluded that the Company’s disclosure controls and procedures and internal control over financial reporting are effective at the reasonable assurance level.

Item 9B. Other Information.

            None. 

13

 


 
 

 

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The following table sets forth certain information as of March 28, 2013 concerning our directors and executive officers:

 

Name

 

Age

 

Position

 

 

 

 

 

Marc Fogassa

 

46

 

Director, Chairman, Chief Executive Officer,

President, Chief Financial Officer, Treasurer and Secretary

 

 

 

 

 

Ambassador Robert F. Noriega

 

53

 

Director

 

 

 

 

 

Ambassador Paul Durand

 

71

 

Director

 

 

 

 

 

 

            Marc Fogassa, age 46, was elected a director and officer of the Company on December 18, 2012. He has been the Chairman and Chief Executive Officer of Brazil Mining, Inc., a privately held Delaware corporation which owns 51% of the Company’s Common Stock, since March 2012. Dr. Fogassa has 14 years of investment experience in private and public equity. He was a venture capitalist initially at Atlas Venture and later at Axiom Ventures, and involved in originating, structuring, and monitoring multiple transactions. He has been on the board of directors of six private companies. Among various transactions, Dr. Fogassa co-led an early stage round and at that time joined the board of directors of Achillion Pharmaceuticals, a company that later underwent a public offering and is now listed on Nasdaq. Dr. Fogassa has invested in multiple Brazilian public companies while at Hedgefort, a registered investment adviser. He is frequently invited as speaker on Brazilian issues. Previously, Dr. Fogassa was at Goldman Sachs & Co. and Deloitte Consulting. Dr. Fogassa is a registered representative of Hunter Wise Financial Group, LLC, a broker-dealer and the private placement agent for the private placement of the Company’s Common Stock reported in this Current Report. Dr. Fogassa has Series 63, 65, and 79 FINRA certifications. Dr. Fogassa double-majored from the Massachusetts Institute of Technology and graduated with two Bachelor of Science degrees in 1990, and also graduated from the Harvard Medical School with a Doctor of Medicine degree in 1995, and from the Harvard Business School with a Master in Business Administration degree in 1999. Dr. Fogassa was born in Brazil and is fluent in Portuguese and English.

 

 

Ambassador Roger F. Noriega, age 53, was elected a director of the Company on December 31, 2012. He has more than two decades of public policy experience focusing on U.S. interests in the Western Hemisphere. Ambassador Noriega's breadth of experience and contacts offers strategic vision and practical insight on U.S. foreign policy and aid programs. As U.S. Assistant Secretary of State from July 2003 to October 2005, Mr. Noriega managed a 3,000-person team of professionals in Washington and 50 diplomatic posts to design and implement political and economic strategies in Canada, Latin America, and the Caribbean. He was a leader in an inter-agency team that actively expanded trade and investment opportunities to spur economic growth and to create opportunities for U.S. companies and consumers. He also helped design and execute an annual plan for the effective use of USD$1.7 billion in U.S. economic assistance in two dozen countries.

 

14


 
 

 

 

As U.S. Ambassador to the Organization of American States (“OAS”) from August 2001 to July 2003, Ambassador Noriega coordinated complex and sensitive multilateral diplomacy in a 34-member international organization to bolster OAS efforts to promote trade, fight illicit drugs, and defend democracy. Ambassador Noriega counseled powerful Congressional leaders on all aspects of U.S. interests in the Americas, drafted historic legislation, and oversaw U.S. aid programs, the Peace Corps, and international narcotics affairs. From July 1997 to August 2001, he was a member of the Senate Foreign Relations Committee staff of Chairman Jesse A. Helms (R-NC), and from July 1994 to July 1997, he served on the House International Relations Committee staff of Chairman Benjamin A. Gilman (R-NY). Mr. Noriega’s other experiences include: senior advisor, OAS (July 1993 to July 1994); senior policy advisor, U.S. Mission to the OAS (August 1990 to January 1993); various program management and public affairs positions, U.S. Agency for International Development and U.S. Department of State (November 1986 to July 1990); press secretary and foreign policy advisor, U.S. Representative Robert Whittaker (R-KS) (May 1983 to October 1986); and research assistant, Kansas Secretary of State (December 1981 to April 1983). Ambassador Noriega is the Founder and CEO of VisonAmericas, a Latin America-focused consulting group. Since April 2012, Ambassador Noriega has been a director of Brazil Mining. Ambassador Noriega has a Bachelor of Arts degree from Washburn University of Topeka, Kansas  

 

Ambassador Paul Durand, age 71, was elected a director of the Company on December 31, 2012. He has had extensive international experience in both the private and public sectors. From 1992 to 1995, Ambassador Durand was Canada’s Ambassador in Costa Rica, with concurrent accreditation to Honduras, Nicaragua and Panama. From 1995 to August 2000, he was Director General responsible for Canada’s relations with Latin America and the Caribbean in the Department of Foreign Affairs and International Trade. In August 2000, he was appointed Ambassador to Chile. A year later in August 2001, he was appointed Ambassador to the OAS and Canada’s National Coordinator for the Summits of the Americas process, positions that he held until 2006. From 2007 until 2009 he was the resident representative of the OAS in the Dominican Republic.

 

Ambassador Durand has participated in numerous electoral observer missions in Central and South America, and was appointed to lead the OAS observer mission to the 2006 elections in Costa Rica, as well as the OAS Mission to observe the referendum on free trade in Costa Rica in 2007. In Canada’s diplomatic service, Ambassador Durand specialized in Latin America, but also served in East Africa and South Asia (India and Nepal). He worked for the Canadian International Development Agency and also as a foreign policy advisor in the office of the Canadian Prime Minister (Privy Council Office), before joining the Department of Foreign Affairs and International Trade. Ambassador Durand is on the Board of Advisors of VisionAmericas, a Latin America-focused consulting group. Since April 2012, Ambassador Durand has been a director of Brazil Mining. He was educated in Canada, obtaining a B.A. (Political Economy) from the University of Toronto, and pursued further studies in International Relations and Economics at Northwestern University in Chicago and Carleton University in Ottawa. He joined the Canadian government after working in international banking in Latin America (Colombia, El Salvador), the Caribbean (Bahamas) and the US (Chicago).

 

15


 
 

 

 

            All of our directors hold their positions on the board until our next annual meeting of the shareholders, and until their successors have been qualified after being elected or appointed.  Officers serve at the discretion of the board of directors.

 

            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 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 vacate 

 

Board Composition

 

            The Company’s Board of Directors is currently composed of three members – Marc Fogassa, Ambassador Roger Noriega and Ambassador Paul Durand.

 

            The Company currently does not have standing audit, nominating or compensation committees. Currently, its entire board of directors is responsible for the functions that would otherwise be handled by these committees.  We intend, however, to establish an audit committee, a nominating committee and a compensation committee of the Board of Directors as soon as practicable.  We envision that nominating committee would be primarily responsible for nominating directors and setting policies and procedures for the nomination of directors.  The nominating committee would also be responsible for overseeing the creation and implementation of our corporate governance policies and procedures.  The compensation committee will be primarily responsible for reviewing and approving our salary and benefit policies (including stock options), including compensation of executive officers.  

 

16


 
 

 

 

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. At the present time, we believe that the members of board of directors are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting.  We currently do not have a member who qualifies as an “audit committee financial expert” as defined in Item 407(e)(5) of Regulation S-K  and is “independent” as the term is used in Item 407(a)(1)) of Regulation S-K under the Exchange Act.  Our board of directors is in the process of searching for a suitable candidate for this position.

Item 11. Executive Compensation.

               The following table sets forth information concerning cash and non-cash compensation paid by the Company to its Chief Executive Officer for each of the year ended February 29, 2012 and the transition period from March 1, 2012 to December 31, 2012. No executive officer of the Company received compensation in excess of $100,000 for either of those two years.

  

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
C.E.O

2/29/2012

-

 

-

-

-

-

-

-

 

-

 

12/31/2012

-

-

-

-

-

-

-

_

Iryna Antaniuk
C.E.O

2/29/2012

-

 

-

-

-

-

-

-

 

-

 

12/31/2012

-

-

-

-

-

-

-

_

Employment Agreement with Marc Fogassa

            On December 31, 2012, the Company and Marc Fogassa entered into an Employment Agreement which had been approved by the Company’s independent directors with Mr. Fogassa recusing himself on such vote. Under the agreement, Mr. Fogassa is employed as Chief Executive Officer, Chairman, Chief Financial Officer, Treasurer and Secretary of the Company for an indefinite term.

17


 
 

            Under the agreement, Mr. Fogassa received a sign up bonus of $50,000 which was paid in January 2013 and is being paid a salary of $150,000 per year. His salary is subject to increase to $175,000 per year and $200,000 per year upon the consummation of sales of Company securities for aggregate amounts of at least $2,500,000 and $5,000,000 in the aggregate, respectively. Mr. Fogassa also receives other standard benefits.

            The agreement is terminable immediately by either party, provided that if Mr. Fogassa’s employment is terminated for any reason by the Company, the Company shall be required to make a $500,000 lump sum cash payment to Mr. Fogassa, and after a change of control or other corporate event Mr. Fogassa is not the Chief Executive Officer of the Company or a controlling person of the Company, then the Company shall be required to make a $2,000,000 lump sum cash payment to Mr. Fogassa.

 Outstanding Equity Awards at Fiscal Year End

            None.

 

Director Compensation

 

            For the year ended December 31, 2012, none of the members of our Board of Directors received compensation for his service as a director.

 

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 as of April 8, 2013 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.

 

Name and Address (1)

Office

Shares Beneficially Owned (2)

Percent of Class (3)

Marc Fogassa

Director, Chairman, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer

37,002,144 (4)

52.8%

Brazil Mining, Inc.

-

35,783,343

51.1%

Iron Grid Ltd.

120 Vantis, Suite 300

Aliso Viejo, California 92656

-

5,199,948

7.4%

Roger F. Noriega

Director

-

*

Paul Durand

Director

-

*

 

* Less than 1%

 

(1)  Unless otherwise specified, the address of each of the officers and directors set forth below is in care of the Company, 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 69,963,463 shares of Common Stock outstanding and computed in accordance with rules promulgated by the Commission

 

(4) Includes (a) 35,783,343 shares of Common Stock owned by Brazil Mining, Inc., a Delaware corporation of which Mr. Fogassa owns approximately 65% of the voting stock and is a director and Chief Executive Officer and (b) 79,999 shares of Common Stock which may be purchased by Mr. Fogassa at any time or from time to time during the period from January 25, 2013 to December 18, 2017 upon exercise of warrants held by Mr. Fogassa to purchase for $1.00 per share 79,999 shares of Common Stock.

 

18


 
 

 

 

 

Item 13. Certain Relationships and Related Transactions, and Director Independence.

 

On December 19, 2012 Marc Fogassa, the Chief Executive Officer and a director of the Company, purchased from the Company for $1.00 one share of Series A Stock. Such share is the only share of Series A Stock issued and outstanding. 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.

 

On December 19, 2012 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. Marc Fogassa, the Chief Executive Officer and a director of the Company is the Chief Executive Officer, a director and shareholder of Brazil Mining.

 

Hunter Wise Securities, LLC ("Hunter Wise"), was the placement agent for the sale of 60,002 shares of Common Stock of the Company to 31 investors in December 2012. The Company paid to Hunter Wise compensation, including cash, Common Stock and warrants to purchase Common Stock, in connection with Hunter Wise's services in such transaction. Marc Fogassa, the Chief Executive Officer of the Company, is a registered representative and a Managing Director of Hunter Wise, and received a portion of the compensation paid to Hunter Wise for such transaction.

 

19


 
 

 

 

On December 31, 2012, the Company and Marc Fogassa entered into an employment agreement. A description of such employment agreement is set forth in Item 11 hereof under the subheading “Employment Agreement with Marc Fogassa.”

 

On January 1, 2013 the Company and Brazil Mining entered into an Administrative Services & Personnel Reimbursement Agreement under which Brazil Mining provides to the Company personnel to carry out the Company’s business activities and day to day administration. As compensation for such services the Company agreed to pay to Brazil Mining an amount equal to Brazil Mining’s direct cost in providing such services. The agreement is for a five year term, but may be terminated upon written notice by the Company.

 

Other than the above transactions or as otherwise set forth in this Annual Report or in any reports filed by the Company with the Commission, there have been no related party transactions, or any other transactions or relationships required to be disclosed pursuant to Item 404 of Regulation S-K.

 

Director Independence

 

            The Company believes that both Ambassador Roger Noriega and Ambassador Paul Durand are “independent” as such term is defined by the rules of the Nasdaq Stock Market.

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"), the Company’s principal accountant, to the Company for the audit of the Company's financial statements for as of February 29, 2012 and as of December 31, 2012 and for the periods then ended an aggregate of $16,000. In addition, Silberstein was paid an aggregate of $3,750 for its reviews of the Company’s quarterly financial statements during 2012.

Audit-Related Fees

            During 2012 and 2011 there were no fees paid to Silberstein in connection with the Company's 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 the Company's financial statements and not reported under "Audit Fees" above.

20


 
 

 

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 the Company by Silberstein in 2012 or 2011.

Pre-Approval Policies and Procedures

            Engagement of accounting services by the Company is not made pursuant to any pre-approval policies and procedures. Rather, the Company believes that its accounting firm is independent because all of its engagements by the Company are approved by the Company's Board of Directors prior to any such engagement.

            The Company's Board of Directors will meet periodically to review and approve the scope of the services to be provided to the Company 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 the Company's independent registered public accounting firm to perform audit and permissible non-audit services for the Company, such as quarterly financial reviews, tax matters, consultation on new accounting and disclosure standards.

            Before the auditors are engaged to provide those services, the 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.

21


 

 

 

 

 

 

 

BRAZIL MINERALS, INC.

 

(FORMERLY, FLUX TECHNOLOGIES, CORP.)

 

(AN EXPLORATION STAGE COMPANY)

 

TABLE OF CONTENTS

 

DECEMBER 31, 2012

 

 

 

   
Report of Independent Registered Public Accounting Firm   F - 1  
   
Balance Sheets as of December 31, 2012 and February 29, 2012   F - 2  
   
Statements of Operations for the periods ended    
December 31, 2012 and February 29, 2012 and the period from    
December 15, 2011 (Date of Inception) to December 31, 2012   F - 3  
   
Statement of Stockholders’ Equity as of December 31, 2012   F - 4  
   
Statements of Cash Flows for the periods ended    
December 31, 2012 and February 29, 2012 and the period from    
December 15, 2011 (Date of Inception) to December 31, 2012   F - 5  
   
Notes to Financial Statements   F - 6 – F - 12  

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

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

 

Report of Independent Registered Public Accounting Firm

 

To the Board of Directors of

Brazil Minerals, Inc. (formerly, Flux Technologies, Corp.)

Beverly Hills, California

 

We have audited the accompanying balance sheets of Brazil Minerals, Inc. (formerly, Flux Technologies, Corp.)  (the “Company”) as of December 31, 2012 and February 29, 2012 and the related statements of operations, stockholders’ equity, and cash flows for the periods from March 1, 2012 through December 31, 2012, December 15, 2011 (Date of Inception) through February 29, 2012 and December 15, 2011 (Date of Inception) 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 financial statements referred to above present fairly, in all material respects, the financial position of Brazil Minerals, Inc. (formerly, Flux Technologies, Corp.) as of December 31, 2012 and February 29, 2012 and the results of its operations and its cash flows for the periods from March 1, 2012 through December 31, 2012, December 15, 2011 (Date of Inception) through February 29, 2012 and December 15, 2011 (Date of Inception) 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 4, 2013

 

 

 

 

 

 

 

F-1

 


 

 

BRAZIL MINERALS, INC.

(FORMERLY, FLUX TECHNOLOGIES, CORP.)

(AN EXPLORATION STAGE COMPANY)

BALANCE SHEETS

AS OF DECEMBER 31, 2012 AND FEBRUARY 29, 2012

 

 

 

December 31,
2102

 

February 29,
2012

ASSETS

 

 

 

 

Current Assets

 

 

 

 

Cash and cash equivalents

 

$ 863,189

 

$ 21,488

Total Current Assets

 

863,189

 

21,488

 

 

 

 

 

Other Assets

 

 

 

 

Loan receivable-related party

 

800,000

 

-

 

 

 

 

 

Total Assets

$

 1,663,189

$

 21,488

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

Liabilities

 

 

 

 

Current Liabilities

 

 

 

 

Accrued expenses

 

$ 67,362

 

$ 4,000

Loan from Director

 

100

 

-

Total Liabilities

 

67,462

 

4,000

 

 

 

 

 

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; 69,963,434 shares issued and outstanding on a post stock dividend basis ( February 29, 2012- 129,332,040)

 

69,963

 

3,880

Additional paid-in-capital

 

37,370,516

 

18,320

Stock Warrants

 

117,765

 

-

Deficit accumulated during the development stage

 

(35,962,517)

 

(4,712)

Total Stockholders’ Equity

 

1,595,727

 

17,488

 

 

 

 

 

Total Liabilities and Stockholders’ Equity

$

 1,663,189

$

 21,488

 

 

 

 

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

 

F-2

 


 

 

BRAZIL MINERALS, INC.

(FORMERLY, FLUX TECHNOLOGIES, CORP.)

(AN EXPLORATION STAGE COMPANY)

STATEMENTS OF OPERATIONS

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

FOR THE PERIOD FROM DECEMBER 15, 2011 (INCEPTION) TO FEBRUARY 29, 2012

FOR THE PERIOD FROM DECEMBER 15, 2011 (INCEPTION) TO DECEMBER 31, 2012

 

 

 

For the period from March 1, 2012 to December 31, 2012

 

For the period from December 15, 2011 (Inception) to February 29, 2012

 

For the period from December 15, 2011 (Inception) to December 31, 2012

 

 

 

 

 

 

 

REVENUES

$

 -

$

 -

$

 -

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

Professional fees

 

94,658

 

-

 

94,658

General and administrative expenses

 

3,885

 

-

 

3,885

Compensation and related costs

 

54,112

 

-

 

54,112

TOTAL OPERATING EXPENSES

 

152,655

 

-

 

152,655

 

 

 

 

 

 

 

LOSS FROM CONTINUING OPERATIONS

 

(152,655)

 

-

 

(152,655)

LOSS FROM DISCONTINUED OPERATIONS

 

(21,808)

 

(4,712)

 

(26,520)

 

 

 

 

 

 

 

LOSS BEFORE PROVISION FOR INCOME TAXES

 

(174,463)

 

(4,712)

 

(179,175)

 

 

 

 

 

 

 

PROVISION FOR CORPORATE INCOME TAXES

 

-

 

-

 

-

 

 

 

 

 

 

 

NET LOSS

$

 (174,463)

$

 (4,712)

$

 (179,175)

 

 

 

 

 

 

 

NET LOSS PER SHARE: BASIC AND DILUTED

$

 (0.00)

$

(0.00)

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED

 

122,907,180

 

63,694,290

 

 

 

 

 

 

 

 

 

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

 

F-3

 


 

 

BRAZIL MINERALS, INC.

(FORMERLY, FLUX TECHNOLOGIES, CORP.)

(AN EXPLORATION STAGE COMPANY)

STATEMENT OF STOCKHOLDERS’ EQUITY

FOR THE PERIOD FROM DECEMBER 15, 2011 (INCEPTION) TO DECEMBER 31, 2012

 

 

Preferred Stock

Common Stock

 

Additional Paid-in

Capital

 

Stock

Warrants

 

Deficit Accumulated During the Exploration

Stage

 

 

 

Shares

 

Amount

Shares

 

Amount

 

 

 

 

Total

Inception, December 15, 2011

-

$

 -

-

$

 -

$

 -

$

 -

$

 -

$

 -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares issued for cash

-

 

-

99,999,000

 

3,000

 

-

 

-

 

-

 

3,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares issued for cash

-

 

-

23,999,760

 

720

 

13,680

 

-

 

-

 

14,400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares issued for cash

-

 

-

5,333,280

 

160

 

4,640

 

-

 

-

 

4,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the period

-

 

-

-

 

-

 

-

 

-

 

(4,712)

 

(4,712)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, February 29, 2012

0

 

0

129,332,040

 

3,880

 

18,320

 

0

 

(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)

 

-

 

-

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the period

-

 

-

-

 

-

 

-

 

-

 

(174,463)

 

(174,463)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2012

1

$

 0

69,963,434

$

69,963

$

37,370,516

$

 117,765

$

(35,962,517)

$

1,595,727

 

 

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

 

F-4

 


 

 

BRAZIL MINERALS, INC.

(FORMERLY, FLUX TECHNOLOGIES, CORP.)

(AN EXPLORATION STAGE COMPANY)

STATEMENTS OF CASH FLOWS

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

FOR THE PERIOD FROM DECEMBER 15, 2011 (INCEPTION) TO FEBRUARY 29, 2012

FOR THE PERIOD FROM DECEMBER 15, 2011 (INCEPTION) TO DECEMBER 31, 2012

 

 

 

For the period from March 1, 2012 to December 31, 2012

 

For the period from December 15, 2011 (Inception) to February 29, 2012

 

For the period from December 15, 2011 (Inception) to December 31, 2012

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss for the period

$

 (174,463)

$

 (4,712)

$

 (179,175)

Loss from discontinued operations

 

21,808

 

4,712

 

26,520

Loss from continuing operations

 

(152,655)

 

0

 

(152,655)

Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:

 

 

 

 

 

 

Change in assets and liabilities:

 

 

 

 

 

 

Increase in accrued expenses

 

66,112

 

0

 

66,112

Net Cash Used in Continuing Operating Activities

 

(86,543)

 

0

 

(86,543)

Net Cash Used in Discontinued Operations

 

(24,558)

 

(712)

 

(25,270)

Net Cash Used in Operating Activities

 

(111,101)

 

(712)

 

(111,813)

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Advances to a related party

 

(800,000)

 

-

 

(800,000)

Net Cash Used in Investing Activities

 

(800,000)

 

-

 

(800,000)

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Loans from officers

 

100

 

-

 

100

Net proceeds from the sale of common stock

 

2,000,033

 

-

 

2,000,033

Cash paid for share offering costs

 

(253,500)

 

 

 

(253,500)

Net Cash Provided by Continuing Financing Activities

 

1,746,633

 

0

 

1,746,633

Net Cash Provided by Discontinued Financing Activities

 

6,169

 

22,200

 

28,369

Net Cash Provided by Financing Activities

 

1,752,802

 

22,200

 

1,775,002

 

 

 

 

 

 

 

Net Increase in Cash and Cash Equivalents

 

841,701

 

21,488

 

863,189

 

 

 

 

 

 

 

Cash and equivalents, beginning of period

 

21,488

 

-

 

-

 

 

 

 

 

 

 

Cash and equivalents, end of period

$

 863,189

$

 21,488

$

 863,189

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

 

Cash paid for interest

$

 0

$

 0

$

0

Cash paid for income taxes

$

 0

$

 0

$

0

 

 

 

 

 

 

 

SUPPLEMENTAL NON-CASH INVESTING AND FINANCING INFORMATION:

 

 

 

 

 

 

Shares issued for exploration rights and mineral property option

$

35,783,342

$

 0

$

 35,783,342

Shares and warrants issued as stock offering costs

$

2,923,245

$

0

$

2,923,245

Forgiveness of shareholder debt recorded as contributed capital

$

 6,169

$

 0

$

 6,169

 

 

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

 

F-5

 


 

 

BRAZIL MINERALS, INC.

(FORMERLY, FLUX TECHNOLOGIES, CORP.)

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2012

 

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Organization and Description of Business

Brazil Minerals, Inc. was incorporated as Flux Technologies, Corp. (“BMIX” and the “Company”) under the laws of the State of Nevada, U.S. on December 15, 2011.  The Company is in the exploration stage. From inception through December 31, 2012 the Company has accumulated losses of $179,175.

 

On December 18, 2012, the Company entered into and consummated an acquisition agreement with Brazil Mining, Inc. (“Brazil Mining”) whereby Brazil Mining 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 Brazil Mining owned 51% of the outstanding common stock of the Company. The Company changed its name to Brazil Minerals, Inc. on December 24, 2012.

 

The Company elected to change its year end date from February 28 or 29 to December 31. 

 

Basis of Presentation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars.

 

Accounting Basis

The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP” accounting).  The Company had initially adopted February 28/29 as its fiscal year end, but after the change in control changed the fiscal year end date to December 31, in order to align its year-end with that of its majority shareholder.

 

Exploration Stage Company

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles related to accounting and reporting by exploration-stage companies.  An exploration-stage company is one in which planned principal operations have not commenced, or if its operations have commenced, there has been no significant revenues therefrom. 

 

Fair Value of Financial Instruments

The Company’s 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 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 are insured up to $250,000. At December 31, 2012 the Company's bank deposits exceeded the insured amounts.

 

 

 

 

 

F-6

 


 

 

BRAZIL MINERALS, INC.

(FORMERLY, FLUX TECHNOLOGIES, CORP.)

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2012

 

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Revenue Recognition

The Company will recognize revenue when products are fully delivered or services have been provided and collection is reasonably assured.

 

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.

 

Basic Income (Loss) Per Share

The Company computes loss per share in accordance with “ASC-260”, “Earnings per Share” 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.

 

Advertising Costs

The Company’s policy regarding advertising is to expense advertising when incurred. The Company incurred advertising expense of $0 during the periods ended December 31, 2012 and February 29, 2012.

 

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-7

 


 

 

BRAZIL MINERALS, INC.

(FORMERLY, FLUX TECHNOLOGIES, CORP.)

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2012

 

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

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

As of December 31, 2012, the Company has not issued any stock-based payments to its employees. Stock-based compensation is accounted for at fair value in accordance with ASC 718.  As of December 31, 2012, the Company had not adopted a stock option plan and had not granted any stock options as employee compensation.

 

Recent accounting pronouncements  

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 the Company.

 

NOTE 2 – LOAN RECEIVABLE-RELATED PARTY

 

The Company issued a loan receivable to its majority shareholder for $800,000. The loan is non-interest bearing and has no specified terms of repayment and is an advance related to the exercise of an option agreement held by Brazil Mining for a 20% share of a monthly diamond production at a property in the State of Minas Gerais, Brazil.  The option pursuant to the option agreement was exercised on January 2, 2013.

 

NOTE 3 – ACCRUED EXPENSES

 

Accrued expenses consisted of the following as of December 31, 2012 and February 29, 2012:

 

 

 

December
31, 2012

 

February
29, 2012

Audit and accounting fees

$

 13,250

$

 4,000

Officer compensation

 

50,000

 

0

Payroll taxes

 

4,112

 

0

Total Accrued Expenses

$

 67,362

$

 4,000

 

NOTE 4 – LOANS FROM OFFICERS

 

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 the bank account opening.  This loan is non-interest bearing, due upon demand and unsecured. The balance due to the director was $100 as of December 31, 2012.

 

F-8

 


 

 

BRAZIL MINERALS, INC.

(FORMERLY, FLUX TECHNOLOGIES, CORP.)

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2012

 

NOTE 5 – COMMON STOCK

 

As of December 31, 2012 the Company had 150,000,000 common shares authorized with a par value of $0.001 per share.

 

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.

 

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 held by Brazil Mining.

 

On December 19, 2012, the Company consummated a private placement with 37 investors in 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. 

 

As part of the private placement, 200,000 warrants to purchase shares of common stock valued at $117,765 were issued as part of share offering costs.  These warrants expire on December 18, 2017 and have an exercise price of $ 1.00.  Any change in the value of the share price to the actual exercise date will be recorded as beneficial conversion at the date of the conversion.

 

The estimated grant date fair value of the warrants granted during the period to December 31, 2012 was estimated using the Black-Scholes option pricing model with the following assumptions: our stock price on date of grant, expected dividend yield of 0%, expected volatility of 72.24%, risk-free interest rate of 0.78%, and expected term of 5 years.

 

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.

 

 

 

F-9

 


 

 

BRAZIL MINERALS, INC.

(FORMERLY, FLUX TECHNOLOGIES, CORP.)

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2012

 

NOTE 6 – COMMITMENTS AND CONTINGENCIES

 

The Company neither owns nor leases any real or personal property. An officer has provided office services without charge.  There is no obligation for the officer to continue this arrangement.  Such costs are immaterial to the financial statements and accordingly are not reflected herein.  The officers and directors are involved in other business activities and most likely will become involved in other business activities in the future.

 

The Company entered into an employment agreement on December 31, 2102 with their CEO, Chairman, CFO, Treasurer and Secretary.  The agreement included a $50,000 signing bonus, which has been accrued as of December 31, 2012. The agreement also requires annual salary for the officer of $150,000. In the event of an equity raise of $2,500,000, the salary increases to $175,000 annually and $200,000 annually if $5,000,000 is raised. In the event that the officer is terminated, the agreement requires an immediate severance payment of $500,000.  If there is a change in control and the officer is no longer the CEO, the agreement requires an immediate severance payment of $2,000,000. There is no set term for the employment agreement.

 

NOTE 7– INCOME TAXES

 

As of December 31, 2012, the Company had net operating loss carry forwards of approximately $179,175 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, as their realization is determined not likely to occur 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, 2012 and February 29, 2012:

 

 

 

December
31, 2012

 

February
29, 2012

Federal income tax benefit attributable to:

 

 

 

 

Current Operations

$

59,317

$

1,602

Less: valuation allowance

 

(59,317)

 

(1,602)

Net provision for Federal income taxes

$

0

$

0

 

The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows as of December 31, 2012 and February 29, 2012:

 

 

 

December
31, 2012

 

February
29, 2012

Deferred tax asset attributable to:

 

 

 

 

Net operating loss carryover

$

 60,919

$

1,602

Less: valuation allowance

 

(60,919)

 

(1,602)

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 $179,175 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-10

 


 

 

BRAZIL MINERALS, INC.

(FORMERLY, FLUX TECHNOLOGIES, CORP.)

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2012

 

NOTE 8 – 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.

 

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 the bank account opening.  Th3 loan is non-interest bearing, due upon demand and unsecured. The balance due to the director was $100 as of December 31, 2012.

 

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.

 

Accrued compensation owing to a director of the Company in the amount of $50,000 is included in accrued expenses.

 

The Company issued a loan receivable to Brazil Mining, Inc., the Company’s parent company for $800,000. The loan is non-interest bearing and has no specified terms of repayment and is an advance related to the exercise of an option agreement held by Brazil Mining for a 20% share of a monthly diamond production at a property in the State of Minas Gerais, Brazil.  The option pursuant to the option agreement was exercised on January 2, 2013.

 

NOTE 9 – 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 period from March 1, 2012 to December 31, 2012

 

For the period from December 15, 2011 (Inception) to February 29, 2012

 

For the period from December 15, 2011 (Inception) to December 31, 2012

Revenue from discontinued operations

$

 4,900

$

0

$

 0

Net loss from discontinued operations

 

(21,808)

 

(4,712)

 

(26,520)

Net loss per share attributable to discontinued operations

$

 (0.00)

$

 (0.00)

$

(0.00)

 

 

 

 

 

F-11

 


 

 

BRAZIL MINERALS, INC.

(FORMERLY, FLUX TECHNOLOGIES, CORP.)

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2012

 

NOTE 10 – SUBSEQUENT EVENTS

 

In accordance with ASC Topic 855-10, the Company has analyzed its operations subsequent to December 31, 2012 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 other than the events described below.

 

The Company had issued a loan receivable to its majority shareholder for $800,000 during 2012. The loan was an advance related to the exercise of an option agreement held by Brazil Mining for a 20% share of a monthly diamond production at a property in the State of Minas Gerais, Brazil.  The option was exercised on January 2, 2013.

 

The Company amended its articles of incorporation to increase the authorized comon stock to 150,000,000 shares. On January 22, 2013, the Company declared a 33.333:1 stock dividend 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 March 23, 2013 the Company and Brazil Mining entered into an Exchange Agreement (the “Exchange Agreement”) pursuant to which Brazil Mining has agreed to sell to a 99.99% owned Brazilian subsidiary of the Company (“BMIX Subsidiary”)   the rights to all profits, losses and appreciation or depreciation and all other economic and voting interests of any kind in a 55% equity interest (“Equity Interest”) in Mineração Duas Barras Ltda., a Brazilian company (“Duas Barras”) in exchange for the issuance to Brazil Mining of 1,000,000 shares of the Company’s Common Stock. Brazil Mining also agreed that if the Exchange Agreement is consummated, Brazil Mining will, in accordance with the applicable laws and regulations of Brazil and state and municipal codes, perform all that is necessary to enable the transfer to the BMIX Subsidiary of record title ownership of the entire Equity Interest upon the Company’s request.

 

 

 

 

 

 

 

 

 

F-12

 


 

 

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.

 

Date: April 8, 2013

By:   

/s/ Marc Fogassa
Marc Fogassa
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

 

 

 

 

By: /s/ Marc Fogassa  

      Marc Fogassa

Chief Executive Officer

April 8, 2013

        

and Director; Chief Financial

Officer and Chief Accounting Officer

 

 

 

 

 

     

 

 

 

 

By: /s/ Roger Noriega

Director 

April 8, 2013

      Roger Noriega

 

 

 

 

 

By: /s/ Paul Durand  

Director 

April 8, 2013

      Paul Durand 

   

 

 

 

 

 

 


 
 

 

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.

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. Incorporated by reference to Exhibit 10.4 to the December 2012 8-K.

10.5

 

Administrative Services and Personnel Reimbursement Agreement between Brazil Mining and the Company dated as of January 1, 2013.*

10.6

 

Employment Agreement between the Company and Marc Fogassa.*

10.7

 

2013 Stock Incentive Plan.*

21.1

 

Subsidiaries of the Company.*

31.1

 

Certification of the Chief Executive Officer and 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

 


 

ADMINISTRATIVE SERVICES &

PERSONNEL REIMBURSEMENT

AGREEMENT

 

This Administrative Services and Personnel Reimbursement Agreement (“Agreement”), dated as of this 1 st day of January, 2013, is between Brazil Minerals, Inc. (“Client”), a Nevada corporation, and Brazil Mining, Inc. (“Provider”), a Delaware corporation.

 

RECITAL

 

Client desires to retain Provider to perform certain personnel, supply and administrative services on the terms and conditions set forth in this Agreement and Provider desires to perform such services on such terms and conditions.

 

NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties do hereby agree as follows:

 

1.       RETENTION OF PROVIDER . On the terms and subject to the conditions hereinafter set forth, Client hereby retains Provider to perform, and Provider hereby agrees to perform, the Services described in Section 2 (the “Services”) commencing on the date hereof. Provider hereby accepts such engagement and agrees to perform the Services in an economical, efficient, and professional manner in accordance with the terms and conditions of this Agreement and in accordance with the directives and policies which Client may establish from time to time.

 

2.       SERVICES TO BE PERFORMED

 

2.1 Nature of Services . The Services will consist generally of providing personnel to carry out Client’s business activities and the handling of the day-to-day administration of Client during the term of this Agreement. Without limiting the generality of the foregoing, the Services will include the following:

 

(a)     Providing experienced and knowledgeable personnel to advise, assist with, and manage the core business and affairs of Client, subject to the overall direction of Client’s Chief Executive Officer and Directors; such operational roles include the continued operations of Client’s assets as well as the  assessment of new investment opportunities, geological and mineralogical due diligence, financial modeling and budgeting, competitive and market assessment, channel identification, regulatory analysis, among others.

 

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(b)    Maintenance of Client’s records and accounts (including, without limitation, minutes of corporate meetings, contracts and relevant documentation), maintenance of accounting and tax records according to generally accepted accounting principles consistently applied, payment of bills, collection of receivables, and handling of customary transactional matters with third parties on behalf of the Client;

 

(c)     Preparation and distribution of all applicable financial reports, tax returns, budgets, and other reports reasonably requested by Client;

 

(d)    Maintenance and administration on behalf of and in the name of Client of one or more bank accounts as required or convenient in connection with Client’s business;

 

(e)     Investment of Client’s excess cash or other financial assets;

 

(f)     Administration of certain contracts as specified by Client in writing on behalf of Client;

 

(g)    If requested by Client in writing, administration of the logistics of ordering and sourcing capital equipment and shipping;

 

(h)    Administration of the annual audit and income and other tax services provided by Client’s external auditors and tax advisors;

 

(i)      Administration of Client’s insurance programs, including procurement and negotiation of policies and the submission, adjustment and administration of claims on behalf of Client;

 

(j)      Administration of any payroll and other benefits for Client, or administration of service providers for such, if outsourced;

 

(k)    Administration of Client’s office space, equipment, supplies, and personnel; and

 

(l)      Administration and management of all community and public relations matters on behalf of Client and representation of Client in all regulatory and other governmental proceedings and matters.

 

 

2.2 Additional Services . Provider will perform such other Services of an administrative, personnel or supply nature as may be reasonably requested from time to time by Client.

 

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2.3 Authority of Provider . Provider at all times will have the power and authority hereunder to do on behalf of Client in its name such things as are necessary, proper, or desirable to carry out the duties and responsibilities of Provider under this Agreement.

 

3.       PAYMENTS TO BE MADE TO PROVIDER.

 

3.1 Services Amount . As compensation in full for Provider’s performance of the Services, Client will pay Provider an amount (the “Services Amount”) equal to the direct cost incurred by Provider in the performance of Services during such period, including, without limitation, the cost of labor, salaries, supervision, materials, equipment, payroll taxes, fringe benefits, insurance, communications, and courier charges, and the reasonable cost of third party consultants or service providers. Client will have no obligation to pay any amount to Provider to reimburse Provider for its indirect costs to provide the Services. All charges included in the Services Amount shall be subject to audit by Client, upon reasonable notice.

 

3.1.1 Notwithstanding the above paragraph, if a person has an employment agreement with the Client and such person is also employed by the Provider, none of her direct labor costs may become part of the Services Amount.

 

3.2 Payment . Services Amounts shall be paid as follows:

 

(a)     In order to induce Provider to enter into employment and other agreements necessary to enable it to perform the Services, Client shall, within three business days following Provider’s request, prepay to Provider an amount equal to one and a half (1.5) times the estimated Services Amounts corresponding to one month’s Services. If at any time, this prepayment becomes, or is reasonably anticipated to become, less than one and a half (1.5) times the Service Amounts corresponding to one month’s Services, Client shall, within the three business days following Provider’s request therefore, increase the amount of the prepayment so that it totals the equivalent of one and a half (1.5) times such Services Amounts. Amounts prepaid pursuant to this Section 3.2(a) are herein referred to as the “Prepaid Amount”, and will be retained by Provider to satisfy Client’s obligations to pay Services Amounts during the Term of this Agreement (as defined in Section 5 below) and applied as provided below in this Section 3.2;

 

(b)    On the fifth day of the first full month during the Term, and on the fifth day of the each month thereafter, Client shall pay Provider the Services Amount corresponding to the prior month, provided that if a Notice of Termination, as defined in Section 5.2, is given, Client shall not be obligated to pay Services Amounts periodically pursuant to this clause (b) for periods following the giving of the Notice of Termination, but rather, Provider will apply the Prepaid Amount to the satisfaction of Client’s obligations to pay Services Amounts for periods from the date of giving the Notice of Termination to the expiration of the Term; and

 

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(c)     Upon the expiration of the Term, or upon the earlier Termination of this Agreement for cause pursuant to Section 5.2(b) or 5.3, (i) Provider will apply the Prepaid Amount to the satisfaction of Client’s obligations to pay unpaid Services Amounts, and return the balance, if any, to Client, and (ii) Client shall pay Provider, within five business days following the expiration or earlier termination, all unpaid Services Amounts, if any, not satisfied by the application of the Prepaid Amount as provided in Section 3.2(c)(i).

 

3.2 Third Party Services . Provider may retain on behalf of Client and in its name such third parties as are necessary to assist Provider in the discharge of its duties hereunder. The costs of retaining such third party services may, at Provider’s election, be billed to and paid directly by Client.

 

4.       STANDARD OF PERFORMANCE AND LIABILITY . Provider will perform the Services under this Agreement (a) in accordance with all applicable federal, state, and local laws, regulations, orders, licenses, and permits; (b) using reasonable prudence and sound business judgment; and (c) using that degree of skill, diligence, efficiency, and judgment that is ordinarily employed by project management professionals in the performance of comparable services.

 

5.       TERM; TERMINATION

 

5.1  Term . This Agreement will be effective on the date of execution and will remain in effect for five (5) years unless earlier terminated in accordance with the provisions of this Article 5.

 

5.2 Termination by Client . Client may terminate this Agreement: (a) at Client’s election, provided that Client gives Provider written notice of its intent to terminate (the “Notice of Termination”), or (b) for cause, if Provider has committed a material breach of this Agreement, provided that Client has given Provider not less than 30 days’ written notice to Provider specifying the breach, and Provider has failed to cure the breach within such 30 days (or, if the breach is not susceptible of cure within 30 days, such longer period of time reasonable necessary for cure, not to exceed 180 days, provided that Provider diligently proceeds to cure within such longer period).

 

5.3 Termination by Provider . If Client commits a material breach of this Agreement, Provider may terminate the Agreement upon not less than five business days’ advance written notice to Client specifying the breach, provided that Client has failed to cure the breach within such five business days.

 

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5.4 Non-Exclusive Remedy . Termination of the Agreement pursuant to the foregoing in the event of a breach of a party will not be the exclusive remedy of the terminating party, but, subject to the provisions of Section 8.8, such party will be entitled to pursue any other remedy provided under this Agreement, or available at law or in equity.

 

5.5 Transfer of Services upon Termination . Upon expiration or other termination of this Agreement for any reason, Provider will cooperate with Client in the transfer of the Services to itself or any new entity that is to perform the same. Without limiting the generality of the foregoing, Provider will provide Client and any such third party with all existing information, books, accounts, and records available and reasonably necessary for the continued and uninterrupted performance of the Services.

 

6.    INDEMNIFICATION . Client agrees to indemnify, defend, and hold harmless Provider and its affiliates, and the officers, directors, employees, shareholders, agents, and representatives of each of them from and against any claims, actions, costs, expenses, damages, and liabilities, including reasonable attorney’s fees related to the provision of Services, excluding only such claims, actions, costs, expenses, damages, or liabilities, including attorney’s fees, to the extent resulting from the bad faith, misconduct, or gross negligence of the proposed indemnitee or its directors, officers, employees, or agents. The duty to indemnify hereunder will continue in full force and effect notwithstanding the expiration or early termination of this Agreement with respect to any claims based on facts or conditions that occurred prior to termination.

 

7.                   DISPUTE RESOLUTION.

 

7.1 Informal Negotiation . The parties agree to make a diligent, good faith attempt to resolve by informal negotiation all disputes relating to or arising out of this Agreement, but if the parties are unable to resolve any dispute within fifteen (15) days after notice from one party to the other of the dispute, either party may then institute proceedings in any court having jurisdiction.

 

7.2 Continued Performance . Unless otherwise provided herein or otherwise agreed in writing, the parties will continue to perform under the terms and conditions of this Agreement during the pendency of any proceeding to resolve a dispute pursuant to Section 7.1.

 

 

 

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8.       MISCELLANEOUS .  

 

8.1 Entire Agreement: Amendment Waiver . This Agreement constitutes the entire agreement between the parties hereto as to the subject matter hereof and supersedes all prior and contemporaneous agreements, representations, warranties, statements, promises, and understandings, whether oral or written, with respect to such subject matter. This Agreement may not be amended, altered, or modified except by a writing signed by both of the parties hereto. The failure of any party hereto to insist upon strict performance of a covenant hereunder or of any obligation hereunder, irrespective of the length of time for which such failure continues, will not be a waiver of such party’s right to demand strict compliance in the future. No consent or waiver, express or implied, to or of any breach or default in the performance of any obligation hereunder will constitute a consent or waiver to or of any other breach or default in the performance of the same or any other obligation hereunder.

 

8.2 Assignment . Neither Client nor Provider will assign its interest in this Agreement or delegate its duties hereunder without the written consent of the other, and any attempted assignment or delegation in violation of the foregoing, whether by operation of law or otherwise, will be null and void. All the rights, benefits, duties, liabilities, and obligations of the parties hereto will inure to the benefit of and be binding upon their respective successors and permitted assigns.

 

8.3 Governing Law . This Agreement will be governed by and construed in accordance with the laws of the State of California without regard to conflict of law doctrines.

 

8.4 Excusable Delay . Neither party will be liable for nonperformance or delay in performance of its obligation under this Agreement due to acts of God, flood, drought, earthquake, storm, fire, pestilence, lightning, and other natural catastrophes, epidemic, war, riot, civil disturbance or civil disobedience, or any other cause, whether or not similar to the foregoing, which is beyond the reasonable control of, and not due to the fault or negligence of, the party affected and which could not have been avoided by such party’s due diligence and use of its reasonable best efforts.

 

8.5 Notifications . All notices required or provided for in this Agreement will be in writing and will be deemed given if delivered personally, or by express courier, or if mailed by registered or certified mail, return receipt requested, to the parties at their addresses as follows:

 

To the Client

Brazil Minerals, Inc.

324 South Beverly Drive, Suite 118

Beverly Hills, CA 90212

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To the Provider

Brazil Mining, Inc.

324 South Beverly Drive, Suite 118

Beverly Hills, CA 90212

 

8.6 Independent Contractor . Provider will be deemed an independent contractor in the performance of services under this Agreement and none of its employees will be considered employees of the Client. Nothing in this Agreement will be deemed to constitute any party hereto a partner, joint venturer, agent or legal representative of the other party, nor will either party have the right or authority to assume, create, or incur any liability or obligation, express or implied, against, in the name of, or on behalf of the other party, except as expressly provided in this Agreement or authorized in writing by such other party. Provider will be solely responsible for all matters relating to the payment of its employees, including compliance with social security, withholding, and all other similar regulations governing such matters, and Provider will be solely responsible for the Services performed hereunder.

 

8.7 Confidentiality . Neither Party will disclose to third parties any confidential or proprietary information regarding the other party’s business strategies, finances, technology, systems, or processes that is received from the other party pursuant to this Agreement and that is marked “confidential”, without the express written consent of the other party. In addition, any business, operating, or financial information generated in connection with the performance of the Services hereunder will be regarded as confidential by Provider and will not be disclosed by Provider to third parties, except as otherwise agreed to in writing by Client and Provider. This Section 8.7 shall not apply, however, to information that was already in the possession of a party prior to receipt from or generation for the other party, that is now or hereafter becomes a part of the public domain through no fault of the party wishing to disclose, or that corresponds in substance to information heretofore or hereafter furnished by third parties without restriction on disclosure.

 

8.8 Consequential Damage . In no event will either party be liable, whether in contract, tot, negligence, strict liability, or otherwise for any special, indirect, incidental, consequential, punitive or exemplary damages of any nature arising at any time or from any cause whatsoever in connection with this Agreement. Notwithstanding any other provisions of this Agreement to the contrary, except in cases of fraud or willful misconduct, Provider’s aggregate cumulative annual liability during the Term of this Agreement, arising out of or in any way relating to this Agreement, shall in no event exceed an amount equal to the fee payable to Provider pursuant to Section 3.1.

 

8.9 Representations and Warranties . Each party represents and warrants to the other party that: (i) such party has the full power and authority to execute, deliver, and perform this Agreement by such party and the carrying out  by such party of the transactions contemplated hereby; and (ii) the execution and delivery of this Agreement by such party and the carrying out by such party of the transactions contemplated hereby have been duly authorized by all requisite corporate action, and this Agreement has been duly executed and delivered by such party and constitutes the legal, valid, and binding obligation of such party, enforceable against it in accordance with the terms hereof, subject, as to enforceability of remedies, to limitations imposed by bankruptcy, insolvency, reorganization, moratorium, or other similar laws relating to or affecting the enforcement of creditor’s rights general and to general principles of equity.

 

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8.10 Further Assurances . Each party agrees to execute and deliver all further instruments and documents, and take all further action not inconsistent with the provisions of this Agreement that may be reasonably necessary to perform the Services and effectuate the purposes and intent of the Agreement.

  

8.11 Severability . Every provision in this Agreement is intended to be severable such that if any term or provision hereof is illegal or invalid for any reason whatsoever, such provision will be severed from this Agreement and will not affect the validity of the remainder of this Agreement.

 

8.12 Non-Recourse . Each party agrees that its obligations under this Agreement shall be its obligations only, and no party shall have any claim against or recourse to (whether by operation of law or otherwise) any officer, director, or shareholder of the other party.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the first date written above, January 1st, 2013.

 

 

Brazil Minerals, Inc. (“Client”)

 

By:__ /s/ Marc Fogassa ____ 

Name: Marc Fogassa

Title: Chairman and CEO

 

 

Brazil Mining, Inc. (“Provider”)

 

By:_ /s/ Marc Fogassa _____ 

Name: Marc Fogassa

Title: Chairman and CEO

 

 

 

EMPLOYMENT AGREEMENT BETWEEN

FLUX TECHNOLOGIES, CORP. AND

MARC FOGASSA

 

 

This Employment Agreement (“Agreement”) is made and entered into on December31 st , 2012, between FLUX TECHNOLOGIES, CORP. , a Nevadacorporation, whose principal business address is at 324 South Beverly Drive, Suite 118, Beverly Hills, CA 90212(hereinafter referred to as “Employer”) and MARC FOGASSA , a California resident, whose mailing address is at 1443 East Washington Boulevard, Suite 278, Pasadena, CA 91104 (hereinafter referred to as “Employee”).

 

In consideration of the mutual covenants set forth below, Employer and Employee enter into the Agreement as set forth below.

 

1.        START 

 

This Agreement shall be effective immediately upon execution.

 

2.        TITLE AND DUTIES

 

A.       Title 

 

The Employee shall be employed in the capacity of Chief Executive Officer , Chairman , Chief Financial Officer , Treasurer , and Secretary

 

B.       Essential Job Functions and Duties

 

The essential job functions and duties expected of the Employee shall be such as customarily performed by persons in similar such positions, as well as such other duties as may be assigned from time to time by the Employer.

 

C.       Supervision andReporting

 

The Employee shall report to the Board of Directors of the Employer. 

 

D.       Duty of Loyalty and Best Efforts

 

Employee shall devote working time, attention, knowledge, and skills to Employer's business interests and shall do so in good faith, with best efforts, and to the reasonable satisfaction of the Employer.  It is understood that the Employee has other business interests that may demand substantial time.

 

3.        COMPENSATION TERMS

 

A.       Sign-in Compensation

 

Employee shall receive a sign-in compensation of USD$50,000 (fifty thousand dollars)as soon as practicable.  Employer shall deduct or withhold from this compensation any amounts required for federal, state, or local taxes.

 

 

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B.       Salary 

Employee shall receive a salary of USD$150,000 (one hundredfiftythousand dollars) per year which shall be payable in equal monthly installments.  Employer shall deduct or withhold from this compensation any amounts required for federal, state, or local taxes.

 

Upon completion of a placement of securities of the Employeein the amount of at least USD$2,500,000 (two million five hundred thousand dollars), the annual salary of Employee shall be raised to USD$175,000 (one hundred seventy five thousanddollars) annually.

 

Upon completion of a placement of securities of the Employeein the amount of at least USD$5,000,000 (five million dollars), the annual salary of Employee shall be raised to USD$200,000 (two hundred thousand dollars) annually.

 

C.       Expense Reimbursement

 

Employee shall be entitled to reimbursement of expenses incurred in the performance of the functions and duties under this Agreement.  In order to receive reimbursement, Employee must timely provide Employer with an itemized account of all expenditures, along with suitable receipts therefore. 

 

D.       Residence Abroad

 

If and when Employee establishesa primary or secondary residence outside of the United States of America, in connection with its functions at the Employer, the Employer shall pay forsuch housing and related expenses on behalf of the Employee for an amount not greater than $5,000 (five thousand dollars) per month.

 

E.        Retirement Funding

 

Employer shall deposit annually the maximum allowable SEP IRA contribution at an individual retirement account designated by Employee and for the benefit of Employee.

 

4.        BENEFITS 

 

A.       Vacation 

 

The Employee has four (4) weeks of vacation per year, which may be taken one (1) week at a time. The Employee must provide in writing at least two (2) weeks of notice of his intent to take vacation unless there are emergency circumstances.

 

B.       Insurance 

 

As soon as practicable, the Employer shall designate Employee in a “key man” insurance policy for an amount no less than US$1,000,000 (one million dollars) payable to the Employer. Unless declined by Employee, the Employer shall pay all costs of reasonable medical, dental, vision, long-term disability, and short-term disability to Employee and to Employee’s spouse or partner and children under the age of 21, at reasonable plans chosen by Employee. Unless declined by Employee, the Employer shall pay the annual premium costs of a life insurance policy for Employee in the amount of USD$5,000,000 (five million dollars) for payment to Employee’s designated beneficiaries.

 

 

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5.        PROPERTY RIGHTS

 

A.       Records and Accounts

 

Employee agrees that all those records and accounts maintained during the course of employment are the property of Employer.

 

B.       Return Upon Termination

 

Employee agrees that upon termination they will return to Employer all of Employer’s property, including, but not limited to, intellectual property, trade secret information, customer lists, operation manuals, records and accounts, materials subject to copyright, trademark, or patent protection, customer and Employer information, business documents, reports, and other items as applicable.

 

C.       Copyrights, Inventions and Patents

 

Employee understands that any copyrights, inventions or patents created or obtained, in part or whole, by Employee during the course of this Agreement are to be considered “works for hire” and the property of Employer.  Employee assigns to Employer all rights and interest in any copyright, invention, patents or other property related to the business of the Employer.

 

6.        INDEMNIFICATION FOR THIRD PARTY CLAIMS

 

Employer hereby agrees to indemnify, defend, save, and hold harmless Employee from and against all claims, liabilities, causes of action, damages, judgments, attorneys’ fees, court costs, and expenses which arise out of or are related to the Employee’s performance of this Agreement, failure to perform job functions or duties as required, or result from conduct while engaging in any activity outside the scope of this Agreement, before, during or after the termination of this Agreement.  Employer understands that this obligation of indemnification survives the expiration or termination of this Agreement. 

 

7.        MEDIATION AND BINDING ARBITRATION

 

Employer and Employee agree to first mediate and may then submit to binding arbitration any claims that they may have against each other, of any nature whatsoever, other than those prohibited by law or for workers compensation, unemployment or disability benefits, pursuit to the rules of the American Arbitration Association in Los Angeles, California, United States of America.

 

8.        TERMINATION 

 

A.       Severance 

 

If Employee is terminated by Employer, the Employer shall immediately make a payment to Employee equal to USD$500,000 (five hundred thousand dollars).  If upon the completion of a change of control, or other corporate event, Employee is not theChief Executive Officer of the Employer, or the Chief Executive Officer of the new controlling person of the Employer, as the case may be, then the Employer shall immediately make a payment to Employee equal to USD$2,000,000 (twomillion dollars).

 

 

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9.        MISCELLANEOUS PROVISIONS

 

A.       Notices 

 

Employee agrees that any notices that are required to be given under this Agreement shall be given in writing, sent by certified mail, return receipt requested, to the principal place of business of the Employer or mailing address of the Employee as set forth herein.

 

FLUX TECHNOLOGIES, CORP.

324 South Beverly Drive, Suite 118

Beverly Hills, CA 90212

 

MARC FOGASSA

1443 East Washington Boulevard, Suite 278

Pasadena, CA 91104

 

B.       Entire Agreement

 

This Agreement represents the complete and exclusive statement of the employment agreement between the Employer and Employee.  No other agreements, covenants, representations or warranties, express or implied, oral or written, have been made by the parties concerning their employment agreement.

 

C.       Prior Agreements or Understandings

 

This Agreement supersedes any and all prior Agreements or understandings between the parties, including letters of intent or understanding, except for those documents specifically referred to within this Agreement.

 

D.       Modifications 

 

Any modifications to this Agreement may only be done in writing between the parts.

 

E.        Severability of Agreement

 

To the extent that any provision hereof is deemed unenforceable, all remaining provisions of this Agreement shall not be affected thereby and shall remain in full force and effect.

 

F.        Waiver of Breach

 

The waiver by Employer of a breach of any provision of this Agreement by Employee shall not operate as a waiver of any subsequent breach by the Employee.  No waiver shall be valid unless placed in writing and signed by Employer.

 

G.      Ambiguities Related to Drafting

 

Employer and Employee agree that any ambiguity created by this document will not be construed against the drafter of same.

 

H.      Choice of Law, Jurisdiction and Venue

 

Employee agrees that this Agreement shall be interpreted and construed in accordance with the laws of the State of California and that should any claims be brought against Employer related to terms or conditions of employment it shall be brought within a court of competent jurisdiction within the county of Los Angeles, California.  Employee also consents to jurisdiction of any claims by Employer related to the terms or conditions of employment by a court of competent jurisdiction within the county of Los Angeles, California.

 

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I.         Statute of Limitations

 

Employee has a one year statute of limitation for the filing of any requests for mediation, or arbitration, or for any lawsuit related to this Agreement or the terms and conditions of their employment.  If said claim is filed more than one year subsequent to Employee’s last day of employment it is precluded by this provision, regardless of whether the claim had accrued at that time or not.

 

J.         Potential Transfer to Similar Agreement at Subsidiary

 

At the option of the Employer, the Agreement may be exchanged at any time for a substantially similar employment agreement between Employer and a subsidiary of the Employer.

 

 

 

 

 

/s/Marc Fogassa

 

12/31/2012

MARC FOGASSA

 

Date

 

 

 

 

 

 

 

/s/ Marc Fogassa

 

12/31/2012

Marc Fogassa

 

Date

       

Chairman and Chief Executive Officer

FLUX TECHNOLOGIES, CORP.

 

 

 

 


 

 

 

B RA ZIL  M I N E RA L S I N C

 


 

2 013  S T O C I N C E N TI V P L A

 

 


 

 

AR TI C L

 

P U R P O S

 

The purpose of this Plan is to enhance the profitability and value of BRAZIL MINERALS, INC. (the “Company”) for the benefit of its stockholders by enabling the Company to offer Eligible Employees, Consultants and Non-Employee Directors cash and stock-based compensation and/or incentives in the Company to compensate, attract, retain or reward such individuals and/or strengthen the mutuality of interests between such individuals and the Company’s stockholders. This Plan may be used to compensate Consultants with stock registered on Form S-8 consistent with the requirements pertaining to Registration Statements on Form S-8.

 

A R TI C LE  II 

 

D E F I N I T I O N

 

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

 

2.1               Acqu isi t i o E v e n t ”  m e a ns  m e r g e or  c o nsol i d a t i on  i w h i c the  Comp a n is n o the  su r v i v i ng  e nt i t y a n t r a ns a c t i on  th a re sul t i t h ac q u i si t ion  of  a ll  o s u bst a nt ia l l a l of the Co m p a n y o u t st a n d i n C o m mo S to c b s i n g le  p e r s o or  e nt i t o b g r o u of  p e r s o ns a n d /or  e nt i t ie ac t i n in  c o n cer t,  or  t h s a le  or  t r a ns fe o a ll  o s u bst a nt ia l l a l of  t h C om p a n y s a ss e ts. 

 

2.2               A ff i l i a t e ”     m e a ns    e a c h     o the     f o l lo w i n g :   ( a a n S u b sidi a r y ;     ( b)     a n y     P a re nt;  (c a n c o r p o r a t i o n,  t r a d o busi n e ss  ( in c lu d i ng,  w i t h out  l i m i t a t i o n ,  a p ar tn er s h i or  l i m i t e d l i a bi l i t c o m p a n y w h i c i di r ec t l o indi r e c t l c o n t r o l l e 5 0%  o m o r ( w h e t h e b o w n e r s hip of sto c k a ss e t o a e q u i v a l e nt  o w n er s h i i n t e r e st  o v ot i ng  int e r e st)  b the  Co mp a n y ( d a n y c o r p o ra t i on,  t r a de  or  bus i n e ss  ( in c lu d i n g w i t h out  l i m i t a t i on,  p ar t n er s hip  or  l i m i t e l i a b i l i t y c o m p a n y w h i c di r e c t l or  i n di r e c t l c o n t r o l 5 0%  o m o r ( w h e t h e b o w n er ship  of  s t o c k , a ss e ts  or  a e quiv a l e n o w n er ship  int ere st  or  v o t i ng  int ere st)  o the  C om p a n y a nd  ( e a n o th e r e nt i t in  w hi c the  Co m p a n or  a n of  i t A f f i l ia t e h a m a t er i a e q u i ty  int e re st  a n w hi c is d e s i g n a t e a a “Aff i l i a t e ”  by  re solut i on  of  t h Co mm i t t e e p r ovid e th a the  Co mmo S to c k su b j e c to  a n A war c o nst i t u t e s e r vi c re c i p i e nt  s t o c k ”  f or  p u r p o s e o S e c t ion  40 9 of  t h e Code o ot h erw i se  do e n ot  su b j e c the  Awar to  S ec t i on  4 09A  of  the  C o d e

 

2.3               A p p rec i a t i o A w a r d ”  m e a ns  a n Aw a r und e t h is  P l a of  a n S to c O pt i on, S t o c A p p r ec i a t i o R i g h or  O th e S t o c k - B a s e Awar d p r o vid e t h a s u c O t h e S to c k - B a s e d Awar is  b a s e o t h a p p r e c i a t ion  in  v a lue  of  sh ar of  C o m m on  S to c i e x ce ss  of  a a mo unt  e q u a to  a l ea st  the  F a ir  M ar k e V a l u of  t h Com m on  S t o c on  the  d a t s u c O t h e S to c k - B a s e d Awar is  g r a nt e d. 

 

 

 

 

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2.4               A w a r d ”  m e a ns  a n a war und e t h i P l a of  a n S t o c O pt i on,  S to c k A p p r e c i a t i o Ri g ht,  R e st r i c t e S to c k P e r f o r m a n c S h a r e O th e S t o c k - B a s e A w a r or P e rf o r m a n c e - B a s e C a sh  Awar ds.  A ll  Awar d s h a ll  b g ra n t e b y c o n f i r m e b y a n subj ec to the t er m o f w r i t te a g re e m e nt  e x e c ut e b t h Co mp a n a n the  P a r t ic i p a n t

 

2.5               Bo a rd ”  m e a ns  the  Bo ar of  D i r e c to r of  the  C o mp a n y

 

2.6               C a u s e ”  m ea ns  w i th  re sp ec to  Par t ic ip a nt T e r m in a t i on  of  E m pl o ym e nt  or T e r m i n a t i o of  Cons u l t a n c fr o a nd  af t e the  d a te  h e r e o f t h f ol l o w i n g ( a in  the  ca se  w h e r e th er is  n e m pl o y m e nt  a g r ee m e nt,  c o ns u l t i n a g r e e m e nt,  c h a n g in  c ont r o a g ree m e nt  o s i m i la r a g r e e m e nt  in  eff e c b e t w ee t h Co m p a n or  a A f f i l i a te  a nd  the  P ar t ic i p a nt  a the  t i m of  t h e g r a n of  the  Awar ( or  w h er th e r is  su c a a g re e m e n b ut  it  do e no d ef i n “ca u s e ”  ( or  w o r ds of l i k i m po r t )) t er m i n a t i o d u to:  ( i P a r t i c i p a nt c o n vi c t i o o f or  p l e of  g ui l t or  n olo c o n t e nd e r t o f e lon y ( i i p er p e t ra t i on  b P art i c ip a nt  o a i l l e g a ac t,  or  f ra ud  w hi c c o uld ca u se  s i g