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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

 

For the quarterly period ended March 31, 2022

 

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

 

For the transition period from ____________ to ____________

 

Commission File Number 000-55191

 

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.)

 

Rua Bahia, 2463, Suite 205

Belo Horizonte, Minas Gerais 30.160-012

Brazil

(Address of principal executive offices)

 

(833) 661-7900

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the issuer (1) 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 ☒ 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 ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or, an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company,” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐   Accelerated filer ☐
Non-accelerated filer ☒   Smaller reporting company ☒
      Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Ticker symbol(s)   Name of each exchange on which registered
Common Stock   BMIX  

Pink Open Market, a marketplace of

OTC Markets Group

 

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

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

As of May 13, 2022, the registrant had 3,370,472,433 shares of common stock, par value $0.001 per share, issued and outstanding.

 

 

 

 

 

 

TABLE OF CONTENTS

 

    Page

PART I - FINANCIAL INFORMATION

  
     
Item 1. Financial Statements  
     
  Condensed Consolidated Balance Sheets as of March 31, 2021 (Unaudited) and December 31, 2020 F-1
     
  Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2020 and 2021 (Unaudited) F-2
     
  Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2020 and 2021 (Unaudited) F-3
     
  Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2021 (Unaudited) F-4
     
  Notes to the Condensed Consolidated Financial Statements (Unaudited) F-5
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 3
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 6
     
Item 4. Controls and Procedures. 6
     
PART II - OTHER INFORMATION  
     
Item 6. Exhibits 8
     
Signatures   9
     
Exhibits/Certifications  

 

2
Table of Contents

 

PART I - FINANCIAL INFORMATION

 

Item 1 FINANCIAL STATEMENTS

 

BRAZIL MINERALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

March 31, 2022 and December 31, 2021

 

   March 31,   December 31, 
   2022   2021 
         
ASSETS          
Current assets:          
Cash and cash equivalents   54,230   $22,776 
Accounts receivable   231    1,401 
Taxes recoverable   19,455    16,507 
Deposits and advances   26,826    17,246 
Total current assets   100,742    57,930 
Property and equipment, net   76,728    53,827 
Intangible assets, net   1,533,738    1,302,440 
Equity investments   150,000    150,000 
Total assets   1,861,208   $1,564,197 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
Current liabilities:          
Accounts payable and accrued expenses   911,719   $988,238 
Convertible notes payable   -    - 
Loans payable   -    - 
Related party notes and other payables   11,940    10,167 
Total current liabilities   923,659    998,405 
Other noncurrent liabilities   129,885    108,926 
Total liabilities   1,053,544    1,107,331 
           
Stockholders’ deficit:          
Series A preferred stock, $0.001 par value. 10,000,000 shares authorized; 1 share issued and outstanding as of March 31, 2022 and December 31, 2021, respectively   1    1 
Series D preferred stock, $0.001 par value. 1,000,000 shares authorized; 214,006 and 0 shares as of March 31, 2022 and December 31, 2021, respectively   214    214 
Common stock, $0.001 par value. 4,000,000,000 shares authorized; 3,250,000,000 shares as of March 31, 2022 and December 31, 2021, respectively   3,199,478    3,109,179 
Additional paid-in capital   52,162,095    51,466,376 
Accumulated other comprehensive loss   (460,316)   (712,810)
Accumulated deficit   (55,488,919)   (54,957,429)
Total Brazil Minerals, Inc. stockholders’ deficit   (587,447)   (1,094,469)
Non-controlling interest   1,395,111    1,551,335 
Total stockholders’ equity (deficit)   807,664    456,866 
Total liabilities and stockholders’ deficit   1,861,208   $1,564,197 

 

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

 

F-1
Table of Contents

 

BRAZIL MINERALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)

For the Three Months Ended March 31, 2022 and 2021

 

   2022   2021 
   Three months ended March 31 
   2022   2021 
         
Revenue   477   $4,459 
Cost of revenue   9,855    22,989 
Gross loss   (9,378)   (18,530)
Operating expenses          
Professional fees   119,841    82,291 
General and administrative   221,465    273,051 
Compensation and related costs   97,992    45,508 
Stock based compensation   388,019    711,446 
Total operating expenses   827,317    1,112,296 
Loss from operations   (836,695)   (1,130,826)
Other expense (income)          
Interest on promissory notes   -    64,750 
Other expense (income)   (1,952)   (208)
Total other expense   (1,952)   64,542 
Loss before provision for income taxes   (834,743)   (1,195,368)
Provision for income taxes   -    - 
Net loss   (834,743)   (1,195,368)
Loss attributable to non-controlling interest   (303,253)   (479,346)
Net loss attributable to Brazil Minerals, Inc. stockholders   (531,490)  $(716,022)
           
Basic and diluted loss per share          
Net loss per share attributable to Brazil Minerals, Inc. common stockholders   -   $- 
           
Weighted-average number of common shares outstanding:          
Basic and diluted   3,191,757,168    2,267,306,033 
           
Comprehensive loss:          
Net loss   (834,743)  $(1,195,368)
Foreign currency translation adjustment   56,815    (36,367)
Comprehensive loss   (777,928)   (1,231,735)
Comprehensive loss attributable to noncontrolling interests   (308,741)   (452,468)
Comprehensive loss attributable to Brazil Minerals, Inc. stockholders   (469,187)  $(779,267)

 

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

 

F-2
Table of Contents

 

BRAZIL MINERALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

For the Three Months Ended March 31, 2022 and 2021

 

   Shares   Value   Shares   Value   Shares   Value   Capital   Loss   Deficit    Interests   (Deficit) 
   Series A Preferred Stock   Series D Preferred Stock   Common Stock  

Additional

Paid-in

  

Accumulated
Other

Comprehensive

    Accumulated    Noncontrolling  

Total
Stockholders’

Equity

 
   Shares   Value   Shares   Value   Shares   Value   Capital   Loss   Deficit    Interests   (Deficit) 
                                              
Balance, December 31, 2020   1   $1    -   $-    1,997,930,297   $1,997,930   $47,489,116   $(775,113)  $(52,185,071)   $1,976,885   $(1,496,252)
                                                         
                                                        
Conversion of related party convertible notes and other indebtedness into Series D preferred stock   -    -    214,006    214    -    -    641,804    -    -     -    642,018 
Issuance of common stock in connection with sales made under private offerings   -    -    -    -    174,019,679    174,020    766,989    -    -     -    941,009 
Issuance of common stock in connection with the exercise of common stock options   -    -    -    -    396,917,702    396,917    (246,917)   -    -     70,700    220,700 
Issuance of common stock in exchange for consulting, professional and other services   -    -    -    -    16,600,539    16,601    148,934    -    -     31,845    197,380 
Issuance of common stock warrants in connection with the issuance of convertible debenture(s)   -    -    -    -    -    -    356,827    -    -     -    356,827 
Conversion of convertible debenture(s) and other indebtedness into common stock   -    -    -    -    523,710,635    523,711    839,277    -    -     -    1,362,988 
Stock based compensation   -    -    -    -    -    -    1,470,346    -    -     -    1,470,346 
Change in foreign currency translation   -    -    -    -    -    -    -    62,303    -     (5,488)   56,815 
Sale of Jupiter Gold common stock in connection with equity offerings   -    -    -    -    -    -    -    -    -     118,000    118,000 
Sale of Apollo Resources common stock in connection with equity offerings   -    -    -    -    -    -    -    -    -     612,500    612,500 
Change in noncontrolling interest(s)   -    -    -    -    -    -    -    -    -     -    - 
Net loss   -    -    -    -    -    -    -    -    (2,772,358)    (1,253,107)   (4,025,465)
                                                         
Balance, December 31, 2021   1   $1    214,006   $214    3,109,178,852   $3,109,179   $51,466,376   $(712,810)  $(54,957,429)   $1,551,335   $456,866 
                                                         
Issuance of common stock in connection with sales made under private offerings   -    -    -    -    90,299,152    90,299    307,700    -    -     -    397,999 
                                                        
Stock based compensation   -    -    -    -    -    -    388,019    -    -     (191,023)   196,996 
Change in foreign currency translation   -    -    -    -    -    -    -    252,494    -     113,052    365,546 
Sale of Jupiter Gold common stock in connection with equity offerings   -    -    -    -    -    -    -    -    -     -    - 
Sale of Apollo Resources common stock in connection with equity offerings   -    -    -    -    -    -    -    -    -     225,000    225,000 
Net loss   -    -    -    -    -    -    -    -    (531,490)    (303,253)    (834,743)
                                                         
Balance, March 31, 2022   1   $1    214,006   $214    3,199,478,004   $3,199,478   $52,162,095   $(460,316)  $(55,488,919)   $1,395,111   $807,664 

 

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

 

F-3
Table of Contents

 

BRAZIL MINERALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the Three Months Ended March 31, 2022 and 2021

 

   2022   2021 
   Three months ended March 31 
   2022   2021 
         
Cash flows from operating activities of continuing operations:          
Net loss   (834,743)   (1,195,368)
Adjustments to reconcile net loss to cash used in operating activities:          
Stock based compensation and services   388,019    743,291 
Convertible debt issued in satisfaction of other financing costs   -    40,836 
Depreciation and amortization   7,571    12,090 
Changes in operating assets and liabilities:          
Accounts receivable   1,170    (220,759)
Taxes recoverable   (2,948)   - 
Deposits and advances   (9,580)   752 
Accounts payable and accrued expenses   (76,519)   1,108,200 
Other noncurrent liabilities   20,959    (331)
Net cash used in operating activities   (506,071)   488,711 
           
Cash flows from investing activities:          
Acquisition of capital assets   (30,472)   - 
Increase in intangible assets   (122,526)   (939,927)
Net cash used in investing activities   (152,998)   (939,927)
           
Cash flows from financing activities:          
Loan from officer   -    (2,943)
Net proceeds from sale of common stock   397,999    266,500 
Proceeds from sale of subsidiary common stock to noncontrolling interests   225,000    168,000 
Proceeds from convertible notes payable   -    270,000 
Repayment of loans payable   -    (235,308)
Net cash provided by financing activities   622,999    466,249 
           
Effect of exchange rates on cash and cash equivalents   67,524    (6,389)
Net increase (decrease) in cash and cash equivalents   31,454    8,644 
Cash and cash equivalents at beginning of period   22,776    253,598 
Cash and cash equivalents at end of period   54,230   $262,242 
           
Supplemental disclosure of non-cash investing and financing activities:          
Related party convertible note payable exchanged for stock   -   $- 
Shares issued in connection with conversion of debt and accrued interest   -   $640,883 
Shares issued in connection with relief of related party payable   -   $- 
Common stock warrants issued in connection with convertible promissory notes   -   $- 

 

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

 

F-4
Table of Contents

 

BRAZIL MINERALS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 – ORGANIZATION, BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Organization and Description of Business

 

Brazil Minerals, Inc. (“Brazil Minerals” or the “Company”) was incorporated as Flux Technologies, Corp. under the laws of the State of Nevada, U.S. on December 15, 2011. The Company changed its management and business on December 18, 2012, to focus on mineral exploration. Brazil Minerals, through subsidiaries, owns mineral rights in Brazil for gold, diamonds, lithium, rare earths, titanium, iron, nickel, and sand.

 

Basis of Presentation and Principles of Consolidation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”) and are expressed in United States dollars. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of March 31, 2022, and the results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 2022 and 2021, are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in Form 10-K for the fiscal year ended December 31, 2021 filed with the Securities and Exchange Commission (the “SEC”) on March 29, 2022.

 

The condensed consolidated financial statements include the accounts of the Company; its 99.99% owned subsidiary, BMIX Participações Ltda. (“BMIXP”), which includes the accounts of BMIXP’s wholly-owned subsidiary, Mineração Duas Barras Ltda. (“MDB”), and BMIXP’s 50% owned subsidiary, RST Recursos Minerais Ltda. (“RST”); its 99.99% owned subsidiary, Hercules Resources Corporation (“HRC”), which includes the accounts of HRC’s wholly-owned subsidiary, Hercules Brasil Comercio e Transportes Ltda. (“Hercules Brasil”); its 30.1% equity interest in Apollo Resources Corporation (“Apollo Resources”) and its subsidiary Mineração Apollo, Ltda.; and its 9.84% equity interest in Jupiter Gold Corporation (“Jupiter Gold”), which includes the accounts of Jupiter Gold’s wholly-owned subsidiary, Mineração Jupiter Ltda. The Company has concluded that Apollo Resources, Jupiter Gold and their subsidiaries are variable interest entities (“VIE”) in accordance with applicable accounting standards and guidance. As such, the accounts and results of Apollo Resources, Jupiter Gold and their subsidiaries have been included in the Company’s condensed consolidated financial statements.

 

All material intercompany accounts and transactions have been eliminated in consolidation.

 

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 contingencies at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results may differ from those estimates.

 

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BRAZIL MINERALS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 – ORGANIZATION, BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Going Concern

 

The condensed consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company has limited working capital, has incurred losses in each of the past two years, and has not yet received material revenues from sales of products or services. These factors create substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.

 

The ability of the Company to continue as a going concern is dependent on the Company generating cash from its operations, the sale of its stock and/or obtaining debt financing. Historically, the Company has funded its operations primarily through the issuance of debt and equity securities. Management’s plan to fund its capital requirements and ongoing operations include the generation of revenue from its mining operations and projects. Management’s secondary plan to cover any shortfall is selling its equity securities, including common stock in the Company, or common stock in Jupiter Gold that it owns, and obtaining debt financing. There can be no assurance the Company will be successful in these efforts.

 

Recent Accounting Pronouncements

 

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new pronouncements that have been issued that might have a material impact on its financial position or results of operations except as noted below:

 

In February 2020, the FASB issued ASU 2020-02, Financial Instruments-Credit Losses (Topic 326) and Leases (Topic 842) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842), which amends the effective date of the original pronouncement for smaller reporting companies. ASU 2016-13 and its amendments will be effective for the Company for interim and annual periods in fiscal years beginning after December 15, 2022. The Company believes the adoption will modify the way the Company analyzes financial instruments, but it does not anticipate a material impact on results of operations. The Company is in the process of determining the effects adoption will have on its consolidated financial statements.

 

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BRAZIL MINERALS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

 

Property and Equipment

 

The following table sets forth the components of the Company’s property and equipment at March 31, 2022 and December 31, 2021:

 

   March 31, 2022   December 31, 2021 
   Cost   Accumulated Depreciation   Net Book
Value		   Cost   Accumulated Depreciation   Net Book
Value		 
                         
Computers and office equipment  $3,880   $(2,852)  $1,028   $3,880   $(2,778)  $1,063 
Machinery and equipment   364,686    (288,986)   75,700    334,253    (281,489)   52,764 
Vehicles   118,653    (118,653)   -    118,653    (118,653)   - 
Total fixed assets  $487,219   $(410,491)  $76,728   $456,747   $(402,920)  $53,827 

 

For the three months ended March 31, 2022 and 2021, the Company recorded depreciation expense of $7,571 and $12,090, respectively.

 

Intangible Assets

 

Intangible assets consist of mining rights are not amortized as the mining rights are perpetual. The carrying value was $1,533,738 and $1,302,440 at March 31, 2022 and December 31, 2021, respectively.

 

Equity Investments without Readily Determinable Fair Values

 

On October 2, 2017, the Company entered into an exchange agreement whereby it issued 25,000,000 shares of its common stock in exchange for 500,000 shares of Ares Resources Corporation. The Company’s chief executive officer also serves as an officer of Ares Resources Corporation, thus making it a related party under common ownership and control. The shares were recorded at $150,000, or $0.006 per share. The shares were valued based upon the lowest market price of the Company’s common stock on the date the agreement.

 

On March 11, 2020, the Company issued 53,947,368 shares of common stock to Lancaster Brazil Fund pursuant to an addendum to the share exchange agreement dated September 28, 2018. The Company recorded a loss on exchange of equity with a related party of $76,926 representing the fair value of the additional shares of common stock issued.

 

Under ASC 321-10, the Company elected to use a measurement alternative for its equity investment that does not have a readily determinable fair value. As such, the Company measured its investment at cost, less any impairment, plus or minus any changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. The Company owns less than 5% of the total shares outstanding of Ares Resources Corporation.

 

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BRAZIL MINERALS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS (CONTINUED)

 

Accounts Payable and Accrued Liabilities

 

   March 31, 2022   December 31, 2021 
Accounts payable and other accruals  $361,644   $310,047 
Mineral rights payable   550,075    672,601 
Accrued interest   -    5,590 
Total  $911,719   $988,237 

 

NOTE 3 – OTHER NONCURRENT LIABILITIES

 

Other noncurrent liabilities are comprised solely of social contributions and other employee-related costs at our operating subsidiaries located in Brazil. The Company has been funding these amounts upon the termination of a worker or employee. The balance of these employee related costs as of March 31, 2022 and December 31, 2021 amounted to $129,885 and $108,926, respectively.

 

NOTE 4 – STOCKHOLDERS’ DEFICIT

 

Authorized and Amendments

 

As of March 31, 2022, the Company had 4,000,000,000 common shares authorized with a par value of $0.001 per share.

 

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BRAZIL MINERALS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Series A Preferred Stock

 

On December 18, 2012, the Company filed with the Nevada Secretary of State a Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock (“Series A Stock”) to designate one share of a new series of preferred stock. The Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock 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 Company’s Common Stock, with the holders of Series A Stock being entitled to 51% of the total votes on all such matters regardless of the actual number of shares of Series A Stock then outstanding, and the holders of Common Stock are entitled to their proportional share of the remaining 49% of the total votes based on their respective voting power.

 

Three Months Ended March 31, 2022 Transactions

 

During the three months ended March 31, 2022, the Company issued 90,299,152 shares of common stock for gross proceeds of $397,999 pursuant to subscription agreements with accredited investors.

 

Three Months Ended March 31, 2021 Transactions

 

During the three months ended March 31, 2021, the Company issued 40,541,666 shares of common stock for gross proceeds of $266,500 pursuant to subscription agreements with accredited investors. Additionally, the Company issued 382,429,714 shares of common stock upon conversion of $640,883 in convertible notes payable and accrued interest. Lastly, during the three months ended March 31, 2021, the Company issued 131,675,682 shares of common stock upon the cashless exercise of 141,000,000 warrants.

 

See Note 6 – Related Party Transactions for additional disclosures of common stock issuances.

 

Common Stock Options

 

During the three months ended March 31, 2022, the Company granted options to purchase an aggregate of 94,159,724 shares of common stock to officers and non-management directors. The options were valued at $196,996 in total. The options were valued using the Black-Scholes option pricing model with the following average assumptions: our stock price on the date of the grant which ranged from $0.006 to $0.008, expected dividend yield of 0.0%, historical volatility calculated between 79.0% and 220%, risk-free interest rate ranging between 0.9% and 1.83%, and an expected term of 10 years.

 

The following table reflects all outstanding and exercisable options at March 31, 2022. All stock options immediately vest and are exercisable for a period of five to ten years from the date of issuance.

 

   Number of Options Outstanding and Vested   Weighted Average Exercise Price   Remaining Contractual Life (Years)   Aggregated Intrinsic Value 
Outstanding, January 1, 2022   4,908,779   $0.011    2.74    19,675 
Issued   –    –    –    – 
Exercised   –    –    –    – 
Forfeited   –    –    –    – 
Outstanding and Vested, March 31, 2022   4,908,779   $0.011    2.74    19,675 

 

As of December 31, 2021, the warrants outstanding has an aggregated intrinsic value of $19,675.

 

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BRAZIL MINERALS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 5 – COMMITMENTS AND CONTINGENCIES

 

Operating Leases

 

The Company leases office space as its principal executive offices in Pasadena, California for approximately $5,750 on a month-to-month basis. The Company also leases office space in the municipality of Olhos D’Agua, Brazil. Such costs are immaterial to the condensed consolidated financial statements.

 

NOTE 6 - RELATED PARTY TRANSACTIONS

 

Jupiter Gold Corporation

 

During the three months ended March 31, 2022, Jupiter Gold granted options to purchase an aggregate of 210,000 shares of its common stock to Marc Fogassa at prices ranging between $0.01 to $1.00 per share. The options were valued at $27,033 and recorded to stock-based compensation. The options were valued using the Black-Scholes option pricing model with the following average assumptions: the Company’s stock price on the date of the grant ($0.25 to $0.30), expected dividend yield of 0%, historical volatility calculated at 232%, risk-free interest rate between a range of 1,59% to 1.79%, and an expected term between 5 and 10 years.

 

During the three months ended March 31, 2021, Jupiter Gold granted options to purchase an aggregate of 105,000 shares of its common stock to Marc Fogassa at prices ranging between $0.01 to $1.00 per share. The options were valued at $124,549 and recorded to stock-based compensation. The options were valued using the Black-Scholes option pricing model with the following average assumptions: the Company’s stock price on the date of the grant ($0.95 to $1.45), expected dividend yield of 0%, historical volatility calculated at 97.3%, risk-free interest rate between a range of 0.92% to 1.41%, and an expected term between 5 and 10 years.

 

Apollo Resource Corporation

 

During the three months ended March 31, 2022, Apollo Resources granted options to purchase an aggregate of 135,000 shares of its common stock to Marc Fogassa at a price of $0.01 per share. The options were valued at $163,990 and recorded to stock-based compensation. The options were valued using the Black-Scholes option pricing model with the following average assumptions: the Company’s stock price on the date of the grant ($0.10 to $5.00), expected dividend yield of 0%, historical volatility calculated at 71%, risk-free interest rate between a range of 0.68% to 2,34%, and an expected term between 5 and 10 years

 

During the three months ended March 31, 2021, Apollo Resources granted options to purchase an aggregate of 105,000 shares of its common stock to Marc Fogassa at a price of $0.01 per share. The options were valued at $217,129 and recorded to stock-based compensation. The options were valued using the Black-Scholes option pricing model with the following average assumptions: the Company’s stock price on the date of the grant ($0.10 to $4.00), expected dividend yield of 0%, historical volatility calculated at 49.2%, risk-free interest rate between a range of 0.68% to 1.41%, and an expected term between 5 and 10 years.

 

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BRAZIL MINERALS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 7 – RISKS AND UNCERTAINTIES

 

Currency Risk

 

The Company operates primarily in Brazil which exposes it to currency risks. The Company’s business activities may generate intercompany receivables or payables that are in a currency other than the functional currency of the entity. Changes in exchange rates from the time the activity occurs to the time payments are made may result in the Company receiving either more or less in local currency than the local currency equivalent at the time of the original activity.

 

The Company’s condensed consolidated financial statements are denominated in U.S. dollars. Accordingly, changes in exchange rates between the applicable foreign currency and the U.S. dollar affect the translation of each foreign subsidiary’s financial results into U.S. dollars for purposes of reporting in the consolidated financial statements. The Company’s foreign subsidiaries translate their financial results from the local currency into U.S. dollars in the following manner: (a) income statement accounts are translated at average exchange rates for the period; (b) balance sheet asset and liability accounts are translated at end of period exchange rates; and (c) equity accounts are translated at historical exchange rates. Translation in this manner affects the shareholders’ equity account referred to as the foreign currency translation adjustment account. This account exists only in the foreign subsidiaries’ U.S. dollar balance sheets and is necessary to keep the foreign subsidiaries’ balance sheets in agreement.

 

NOTE 8 - SUBSEQUENT EVENTS

 

In accordance with FASB ASC 855-10 Subsequent Events, the Company has analyzed its operations subsequent to March 31, 2022 to the date these consolidated financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these consolidated financial statements.

 

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

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

 

This Quarterly Report contains forward-looking statements. Forward-looking statements for Brazil Minerals, Inc. reflect current expectations, as of the date of this Quarterly 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.

 

Description of Business

 

We are a U.S. mineral exploration and mining company with projects and properties in essentially all battery metals to power the Green Energy Revolution – lithium, rare earths, nickel, cobalt, graphite, and titanium. Our current focus is on developing our hard-rock lithium project located in a premier pegmatitic district in Brazil – as lithium is essential for batteries in electric vehicles. Additionally, through subsidiaries, we participate in iron, gold, and quartzite projects. We also own multiple mining concessions for gold, diamond, and industrial sand.

 

All of our mineral projects and properties are located in Brazil and, as of the date of this Report, our mineral rights portfolio for battery metals includes approximately 60,077 acres (243 km2) for lithium, 30,009 acres (121 km2) for rare earths, 57,900 acres (234 km2) for nickel, 22,050 acres (89 km2) for titanium, and 14,507 acres (59 km2) for graphite. We believe that we have one of the largest battery metals exploration footprints among publicly listed companies.

 

Currently we are primarily focused on advancing and developing our hard-rock lithium project located in the state of Minas Gerais, Brazil, where some of our high-potential mineral rights are adjacent to or near large lithium deposits that belong to a large, publicly traded competitor. Our Minas Gerais Lithium Project is our largest endeavor and consists of 44 mineral rights spread over 45,456 acres (184 km2) and predominantly located within the Brazilian Eastern Pegmatitic Province which has been surveyed by the Brazilian Geological Survey and is known for the presence of hard rock formations known as pegmatites which contain lithium-bearing minerals such as spodumene and petalite. In general, lithium derived from pegmatites is less costly to purify for uses in high technology applications than lithium obtained from brine. Such applications include the battery supply chain for electric vehicles (“EVs”), an area of expected high growth for the next several decades.

 

We also own 44.41% of the common shares of Apollo Resources Corporation, (“Apollo Resources”), a private company currently primarily focused on the development of its initial iron mine, expected to start operations and revenues in early 2023. We also own approximately 24.56% of Jupiter Gold Corporation (“Jupiter Gold”), a company focused on the development of gold projects and of a quartzite mine, and whose common shares are quoted on the OTCQB under the symbol “JUPGF.” The quartzite mine is expected to start operations and revenues in 2022. The results of operations from both Apollo Resources and Jupiter Gold are consolidated in our financial statements under accounting principles generally accepted in the United States (“U.S. GAAP”).

 

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As the self-titled “Mineral Resources Company for the Green Energy Revolution,” we are deeply committed to Environmental, Social, and Corporate Governance (“ESG”) causes. We have an ESG Chief who coordinates our efforts in these important matters. Within the last few years, we planted more than 6,000 trees of diverse types for the benefit of local populations in areas in which we operate and constructed over 1,000 small retention walls to preserve and enhance dirt access roads used by such communities. Separately, many of our work needs have been specifically delegated to firms owned or managed by women and minorities.

 

We are an exploration stage company and we have no “reserves” as such term is defined by Regulation S-K, Subpart 1300 (“S-K 1300”).

 

Operational Update

 

During the first quarter of 2022 and continuing to date, we have been primarily focused on the geological exploration and advancement of one of our mineral rights within our Minas Gerais Lithium Project. Within this one claim, our exploration team has identified three distinct pegmatitic ore bodies with spodumene, a mineral which contains lithium. Recent geochemical analysis of spodumene samples from one drill hole included a reading of 2.86% Li2O. We have two qualified persons under S-K 1300 who are responsible for the technical advancement of the project.

 

After the end of the first quarter of 2022, we increased the size of our nickel exploration footprint with the addition of another 11 mineral rights in the Brazilian state of Goiás.

 

On March 16, 2022, we terminated the Consulting Services Agreement with Jason Baybutt, who served as our Chief Financial Officer, Principal Accounting Officer, and Treasurer from December 29, 2021 to March 16, 2022.

 

On March 16, 2022, we appointed Gustavo Pereira de Aguiar as our Chief Financial Officer, Principal Accounting Officer, and Treasurer. From 2016 until March 15, 2022, Mr. Aguiar was the Controller of Jaguar Mining, Inc., a Canadian publicly traded company with two producing gold mines in the state of Minas Gerais in Brazil and current market capitalization of approximately $270 million. From 2013 to 2016, Mr. Aguiar was Controller at Grupo Orguel, an enterprise in the construction equipment rental sector in Brazil which received funding from Carlyle, a U.S. private equity group, and from 2010 to 2013, Mr. Aguiar worked at Mirabella Mineração, which at the time was developing its nickel project in the state of Bahia in Brazil. From 2006 to 2010, Mr. Aguiar was an auditor with Deloitte in Brazil. Mr. Aguiar has undergraduate degrees in Business Administration and in Accounting from Universidade FUMEC in Brazil. He has an executive MBA and further post-graduate education in finance from Fundação Dom Cabral in Brazil. Mr. Aguiar is fluent in Portuguese and English and is a licensed accountant in Brazil.

 

Results of Operations

 

The Three Months Ended March 31, 2022 Compared to the Three Months ended March 31, 2021

 

Revenue for the three months ended March 31, 2022 totaled $477, compared to revenue of $4,459 during the three months ended March 31, 2021 representing a decrease of 89%. This revenue comes from sales of industrial sand during the raining season. Industrial sand is a residual business line as the Company is primarily focused on its lithium exploration as described above.

 

Cost of goods sold for the three months ended March 31, 2022 totaled $9,855, as compared to cost of goods sold of $22,989 during the three months ended March 31, 2021 representing a decrease of 57.13%. Cost of goods sold is primarily comprised of labor, fuel, and repairs and maintenance on our mining equipment. The decrease is explained by reduced production activities and mining costs partially attributable to our exploratory efforts.

 

Gross loss for the three months ended March 31, 2022 totaled $9,378, compared to gross loss of $18,530 during the three months ended March 31, 2021, representing an improvement of 49.4%.

 

Operating expenses for the three months ended March 31, 2022 totaled $827,317, compared to operating expenses of $1,112,296 during the three months ended March 31, 2021, representing a decrease of 25.6%. The decrease was mostly due to lower general and administrative expenses related to public company costs and stock-based compensation from issuances of stock options to officers and directors.

 

As a result, we incurred a net loss attributable to our stockholders of $531,490, or $0.00 per share, for the three months ended March 31, 2022, compared to a net loss attributable to our stockholders of $716,022, or $0.00 per share, during the three months ended March 31, 2021.

 

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Liquidity and Capital Resources

 

As of March 31, 2021, we had cash and cash equivalents of $54,230 and a working capital deficit of $822,917.

 

Net cash used by operating activities totaled $506,071 for the three months ended March 31, 2022, compared to net cash generation of $488,711 during the three months ended March 31, 2021 representing a decrease in cash of $994,782 or 203.5%. Net cash used in investing activities totaled $152,998 for the three months ended March 31, 2022, compared to net cash used of $939,927 during the three months ended March 31, 2021, representing a decrease in cash used of $786,929 or 83.7%. Net cash provided by financing activities totaled $622,999 for the three months ended March 31, 2022, compared to $466,249 during the three months ended March 31, 2021, representing an increase in cash provided of $156,750 or 33.62%.

 

We have limited working capital, have historically incurred net operating losses, and have not yet received material revenues from the sale of products or services. These factors create substantial doubt about our ability to continue as a going concern.

 

Our primary sources of liquidity have been derived through proceeds from the (i) issuance of debt and (ii) sales of our equity and the equity of one of our subsidiaries. Our ability to continue as a going concern is dependent upon our capability to generate cash flows from operations and successfully raise new capital through debt issuances and sales of our equity. We have no plans for any significant cash acquisitions in the foreseeable future.

 

Currency Risk

 

We operate primarily in Brazil which exposes us to currency risks. Our business activities may generate intercompany receivables or payables that are in a currency other than the functional currency of the entity. Changes in exchange rates from the time the activity occurs to the time payments are made may result in us receiving either more or less in local currency than the local currency equivalent at the time of the original activity.

 

Our condensed consolidated financial statements are denominated in U.S. dollars. Accordingly, changes in exchange rates between the applicable foreign currency and the U.S. dollar affect the translation of each foreign subsidiary’s financial results into U.S. dollars for purposes of reporting in the consolidated financial statements. Our foreign subsidiaries translate their financial results from the local currency into U.S. dollars in the following manner: (a) income statement accounts are translated at average exchange rates for the period; (b) balance sheet asset and liability accounts are translated at end of period exchange rates; and (c) equity accounts are translated at historical exchange rates. Translation in this manner affects the shareholders’ equity account referred to as the foreign currency translation adjustment account. This account exists only in the foreign subsidiaries’ U.S. dollar balance sheets and is necessary to keep the foreign subsidiaries’ balance sheets in agreement.

 

Off-Balance Sheet Arrangements

 

We currently have no off-balance sheet arrangements.

 

Critical Accounting Policies and Estimates

 

Our financial instruments consist of cash and cash equivalents, loans to a related party, accrued expenses, and an amount due to a director. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in our financial statements. If our estimate of the fair value is incorrect at March 31, 2022, it could negatively affect our financial position and liquidity and could result in our having understated our net loss.

 

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Recent Accounting Pronouncements

 

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

 

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), we are not required to provide the information required by this Item as we are a “smaller reporting company,” as defined by Rule 229.10(f)(1).

 

Item 4. CONTROLS AND PROCEDURES

 

(a) Evaluation of Disclosure Controls and Procedures

 

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the design, operation, and effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”) as of March 31, 2022. On the basis of that evaluation, management concluded that our disclosure controls and procedures designed 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 Securities and Exchange Commission (the “Commission”), and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure were effective.

 

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

 

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control system is designed to provide reasonable assurance to management and to our Board of Directors regarding the preparation and fair presentation of published financial statements. Our Chief Executive Officer and Chief Financial Officer conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on their evaluation under the framework in Internal Control—Integrated Framework (2013), they concluded that our internal control over financial reporting was effective as of March 31, 2022.

 

(c) Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting that occurred in the quarter ended March 31, 2022 that materially affected, or would be reasonably likely to materially affect, our internal control over financial reporting.

 

(d) Limitations of the Effectiveness of Internal Controls

 

The effectiveness of our 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 our disclosure controls and procedures and internal control over financial reporting will detect all errors or fraud. However, our control systems have been designed to provide reasonable assurance of achieving out objectives, and our Principal Executive Officer and Principal Financial Officer have concluded that out disclosure controls and procedures and internal control over financial reporting are effective at the reasonable assurance level.

 

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PART II OTHER INFORMATION

 

Item 1. LEGAL PROCEEDINGS

 

None material.

 

Item 1A. RISK FACTORS

 

There have been no material changes in the risk factors applicable to us from those identified in the Annual Report on Form 10-K for the period ended December 31, 2021 filed with the Securities and Exchange Commission on March 29, 2022.

 

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

During the three months ended March 31, 2022, we received an aggregate of $250,000 in gross proceeds from the sale of shares of our unregistered common stock to four investors and one director.

 

All of the above securities were issued in accordance with an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) under Section 4(a)(2) of the Securities Act by virtue of being offered without employing any means of general solicitation and issued to purchasers which represented to us that they are accredited investors and that they were acquiring the securities for investment and could bear the economic risk of the investment.

 

Item 3. DEFAULTS UPON SENIOR SECURITIES

 

None

 

Item 4. MINE SAFETY DISCLOSURES

 

None

 

Item 5. OTHER INFORMATION

 

None

 

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Item 6. EXHIBITS

 

(a) Exhibits

 

Exhibit

Number

   Description
     
10.1   Consulting Services Agreement between the Company and Jason Baybutt.*
     
10.2   Employment Agreement between the Company and Gustavo Pereira de Aguiar.*
     
10.3   Form of Securities Purchase Agreement between the Company and Investors.
     
31.1   Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
31.2   Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
32.1   Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
101.INS   Inline XBRL Instance Document
     
101.SCH   Inline XBRL Taxonomy Extension Schema Document
     
101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB   Inline XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase Document
     
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

* Management contract or compensatory plan or arrangement.

 

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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.

 

Signature   Title   Date
         
/s/ Marc Fogassa       May 13, 2022
Marc Fogassa   Chief Executive Officer (Principal Executive Officer) and Chairman of the Board    
         
/s/ Gustavo Pereira de Aguiar       May 13, 2022
Gustavo Pereira de Aguiar   Chief Financial Officer (Principal Financial and Accounting Officer)    

 

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Exhibit 10.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 10.2

 

AGREEMENT

 

This Agreement (this “Agreement”) is entered into on March 15, 2022, by and between Brazil Minerals, Inc., a Nevada corporation (the “Company”), with address at 433 N. Camden Drive, Suite 810, Beverly Hills, CA 90210, and Gustavo Pereira de Aguiar (“GPA”), a citizen and resident of Brazil, with address at Rua Universo 387, apto 401, Bairro Santa Lucia, Belo Horizonte, Minas Gerais, Brazil. The Company and GPA shall be referred to herein collectively as “the Parties” and each individually as a “Party.”

 

The Parties agree to the following terms:

 

1.Retention of GPA. Subject to the terms and conditions set forth in this Agreement, the Company hereby retains GPA on a full-time basis to perform the services set forth in this Agreement, and GPA accepts this retention on the terms and conditions set forth in this Agreement.

 

2.Effective Date. This Agreement shall be effective as of March 16, 2022 (the “Start Date”).

 

3.Termination. This Agreement may be terminated at any time by mutual agreement of the Parties, and at any time for any reason or no reason, by one Party, within a prior written notice of 30 (thirty) days to the other Party. The consequences of the termination, as applicable, are provided for in Section 9 of this Agreement.

 

4.Scope of Work. The services to be performed by GPA under this Agreement (the “Work”) shall consist of all tasks related to planning, implementation, managing and running of the finance activities of the Company, including business planning, budgeting, forecasting and reporting, as well as other tasks assigned by the Chief Executive Officer of the Company accordingly, including, but not limited to, the following:

 

●Financial reporting, including preparation of all financial statements and other parts of the Forms 10-K and 10-Q with respect to the Company, including those of any subsidiaries; such work involves:

 

○Overseeing the preparation of the financial statements of Brazilian subsidiaries by Brazilian accountants
○Overseeing the preparation of general ledger of U.S.-based accounts
○Consolidation of period activity from Brazil and U.S. into global financial statements
○Preparation of footnotes to such financial statements
○Preparation of the Management and Analysis Discussion parts of the Forms 10-K and 10-Q
○Interface with the auditor’s team until clearance for filling is obtained;

 

●Budgeting;
●Treasury functions, including payments;
●Internal controls;
●Modeling of projects (forecast of revenues, costs, cash flows, etc); and
●Other topics within the finance function to be determined as needed.

 

Services will be provided in GPA’s city of residence. All costs incurred by GPA in the provision of services outside the place of residence, including, without limitation, airline tickets, vehicle rental, fuel, accommodation and food, will be borne by the Company.

 

5.Titles. GPA shall be referred to under the following titles: Chief Financial Officer, Treasurer, and Principal Accounting Officer of the Company.

 

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6.Base Compensation. A monthly cash compensation of US$ 9,500 shall be deposited to an account of choice provided to the Company by GPA in return for the Work rendered by GPA during the term of this Agreement.

 

7.Sign-In Bonus Compensation. GPA shall also receive a sign-in bonus totaling US$ 25,000 which shall be paid up in two tranches. GPA shall receive the first tranche of US$ 12,500 within ten days after the Start Date and shall receive the second tranche of US$ 12,500 three months after the Start Date.

 

8.Annual Performance Bonus Compensation. GPA shall also be entitled to a maximum annual bonus of US$ 45,000 (the “Annual Bonus”), conditioned to the filing, by the Company, on an annual basis, of one Form 10-K and three Form 10-Q with the Securities and Exchange Commission (the “SEC”), in accordance with the following rules:

 

a) If and only if the Form 10-K is filed timely on or before the regularly scheduled filing date (and not filed on an extension), GPA shall receive 40% of the Annual Bonus, which corresponds to US$ 18,000, within thirty days after such actual filing date;

 

b) For each Form 10-Q that is filed on the regularly scheduled filing date (and not filed on an extension), GPA shall receive 20% of the Annual Bonus, which corresponds to US$ 9,000, within thirty days after the relevant filing date.

 

9.Stock Compensation.

 

As of March 8, 2022, the total number of authorized and issued common shares of the Company is 3,188,198,223. Two percent of such number equals 63,763,964 shares.

 

On the Start Date, GPA shall be granted, for the purchase price of US$ 1.00 to be discounted from the first base compensation, 63,763,964 shares (the “GPA Grant”) which shall vest over four years in four tranches, on the first, second, third, and fourth anniversaries of the Start Date.

 

a)If GPA resigns before the first-year anniversary of the Start Date, all 63,763,964 shares of the GPA Grant shall be deemed to be forfeited and returned to Company’s treasury;

 

b)If GPA resigns after the first-year anniversary, but before the second anniversary of the Start Date, 3/4 of the shares of the GPA Grant, which corresponds to 47,822,973 shares of the GPA Grant, shall be deemed to be forfeited and returned to Company’s treasury;

 

c)If GPA resigns after the second-year anniversary, but before the third anniversary of the Start Date, 1/2 of the shares of the GPA Grant, which corresponds to 31,881,982 shares of the GPA Grant, shall be deemed to be forfeited and returned to Company’s treasury;

 

d)If GPA resigns after the third-year anniversary, but before the fourth anniversary of the Start Date, 1/4 of the shares of the GPA Grant, which corresponds to 15,940,991 shares of the GPA Grant, shall be deemed to be forfeited and returned to Company’s treasury;

 

e)If and when the Company terminates this Agreement for any reason other than gross negligence or willful malfeasance of GPA, then the GPA Grant shall be deemed to be fully vested immediately upon such termination;

 

 a.If such termination occurs before the first-year anniversary of the Start Date, GPA shall be entitled to receive US$ 60,000 within thirty days of said termination;

 

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b.If such termination occurs after the first anniversary, but before the second anniversary of the Start Date, then GPA shall be entitled to receive US$ 30,000 within thirty days of said termination;

 

f)If the Company terminates this Agreement for gross negligence or willful malfeasance, then the portion of the GPA Grant which is not yet vested shall be deemed to be forfeited.

 

10.Currency of Payments. All cash payments under this Agreement will be made net in the currency of Brazil, the Brazilian real, using for conversion the prior day’s end-of-day PTAX exchange rate provided by the Brazilian Central Bank, without any deduction, discount, reduction or withholding. Further paperwork in Brazil required to properly make the payments under this Agreement shall be completed by the Company and GPA.
  
11.Inflation-Adjustment. All cash payments under this Agreement shall be adjusted annually in March in accordance with the Brazilian inflation rate known as IPCA.
  
12.Personal Time. GPA shall have four weeks of personal time per year.
  
13.Independent Contractor. GPA agrees to perform the Work as an independent contractor and not as an agent of the Company, its subsidiaries or affiliates. GPA is not granted any right or authority or responsibility, expressed, implied or apparent, on behalf of or in the name of the Company to bind, or act on behalf of, the Company or its affiliates or subsidiaries. This Agreement is an at-will contract.
  
14.Covenants by GPA. GPA hereby agrees to disclose to the Company within two business days: i) any inquiries or other contact from any entity pertaining to any work-related activity involving GPA; and ii) any material events affecting, or which may reasonably be expected to affect, GPA’s ability to perform the Work.
  
15.Confidential Information. All information which GPA may now possess, may obtain during or after the term of this Agreement, or may create prior to the end of the term of this Agreement relating to the business of the Company or its affiliates or subsidiaries or of any of their respective customers or vendors (collectively, the “Confidential Information”) shall not be published, disclosed, or made accessible by him to any other person, firm or corporation either during or after the term of this Agreement or used by him, except during the term of this Agreement in the business and for the benefit of the Company without the prior written consent of the Company. GPA shall return all tangible evidence of such Confidential Information to the Company prior to or at the end of the term of this Agreement. This Agreement is also confidential, except to the extent required to be disclosed pursuant to the laws applicable to the parties, including, as the case may be, U.S. federal securities laws. GPA agrees that he will not disclose, publicize, or discuss any of the terms or conditions of this Agreement with anyone, except his attorneys, consultants and/or accountants, or as otherwise required by law. In the event GPA discloses this Agreement or any of its terms or conditions to his attorneys, consultants and/or accountant, it shall be his duty to advise said individual(s) of the confidential nature of this Agreement; and direct them not to disclose, publicize, or discuss any of the terms or conditions of this Agreement with anyone else.

 

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16.Indemnification. GPA shall protect, defend, indemnify and hold the Company, its affiliates, officers, consultants, partners, members, successors and assigns (collectively, the “Indemnified Party”) free and unharmed from and against any and all claims, liabilities, loss, costs, or damages, including court costs and attorneys’ fees, whether raised by the Indemnified Party or a third party, which shall arise in connection with any breach by GPA of a covenant, warranty or representation contained herein. The Company agrees to protect, indemnify, defend, and hold GPA free and unharmed from and against any and all losses, costs (including court costs and attorneys’ fees), damages, expenses, claims, demands or liabilities arising out of or in consequence of the breach by the Company, or its directors, officers, agents or employees of any of the covenants, warranty or representation made by the Company herein, including, without restricting the foregoing, the misuse of, or unauthorized dissemination of communications with GPA or the financial statements, or any other work product made available to the Company by GPA in performing the Work.

 

17.Liability Limitation. In no event shall either party be liable to the other party whether in contract, tort or otherwise, for payment of any special, indirect, incidental, consequential or similar damages. Any and all actions, causes of action, contracts, demands or claims, whether in contract, negligence or otherwise known to law, which the Company may have arising out of the Work provided by GPA under this Agreement (hereinafter referred to as “claims” or “claim”) shall be limited to the compensation paid to GPA for the portion of the Work giving rise to liability, except when “gross negligence” and/or “willful malfeasance” on the part of GPA is determined, in which case there are no limitations.

 

18.Notices. All notices required under this Agreement shall be deemed given when sent by email, overnight courier or registered or certified mail, or when sent by telecopy, telegraph or other graphic, electronic means and confirmed by overnight courier or registered or certified mail addressed to the address set forth in the preamble to this Agreement. Either Party shall have the right to change the address or name of the person to whom such notices are to be delivered by notice to the other Party.

 

19.Law and Venue. This Agreement shall be governed in all respects by and construed in accordance with the laws of the State of California without regard to conflicts of law provisions. Any dispute between the Parties shall be heard only in the state and federal courts located in the County of Los Angeles, California, having personal and subject matter jurisdiction.

 

20.Waiver of Trial by Jury. The Company and GPA hereby knowingly, voluntarily and intentionally waive the right to a trial by jury with respect to any litigation based hereon, or arising out of, under or in connection with this agreement. This provision is a material inducement for the parties entering into this Agreement.

 

21.Headings. The headings in this Agreement are provided for convenience of reference only and shall not affect the construction of the text of this Agreement.

 

22.Non-Waiver. No waiver of any provision of this Agreement shall be deemed to be nor shall constitute a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the party making the waiver.

 

23.Cumulative Remedies. All rights and remedies of the parties under this Agreement shall be cumulative, and the exercise of any one right or remedy shall not bar the exercise of any other right or remedy.

 

24.Severability. If any provision of this Agreement shall be held or deemed to be invalid, inoperative or unenforceable, such circumstances shall not affect the validity of any other provision of this Agreement.

 

25.Publicity. GPA shall not make any public disclosures regarding the Company, its subsidiaries or affiliates or the project for which he is performing the Work without the prior approval of the Company.

 

26.Modifications. No amendment or modification to this Agreement shall be effective unless made in writing.

 

27.Electronic Signature. This Agreement may be signed electronically or digitally by any Party or witness, being the electronic signature, by any means, admitted as valid. Should this Agreement be signed electronically, the date of execution of this Agreement shall be the date indicated above (and not the date indicated in any documents generated by the electronic or digital signature platform used).

 

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IN WITNESS WHEREOF, the undersigned have executed or caused their respective duly authorized representatives to execute this Agreement electronically or digitally only or in two (2) counterparts of equal form and content.

 

BRAZIL MINERALS, INC.   Gustavo Pereira Aguiar
       
By: Marc Fogassa, CEO    

 

Signature:      

 

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Exhibit 10.3

 

SEcurities PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is made as of [●] by and between [●], with an address at [●] (the “Purchaser”) and Brazil Minerals, Inc., a Nevada corporation, with an address at 433 North Camden Drive, Suite 810, Beverly Hills, CA 90210 (the “Company”).

 

WHEREAS, the Purchaser has had the opportunity to receive all information he has requested from the Company and to ask the Chief Executive Officer of the Company all questions relative to an investment in the Company and the Purchaser is interested in making the purchase of securities (the “Investment”) set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I

 

Subject to the terms and conditions of this Agreement, the Purchaser agrees to purchase, and the Company agrees to sell to such Purchaser, the securities set forth opposite the name of such Purchaser (the “Securities”) for the consideration (the “Consideration”) set forth opposite the Purchaser’s name on Annex A. Wire transfer instructions are on Annex B. A form of accredited investor questionnaire must also be completed and signed by the Purchaser and must be in form and substance to the satisfaction of the Company as a condition to Company’s obligations under this Agreement.

 

ARTICLE II

 

The Company hereby represents and warrants to the Purchaser with respect to the purchase of the Securities by such Purchaser as of the date of this Agreement as follows:

 

a) The Company is not subject to any material litigation, has not received any threats of litigation, and is unaware of any potential dispute that could jeopardize the Company’s business prospects.

 

b) The Company is not in bankruptcy.

 

c) The Company has no special arrangement with any holder of its common shares which would give such person additional rights or privileges than those afforded to any other holder of its common shares.

 

d) The Company has one share of a Preferred A Stock issued and outstanding and held by Marc Fogassa which gives him 51% of the votes in any shareholder meeting. There is no other capital stock in the Company with higher voting rights than common stock.

 

 

 

 

ARTICLE III

 

The Purchaser hereby represents and warrants to the Company with respect to the purchase of the Securities by such Purchaser as of the date of this Agreement as follows:

 

a) The Purchaser is an “accredited investor” as such term is defined in Rule 501(a) promulgated by the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended.

 

b) The Purchaser is making the Investment contemplated by this Agreement for Purchaser’s own account, and not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof, nor with any present intention of distributing such Securities.

 

c) The Purchaser is aware of the limits on resale imposed by Rule 144, among others, and is aware that the certificates representing any common stock which are part of, or derived from, the Securities purchased will bear a restrictive legend, until such time that such legend may be legally removed. At that time, the Company shall provide to the Purchaser, free of any charge, the appropriate legal opinion of counsel of recognized standing in customary form and substance to facilitate the removal of any such restricted legend. The Company represents that it expects that after six months from the date of the Investment by Purchaser it will continue to be a reporting concern in good standing and in a position to obtain at that time the legal opinion of counsel to remove such restricted legend pertaining to transfers under the U.S. federal securities laws.

 

d) The Purchaser has such knowledge and experience in financial, tax, and business matters so as to enable Purchaser to evaluate the risks and merits of the Investment contemplated by this Agreement. The Purchaser is financially able to bear the economic risk of the Investment, including a total loss. The Purchaser has adequate means of providing for the Purchaser’s current needs and has no need for immediate liquidity in the Investment and has no reason to anticipate any material change in his financial condition in the foreseeable future.

 

e) The Purchaser acknowledges that the Purchaser has had the opportunity to review the publicly available information on the companies issuing the Securities that are part of the Investment contemplated by this Agreement, including and in particular, those sections of the filings in which risk factors are detailed.

 

f) The Purchaser understands that neither the Commission nor any other U.S. federal or state agency has reviewed the proposed offering of the Securities or made any finding or determination of fairness of the offering of the Securities or any recommendation or endorsement of the Investment contemplated by this Agreement.

 

g) The Purchaser acknowledges that the Purchaser has not received any information regarding the offering of the Securities from any seminar or meeting held by the Company, or through any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio. The Purchaser also acknowledges that no investment banker, broker, or finder was involved in connection with the Investment contemplated by this Agreement.

 

h) The Purchaser acknowledges that no consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority on the part of Purchaser is required in connection with (i) the execution, delivery and performance of this Agreement, (ii) the purchase of the Securities, and (iii) the consummation by the Purchaser of the Investment contemplated by this Agreement.

 

ARTICLE IV

 

This Agreement shall be governed in all respects by the laws of the State of California without giving effect to the conflicts of laws principles thereof. All suits, actions or proceedings arising out of, or in connection with, this Agreement or the transactions contemplated by this Agreement shall be brought in any court of competent subject matter jurisdiction sitting in Los Angeles, California. This Agreement and the other documents executed in connection with this Agreement constitute the full and entire understanding and agreement between the parties with regard to the subject matter herein. None of the terms of this Agreement can be waived or modified, except by an express agreement signed by the parties.

 

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

 

   
Brazil Minerals, Inc.  
   
By:    
                
   
[●]    

 

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ANNEX A

 

Purchaser  

Consideration

Delivered by Purchaser to

Company

   Securities Purchased by Purchaser
[●]   $[●]  

a) [●] common shares of Brazil Minerals, Inc.

 

and

 

b) warrants to purchase up to [●] common shares of Brazil Minerals, Inc. at an exercise price of $[●] per share, exercisable at any time until [●], and subject to standard equitable adjustments for stock splits, reverse stock splits, dividends, etc.

 

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ANNEX B

 

WIRE INSTRUCTIONS

 

WIRE INSTRUCTIONS

 

Account Name: Brazil Minerals, Inc.
   
Account Number: [●]
   
   
Routing Number/ABA: [●]
   
Bank: [●]

 

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Exhibit 31.1

 

CERTIFICATION

 

I, Marc Fogassa, certify that:

 

(1)I have reviewed this Quarterly Report on Form 10-Q for the fiscal year ended March 31, 2022 of Brazil Minerals, Inc.;

 

(2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

(3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

 

(4)The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

 

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under their supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

  

(5)The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s Board of Directors (or persons performing the equivalent functions):

 

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

 

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

 

Date: May 13, 2022   /s/ Marc Fogassa
    Marc Fogassa
    Chief Executive Officer
    (Principal Executive Officer)

 

 

 

Exhibit 31.2

 

CERTIFICATION

 

I, Gustavo Pereira de Aguiar, certify that:

 

(1)I have reviewed this Quarterly Report on Form 10-Q for the fiscal year ended March 31, 2022 of Brazil Minerals, Inc.;

 

(2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

(3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

 

(4)The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

 

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under their supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

  

(5)The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s Board of Directors (or persons performing the equivalent functions):

 

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

 

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

 

Date: May 13, 2022   /s/ Gustavo Pereira de Aguiar
    Gustavo Pereira de Aguiar
    Chief Financial Officer
    (Principal Financial and Accounting Officer)

 

 

 

Exhibit 32.1

 

Certification of Chief Executive Officer and Principal Financial Officer

Pursuant to 18 U.S.C. Section 1350,

as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned principal executive officer and principal financial officer of Brazil Minerals, Inc. (the “Company”), certify that the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2022 fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. 

 

Date: May 13, 2022 By: /s/ Marc Fogassa
    Marc Fogassa
   

Chief Executive Officer
   

(Principal Executive Officer)

 

Date: May 13, 2022 By: /s/ Gustavo Pereira de Aguiar
    Gustavo Pereira de Aguiar
   

Chief Financial Officer
   

(Principal Financial and Accounting Officer)

 

  

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.