0001540684
false
3,250,000,000
3,250,000,000
0001540684
2021-01-01
2021-09-30
0001540684
dei:BusinessContactMember
2021-01-01
2021-09-30
0001540684
2021-09-30
0001540684
2020-12-31
0001540684
us-gaap:SeriesAPreferredStockMember
2021-09-30
0001540684
us-gaap:SeriesAPreferredStockMember
2020-12-31
0001540684
us-gaap:SeriesDPreferredStockMember
2021-09-30
0001540684
us-gaap:SeriesDPreferredStockMember
2020-12-31
0001540684
2021-07-01
2021-09-30
0001540684
2020-07-01
2020-09-30
0001540684
2020-01-01
2020-09-30
0001540684
us-gaap:PreferredStockMember
us-gaap:SeriesAPreferredStockMember
2020-06-30
0001540684
us-gaap:PreferredStockMember
us-gaap:SeriesDPreferredStockMember
2020-06-30
0001540684
us-gaap:CommonStockMember
2020-06-30
0001540684
us-gaap:AdditionalPaidInCapitalMember
2020-06-30
0001540684
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2020-06-30
0001540684
us-gaap:RetainedEarningsMember
2020-06-30
0001540684
us-gaap:NoncontrollingInterestMember
2020-06-30
0001540684
2020-06-30
0001540684
us-gaap:PreferredStockMember
us-gaap:SeriesAPreferredStockMember
2020-07-01
2020-09-30
0001540684
us-gaap:PreferredStockMember
us-gaap:SeriesDPreferredStockMember
2020-07-01
2020-09-30
0001540684
us-gaap:CommonStockMember
2020-07-01
2020-09-30
0001540684
us-gaap:AdditionalPaidInCapitalMember
2020-07-01
2020-09-30
0001540684
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2020-07-01
2020-09-30
0001540684
us-gaap:RetainedEarningsMember
2020-07-01
2020-09-30
0001540684
us-gaap:NoncontrollingInterestMember
2020-07-01
2020-09-30
0001540684
us-gaap:PreferredStockMember
us-gaap:SeriesAPreferredStockMember
2020-09-30
0001540684
us-gaap:PreferredStockMember
us-gaap:SeriesDPreferredStockMember
2020-09-30
0001540684
us-gaap:CommonStockMember
2020-09-30
0001540684
us-gaap:AdditionalPaidInCapitalMember
2020-09-30
0001540684
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2020-09-30
0001540684
us-gaap:RetainedEarningsMember
2020-09-30
0001540684
us-gaap:NoncontrollingInterestMember
2020-09-30
0001540684
2020-09-30
0001540684
us-gaap:PreferredStockMember
us-gaap:SeriesAPreferredStockMember
2021-06-30
0001540684
us-gaap:PreferredStockMember
us-gaap:SeriesDPreferredStockMember
2021-06-30
0001540684
us-gaap:CommonStockMember
2021-06-30
0001540684
us-gaap:AdditionalPaidInCapitalMember
2021-06-30
0001540684
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2021-06-30
0001540684
us-gaap:RetainedEarningsMember
2021-06-30
0001540684
us-gaap:NoncontrollingInterestMember
2021-06-30
0001540684
2021-06-30
0001540684
us-gaap:PreferredStockMember
us-gaap:SeriesAPreferredStockMember
2021-07-01
2021-09-30
0001540684
us-gaap:PreferredStockMember
us-gaap:SeriesDPreferredStockMember
2021-07-01
2021-09-30
0001540684
us-gaap:CommonStockMember
2021-07-01
2021-09-30
0001540684
us-gaap:AdditionalPaidInCapitalMember
2021-07-01
2021-09-30
0001540684
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2021-07-01
2021-09-30
0001540684
us-gaap:RetainedEarningsMember
2021-07-01
2021-09-30
0001540684
us-gaap:NoncontrollingInterestMember
2021-07-01
2021-09-30
0001540684
us-gaap:PreferredStockMember
us-gaap:SeriesAPreferredStockMember
2021-09-30
0001540684
us-gaap:PreferredStockMember
us-gaap:SeriesDPreferredStockMember
2021-09-30
0001540684
us-gaap:CommonStockMember
2021-09-30
0001540684
us-gaap:AdditionalPaidInCapitalMember
2021-09-30
0001540684
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2021-09-30
0001540684
us-gaap:RetainedEarningsMember
2021-09-30
0001540684
us-gaap:NoncontrollingInterestMember
2021-09-30
0001540684
us-gaap:PreferredStockMember
us-gaap:SeriesAPreferredStockMember
2019-12-31
0001540684
us-gaap:PreferredStockMember
us-gaap:SeriesDPreferredStockMember
2019-12-31
0001540684
us-gaap:CommonStockMember
2019-12-31
0001540684
us-gaap:AdditionalPaidInCapitalMember
2019-12-31
0001540684
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2019-12-31
0001540684
us-gaap:RetainedEarningsMember
2019-12-31
0001540684
us-gaap:NoncontrollingInterestMember
2019-12-31
0001540684
2019-12-31
0001540684
us-gaap:PreferredStockMember
us-gaap:SeriesAPreferredStockMember
2020-01-01
2020-09-30
0001540684
us-gaap:PreferredStockMember
us-gaap:SeriesDPreferredStockMember
2020-01-01
2020-09-30
0001540684
us-gaap:CommonStockMember
2020-01-01
2020-09-30
0001540684
us-gaap:AdditionalPaidInCapitalMember
2020-01-01
2020-09-30
0001540684
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2020-01-01
2020-09-30
0001540684
us-gaap:RetainedEarningsMember
2020-01-01
2020-09-30
0001540684
us-gaap:NoncontrollingInterestMember
2020-01-01
2020-09-30
0001540684
us-gaap:PreferredStockMember
us-gaap:SeriesAPreferredStockMember
2020-12-31
0001540684
us-gaap:PreferredStockMember
us-gaap:SeriesDPreferredStockMember
2020-12-31
0001540684
us-gaap:CommonStockMember
2020-12-31
0001540684
us-gaap:AdditionalPaidInCapitalMember
2020-12-31
0001540684
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2020-12-31
0001540684
us-gaap:RetainedEarningsMember
2020-12-31
0001540684
us-gaap:NoncontrollingInterestMember
2020-12-31
0001540684
us-gaap:PreferredStockMember
us-gaap:SeriesAPreferredStockMember
2021-01-01
2021-09-30
0001540684
us-gaap:PreferredStockMember
us-gaap:SeriesDPreferredStockMember
2021-01-01
2021-09-30
0001540684
us-gaap:CommonStockMember
2021-01-01
2021-09-30
0001540684
us-gaap:AdditionalPaidInCapitalMember
2021-01-01
2021-09-30
0001540684
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2021-01-01
2021-09-30
0001540684
us-gaap:RetainedEarningsMember
2021-01-01
2021-09-30
0001540684
us-gaap:NoncontrollingInterestMember
2021-01-01
2021-09-30
0001540684
bmix:BmixparticipacoesltdMember
2021-09-30
0001540684
bmix:RSTRecursosMineraisMember
2021-09-30
0001540684
bmix:HerculesBrasilMember
2021-09-30
0001540684
bmix:ApolloResourcesMember
2021-09-30
0001540684
bmix:JupiterGoldMember
2021-09-30
0001540684
bmix:ComputersAndOfficeEquipmentMember
2021-09-30
0001540684
bmix:ComputersAndOfficeEquipmentMember
2020-12-31
0001540684
us-gaap:MachineryAndEquipmentMember
2021-09-30
0001540684
us-gaap:MachineryAndEquipmentMember
2020-12-31
0001540684
us-gaap:VehiclesMember
2021-09-30
0001540684
us-gaap:VehiclesMember
2020-12-31
0001540684
bmix:ExchangeAgreementMember
2017-10-01
2017-10-02
0001540684
bmix:ExchangeAgreementMember
bmix:AresResourcesCorporationMember
2017-10-01
2017-10-02
0001540684
bmix:ExchangeAgreementMember
bmix:AresResourcesCorporationMember
2017-10-02
0001540684
bmix:LancasterBrazilFundMember
2020-03-10
2020-03-11
0001540684
srt:MaximumMember
bmix:AresResourcesCorporationMember
2021-09-30
0001540684
bmix:ConvertiblePromissoryNoteMember
2014-01-06
2014-01-07
0001540684
2018-12-26
0001540684
bmix:ConvertiblePromissoryNoteMember
2014-01-07
0001540684
bmix:ConvertiblePromissoryNoteMember
2021-01-01
2021-09-30
0001540684
bmix:ConvertibleNotesPayableFixedConversionPriceMember
2021-02-01
2021-02-03
0001540684
bmix:ConvertibleNotesPayableFixedConversionPriceMember
2021-05-05
2021-05-06
0001540684
bmix:ConvertibleNotesPayableFixedConversionPriceMember
2021-09-30
0001540684
bmix:ConvertibleNotesPayableFixedConversionPriceMember
2021-06-18
0001540684
bmix:ConvertibleNotesPayableFixedConversionPriceMember
2021-06-17
2021-06-18
0001540684
bmix:ConvertibleNotesPayableFixedConversionPriceMember
2021-01-01
2021-09-30
0001540684
us-gaap:WarrantMember
2021-01-01
2021-09-30
0001540684
bmix:ConvertiblePromissoryNoteMember
2021-09-30
0001540684
bmix:ConvertiblePromissoryNotesOneMember
2016-12-31
0001540684
bmix:ConvertiblePromissoryNotesOneMember
2016-01-01
2016-12-31
0001540684
bmix:ConvertiblePromissoryNotesOneMember
2021-09-30
0001540684
bmix:ConvertiblePromissoryNotesTwoMember
2017-12-31
0001540684
bmix:ConvertiblePromissoryNotesTwoMember
2017-01-01
2017-12-31
0001540684
bmix:ConvertiblePromissoryNotesTwoMember
2021-01-01
2021-09-30
0001540684
bmix:ConvertiblePromissoryNotesTwoMember
2021-09-30
0001540684
bmix:ConvertiblePromissoryNotesThreeMember
2018-12-31
0001540684
bmix:ConvertiblePromissoryNotesThreeMember
2018-01-01
2018-12-31
0001540684
bmix:ConvertiblePromissoryNotesThreeMember
2021-01-01
2021-09-30
0001540684
bmix:ConvertiblePromissoryNotesThreeMember
2021-09-30
0001540684
bmix:ConvertiblePromissoryNotesFourMember
2019-12-31
0001540684
bmix:ConvertiblePromissoryNotesFourMember
2019-01-01
2019-12-31
0001540684
bmix:ConvertiblePromissoryNotesFourMember
2021-09-30
0001540684
bmix:ConvertiblePromissoryNotesFourMember
2021-01-01
2021-09-30
0001540684
bmix:ConvertibleNotesPayableVariableConversionPriceMember
2021-04-08
2021-04-09
0001540684
bmix:ConvertibleNotesPayableVariableConversionPriceMember
2021-04-09
0001540684
us-gaap:WarrantMember
2021-04-08
2021-04-09
0001540684
bmix:ConvertibleNotesPayableVariableConversionPriceMember
2021-01-18
2021-01-19
0001540684
2021-01-18
2021-01-19
0001540684
bmix:ConvertibleNotesPayableVariableConversionPriceMember
2021-01-19
0001540684
bmix:ConvertibleNotesPayableVariableConversionPriceMember
2021-05-04
2021-05-07
0001540684
bmix:ConvertibleNotesPayableVariableConversionPriceMember
2021-05-07
0001540684
bmix:ConvertibleNotesPayableVariableConversionPriceMember
2021-09-30
0001540684
us-gaap:BridgeLoanMember
2020-12-31
0001540684
us-gaap:BridgeLoanMember
2020-01-01
2020-12-31
0001540684
us-gaap:BridgeLoanMember
2021-02-01
2021-02-28
0001540684
us-gaap:BridgeLoanMember
2021-09-30
0001540684
us-gaap:SeriesAPreferredStockMember
2021-01-01
2021-09-30
0001540684
us-gaap:SeriesDPreferredStockMember
2021-09-14
0001540684
us-gaap:SeriesDPreferredStockMember
2021-09-12
2021-09-14
0001540684
us-gaap:SeriesDPreferredStockMember
bmix:MarcFogassaMember
2021-09-13
2021-09-15
0001540684
bmix:SubscriptionAgreementMember
bmix:AccreditedInvestorsMember
2021-01-01
2021-09-30
0001540684
bmix:SubscriptionAgreementMember
2021-01-01
2021-09-30
0001540684
bmix:SubscriptionAgreementMember
2021-09-30
0001540684
bmix:SubscriptionAgreementMember
bmix:AccreditedInvestorsMember
2020-01-01
2020-09-30
0001540684
bmix:NonEmployeesMember
us-gaap:CommonStockMember
2020-01-01
2020-09-30
0001540684
bmix:SubscriptionAgreementMember
2020-01-01
2020-09-30
0001540684
bmix:AccreditedInvestorsMember
2020-01-01
2020-09-30
0001540684
us-gaap:PreferredStockMember
2020-12-31
0001540684
us-gaap:PreferredStockMember
2021-01-01
2021-09-30
0001540684
us-gaap:PreferredStockMember
2021-09-30
0001540684
bmix:OfficersAndNonManagementDirectorsMember
2021-01-01
2021-09-30
0001540684
bmix:OfficersAndNonManagementDirectorsMember
srt:MinimumMember
2021-09-30
0001540684
bmix:OfficersAndNonManagementDirectorsMember
srt:MaximumMember
2021-09-30
0001540684
us-gaap:SeriesDPreferredStockMember
2021-09-15
0001540684
us-gaap:SeriesDPreferredStockMember
2021-09-12
2021-09-15
0001540684
us-gaap:SeriesDPreferredStockMember
2021-09-13
2021-09-15
0001540684
us-gaap:WarrantMember
2020-12-31
0001540684
us-gaap:WarrantMember
2021-09-30
0001540684
srt:ChiefExecutiveOfficerMember
2021-09-30
0001540684
srt:ChiefExecutiveOfficerMember
2020-12-31
0001540684
srt:ChiefExecutiveOfficerMember
2018-06-30
0001540684
srt:ChiefExecutiveOfficerMember
2018-06-29
2018-06-30
0001540684
srt:ChiefExecutiveOfficerMember
2019-04-07
0001540684
srt:ChiefExecutiveOfficerMember
2019-04-06
2019-04-07
0001540684
srt:ChiefExecutiveOfficerMember
2019-06-30
0001540684
srt:ChiefExecutiveOfficerMember
2019-06-29
2019-06-30
0001540684
us-gaap:SeriesDPreferredStockMember
bmix:MarcFogassaMember
2021-09-15
0001540684
srt:ChiefExecutiveOfficerMember
2020-03-10
2020-03-11
0001540684
srt:ChiefExecutiveOfficerMember
2020-03-11
0001540684
srt:ChiefExecutiveOfficerMember
2020-12-02
2020-12-03
0001540684
bmix:MarcFogassaMember
2021-01-01
2021-09-30
0001540684
bmix:MarcFogassaMember
srt:MinimumMember
2021-09-30
0001540684
bmix:MarcFogassaMember
srt:MaximumMember
2021-09-30
0001540684
srt:MinimumMember
bmix:MarcFogassaMember
2021-09-30
0001540684
srt:MaximumMember
bmix:MarcFogassaMember
2021-09-30
0001540684
bmix:MarcFogassaMember
us-gaap:CommonStockMember
2021-01-01
2021-09-30
0001540684
srt:MinimumMember
bmix:MarcFogassaMember
2021-01-01
2021-09-30
0001540684
srt:MaximumMember
bmix:MarcFogassaMember
2021-01-01
2021-09-30
0001540684
bmix:MarcFogassaMember
2021-01-01
2021-09-30
0001540684
bmix:JupiterGoldMember
2021-01-01
2021-09-30
0001540684
bmix:JupiterGoldMember
2021-09-30
0001540684
bmix:ApolloResourceCorporationMember
bmix:MarcFogassaMember
2021-01-01
2021-09-30
0001540684
bmix:ApolloResourceCorporationMember
bmix:MarcFogassaMember
2021-09-30
0001540684
bmix:ApolloResourceCorporationMember
2021-01-01
2021-09-30
0001540684
srt:MinimumMember
bmix:ApolloResourceCorporationMember
2021-09-30
0001540684
srt:MaximumMember
bmix:ApolloResourceCorporationMember
2021-09-30
0001540684
srt:MinimumMember
bmix:ApolloResourceCorporationMember
2021-01-01
2021-09-30
0001540684
srt:MaximumMember
bmix:ApolloResourceCorporationMember
2021-01-01
2021-09-30
0001540684
bmix:MarcFogassaMember
us-gaap:CommonStockMember
2021-01-01
2021-09-30
0001540684
bmix:AplloResourcesMember
2021-01-01
2021-09-30
0001540684
bmix:ApolloResourceCorporationMember
2021-09-30
0001540684
us-gaap:SeriesAPreferredStockMember
2019-12-31
0001540684
2020-01-01
2020-12-31
0001540684
2019-01-01
2019-12-31
0001540684
us-gaap:PreferredStockMember
us-gaap:SeriesAPreferredStockMember
2018-12-31
0001540684
us-gaap:CommonStockMember
2018-12-31
0001540684
us-gaap:AdditionalPaidInCapitalMember
2018-12-31
0001540684
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2018-12-31
0001540684
us-gaap:RetainedEarningsMember
2018-12-31
0001540684
us-gaap:NoncontrollingInterestMember
2018-12-31
0001540684
2018-12-31
0001540684
us-gaap:PreferredStockMember
us-gaap:SeriesAPreferredStockMember
2019-01-01
2019-12-31
0001540684
us-gaap:CommonStockMember
2019-01-01
2019-12-31
0001540684
us-gaap:AdditionalPaidInCapitalMember
2019-01-01
2019-12-31
0001540684
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2019-01-01
2019-12-31
0001540684
us-gaap:RetainedEarningsMember
2019-01-01
2019-12-31
0001540684
us-gaap:NoncontrollingInterestMember
2019-01-01
2019-12-31
0001540684
us-gaap:PreferredStockMember
us-gaap:SeriesAPreferredStockMember
2020-01-01
2020-12-31
0001540684
us-gaap:CommonStockMember
2020-01-01
2020-12-31
0001540684
us-gaap:AdditionalPaidInCapitalMember
2020-01-01
2020-12-31
0001540684
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2020-01-01
2020-12-31
0001540684
us-gaap:RetainedEarningsMember
2020-01-01
2020-12-31
0001540684
us-gaap:NoncontrollingInterestMember
2020-01-01
2020-12-31
0001540684
bmix:BmixparticipacoesltdMember
2020-12-31
0001540684
bmix:RSTRecursosMineraisMember
2020-12-31
0001540684
bmix:HerculesBrasilMember
2020-12-31
0001540684
bmix:ApolloResourcesMember
2020-12-31
0001540684
bmix:JupiterGoldMember
2020-12-31
0001540684
bmix:UsBanksMember
2020-12-31
0001540684
bmix:BrazilianBanksMember
2020-12-31
0001540684
us-gaap:MachineryAndEquipmentMember
2020-01-01
2020-12-31
0001540684
us-gaap:VehiclesMember
2020-01-01
2020-12-31
0001540684
us-gaap:ComputerEquipmentMember
2020-01-01
2020-12-31
0001540684
bmix:ComputersAndOfficeEquipmentMember
2019-12-31
0001540684
us-gaap:MachineryAndEquipmentMember
2019-12-31
0001540684
us-gaap:VehiclesMember
2019-12-31
0001540684
2020-03-10
2020-03-11
0001540684
2020-11-01
2020-11-30
0001540684
2020-12-01
2020-12-31
0001540684
bmix:ConvertiblePromissoryNoteMember
2020-01-01
2020-12-31
0001540684
bmix:ConvertiblePromissoryNoteMember
2020-12-31
0001540684
bmix:ConvertiblePromissoryNotesOneMember
2020-01-01
2020-12-31
0001540684
bmix:ConvertiblePromissoryNotesOneMember
2020-12-31
0001540684
bmix:ConvertiblePromissoryNotesTwoMember
2020-01-01
2020-12-31
0001540684
bmix:ConvertiblePromissoryNotesTwoMember
2020-12-31
0001540684
bmix:ConvertiblePromissoryNotesThreeMember
2020-12-31
0001540684
bmix:ConvertiblePromissoryNotesFourMember
2020-12-31
0001540684
bmix:ConvertiblePromissoryNotesFourMember
2020-01-01
2020-12-31
0001540684
bmix:ConvertibleNotesPayableVariableConversionPriceMember
2020-12-31
0001540684
bmix:ConvertibleNotesPayableVariableConversionPriceMember
2020-01-01
2020-12-31
0001540684
bmix:ConvertibleNotesPayableVariableConversionPriceMember
2019-01-01
2019-12-31
0001540684
us-gaap:BridgeLoanMember
2019-01-01
2019-12-31
0001540684
us-gaap:BridgeLoanMember
2019-07-07
2019-07-08
0001540684
us-gaap:BridgeLoanMember
2019-12-31
0001540684
2021-01-11
0001540684
us-gaap:SeriesAPreferredStockMember
2020-01-01
2020-12-31
0001540684
bmix:AccreditedInvestorsMember
2020-01-01
2020-12-31
0001540684
bmix:SubscriptionAgreementMember
bmix:AccreditedInvestorsMember
2020-01-01
2020-12-31
0001540684
bmix:NonEmployeesMember
us-gaap:CommonStockMember
2020-01-01
2020-12-31
0001540684
bmix:NonEmployeesMember
2020-01-01
2020-12-31
0001540684
bmix:JupiterGoldsMember
2019-01-01
2019-12-31
0001540684
srt:MinimumMember
2019-12-31
0001540684
srt:MaximumMember
2019-12-31
0001540684
bmix:JupiterGoldsMember
bmix:AccreditedInvestorsMember
2019-01-01
2019-12-31
0001540684
bmix:AccreditedInvestorsMember
2019-01-01
2019-12-31
0001540684
bmix:OfficersAndNonManagementDirectorsMember
2020-01-01
2020-12-31
0001540684
bmix:OfficersAndNonManagementDirectorsMember
srt:MinimumMember
2020-12-31
0001540684
bmix:OfficersAndNonManagementDirectorsMember
srt:MaximumMember
2020-12-31
0001540684
bmix:OfficersAndNonManagementDirectorsMember
2019-01-01
2019-12-31
0001540684
bmix:OfficersAndNonManagementDirectorsMember
srt:MinimumMember
2019-12-31
0001540684
bmix:OfficersAndNonManagementDirectorsMember
srt:MaximumMember
2019-12-31
0001540684
srt:ChiefExecutiveOfficerMember
2019-12-31
0001540684
bmix:JupiterGoldMember
2019-04-06
2019-04-07
0001540684
bmix:JupiterGoldMember
2019-04-07
0001540684
2019-04-06
2019-04-07
0001540684
2019-04-07
0001540684
us-gaap:ConvertibleDebtMember
srt:MinimumMember
us-gaap:MeasurementInputPriceVolatilityMember
2019-04-07
0001540684
us-gaap:ConvertibleDebtMember
srt:MaximumMember
us-gaap:MeasurementInputPriceVolatilityMember
2019-04-07
0001540684
us-gaap:MeasurementInputRiskFreeInterestRateMember
2019-04-07
0001540684
bmix:MarcFogassaMember
2019-01-01
2019-12-31
0001540684
srt:MinimumMember
bmix:MarcFogassaMember
2019-12-31
0001540684
srt:MaximumMember
bmix:MarcFogassaMember
2019-12-31
0001540684
bmix:JupiterGoldCorporationMember
2020-02-11
2020-02-12
0001540684
bmix:JupiterGoldCorporationMember
2020-02-12
0001540684
bmix:BrazilMineralsIncMember
2020-02-12
0001540684
bmix:BrazilMineralsIncMember
2020-02-11
2020-02-12
0001540684
bmix:BrazilMineralsIncMember
bmix:AccreditedInvestorsMember
2020-02-11
2020-02-12
0001540684
bmix:JupiterGoldCorporationMember
2020-02-14
0001540684
bmix:JupiterGoldCorporationMember
2020-02-13
2020-02-14
0001540684
bmix:JupiterGoldCorporationMember
2020-02-13
2020-02-15
0001540684
bmix:MarcFogassaMember
2020-01-01
2020-12-31
0001540684
bmix:MarcFogassaMember
srt:MinimumMember
2020-12-31
0001540684
bmix:MarcFogassaMember
srt:MaximumMember
2020-12-31
0001540684
bmix:JupiterGoldCorporationMember
2020-12-31
0001540684
bmix:JupiterGoldCorporationMember
2020-01-01
2020-12-31
iso4217:USD
xbrli:shares
iso4217:USD
xbrli:shares
xbrli:pure
bmix:Integer
iso4217:BRL
As
filed with the Securities and Exchange Commission on January 28, 2022.
Registration
No. 333-
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
BRAZIL
MINERALS, INC.
(Exact
name of registrant as specified in its charter)
Nevada
|
|
39-2078861
|
(State
or other jurisdiction
of incorporation)
|
|
(IRS
Employer
Identification No.)
|
1400
Primary
Standard Industrial Classification Code Number
Brazil
Minerals, Inc.
Rua
Vereador João Alves Praes, 95-A
Olhos
D’Água, Minas Gerais 39.398-000
Brazil
+55-11-3956-1109
(Address,
including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Marc
Fogassa
Chief
Executive Officer
433
North Camden Drive
Suite
810
Beverly
Hills, CA 90210
(833)
661-7900
(Name,
address, including zip code, and telephone number, including area code, of agent for service)
With
copies to:
Jay
Weil, Esq.
27
Viewpoint Road
Wayne,
NJ 07470
(973)
633-5072
|
|
Jessica
R. Sudweeks, Esq.
John
P. Kennedy, Esq.
Disclosure
Law Group, a Professional Corporation
655
West Broadway, Suite 870
San
Diego, CA 92101
(619)
272-7050
|
Approximate
date of commencement of proposed sale of the securities to the public: As soon as practicable
after the effective date of this Registration Statement
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 check the following box. ☒
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the earlier effective registration statement for the same
offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
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
|
☐
|
Non-accelerated
filer
|
☒
|
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 7(a)(2)(B) of the Securities Act. ☐
CALCULATION OF REGISTRATION FEE
Title of each class of securities to be registered
|
|
Proposed
maximum
aggregate
offering price(1)
|
|
|
Amount of
registration fee
|
|
Units(2)(3)(4)
|
|
$
|
17,250,000
|
|
|
$
|
1,599.08
|
|
Common Stock, par value $0.0001 per share, included
in the units(5)
|
|
|
–
|
|
|
|
–
|
|
Warrants included in the
units(5)
|
|
|
–
|
|
|
|
–
|
|
Common Stock, par value
$0.0001 per share, underlying the warrants included in the units(4)
|
|
$
|
17,250,000
|
|
|
$
|
1,599.08
|
|
Representative’s Warrants(6)
|
|
|
–
|
|
|
|
–
|
|
Common
Stock Underlying Representative’s Warrants(4)(6)
|
|
$
|
1,078,126
|
|
|
$
|
99.94
|
|
TOTAL
|
|
$
|
35,578,134
|
|
|
$
|
3,298.09
|
|
(1)
|
Estimated
solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933,
as amended.
|
(2)
|
Each
unit consists of one share of common stock and a warrant to purchase one share of common stock at an exercise price per share equal
to 125% of the unit offering price.
|
(3)
|
Includes
shares of common stock and/or warrants to purchase shares of common stock that may be purchased by the underwriters pursuant to their
over-allotment option.
|
(4)
|
Pursuant
to Rule 416 under the Securities Act of 1933, as amended, there is also being registered hereby such indeterminate number of additional
shares as may be issued or issuable because of stock splits, stock dividends and similar transactions.
|
(5)
|
Included
in the price of the units. No separate registration fee required pursuant to Rule 457(g) under the Securities Act of 1933, as amended.
|
(6)
|
We
have agreed to issue to the representative of the underwriter warrants to purchase the number of shares of common stock in the aggregate
equal to five percent (5%) of the shares of common stock to be issued and sold in this offering (including any shares of common stock
sold upon exercise of the over-allotment option). The representative’s warrants are exercisable for a price per share equal
to 125% of the public offering price and are exercisable at any time and from time to time, in whole or in part, during the four-and-a-half-year
period commencing six months after the date of issuance. This registration statement also covers shares of common stock issuable
upon the exercise of the representative’s warrants. As estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(g) under the Securities Act, the proposed maximum aggregate offering price of the representative’s warrants
is $1,078,125, which is equal to 125% of $862,500 (5% of $17,250,000). See “Underwriting.”
|
The
registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective
in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date
as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The
information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration
statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities
nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY
PROSPECTUS
|
SUBJECT
TO COMPLETION
|
DATED
JANUARY 28, 2022
|
[●]
Units
Each
Unit Consisting of
[●]
Share(s) of Common Stock
and
[●]
Warrant(s) to Purchase [●] Share(s) of Common Stock
This
prospectus relates to a firm commitment public offering of [●] Units (collectively, the “Units”, and each, a “Unit”),
at an assumed offering price of $[●] per Unit, based on the assumed public offering price of $[●] per Unit, the last reported
bid price of our common stock on the OTCQB on [●], 2022. Each Unit consisting of [●] share(s) of our common stock, $0.001 par
value per share, and [●] warrant(s), each exercisable for [●] share of common stock, of Brazil Minerals, Inc., a Nevada corporation
(the “Company”). Each warrant is immediately exercisable for [●] share of common stock at an exercise price of $[●]
per share (equal to [●]% of the price of each share of common stock sold in this offering), and will expire [●] from the date
of issuance. The shares of common stock and warrants that are part of the Units are immediately separable and will be issued separately.
This offering also includes the shares of common stock issuable from time to time upon exercise of the warrants.
Our
common stock is currently traded on the OTCQB Marketplace (“OTCQB”) operated by the OTC Markets Group, Inc. under the symbol
“BMIX.” There is no established trading market for the Warrants and we do not expect a market to develop. In addition, we
do not intend to apply for the listing of the Warrants on any national securities exchange or other trading market. Without an active
trading market, the liquidity of the Warrants will be limited.
We
intend to apply to list our common stock under the proposed symbol “BMIX”
and our warrants under the symbol “BMIXW”, both on a national securities exchange such as the Nasdaq Capital Market or
NYSE American. No assurance can be given that our application will be approved by any national securities exchange, and we will
not consummate this offering unless our common stock and warrants are approved for listing on a national securities exchange.
On
January 27, 2022, the last reported sale price for our common stock was $0.007 per share. Quotes of stock trading prices
on an over-the-counter marketplace may not be indicative of the market price on a national securities exchange.
INVESTING
IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. SEE “RISK FACTORS” BEGINNING ON PAGE 9 OF THIS PROSPECTUS FOR A
DISCUSSION OF INFORMATION THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN OUR SECURITIES.
|
|
Per Unit
|
|
Total
|
Assumed public offering price(1)
|
|
|
|
|
|
|
|
|
Underwriting discounts and commissions(2)
|
|
|
|
|
|
|
|
|
Proceeds to us, before expenses
|
|
|
|
|
|
|
|
|
(1)
|
Based
on the last reported bid price of our common stock on the OTCQB on [●], 2022.
|
|
|
(2)
|
Does
not include the following additional compensation payable to the underwriters. In addition to the compensation referenced above, we
have agreed to pay to EF Hutton, division of Benchmark Investments, LLC, the representative of the underwriters (the
“Representative”), a non-accountable expense allowance equal to three-quarters of
one percent (0.75%) of the total proceeds raised and to reimburse the underwriters for certain expenses incurred relating to this
offering. In addition, we will issue to the Representative warrants to purchase up to that number of shares of our common stock
equal to five percent (5%) of the number of shares common stock sold in this offering. The registration statement of which this
prospectus forms a part also registers the issuance of the shares of common stock issuable upon exercise of the
Representative’s warrants. See “Underwriting” for a description of
compensation and other items of value payable to the underwriters.
|
We
have granted to the underwriter a 45-day option, exercisable one or more times in whole or in part, to purchase up to an additional
[●] shares of common stock and/or warrants (an amount equal to 15% of the Units sold in
the offering, assuming a total of [●] units are sold at the public offering price
per Unit of $[●] (which is the last reported closing price of our common stock, as
reported on the OTCQB [●], 2022))
at the public offering price per Unit and, in each case, less the underwriting discounts and commissions, to cover over-allotments,
if any.
We
have also agreed to issue to the underwriters warrants to purchase up to an aggregate of [●] shares of our common stock. See “Underwriting”
beginning on page 60 for additional information regarding these warrants and underwriting compensation generally.
The
underwriters expect to deliver our shares and warrants to purchasers in this offering on or about [●], 2022.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED
IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Sole
Book Running Manager
EF
HUTTON
division
of Benchmark Investments, LLC
The
date of this prospectus is [●], 2022.
TABLE
OF CONTENTS
Through
and including [●], 2022 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities,
whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation
to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.
You
should rely only on the information contained in this prospectus or in any free writing prospectus we or the underwriters may authorize
to be delivered or made available to you. Neither we or the underwriters have authorized anyone to provide you with different information.
We are offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted.
The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus
or of any sale of shares of our common stock. Our business, financial condition, operating results and prospects may have changed since
that date.
For
investors outside of the United States: No action is being taken in any jurisdiction outside of the United States that would permit
a public offering of the shares of our common stock or possession or distribution of this prospectus in any such jurisdiction. Persons
outside of the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating
to, the offering of the shares of common stock and the distribution of this prospectus outside of the United States.
In
this prospectus, unless the context indicates otherwise, references to “Brazil Minerals, “we,” the “Company,”
“our” and “us” refer to Brazil Minerals, Inc., a Nevada corporation, and references to the “Board”
or the “Board of Directors” means the Board of Directors of Brazil Minerals, Inc.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains forward-looking statements that involve substantial risks and uncertainties. The forward-looking statements are contained
principally in the sections of this prospectus entitled “Prospectus Summary,” “Risk Factors,” “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” but are also contained elsewhere
in this prospectus. In some cases, you can identify forward-looking statements by the words “anticipate,” “believe,”
“continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,”
“objective,” “ongoing,” “plan,” “predict,” “project,” “potential,”
“should,” “will,” or “would,” or the negative of these terms, or other comparable terminology intended
to identify statements about the future. These statements involve known and unknown risks, uncertainties and other factors that may cause
our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied
by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement contained
in this prospectus, we caution you that these statements are based on a combination of facts and factors currently known by us and our
expectations of the future, about which we cannot be certain. Forward-looking statements include statements about:
|
●
|
our
ability to continue as a going concern and our history of losses;
|
|
|
|
|
●
|
our
ability to obtain additional financing;
|
|
|
|
|
●
|
our
use of the net proceeds from this offering;
|
|
|
|
|
●
|
our
ability to study and properly explore the various mineral rights that we own;
|
|
|
|
|
●
|
our
ability to obtain the necessary permitting for mining and operating mining properties in Brazil;
|
|
|
|
|
●
|
the
accuracy of our estimates regarding expenses, future revenues and capital requirements;
|
|
|
|
|
●
|
the
implementation of our business model and strategic plans for our business;
|
|
|
|
|
●
|
our
ability to retain key management personnel; and
|
|
|
|
|
●
|
regulatory
developments and our compliance with applicable laws.
|
Forward-looking
statements are inherently subject to risks and uncertainties, many of which we cannot predict with accuracy and some of which we might
not even anticipate. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable
assumptions at the time made, we can give no assurance that such expectations will be achieved. Actual events or results may differ materially.
Readers are cautioned not to place undue reliance on forward-looking statements. We have no duty to update or revise any forward-looking
statements after the date of this prospectus or to conform them to actual results, new information, future events or otherwise.
Although
we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels
of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness
of these forward-looking statements.
You
should read the risk factors and the other cautionary statements made in this prospectus as being applicable to all related forward-looking
statements wherever they appear in this prospectus. If one or more of these factors materialize, or if any underlying assumptions prove
incorrect, our actual results, performance or achievements may vary materially from any future results, performance or achievements expressed
or implied by these forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether
as a result of new information, future events or otherwise, except as required by law.
INDUSTRY
AND MARKET DATA
This
prospectus contains estimates and other statistical data made by independent parties and by us relating to market size and growth and
other data about our industry. We obtained the industry and market data in this prospectus from our own research as well as from industry
and general publications, surveys and studies conducted by third parties. This data involves a number of assumptions and limitations
and contains projections and estimates of the future performance of the industries in which we operate that are subject to a high degree
of uncertainty, including those discussed in “Risk Factors”. We caution you not to give undue weight to such projections,
assumptions and estimates. Further, industry and general publications, studies and surveys generally state that they have been obtained
from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe
that these publications, studies and surveys are reliable, we have not independently verified the data contained in them. In addition,
while we believe that the results and estimates from our internal research are reliable, such results and estimates have not been verified
by any independent source.
CAUTIONARY
NOTE REGARDING DISCLOSURE OF MINERAL PROPERTIES
We
are subject to the reporting requirements of the applicable U.S. securities laws. U.S. reporting requirements currently applicable
to us are governed by the Securities Act of 1933, as amended (“Securities Act”), and the Exchange Act of 1934, as amended
(“Exchange Act”), including Regulation S-K, Subpart 1300 (“Regulation S-K 1300”).
Under
Regulation S-K 1300, mineralization may not be classified as a reserve unless the determination has been made that the mineralization
could be economically and legally produced or extracted at the time the reserve determination is made. We are an exploration stage company, and we have no reserves as defined by Regulation S-K 1300.
PROSPECTUS
SUMMARY
The
following summary highlights selected information contained elsewhere in this prospectus and is qualified in its entirety by the more
detailed information and financial statements included elsewhere in this prospectus. It does not contain all the information that may
be important to you and your investment decision. You should carefully read this entire prospectus, including the matters set forth under
“Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,”
and our financial statements and related notes included elsewhere in this prospectus.
Unless
otherwise expressly provided herein, all share and per share numbers set forth herein relating to our common stock assume no exercise
of (a) any warrants and/or options, (b) the representatives’ common stock purchase warrants and/or (c) the representatives’
over-allotment option.
Company
Overview
Brazil
Minerals, Inc. (“Brazil Minerals”, the “Company”, “we”, “us”, or “our”) is
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, graphite, nickel, cobalt, 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 prospectus, our mineral rights portfolio for battery metals includes approximately
60,077 acres (243 km2) for lithium, 30,009 acres (121 km2) for rare earths, 22,050 acres (89 km2) for
titanium, 14,507 acres (59 km2) for graphite, and 7,509 acres (30 km2) for nickel and cobalt. We believe we
are among the largest listed companies by size and breadth in exploration projects for strategic minerals in Brazil, a premier mineral
jurisdiction.
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 competitor, a Nasdaq listed company. 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. Generally, 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
believe that we can materially increase our value by the acceleration of our exploratory work and quantification of our
lithium mineralization. Our initial commercial goal is to be able to enter production of lithium-bearing concentrate, a product which is highly sought after in the battery supply chain for EVs.
We
also have 100%-ownership of early-stage projects and properties in other minerals that are needed in the battery supply chain and high
technology applications such as rare earths, titanium, nickel, and cobalt. Our goal is to become “the Mineral Resources Company
for the Green Energy Revolution”. We believe that the shift from fossil fuels to battery power will yield long-term opportunities
for us not only in lithium but also in such other minerals.
Additionally,
we have 100%-ownership of several mining concessions for gold and diamonds. Historically, we have had revenues from mining and
selling gold and diamonds. More recently we have had revenues from mining and selling industrial sand for the local construction
industry, which is at the time of this prospectus is our primary source of revenues. Such endeavors have given us the critical
management experience needed to take early-stage projects in Brazil from the exploration phase through successful licensing from
regulators and to revenues.
As of the date of this prospectus,
we also own 48.94% 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.
As of the date of this prospectus,
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 USGAAP.
Risk
Factors
Our
business is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors,”
that represent challenges that we face in connection with the successful implementation of our strategy. The occurrence of one or more
of the events or circumstances described in the section titled “Risk Factors,” alone or in combination with other events
or circumstances, may have an adverse effect on our business, cash flows, financial condition, and results of operations. Such risks
include, but are not limited to:
|
●
|
Our
future performance is difficult to evaluate because we have a limited operating history.
|
|
|
|
|
●
|
There
is substantial doubt about our ability to continue as a going concern.
|
|
|
|
|
●
|
We
are an exploration stage company, and there is no guarantee that our properties will result in the commercial extraction of mineral
deposits.
|
|
|
|
|
●
|
Because
the probability of an individual prospect ever having reserves is not known, our properties may not contain any reserves, and any
funds spent on exploration and evaluation may be lost.
|
|
|
|
|
●
|
We
face risks related to mining, exploration, and mine construction, if warranted, on our properties.
|
|
|
|
|
●
|
Our
long-term success will depend ultimately on our ability to achieve and maintain profitability and to develop positive cash flow from
our mining activities.
|
|
|
|
|
●
|
We
depend on our ability to successfully access the capital and financial markets. Any inability to access the capital or financial
markets may limit our ability to fund our ongoing operations, execute our business plan or pursue investments that we may rely on
for future growth.
|
|
|
|
|
●
|
Our
quarterly and annual operating and financial results and our revenue are likely to fluctuate significantly in future periods.
|
|
●
|
We
may be unable to find sources of funding if and when needed, resulting in the failure of our business.
|
|
|
|
|
●
|
Our
ability to manage growth will have an impact on our business, financial condition, and results of operations.
|
|
|
|
|
●
|
We
depend upon Marc Fogassa, our Chief Executive Officer and Chairman.
|
|
|
|
|
●
|
Our
growth will require new personnel, which we will be required to recruit, hire, train and retain.
|
|
|
|
|
●
|
Certain
of our executive officers and directors may be in a position of conflict of interest.
|
|
|
|
|
●
|
Our
mineral projects will be subject to significant governmental regulations.
|
|
|
|
|
●
|
We
will be required to obtain governmental permits in order to conduct development and mining operations, a process which is often costly
and time-consuming.
|
|
|
|
|
●
|
Compliance
with environmental regulations and litigation based on environmental regulations could require significant expenditures.
|
|
|
|
|
●
|
Our
operations are subject to extensive environmental laws and regulations.
|
|
|
|
|
●
|
Mineral
prices are subject to unpredictable fluctuations.
|
|
|
|
|
●
|
Our
ability to execute our business plan depends primarily on the continuation of a favorable mining environment in Brazil and our ability
to freely sell our minerals.
|
|
|
|
|
●
|
The
perception of Brazil by the international community may affect us.
|
|
|
|
|
●
|
Exposure
to foreign exchange fluctuations and capital controls may adversely affect our costs, earnings and the value of some of our assets.
|
|
|
|
|
●
|
Our
common stock price may be volatile.
|
|
|
|
|
●
|
We
do not intend to pay regular future dividends on our common stock and thus stockholders must look to appreciation of our common stock
to realize a gain on their investments.
|
|
|
|
|
●
|
We
may seek to raise additional funds, finance acquisitions, or develop strategic relationships by issuing securities that would dilute
your ownership.
|
|
|
|
|
●
|
Our
Series A Preferred Stock has the effect of concentrating voting control over us in Marc Fogassa, our Chief Executive Officer and
Chairman.
|
Corporate
Information
We
were originally incorporated in the State of Nevada on December 15, 2011 under the name “Flux Technologies, Corp.” On January
24, 2013, an amendment to our articles of incorporation was filed with the Nevada Secretary of State changing our name to “Brazil
Minerals, Inc.” Our principal place of business is located at Rua Vereador João Alves Praes, 95-A, Olhos D’Água,
Minas Gerais 39.398-000, Brazil. We also maintain an office at 433 North Camden Drive, Suite 810, Beverly Hills, CA 90210. Our telephone
numbers are +55-31-3956-1109 (Brazil) and (833) 661-7900 (U.S.). Our website address is www.brazil-minerals.com. The information contained
on our website is not incorporated by reference into this prospectus, and you should not consider any information contained on, or that
can be accessed through, our website as part of this prospectus or in deciding whether to purchase our common shares.
Listing on a National Stock Exchange
We
intend to apply to list our common stock under the proposed symbol “BMIX” and our warrants under the symbol “BMIXW”,
both on a national securities exchange such as the Nasdaq Capital Market or NYSE American. No assurance can be given that our application
will be approved by any national securities exchange, and we will not consummate this offering unless our common stock and warrants are
approved for listing on a national securities exchange.
Controlled
Company
Marc
Fogassa, our Chief Executive Officer and Chairman, currently controls approximately [●]% of the voting power of our capital stock
and will control approximately [●]% of the combined voting power of our capital stock upon completion of this offering, and we
believe may be a “controlled company,” as such term is defined under the Nasdaq Listing Rules
or the NYSE Listing Standards .
THE
OFFERING
Securities
Offered:
|
|
[●]
Units, each consisting of [●] share(s) of common stock and [●] warrant. Each warrant will be exercisable for [●] share(s)
of common stock, will have an exercise price of $[●] per share ([●]% of the public offering price of each Unit), is exercisable
immediately and will expire [●] years from the date of issuance. The shares of common stock and warrants that are part of the
Units are immediately separable and will be issued separately.
|
|
|
|
|
|
This
prospectus also relates to the offering of the shares of common stock issuable upon exercise of the warrants. See “Description
of Capital Stock” on page [●].
|
|
|
|
Assumed
Public Offering Price:
|
|
$[●]
per Unit
|
|
|
|
Number
of Shares of Common Stock Offered:
|
|
Up
to [●] shares of common stock, assuming a public offering price of $[●]
per Unit (the last reported sale price of our common stock on the OTCQB on [●],
2022).
|
|
|
|
Number
of Warrants Offered:
|
|
Up
to [●] warrants to purchase up to [●] shares
of common stock, assuming a public offering price of $[●] per Unit (the
last reported sale price of our common stock on the OTCQB on [●], 2022). Each whole share
exercisable pursuant to the warrants will have an assumed exercise price per share equal to $[●],
an amount equal to [●]% of the assumed public offering price. Each warrant will
be immediately exercisable and will expire on the [●] anniversary of the original
issuance date. Warrants may be exercised only for a whole number of shares. The shares of common stock and warrants offered and sold
pursuant to this prospectus are immediately separable and will be issued separately, but must be purchased together in this offering
as units. This prospectus also relates to the offering of the shares issuable upon exercise of the warrants.
|
|
|
|
Shares
of Common Stock Outstanding before the Offering:
|
|
3,153,007,115 shares
|
|
|
|
Shares
of Common Stock to be Outstanding after this Offering:
|
|
[●]
shares (not including the possible sale of over-allotment shares and/or warrants, and assuming none of the warrants issued
in this offering are exercised).
|
|
|
|
Trading
Symbol:
|
|
Our
common stock is presently quoted on the OTCQB under the symbol “BMIX”. We intend to apply to list our common stock
under the proposed symbol “BMIX” and our warrants under the symbol “BMIXW”, both on a national securities
exchange such as the Nasdaq Capital Market or NYSE American.
|
|
|
|
Reverse
Stock Split:
|
|
On
[●], 2022, our Board and the holder of a majority of our outstanding voting securities approved of a reverse stock split within
the range of 1-for-[●] to 1-for-[●] of our issued and outstanding shares of common stock (the “Reverse Split”)
and authorized the Board, in its sole discretion, to determine the final ratio any time before [●], 2022. We expect to effect
the Reverse Split prior to the consummation of this offering. See “Description of Securities” for additional information
regarding the Reverse Split and other matters related to our common stock.
|
|
|
|
|
|
The
purpose of the reverse stock split is to allow us to meet the stock price threshold of the listing requirements of a national
securities exchange. All option, share, and per share information in this prospectus does not give effect to the proposed reverse
stock split.
|
Over-Allotment Option:
|
|
We
have granted to the underwriters a 45-day option to purchase from us up to an additional 15% of the shares of common stock and/or
warrants sold in the offering in any combination thereof, solely to cover over-allotments, if any, at the public offering price per
Unit, less the underwriting discounts.
|
|
|
|
Use
of Proceeds:
|
|
We
estimate that we will receive net proceeds of approximately $[●] from our sale of Units in this offering, after deducting
underwriting discounts and estimated offering expenses payable by us. We intend to use the net proceeds from this offering for exploration,
including drilling and assessment of deposits and reserves, if any, as well as capital expenditures, and working capital. See “Use
of Proceeds” for a more complete description of the intended use of proceeds from this offering.
|
|
|
|
Risk
Factors:
|
|
Investing
in our securities involves substantial risks. You should carefully review and consider the “Risk Factors” section of
this prospectus beginning on page 9 and the other information in this prospectus for a discussion of the factors you should consider
before you decide to invest in this offering.
|
|
|
|
Lock-up
|
|
We,
our directors, and officers have agreed with the underwriters not to offer for sale, issue, sell, contract to sell, pledge or otherwise
dispose of any of our common stock or securities convertible into common stock for 180 days after the date of this prospectus.
|
|
|
|
Representative’s
Warrant:
|
|
We
will issue to EF Hutton, division of Benchmark Investments, LLC, as Sole Book Running Manager and underwriter, at the closing of
this offering warrants to purchase the number of common shares equal to 5.0% of the aggregate number of common shares sold
in this offering (the “Representative’s Warrants”). The Representative’s Warrants are exercisable at any
time and from time to time, in whole or in part, during the four-and-a-half-year period commencing six months after the effective
date of the registration statement of which this prospectus forms a part. The registration statement of which this prospectus forms
a part also registers the issuance of the shares of common stock issuable upon exercise of the representative’s warrant.
The exercise price of the Representative’s warrant will equal 125% of the assumed public offering price per Unit.
See “Underwriting.”
|
|
The number of shares of our
common stock outstanding after the completion of this offering is based on 3,153,007,115 shares of our common stock outstanding
as of January 14, 2022, does not give effect to the potential reverse stock split, and excludes the following, as of the date of this
prospectus:
|
|
●
|
294,610,599 shares of common stock issuable upon the
exercise of outstanding options and warrants with a weighted average exercise price of $0.016 per share;
|
|
●
|
25,000,000 shares of common stock reserved for the future issuance of awards
under our 2017 Stock Incentive Plan;
|
|
●
|
One share of common stock issuable upon the conversion of our outstanding
Series A Convertible Preferred Stock; and
|
|
●
|
2,140,060,000
shares of common stock issuable upon the conversion
of our outstanding Series D Convertible Preferred Stock.
|
Except
as otherwise indicated herein, all information in this prospectus assumes the following:
|
●
|
no
exercise of the outstanding warrants or conversion of the convertible preferred stock described above;
|
|
|
|
|
●
|
no
exercise of the warrants included in the Units;
|
·
|
|
|
|
●
|
no
exercise by the underwriter of their option to purchase additional Units consisting of common shares and warrants to purchase common
shares to cover over-allotments, if any; and
|
·
|
|
|
|
●
|
no
exercise of the underwriter’s warrants.
|
SUMMARY
FINANCIAL DATA
The
following table sets forth our selected financial data as of the dates and for the periods indicated. We have derived the statement of
operations data for the years ended December 31, 2020 and 2019 from our audited financial statements included elsewhere in this prospectus.
The statements of operations data for the nine months ended September 30, 2021 and 2020 and the
balance sheet data as of September 30, 2021 have been derived from our unaudited financial statements included elsewhere in this prospectus.
The following summary financial data should be read with “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” and our financial statements and related notes and other information included elsewhere in this prospectus.
Our historical results are not necessarily indicative of the results to be expected in the future.
|
|
Year Ended
December 31,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
Statements of Operations and Comprehensive Loss Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
23,446
|
|
|
$
|
15,393
|
|
|
$
|
9,088
|
|
|
$
|
22,254
|
|
Cost of revenue
|
|
|
129,943
|
|
|
|
182,168
|
|
|
|
74,476
|
|
|
|
86,805
|
|
Gross loss
|
|
|
(106,497
|
)
|
|
|
(166,775
|
)
|
|
|
(65,388
|
)
|
|
|
(64,551
|
)
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional fees
|
|
|
170,071
|
|
|
|
134,770
|
|
|
|
252,307
|
|
|
|
99,960
|
|
General and administrative
|
|
|
551,584
|
|
|
|
489,877
|
|
|
|
851,525
|
|
|
|
428,615
|
|
Compensation and related costs
|
|
|
329,044
|
|
|
|
306,827
|
|
|
|
227,741
|
|
|
|
255,021
|
|
Stock based compensation
|
|
|
124,357
|
|
|
|
166,095
|
|
|
|
1,228,598
|
|
|
|
73,918
|
|
Total operating expenses
|
|
|
1,175,056
|
|
|
|
1,097,569
|
|
|
|
2,560,171
|
|
|
|
857,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(1,281,553
|
)
|
|
|
(1,264,344
|
)
|
|
|
(2,625,559
|
)
|
|
|
(922,065
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense (income)
|
|
|
264,482
|
|
|
|
821,537
|
|
|
|
476,532
|
|
|
|
458,139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,546,035
|
)
|
|
$
|
(2,085,881
|
)
|
|
$
|
(3,102,091
|
)
|
|
$
|
(1,380,204
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share attributable to common stockholders(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
Diluted
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
Weighted average shares outstanding used in computing net loss per share attributable to common stockholders(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
1,271,251,526
|
|
|
|
802,114,793
|
|
|
|
2,659,344,430
|
|
|
|
1,073,824,015
|
|
Diluted
|
|
|
1,271,251,526
|
|
|
|
802,114,793
|
|
|
|
2,659,344,430
|
|
|
|
1,073,824,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(1,546,035
|
)
|
|
|
(2,085,881
|
)
|
|
|
(3,102,091
|
)
|
|
|
(1,380,204
|
)
|
Foreign currency translation adjustment
|
|
|
(134,914
|
)
|
|
|
(14,852
|
)
|
|
|
25,498
|
|
|
|
(154,524
|
)
|
Comprehensive loss
|
|
|
(1,680,949
|
)
|
|
|
(2,100,733
|
)
|
|
|
(3,076,593
|
)
|
|
|
(1,534,728
|
)
|
Comprehensive loss attributable to noncontrolling interests
|
|
|
(345,130
|
)
|
|
|
(223,804
|
)
|
|
|
(940,450
|
)
|
|
|
(190,132
|
)
|
Comprehensive loss attributable to Brazil Minerals, Inc. stockholders
|
|
|
(1,335,819
|
)
|
|
|
(1,876,929
|
)
|
|
|
(2,136,143
|
)
|
|
|
(1,344,596
|
)
|
(1)
|
See
Note 1 to each of our audited and unaudited condensed financial statements, respectively, included elsewhere in this prospectus for
an explanation of the methods used to calculate the historical net loss per share, basic and diluted, comprehensive loss,
comprehensive loss attributable to noncontrolling interests, comprehensive loss attributable to Brazil Minerals, Inc. stockholders,
and the number of shares used in the computation of the per share amounts.
|
|
|
As
of September 30, 2021
|
|
|
|
|
|
|
Actual
|
|
|
Proforma
(1)
|
|
|
Proforma,
as adjusted(2)
|
|
|
|
(unaudited)
|
|
Balance
Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
18,132
|
|
|
|
987,496
|
|
|
|
|
|
Working
capital
|
|
|
(1,014,430
|
)
|
|
|
88,175
|
|
|
|
|
|
Total
assets
|
|
|
1,614,986
|
|
|
|
2,584,350
|
|
|
|
|
|
Other
noncurrent liabilities
|
|
|
115,316
|
|
|
|
115,316
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
paid-in capital
|
|
|
50,941,680
|
|
|
|
51,495,484
|
|
|
|
|
|
Accumulated
other comprehensive loss
|
|
|
(749,421
|
)
|
|
|
(749,421
|
)
|
|
|
|
|
Accumulated
deficit
|
|
|
(54,346,906
|
)
|
|
|
(54,232,699
|
)
|
|
|
|
|
Total
Brazil Minerals Inc. stockholders’ equity (deficit)
|
|
|
(1,103,733
|
)
|
|
|
(340,339
|
)
|
|
|
|
|
Non-controlling
interest
|
|
|
1,524,480
|
|
|
|
1,863,691
|
|
|
|
|
|
Total
stockholders’ equity (deficit)
|
|
|
420,747
|
|
|
|
1,523,352
|
|
|
|
|
|
Total
liabilities and stockholders’ deficit
|
|
|
1,614,986
|
|
|
|
2,584,350
|
|
|
|
|
|
(1)
|
Pro forma bases giving effect to, as of the
date of this prospectus:
(a) the sale of a total of 11,884,717
shares of our common stock to Triton Funds, LP (“Triton”) at an average price per share of $0.0063 between
December 13, 2021 and January 6, 2022 for total gross proceeds to us of $74,364. Such shares were offered
and sold to Triton pursuant to the Common Stock Purchase Agreement by and between the Company and Triton, dated February 26, 2021
(the “Triton Equity Line Agreement”);
(b) the sale of a total of 64,464,286 restricted
shares of our common stock between October 13, 2021 and January 10, 2022 to three accredited investors at an average
price per share of $0.0066 Such shares were offered and sold in reliance of an exemption from registration provided by Section 4(a)(2)
under the Securities Act of 1933, as amended, for transactions not involving a public offering;
(c) the sale of restricted common shares of
a private subsidiary of the Company between October 6, 2021 and January 10, 2022 for total gross proceeds to such subsidiary of $470,000.
The financial statements from this subsidiary, including its balance sheet, are consolidated in our financial statements under USGAAP;
and
(d) the elimination of the last convertible
note from our books on November 15, 2021 achieved by a settlement agreement which extinguished $133,241.10 in principal
and accrued interest of such note in exchange for the issuance of 19,034,442 restricted shares of our common stock.
|
|
|
(2)
|
Pro forma as adjusted balance sheet data reflects the pro forma items described immediately above plus our sale of [●] Units in
this offering at an assumed public offering price of $ [●] per Unit, the last reported sale price of our common stock on the
OTCQB on [●], 2022, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. Pro
forma as adjusted balance sheet data is illustrative only and will change based on the actual public offering price and other terms
of this offering determined at pricing. Each $[●] increase or decrease in the assumed public offering price of $[●] per
share, the last reported sale price of our common stock on the OTCQB on [●], 2022, would increase or decrease pro forma as
adjusted cash, total assets and total stockholders’ deficit by approximately $[●] million, assuming that the number of
Units offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting underwriting discounts
and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of Units we are offering.
A [●] increase or decrease in the number of Units offered by us would increase or decrease pro forma as adjusted cash, total
assets and total stockholders’ deficit by approximately $[●] million, assuming that the assumed price to public remains
the same, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. These unaudited
pro forma adjustments are based upon available information and certain assumptions we believe are reasonable under the
circumstances.
|
RISK
FACTORS
Investing
in our common stock involves a high degree of risk. You should carefully consider the risks described below, as well as the other information
in this prospectus, including our financial statements and the related notes thereto and “Management’s Discussion and Analysis
of Financial Condition and Results of Operations,” before deciding whether to invest in our securities. The occurrence of any of
the events or developments described below could harm our business, financial condition, operating results, and growth prospects. In
such an event, the market price of our common stock could decline, and you may lose all or part of your investment. Additional risks
and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.
Business
Risks
Our
future performance is difficult to evaluate because we have a limited operating history.
Investors
should evaluate an investment in us considering the uncertainties encountered by developing companies. Although we were incorporated
in 2011, we began to implement our current business strategy in 2016. Our current business strategy is focused on the exploration of
strategic minerals and, through specific subsidiaries, the exploration of iron and gold. While we have had a small amount of revenues
from the sales of gold and diamonds mined by us, and currently have a small amount of revenue from the sale of sand mined by us and for
construction use, we have not realized any revenues to date from the sale of strategic minerals or iron. Our operating cash flow needs
have been financed primarily through debt or equity and not through cash flows derived from our operations. As a result, we have little
historical financial and operating information available to help you evaluate and predict our future performance. There can be no assurance
that our efforts will be successful or that we will ultimately be able to attain profitability.
There
is substantial doubt about our ability to continue as a going concern.
We
have not been profitable and such condition raises substantial doubt about our ability to continue as a going concern. There is uncertainty
regarding our ability to implement our business plan and to grow our business to a greater extent than we can with our existing financial
resources without additional financing. Our long-term future growth and success is dependent upon our ability to raise additional capital
and implement our business plan. There is no assurance that we will be successful in implementing our business plan or that we will be
able to generate sufficient cash from operations, sell securities or borrow funds on favorable terms or at all. Our inability to generate
significant revenue or obtain additional financing could have a material adverse effect on our ability to fully implement our business
plan and grow our business to a greater extent than we can with our existing financial resources.
We
are an exploration stage company, and there is no guarantee that our properties will result in the commercial extraction of mineral deposits.
We
are engaged in the business of exploring and developing mineral properties with the intention of locating economic deposits of minerals.
An economic deposit is a mineral property which can be reasonably expected to generate profits upon extraction and commercialization
of its minerals after considering all costs involved. Our property interests are at the exploration stage. Accordingly, it is unlikely
that we will realize profits in the short term, and we also cannot assure you that we will realize profits in the medium to long term.
Any profitability in the future from our business will be dependent upon development of at least one economic deposit and most likely
further exploration and development of other economic deposits, each of which is subject to numerous risk factors.
Further,
we cannot assure you that, even if an economic deposit of minerals is located, any of our property interests can be commercially mined.
The exploration and development of mineral deposits involves a high degree of financial risk over a significant period which a combination
of careful evaluation, experience and knowledge of management may not eliminate. While discovery of additional ore-bearing deposits may
result in substantial rewards, few properties which are explored are ultimately developed into producing mines. Major expenses may be
required to establish reserves by drilling and to construct mining and processing facilities at a particular site. It is impossible to
ensure that our current exploration programs will result in profitable commercial mining operations. The profitability of our operations
will be, in part, related to the cost and success of its exploration and development programs which may be affected by several factors.
Additional expenditures are required to establish reserves which are sufficient to commercially mine and to construct, complete and install
mining and processing facilities in those properties that are mined and developed.
In
addition, exploration-stage projects like ours have no operating history upon which to base estimates of future operating costs and capital
requirements. Exploration project items, such as any future estimates of reserves, metal recoveries or cash operating costs will to a
large extent be based upon the interpretation of geologic data, obtained from a limited number of drill holes and other sampling techniques,
as well as future feasibility studies. Actual operating costs and economic returns of all exploration projects may materially differ
from the costs and returns estimated, and accordingly our financial condition, results of operations, and cash flows may be negatively
affected.
Because
the probability of an individual prospect ever having reserves is not known, our properties may not contain any reserves, and any funds
spent on exploration and evaluation may be lost.
We
are an exploration stage company, and we have no “reserves” as such term is defined by Industry Guide 7. We cannot
assure you about the existence of economically extractable mineralization at this time, nor about the quantity or grade of any mineralization
we may have found. Because the probability of an individual prospect ever having reserves is uncertain, our properties may not contain
any reserves and any funds spent on evaluation and exploration may be lost. Even if we confirm reserves on our properties, any quantity
or grade of reserves we indicate must be considered as estimates only until such reserves are mined. We do not know with certainty that
economically recoverable minerals exist on our properties. In addition, the quantity of any reserves
may vary depending on commodity prices. Any material change in the quantity or grade of reserves may affect the economic viability of
our properties. Further, our lack of established reserves means that we are uncertain about our ability to generate revenue from our
operations.
We
face risks related to mining, exploration and mine construction, if warranted, on our properties.
Our
level of profitability, if any, in future years will depend to a great degree on prices of minerals set by global markets and whether
our exploration-stage properties can be brought into production. It is impossible to ensure that the current and future exploration programs
and/or feasibility studies on our existing properties will establish reserves. Whether it will be economically feasible to extract a
mineral depends on a number of factors, including, but not limited to: the particular attributes of the deposit, such as size, grade
and proximity to infrastructure; mineral prices; mining, processing and transportation costs; the willingness of lenders and investors
to provide project financing; labor costs and possible labor strikes; and governmental regulations, including, without limitation, regulations
relating to prices, taxes, royalties, land tenure, land use, importing and exporting materials, foreign exchange, environmental protection,
employment, worker safety, transportation, and reclamation and closure obligations. The exact effect of these factors cannot be accurately
predicted, but the combination of these factors may result in us receiving an inadequate return on invested capital.
Our
long-term success will depend ultimately on our ability to achieve and maintain profitability and to develop positive cash flow from
our mining activities.
Our
long-term success, including the recoverability of the carrying values of our assets, our ability to continue with exploration, development
and commissioning and mining activities on our existing projects or to acquire additional projects, will depend ultimately on our ability
to achieve and maintain profitability and to develop positive cash flow from our operations by establishing ore bodies that contain commercially
recoverable minerals and to develop these into profitable mining activities. We cannot assure you that any ore body that we extract mineralized
materials from will result in achieving and maintaining profitability and developing positive cash flow.
We
depend on our ability to successfully access the capital and financial markets. Any inability to access the capital or financial markets
may limit our ability to fund our ongoing operations, execute our business plan or pursue investments that we may rely on for future
growth.
Until
commercial production is achieved from one of our larger projects, we will continue to incur operating and investing net cash outflows
associated with among other things maintaining and acquiring exploration properties, undertaking ongoing exploration activities and the
development of mines. As a result, we rely on access to capital markets as a source of funding for our capital and operating requirements.
We cannot assure you that such additional funding will be available to us on satisfactory terms, or at all.
In
order to finance our current operations and future capital needs, we will require additional funds through the issuance of additional
equity and/or debt securities. In addition to the proceeds of this offering, we may continue to seek capital through private placement
transactions and by utilizing proceeds available under the Triton Equity Line Agreement. Depending on the type and the terms of any
financing we pursue, shareholders’ rights and the value of their investment in our shares could be reduced. Any additional equity
financing will dilute shareholdings, and new or additional debt financing, if available, may involve restrictions on financing and operating
activities. In addition, if we issue secured debt securities, the holders of the debt would have a claim to our assets that would be
prior to the rights of shareholders until the debt is paid. Interest on such debt securities would increase costs and negatively impact
operating results.
If
we are unable to obtain additional financing, as needed, at competitive rates, our ability to fund our current operations and implement
our business plan and strategy will be affected, and we would be required to reduce the scope of our operations and scale back our exploration,
development and mining programs. There is, however, no guarantee that we will be able to secure any additional funding or be able to
secure funding which will provide us with sufficient funds to meet our objectives, which may adversely affect our business and financial
position.
Our
quarterly and annual operating and financial results and our revenue are likely to fluctuate significantly in future periods.
Our
quarterly and annual operating and financial results are difficult to predict and may fluctuate significantly from period to period.
Our revenues, net income and results of operations may fluctuate as a result of a variety of factors that are outside our control including,
but not limited to, lack of sufficient working capital, equipment malfunction and breakdowns, inability to timely find spare machines
or parts to fix the broken equipment, regulatory or licensing delays and severe weather phenomena.
We
may be unable to find sources of funding if and when needed, resulting in the failure of our business.
As
of today, we need additional equity or debt financing beyond our existing cash to operate. In addition to the proceeds of this offering,
we may continue to seek capital through private placement transactions and by utilizing proceeds available under the Triton Equity Line
Agreement. This additional financing may not become available and, if available, may not be available on terms that are acceptable
to us. If we do obtain acceptable funding, the terms and conditions of receiving such capital would likely result in further dilution.
If we are not successful in raising capital or sufficient capital, we will have to modify our business plans and substantially reduce
or eliminate operations, or even seek reorganization. In these events, the holders of our securities could lose a substantial part or
all of their investment.
Our
ability to manage growth will have an impact on our business, financial condition and results of operations.
Future
growth may place strains on our financial, technical, operational and administrative resources and cause us to rely more on project partners
and independent contractors, potentially adversely affecting our financial position and results of operations. Our ability to grow will
depend on several factors, including:
|
●
|
our
ability to develop existing projects;
|
|
|
|
|
●
|
our
ability to identify new projects;
|
|
|
|
|
●
|
our
ability to continue to retain and attract skilled personnel;
|
|
|
|
|
●
|
our
ability to maintain or enter into relationships with project partners and independent contractors;
|
|
|
|
|
●
|
the
results of our exploration programs;
|
|
|
|
|
●
|
the
market prices for our minerals;
|
|
|
|
|
●
|
our
access to capital; and
|
|
|
|
|
●
|
our
ability to enter into agreements for the sale of our minerals.
|
We
may not be successful in upgrading our technical, operational and administrative resources or increasing our internal resources sufficiently
to provide certain of the services currently provided by third parties, and we may not be able to maintain or enter into new relationships
with project partners and independent contractors on financially attractive terms, if at all. Our inability to achieve or manage growth
may materially and adversely affect our business, results of operations and financial condition.
We
depend upon Marc Fogassa, our Chief Executive Officer and Chairman.
Our
success is largely dependent upon the personal efforts of Marc Fogassa, our Chief Executive Officer and Chairman. Currently he is the
only member of our management team that is fluent and fully conversant in both Portuguese, the language of Brazil, and English. The loss
of the services of Mr. Fogassa would have a material adverse effect on our business and prospects. We maintain key-man life insurance
on the life of Mr. Fogassa. See “Management.”
Our
growth will require new personnel, which we will be required to recruit, hire, train and retain.
Our
ability to recruit and assimilate new personnel will be critical to our performance. We will be required to recruit additional personnel
and to train, motivate and manage employees, which may adversely affect our plans.
Certain
executive officers and directors may be in a position of conflict of interest.
Marc
Fogassa, our Chief Executive and Chairman, also serves as chief executive officer and director of Apollo Resources Corporation (“Apollo
Resources”) and Jupiter Gold Corporation (“Jupiter Gold”). Joel Monteiro, Esq., one of our officers, is
a director in both Apollo Resources and Jupiter Gold. Areli Nogueira, one of our officers, is a director in Jupiter
Gold. We have partial equity ownership in both Apollo Resources and Jupiter Gold. There exists the possibility
that one or more of these individuals, or others, may in the future be in a position of conflict of interest. Any decision made by such
persons involving us will be made in accordance with their duties and obligations to deal fairly and in good faith with us and such other
companies. In addition, any such officer or directors will declare, and refrain from voting on, any matter in which they may have a material
interest.
Regulatory
and Industry Risks
The
mining industry subjects us to several risks.
In
our operations, we are subject to the risks normally encountered in the mining industry, such as:
|
●
|
the
discovery of unusual or unexpected geological formations;
|
|
|
|
|
●
|
accidental
fires, floods, earthquakes or other natural disasters;
|
|
|
|
|
●
|
unplanned
power outages and water shortages;
|
|
|
|
|
●
|
controlling
water and other similar mining hazards;
|
|
|
|
|
●
|
operating
labor disruptions and labor disputes;
|
|
|
|
|
●
|
the
ability to obtain suitable or adequate machinery, equipment, or labor;
|
|
|
|
|
●
|
our
liability for pollution or other hazards; and
|
|
|
|
|
●
|
other
known and unknown risks involved in the conduct of exploration and operation of mines.
|
The
nature of these risks is such that liabilities could exceed any applicable insurance policy limits or could be excluded from coverage.
There are also risks against which we cannot insure or against which we may elect not to insure. The potential costs which could be associated
with any liabilities not covered by insurance, or in excess of insurance coverage, or compliance with applicable laws and regulations
may cause substantial delays and require significant capital outlays, adversely affecting our future earnings and competitive position
and, potentially our financial viability.
Our
mineral projects will be subject to significant governmental regulations.
Mining
activities in Brazil are subject to extensive federal, state, and local laws and regulations governing environmental protection, natural
resources, prospecting, development, production, post-closure reclamation costs, taxes, labor standards and occupational health and safety
laws and regulations, including mine safety, toxic substances and other matters. The costs associated with compliance with such laws
and regulations can be substantial. In addition, changes in such laws and regulations, or more
restrictive interpretations of current laws and regulations by governmental authorities, could result in unanticipated capital expenditures,
expenses, or restrictions on, or suspensions of our operations and delays in the development of our properties.
We
will be required to obtain governmental permits in order to conduct development and mining operations, a process which is often costly
and time-consuming.
We
are required to obtain and renew governmental permits for our exploration activities and, prior to developing or mining any mineralization
that we discover, we will be required to obtain new governmental permits. Obtaining and renewing governmental permits is a complex, costly
and time-consuming process. The timeliness and success of permitting efforts are contingent upon many variables not within our control,
including the interpretation of permit approval requirements administered by the applicable permitting authority. We may not be able
to obtain or renew permits that are necessary to our planned operations or the cost and time required to obtain or renew such permits
may exceed our expectations. Any unexpected delays or costs associated with the permitting process could delay the exploration, development
or operation of our properties, which in turn could materially adversely affect our future revenues and profitability. In addition, key
permits and approvals may be revoked or suspended or may be changed in a manner that adversely affects our activities.
Private
parties, such as environmental activists, frequently attempt to intervene in the permitting process and to persuade regulators to deny
necessary permits or seek to overturn permits that have been issued. Obtaining the necessary governmental permits involves numerous jurisdictions,
public hearings and possibly costly undertakings. These third-party actions can materially increase the costs and cause delays in the
permitting process and could cause us to not proceed with the development or operation of a property. In addition, our ability to successfully
obtain key permits and approvals to explore for, develop, operate and expand operations will likely depend on our ability to undertake
such activities in a manner consistent with the creation of social and economic benefits in the surrounding communities, which may or
may not be required by law. Our ability to obtain permits and approvals and to successfully operate in particular communities may be
adversely affected by real or perceived detrimental events associated with our activities.
Compliance
with environmental regulations and litigation based on environmental regulations could require significant expenditures.
Environmental
regulations mandate, among other things, the maintenance of air and water quality standards, and the rules on land development and reclamation.
They also set forth limitations on the generation, transportation, storage, and disposal of solid and hazardous waste. Environmental
legislation is evolving in a manner that may require stricter standards and enforcement, increased fines and penalties for non-compliance,
more stringent environmental assessments of proposed projects, and a heightened degree of responsibility for mining companies and their
officers, directors and employees. In connection with our current exploration activities or with our prior mining operations, we may
incur environmental costs that could have a material adverse effect on our financial condition and results of operations. Any failure
to remedy an environmental problem could require us to suspend operations or enter into interim compliance measures pending completion
of the required remedy.
Moreover,
governmental authorities and private parties may bring lawsuits based upon damage to property and injury to persons resulting from the
environmental, health and safety impacts of prior and current operations, including operations conducted by other mining companies many
years ago at sites located on properties that we currently own or formerly owned. These lawsuits could lead to the imposition of substantial
fines, remediation costs, penalties and other civil and criminal sanctions. We cannot assure you that any such law, regulation, enforcement
or private claim would not have a material adverse effect on our financial condition, results of operations or cash flows.
Our
operations face substantial regulation of health and safety.
Our
operations are subject to extensive and complex laws and regulations governing worker health and safety across our operating regions
and our failure to comply with applicable legal requirements can result in substantial penalties. Future changes in applicable laws,
regulations, permits and approvals or changes in their enforcement or regulatory interpretation could substantially increase costs to
achieve compliance, lead to the revocation of existing or future exploration or mining rights or otherwise have an adverse impact on
our results of operations and financial position.
Our
mines are inspected on a regular basis by government regulators who may issue citations and orders when they believe a violation has
occurred under local mining regulations. If inspections result in an alleged violation, we may be subject to fines, penalties or sanctions
and our mining operations could be subject to temporary or extended closures.
In
addition to potential government restrictions and regulatory fines, penalties or sanctions, our ability to operate (including the effect
of any impact on our workforce) and thus, our results of operations and our financial position (including because of potential related
fines and sanctions), could be adversely affected by accidents, injuries, fatalities or events detrimental (or perceived to be detrimental)
to the health and safety of our employees, the environment or the communities in which we operate.
Our
operations are subject to extensive environmental laws and regulations.
Our
exploration, development, mining and processing operations are subject to extensive laws and regulations governing land use and the protection
of the environment, which generally apply to air and water quality, protection of endangered, protected or other specified species, hazardous
waste management and reclamation. We have made, and expect to make in the future, significant expenditures to comply with such laws and
regulations. Compliance with these laws and regulations imposes substantial costs and burdens, and can cause delays in obtaining, or
failure to obtain, government permits and approvals which may adversely impact our closure processes and operations.
Increased
global attention or regulation of consumption of water by industrial activities, as well as water quality discharge, and on restricting
or prohibiting the use of cyanide and other hazardous substances in processing activities could similarly have an adverse impact on our
results of operations and financial position due to increased compliance and input costs.
Mineral
prices are subject to unpredictable fluctuations.
Portions
of our revenues may come from the extraction and sale of minerals. The price of minerals may fluctuate widely and is affected by numerous
factors beyond our control, including international, economic and political trends, expectations of inflation, currency exchange fluctuations,
interest rates, global or regional consumptive patterns, speculative activities, increased production due to new extraction developments
and improved extraction and production methods and technological changes in the markets for the end products. The effect of these factors
on the price of minerals, and therefore the economic viability of any of our exploration properties, cannot accurately be predicted.
Country
and Currency Risks
Our
ability to execute our business plan depends primarily on the continuation of a favorable mining environment in Brazil and our ability
to freely sell our minerals.
Mining
operations in Brazil are heavily regulated. Any significant change in mining legislation or other changes in Brazil’s current mining
environment may slow down or alter our business prospects. Further, countries in which we may wish to sell our mined minerals may impose
special taxes, tariffs, or otherwise place limits and controls on consumption of our mined minerals.
The
perception of Brazil by the international community may affect us.
Brazil’s
political environment and its environmental policies, in particular the preservation of the Amazon rain forest, are continuously scrutinized
by the global media. If Brazil’s situation or policies are perceived as being inadequate, we may lose the interest of investor
groups or potential buyers of our minerals, which will have a negative impact on us.
Exposure
to foreign exchange fluctuations and capital controls may adversely affect our costs, earnings and the value of some of our assets.
Our
reporting currency is the U.S. dollar; however, we conduct our business in Brazil utilizing the Brazilian real. A large portion of our
operating expenses are incurred in Brazilian real. An appreciation of the Brazilian real against the U.S. dollar would increase our costs
in U.S. dollar terms. Our consolidated financials are directly impacted by movements in the Brazilian real to U.S. dollar exchange rate.
While
not expected, Brazil may choose to adopt measures to restrict the entry of U.S. dollars or the repatriation of capital across borders.
These measures would have a number of negative effects on us, reducing the immediately available capital that we could otherwise deploy
for investment opportunities or the payment of expenses, and the ability to repatriate any profits.
Common
Stock Risks
Our
common stock price may be volatile.
The
market price of our common stock has been and is likely to continue to be volatile and could fluctuate in price in response to various
factors, many of which are beyond our control, including the following:
|
●
|
our
ability to grow revenues;
|
|
|
|
|
●
|
our
ability to achieve profitability;
|
|
|
|
|
●
|
our
ability to raise capital when needed;
|
|
|
|
|
●
|
our
ability to execute our business plan;
|
|
|
|
|
●
|
legislative,
regulatory, and competitive developments; and
|
|
|
|
|
●
|
economic
and external factors.
|
In
addition, the securities markets have from time-to-time experienced significant price and volume fluctuations that are unrelated to the
operating performance of any company. These market fluctuations may also materially and adversely affect the market price of our common
stock regardless of our actual operations and the results from those operations.
There
is no assurance that an active, liquid and orderly trading market will develop for our common stock or what the market price of our common
stock will be and, as a result, it may be difficult for you to sell your shares of our common stock.
Since
we became a publicly traded company in April 2012, there has been a limited public market for shares of our common stock on the OTCQB.
We do not yet meet the initial listing standards of the Nasdaq Capital Market, NYSE American, or other similar national securities
exchange. Although we intend to apply for listing on a national securities exchange and uplist concurrently upon completion of
this offering, no assurances can be given that we will be successful. Until our common stock is listed on that market or a broader exchange,
we anticipate that it will remain quoted on the OTCQB. In that venue, investors may find it difficult to obtain accurate quotations as
to the market value of our common stock. In addition, if we fail to meet the criteria set forth in SEC regulations, various requirements
would be imposed by law on broker-dealers who sell our securities to persons other than established customers and accredited investors.
Consequently, such regulations may deter broker-dealers from recommending or selling our common stock, which may further affect liquidity.
This could also make it more difficult to raise additional capital.
We
cannot predict the extent to which investor interest in our Company will lead to the development of a more active trading market on the
OTCQB, whether we will meet the initial listing standards of the Nasdaq Capital Market, NYSE American, or other similar national
securities exchange, or how liquid that market might become. If an active trading market does not develop, you may have difficulty selling
any of the shares of our common stock that you buy.
Our
common stock is currently defined as “penny stock” and the rules imposed on the sale of the shares may affect your ability
to resell any shares you may purchase, if at all.
Our
common stock currently trades below $5 and is therefore defined as a “penny stock” under the Securities Exchange Act of 1934
(the “Exchange Act”). The Exchange Act and penny stock rules generally impose additional sales practice and disclosure requirements
on broker-dealers who sell our securities. For transactions covered by the penny stock rules, a broker-dealer must make a suitability
determination for each purchaser and receive the purchaser’s written agreement prior to the sale. In addition, the broker-dealer
must make certain mandated disclosures in penny stock transactions, including the actual sale or purchase price and actual bid and offer
quotations, the compensation to be received by the broker-dealer and certain associated persons, and deliver certain disclosures required
by the Commission. Consequently, the penny stock rules may affect the ability of broker-dealers to make a market in or trade our common
stock and may consequently affect a stockholder’s ability to resell any of our shares in the public markets.
We
do not intend to pay regular future dividends on our common stock and thus stockholders must look to appreciation of our common stock
to realize a gain on their investments.
We
have never paid a dividend and we do not have any plans to pay dividends in the foreseeable future. Our future dividend policy is within
the discretion of our Board of Directors and will depend upon various factors, including future earnings, if any, our capital requirements
and general financial condition, and other factors. Accordingly, stockholders must look solely to appreciation of our common stock to
realize a gain on their investment. This appreciation may not occur or may occur only over a longer timeframe.
We
may seek to raise additional funds, finance acquisitions, or develop strategic relationships by issuing securities that would dilute
your ownership.
We
may largely finance our operations by issuing equity securities, which may materially reduce the percentage ownership of our existing
stockholders. Furthermore, any newly issued securities could have rights, preferences, and privileges senior to those of our existing
common stock. Moreover, any issuances by us of equity securities may be at or below the prevailing market price of our stock and in any
event may have a dilutive impact on ownership interest of existing common stockholders, which could cause the market price of our common
stock to decline. We may also raise additional funds through the incurrence of debt or the issuance or sale of other securities or instruments
senior to our Common Stock. The holders of any debt securities or instruments that we may issue could have rights superior to the rights
of our common stockholders.
Our
Series A Preferred Stock has the effect of concentrating voting control over us in Marc Fogassa, our Chief Executive Officer and Chairman.
One
share of our Series A Preferred Stock is issued, outstanding and held since 2012 by Marc Fogassa, our Chief Executive Officer and Chairman.
The Certificate of Designations, Preferences and Rights of our Series A Convertible Preferred provides that for so long as Series A Preferred
Stock is issued and outstanding, the holders of Series A Preferred Stock shall vote together as a single class with the holders of our
common stock, with the holders of Series A Preferred Stock being entitled to 51% of the total votes on all matters regardless of the
actual number of shares of Series A Preferred Stock then outstanding, and the holders of common stock and any other class or series of
capital stock entitled to vote with the common stock being entitled to their proportional share of the remaining 49% of the total votes
based on their respective voting power. As a result, you may have limited ability to impact our operations and activities.
Marc
Fogassa, our Chief Executive Officer and member of our Board of Directors, owns greater than 50% of the Company’s voting securities,
which will cause us to be deemed a “controlled company” under the rules of Nasdaq or NYSE.
As
a result of his ownership of all issued and outstanding shares of our Series A Preferred Stock, Mr. Fogassa, our Chief Executive Officer
and member of our Board of Directors, holds more than 50% of our voting securities (and will continue to own more than 50% of our outstanding
voting securities upon consummation of the offering), and as such, we are a “controlled company” under the rules of Nasdaq
or NYSE. Under these rules, a company of which more than 50% of the voting power is held by an individual, a group or another
company is a “controlled company” and, as such, can elect to be exempt from certain corporate governance requirements, including
requirements that:
|
●
|
a
majority of the Board of Directors consist of independent directors;
|
|
●
|
the
board maintain a nominations committee with prescribed duties and a written charter; and
|
|
●
|
the
board maintain a compensation committee with prescribed duties and a written charter and comprised solely of independent directors
|
As
a “controlled company,” we may elect to rely on some or all of these exemptions, and we currently intend to take
advantage of all of these exemptions. Accordingly, should the interests of Mr. Fogassa differ from those of other stockholders, the
other stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the Nasdaq or
NYSE corporate governance standards. Even if we do not avail ourselves of these exemptions, our status as a controlled company
could make our common stock less attractive to some investors or otherwise harm our stock price.
You
will need to keep records of your investment for tax purposes.
Each
purchase or sell of securities, including our common stock, may result in tax consequences for you. We will not keep tax records for
you. You, or someone on your behalf, will be required to keep your own tax records with regard to your transactions involving our securities.
Risks
Related To This Offering And The Reverse Stock Split
Our
stock price may be volatile, and you could lose all or part of your investment.
The
trading price of our common stock following this offering may fluctuate substantially and may be higher or lower than the public offering
price. This may be especially true for companies with a small public float. The trading price of our common stock following this offering
will depend on several factors, including those described in this “Risk Factors” section, many of which are beyond our control
and may not be related to our operating performance. These fluctuations could cause you to lose all or part of your investment in our
securities since you might be unable to sell your shares at or above the price you paid in this offering. Factors that could cause fluctuations
in the trading price of our common stock include:
|
●
|
changes
to our industry, including demand and regulations;
|
|
|
|
|
●
|
failure
to achieve commercial extraction of mineral deposits from any of our properties;
|
|
|
|
|
●
|
absence
of any reserves contained within our properties, and loss of any funds spent on exploration and evaluation;
|
|
|
|
|
●
|
we
may not be able to compete successfully against current and future competitors;
|
|
|
|
|
●
|
competitive
pricing pressures;
|
|
|
|
|
●
|
our
ability to obtain working capital financing as required;
|
|
|
|
|
●
|
additions
or departures of key personnel;
|
|
|
|
|
●
|
sales
of our common stock;
|
|
|
|
|
●
|
our
ability to execute our business plan;
|
|
|
|
|
●
|
operating
results that fall below expectations;
|
|
|
|
|
●
|
any
major change in our management;
|
|
|
|
|
●
|
changes
in accounting standards, procedures, guidelines, interpretations or principals; and
|
|
|
|
|
●
|
economic,
geo-political and other external factors, particularly within the country of Brazil.
|
In
addition, the stock market in general, and the market for technology companies in particular, have experienced extreme price and volume
fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry
factors, as well as general economic, political and market conditions such as recessions or interest rate changes, may seriously affect
the market price of our common stock, regardless of our actual operating performance. These fluctuations may be even more pronounced
in the trading market for our stock shortly following this offering. If the market price of our common stock after this offering does
not exceed the per Unit public offering price, you may not realize any return on your investment in us and may lose some or all of your
investment.
Further,
in the past, following periods of volatility in the overall market and the market prices of particular companies’ securities, securities
class action litigations have often been instituted against these companies. Litigation of this type, if instituted against us, could
result in substantial costs and a diversion of our management’s attention and resources. Any adverse determination in any such
litigation or any amounts paid to settle any such actual or threatened litigation could require that we make significant payments.
You
will experience dilution as a result of future equity offerings.
We
may in the future offer additional shares of our common stock or other securities convertible into or exchangeable for our common stock.
Although no assurances can be given that we will consummate a future financing, in the event we do, or in the event we sell shares of
common stock or other securities convertible into shares of our common stock in the future, additional and potentially substantial dilution
will occur. In addition, investors purchasing shares or other securities in the future could have rights superior to investors in this
offering.
We
have not paid cash dividends in the past and do not expect to pay dividends in the future. Any return on investment will likely be limited
to the value of our common stock.
We
have never paid cash dividends on our common stock and do not anticipate doing so in the foreseeable future. The payment of dividends
on our common stock will depend on earnings, financial condition and other business and economic factors affecting us at such time as
our board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your
investment will only occur if our stock price appreciates.
Since
we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, stock price appreciation, if any, will
be your sole source of gain.
We
currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. In addition, the
terms of any future debt agreements may preclude us from paying dividends. As a result, appreciation, if any, in the market price of
our common stock will be your sole source of gain for the foreseeable future.
We
may need additional capital, and we may be unable to obtain such capital in a timely manner or on acceptable terms, or at all. Furthermore,
our future capital needs may require us to sell additional equity or debt securities that may dilute our stockholders or introduce covenants
that may restrict our operations or our ability to pay dividends.
To
grow our business and remain competitive, we may require additional capital from time to time for our daily operation. In addition
to the proceeds of this offering, we may continue to seek capital through private placement transactions and by utilizing proceeds available
under the Triton Equity Line Agreement. Our ability to obtain additional capital is subject to a variety of uncertainties, including:
|
●
|
our
market position and competitiveness in our industry;
|
|
|
|
|
●
|
our
ability to prove reserves in each of our properties and, ultimately, commence commercial extraction on each of our properties;
|
|
|
|
|
●
|
our
future profitability, overall financial condition, results of operations and cash flows; and
|
|
|
|
|
●
|
economic,
political and other conditions in the U.S., Brazil and other international jurisdictions.
|
We
may be unable to obtain additional capital in a timely manner or on acceptable terms or at all. In addition, our future capital needs
and other business reasons could require us to sell additional equity or debt securities or obtain a credit facility. The sale of additional
equity or equity-linked securities could dilute our stockholders. The incurrence of indebtedness would result in increased debt service
obligations and could result in operating and financing covenants that would restrict our operations or our ability to pay dividends
to our stockholders.
Our
existing stockholders have substantial influence over our company and their interests may not be aligned with the interests of our other
stockholders, which may discourage, delay or prevent a change in control of our company, which could deprive our stockholders of an opportunity
to receive a premium for their securities.
As
of the date of this prospectus, certain stockholders control approximately [●]% of the voting power in us, including management.
As a result, these stockholders have substantial influence over our business, including decisions regarding mergers, consolidations and
the sale of all or substantially all of our assets, election of directors and other significant corporate actions. This concentration
of ownership may discourage, delay or prevent a change in our control, which could deprive our stockholders of an opportunity
to receive a premium for their shares as part of any contemplated sale of our Company and may reduce the price of our common stock.
Investors
in this offering will experience immediate and substantial dilution in net tangible book value.
The
public offering price per Unit will be substantially higher than the net tangible book value per share of our outstanding shares of common
stock. As a result, investors in this offering will incur immediate dilution of $[●] per share, based on the assumed public offering
price of $[●] per Unit, the last reported bid price of our common stock on the OTCQB on [●], 2022. Investors in this offering
will pay a price per share that substantially exceeds the book value of our assets after subtracting our liabilities. See “Dilution”
for a more complete description of how the value of your investment will be diluted upon the completion of this offering.
The
warrants are speculative in nature.
The
warrants offered in this offering do not confer any rights of common stock ownership on their holders, such as voting rights or the right
to receive dividends, but rather merely represent the right to acquire shares of our common stock at a fixed price for a limited period
of time. Specifically, commencing on the date of issuance, holders of the warrants may exercise their right to acquire the common stock
and pay an exercise price of [●]% of the public offering price of the Units in this offering, prior to [●] years from the
date of issuance, after which date any unexercised warrants will expire and have no further value. There can be no assurance that the
market price of the common stock will ever equal or exceed the exercise price of the warrants, and consequently, whether it will ever
be profitable for holders of the warrants to exercise the warrants.
Our
management will have broad discretion over the use of proceeds from this offering and may not use the proceeds effectively.
Our
management will have broad discretion over the use of proceeds from this offering. We intend to use the net proceeds from this offering
for exploration, including drilling and assessment of deposits and reserves, if any, as well as capital expenditures, and working capital.
We may also use our net proceeds to acquire and invest in complementary technologies or businesses; however, we currently have no agreements
or commitments to complete any such transaction. Our management will have considerable discretion in the application of the net proceeds,
and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately.
The net proceeds may be used for corporate purposes that do not improve our operating results or enhance the value of our securities.
Our
expected use of net proceeds from this offering represents our current intentions based upon our present plans and business condition.
As of the date of this prospectus, we cannot predict with certainty all of the particular uses for the net proceeds to be received upon
the completion of this offering. The amounts and timing of our actual use of the net proceeds will vary depending on numerous factors,
including amount of cash used in our operations, which can be highly uncertain, subject to substantial risks and can often change. Our
management will have broad discretion in the application of the net proceeds, and investors will be relying on our judgment regarding
the application of the net proceeds of this offering.
The
failure by our management to apply these funds effectively could harm our business. Pending their use, we may invest the net proceeds
from this offering in short-term, investment-grade, interest-bearing securities. These investments may not yield a favorable return to
our stockholders. If we do not invest or apply the net proceeds from this offering in ways that enhance stockholder value, we may fail
to achieve expected financial results, which could cause our stock price to decline.
The
proposed reverse stock split could cause our stock price to decline relative to its value before the split and decrease the liquidity
of shares of our common stock.
We
plan to effect a reverse stock split of our issued and outstanding common stock immediately following the effectiveness but prior to
the closing of this offering in order to achieve a sufficient increase in our stock price to enable us to qualify for listing on the
Nasdaq or the NYSE American. There is no assurance that that the reverse stock split will not cause an actual decline in the
value of our outstanding common stock. The liquidity of the shares of our common stock may be affected adversely by the reverse stock
split given the reduced number of shares that will be outstanding following the reverse stock split, especially if the market price of
our common stock does not increase as a result of the reverse stock split. In addition, the reverse stock split may increase the number
of stockholders who own odd lots (less than 100 shares) of our common stock, creating the potential for such stockholders to experience
an increase in the cost of selling their shares and greater difficulty effecting such sales.
Following
the proposed reverse stock split, we cannot assure you that we will be able to continue to comply with listing standards of the Nasdaq,
NYSE American, or other national securities exchange,
We
intend to apply for listing of our common stock on the Nasdaq or NYSE American in connection with this offering. Following
the proposed reverse stock split, we expect that our common stock will be eligible to be quoted on Nasdaq or NYSE American. For
our common stock to be so listed, we must meet the current Nasdaq or NYSE American listing standards, including the minimum bid
price requirement. There can be no assurance that the market price of our common stock following the reverse stock split will remain
at the level required for continuing compliance with the minimum bid price requirement of Nasdaq or NYSE American. It is not uncommon
for the market price of a company’s common stock to decline in the period following a reverse stock split. If the market price
of our common stock declines following the effectuation of the reverse stock split, the percentage decline may be greater than would
occur in the absence of a reverse stock split. In addition, other factors unrelated to the number of shares of our common stock outstanding,
such as negative financial or operational results, could adversely affect the market price of our common stock and jeopardize our ability
to meet or maintain Nasdaq’s or NYSE American’s minimum bid price requirement. If we fail to comply with the minimum
bid price requirement, our securities could be delisted.
In
addition to the minimum bid price requirement for continuing compliance with Nasdaq or NYSE American listing rules, we cannot
assure you that we will be able to comply with the other standards that we are required to meet in order to maintain a listing of our
common stock and/or warrants on Nasdaq or NYSE American. For example, we may lose an independent director on our Audit Committee,
who cannot readily be replaced. Our failure to meet these requirements may result in our common stock and/or warrants sold in this offering
being delisted from Nasdaq or NYSE American, irrespective of our compliance with the minimum bid price requirement.
If
our common stock were to be delisted from Nasdaq or NYSE American, our common stock could continue to trade on the over-the-counter
bulletin board or OTCQB Market following any delisting from Nasdaq or NYSE American, or on the OTC Pink Sheets. Any such delisting
of our common stock could have an adverse effect on the market price of, and the efficiency of the trading market for, our common stock,
not only in terms of the number of shares that can be bought and sold at a given price, but also through delays in the timing of transactions
and less coverage of us by securities analysts, if any. Also, as we are seeking additional equity capital, it could have an adverse effect
on our ability to raise capital in the public or private equity markets.
USE
OF PROCEEDS
We
estimate that the net proceeds from the sale of Units in this offering will be approximately $[●], or approximately $[●] if
the underwriter exercises in full its option to purchase additional Units, based on an assumed public offering price of $[●] per
Unit, the last reported bid price of our common stock on the OTCQB as reported on [●], 2022, after deducting the estimated underwriting
discounts and commissions and estimated offering expenses payable by us. This estimate excludes the proceeds, if any, from the exercise
of the warrants in this offering. If all of the warrants sold in this offering were to be exercised in cash at an assumed exercise price
of $[●], the last reported bid price of our common stock on the OTCQB as reported on [●], 2022 per share, we would receive
additional net proceeds of approximately $[●]. We cannot predict when or if these warrants will be exercised. It is possible that
these warrants may expire and may never be exercised. Each $1.00 increase (decrease) in the assumed public offering price per Unit would
increase (decrease) the net proceeds to us from this offering by approximately $[●], or approximately $[●] if the underwriter
exercises its over-allotment option in full, assuming the number of shares offered by us, as set forth on the cover page of this prospectus,
remain the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.
The
expected use of net proceeds of this offering represents our current intentions based upon our present plan and business conditions.
As of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds to be received upon
the completion of this offering. The amounts and timing of our actual use of net proceeds will vary depending on numerous factors. As
a result, management will have broad discretion in the application of the net proceeds, and investors will be relying on our judgment
regarding the application of the net proceeds of this offering. We intend to use of proceeds from this offering is to expand and accelerate
our exploration program leading to the identification and quantitative measurement of our lithium prospective lithium deposits, as well
as for exploration for other mineral deposits in our other properties, including drilling and assessment of deposits and reserves, if
any, and working capital and general corporate purposes. We may also use some amount of the proceeds for the acquisition of additional
mineral rights and/or mines, and mining assets such as earth moving equipment, processing and recovery units, among others. We have presumed
that we will receive aggregate gross proceeds of $[●] from this offering (excluding any proceeds received from exercise of the warrants
offered as a part of the Units and/or exercise of the over-allotment by the underwriter, if any) and will incur $[●] in offering
costs, commissions and fees.
The
use of the proceeds represents management’s estimates based upon current business and economic conditions. We reserve the right
to use the net proceeds we receive in the offering in any manner we consider to be appropriate. Although we do not contemplate changes
in the proposed use of proceeds, to the extent we find that adjustment is required for other uses by reason of existing business conditions,
the use of proceeds may be adjusted. The actual use of the proceeds of this offering could differ materially from those outlined above
as a result of several factors including those set forth under “Risk Factors” and elsewhere in this prospectus.
Pending
the use of the net proceeds of this offering, we intend to invest the net proceeds in short-term investment-grade, interest-bearing securities.
DETERMINATION
OF OFFERING PRICE
Prior to this offering, there
was a limited public market for our common stock. We will determine at what price we may sell the Units offered by this prospectus. As
of January 27, 2022, the closing bid price for our common stock as reported on the OTCQB was $0.007 per share. The principal
factors to be considered when determining the public offering price include:
|
●
|
our
negotiation with the investors;
|
|
●
|
the
information set forth in this prospectus
|
|
●
|
our
history and prospects and the history and prospects for the industry in which we compete;
|
|
●
|
our
past and present financial performance;
|
|
●
|
our
prospects for future earnings and the present state of our development;
|
|
●
|
the
general condition of the securities market at the time of this offering;
|
|
●
|
the
recent market prices of, and demand for, publicly traded common stock of generally comparable companies; and
|
|
●
|
other
factors deemed relevant by the underwriter and us.
|
MARKET
FOR OUR COMMON STOCK AND RELATED SHAREHOLDER MATTERS
Market
and Other Information
Our
common stock is traded in OCTQB under the symbol “BMIX” and quotations for our common stock are available on otcmarkets.com.
As of December 31, 2021, we had 207 holders of record of our common stock as such term is defined in SEC rules, according to records
maintained by our transfer agent. The following table sets forth, for each of the quarterly periods indicated, the range of high and
low sales prices, in U.S. dollars, for our common stock for each quarter in 2019, 2020, and 2021, and for the applicable period in
2022.
|
|
Year Ended
|
|
|
|
December 31, 2019
|
|
|
|
High
|
|
|
Low
|
|
2019 Quarters
|
|
|
|
|
|
|
|
|
First (01/01 - 03/31)
|
|
$
|
0.0024
|
|
|
$
|
0.0009
|
|
Second (04/01 - 06/30)
|
|
$
|
0.0015
|
|
|
$
|
0.0006
|
|
Third (07/01 - 09/30)
|
|
$
|
0.0090
|
|
|
$
|
0.0009
|
|
Fourth (10/01 - 12/31)
|
|
$
|
0.0043
|
|
|
$
|
0.0014
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
December 31, 2020
|
|
|
|
|
High
|
|
|
|
Low
|
|
2020 Quarters
|
|
|
|
|
|
|
|
|
First (01/01 - 03/31)
|
|
$
|
0.0018
|
|
|
$
|
0.0009
|
|
Second (04/01 - 06/30)
|
|
$
|
0.0021
|
|
|
$
|
0.0008
|
|
Third (07/01 - 09/30)
|
|
$
|
0.0019
|
|
|
$
|
0.0008
|
|
Fourth (10/01 - 12/31)
|
|
$
|
0.0027
|
|
|
$
|
0.0007
|
|
|
|
Year Ended
|
|
|
|
December 31, 2021
|
|
|
|
High
|
|
|
Low
|
|
2021 Quarters
|
|
|
|
|
|
|
|
|
First (01/01 - 03/31)
|
|
$
|
0.1000
|
|
|
$
|
0.0014
|
|
Second (04/01 – 06/30)
|
|
$
|
0.0225
|
|
|
$
|
0.0119
|
|
Third (07/01 - 09/30)
|
|
$
|
0.0152
|
|
|
$
|
0.0090
|
|
Fourth (10/01 – 12/31)
|
|
$
|
0.0150
|
|
|
$
|
0.0071
|
|
|
|
Year Ended
|
|
|
|
December 31, 2022
|
|
|
|
High
|
|
|
Low
|
|
2022 Quarters
|
|
|
|
|
|
|
First (01/01 - 01/27)
|
|
$
|
0.0089
|
|
|
$
|
0.007
|
|
We
intend to apply to list our common stock under the proposed symbol “BMIX” and our warrants under the symbol “BMIXW”,
both on a national securities exchange such as the Nasdaq Capital Market or NYSE American. No assurance can be given that our application
will be approved by any national securities exchange, and we will not consummate this offering unless our common stock and warrants are
approved for listing on a national securities exchange.
Dividend
Policy
We
have never paid or declared any cash dividends on our common stock, and we do not anticipate paying any cash dividends on our common
stock in the foreseeable future. We intend to retain all available funds and any future earnings to fund the development and expansion
of our business. Any future determination to pay dividends will be at the discretion of our board of directors and will depend upon a
number of factors, including our results of operations, financial condition, future prospects, contractual restrictions, restrictions
imposed by applicable law and other factors our board of directors deems relevant.
CAPITALIZATION
The
following table sets forth our cash and capitalization as of September 30, 2021 on:
|
●
|
an
actual basis;
|
|
|
|
|
●
|
on
a pro forma basis to reflect:
(a)
the sale of a total of 11,884,717 shares of our common stock to Triton at an average price per share of $0.0063 between
December 13, 2021 and January 6, 2022, for total gross proceeds to us of $74,364. Such shares were offered and sold to Triton
pursuant to the Triton Equity Line Agreement;
(b)
the sale of a total of 64,464,286 restricted shares of our common stock between October 13, 2021 and January 10, 2022
to three accredited investors at an average price per share of $0.0066 Such shares were offered and sold in reliance of an exemption
from registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended, for transactions not involving a public offering;
(c)
the sale of restricted common shares of a private subsidiary of the Company between October 6, 2021 and January 10, 2022 for total gross
proceeds to such subsidiary of $470,000. The financial statements from this subsidiary, including its balance sheet, are consolidated
in our financial statements under USGAAP;
(d)
the elimination of the last convertible note from our books on November 15, 2021 achieved by a settlement agreement
which extinguished $133,241.10 in principal and accrued interest of such note in exchange for the issuance of 19,034,442 restricted
shares of our common stock; and
(e)
the increase in the number of our authorized common shares to 4,000,000,000 which is expected to occur by or around February 10, 2022
|
|
|
|
|
●
|
on
a pro forma as adjusted basis to reflect the sale by us of an assumed [●] Units at an assumed public offering price
of $[●] per Unit, the last reported sale price of our common stock as reported on the OTCQB on [●], 2022, after deducting
the underwriting discounts and commissions and estimated offering costs payable by us.
|
The
pro forma as adjusted information in this table is unaudited and is illustrative only and our capitalization following the completion
of this offering will be adjusted based on the actual public offering price and other terms of this offering determined at pricing. You
should read this table in conjunction with the information contained in “Use of Proceeds,” “Summary Financial Data”
and “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” as well as the financial
statements and the notes included elsewhere in this prospectus.
|
|
As of September 30, 2021
|
|
|
|
Actual
|
|
|
Pro Forma
|
|
|
Pro Forma, as Adjusted (1)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
18,132
|
|
|
|
987,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible notes payable
|
|
|
97,820
|
|
|
|
0
|
|
|
|
|
|
Loans payable
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Related party notes and other payable
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Series A preferred stock, $0.001 par value. 10,000,000 shares authorized; 1 share issued and outstanding,
actual; 1 share issued and outstanding, pro forma and pro forma as adjusted.
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
Series D preferred stock, $0.001 par value. 1,000,000 shares authorized; 214,006 shares issued
and outstanding, actual; 214,006 shares issued and outstanding, pro forma and pro forma as adjusted.
|
|
|
214
|
|
|
|
214
|
|
|
|
|
|
Common stock, $0.001 par value. 3,250,000,000 shares authorized; 3,050,699,071 shares issued and outstanding,
actual; 4,000,000,000 shares authorized, 3,153,007,115 shares issued and outstanding, pro forma; [●] shares issued and
outstanding, pro forma as adjusted.
|
|
|
3,050,699
|
|
|
|
3,153,007,115
|
|
|
|
|
|
Additional paid-in capital
|
|
|
50,941,680
|
|
|
|
51,495,484
|
|
|
|
|
|
Accumulated other comprehensive loss
|
|
|
(749,421
|
)
|
|
|
(749,421
|
)
|
|
|
|
|
Accumulated deficit
|
|
|
(54,346,906
|
)
|
|
|
(54,232,699
|
)
|
|
|
|
|
Total Brazil Minerals, Inc. stockholders’ deficit
|
|
|
(1,103,733
|
)
|
|
|
(340,339
|
)
|
|
|
|
|
Non-controlling interest
|
|
|
1,524,480
|
|
|
|
1,863,691
|
|
|
|
|
|
Total stockholders’ equity (deficit)
|
|
|
420,747
|
|
|
|
1,523.352
|
|
|
|
|
|
Total capitalization
|
|
$
|
1,614,986
|
|
|
|
2,584,350
|
|
|
|
|
|
(1)
|
Each
$1.00 increase (decrease) in the assumed public offering price of [●] per Unit, the last reported bid price of our common stock
as reported on the OTCQB on [●], 2022, would increase (decrease) each of cash, total stockholders’ (deficit) equity and
total capitalization by approximately $[●] million, assuming that the number of Units offered by us, as set forth on the cover
page of this prospectus, remains the same, and after deducting underwriting discounts and commissions and estimated offering expenses
payable by us. Similarly, each increase (decrease) of [●] Units offered by us would increase (decrease) each of cash, total stockholders’
(deficit) equity and total capitalization by approximately $[●] million, assuming that
the assumed public offering price remains the same, and after deducting underwriting discounts and commissions and estimated offering
expenses payable by us. The pro forma as adjusted information discussed above is illustrative only and will adjust based on
the actual public offering price and other terms of this offering determined at pricing.
|
The
number of common shares that will be outstanding after this offering set forth above is based on shares of our common stock outstanding
as of September 30, 2021, does not give effect to the potential reverse stock split, and excludes the following:
|
●
|
294,610,599 shares of common
stock issuable upon the exercise of outstanding options and warrants with a weighted average exercise price of $0.016 per
share;
|
|
●
|
25,000,000 shares of common stock reserved for the future issuance of awards under our 2017 Stock Incentive Plan;
|
|
●
|
One share of common stock issuable upon the conversion of our outstanding Series A Convertible Preferred Stock; and
|
|
●
|
2,140,060,000 shares of
common stock issuable upon the conversion of our outstanding Series D Convertible Preferred Stock.
|
DILUTION
If
you invest in our Units in this offering, your ownership interest will be diluted to the extent of the difference between the assumed
public offering price per common share of in this offering and the as adjusted net tangible book value per share immediately after this
offering. We calculate net tangible book value per share by dividing our net tangible book value, which is tangible assets less total
liabilities less debt discounts, by the number of our outstanding common stock as of September 30, 2021, assuming no value is attributed
to the warrants and such warrants are accounted for and classified as equity. Our historical net tangible book value as of September
30, 2021, was approximately $420,747 or $0.00 per share based upon shares of common stock outstanding on such date.
Our pro forma net tangible book
value as of September 30, 2021, was approximately $1,523,352 or $0.00 per share of common stock after giving effect to:
(a) the sale of a total
of 11,884,717 shares of our common stock to Triton at an average price per share of $0.0063 between December
13, 2021 and January 6, 2022, for total gross proceeds to us of $74,364 pursuant to the Triton Equity Line Agreement;
(b) the sale of a total of
64,464,286 restricted shares of our common stock between October 13, 2021 and January 10, 2022 to three accredited investors
at an average price per share of $0.0066 Such shares were offered and sold in reliance of an exemption from registration provided by
Section 4(a)(2) under the Securities Act of 1933, as amended, for transactions not involving a public offering;
(c) the sale of restricted
common shares of a private subsidiary of the Company between October 6, 2021 and January 10, 2022 for total gross proceeds to such subsidiary
of $470,000. The financial statements from this subsidiary, including its balance sheet, are consolidated in our financial statements
under USGAAP; and
(d) the elimination of
the last convertible note from our books on November 15, 2021 achieved by a settlement agreement which extinguished
$133,241.10 in principal and accrued interest of such note in exchange for the issuance of 19,034,442 restricted shares of our common stock.
Our pro forma net tangible book
value per share represents pro forma net tangible book value divided by 3,153,007,115 shares of common stock outstanding, as if
such sales occurred on September 30, 2021.
After
giving effect to our receipt of approximately $[●] million of estimated net proceeds, after deducting underwriting discounts and
commissions and estimated offering expenses payable by us, from our sale of Units in this offering at an assumed public offering price
of $[●] per Unit, the last reported bid price of our common stock as reported on the OTCQB on [●], 2022, our pro forma
as adjusted net tangible book value as of September 30, 2021, would have been approximately $[●] million, or $[●]
per share. This amount represents an immediate increase in net pro forma tangible book value of $[●] per share of
our common stock to existing stockholders and an immediate dilution in the pro forma net tangible book value of $[●]
per share of our common stock to new investors purchasing shares of common stock in this offering.
The
following table illustrates this dilution on a per share basis to new investors:
Assumed
public offering price
|
|
|
|
|
|
|
|
|
|
Historical
net tangible book value (deficit) as of September 30, 2021
|
|
|
420,747
|
|
|
|
|
|
|
Increase
in pro forma net tangible book value attributable to pro forma adjustments described above
|
|
|
1,102,605
|
|
Pro
forma as adjusted net tangible book value as of September 30, 2021
|
|
|
1,523,352
|
|
|
|
|
|
|
Increase
in pro forma as adjusted net tangible book value attributable to investors participating in this offering
|
|
|
|
|
|
|
|
|
|
Pro
forma as adjusted net tangible book value immediately after this offering
|
|
|
|
|
|
|
|
|
|
Dilution
per share to net investors in this offering
|
|
|
|
|
The
dilution information discussed above is illustrative only and will change based on the actual public offering price and other terms of
this offering to be determined at pricing. Each $1.00 increase (decrease) in the assumed public offering price of $[●] per share,
the last reported bid price of our common stock as reported on the OTCQB on [●], 2022, would increase (decrease) the pro forma net
tangible book value per share by approximately $[●] million, or by approximately $[●] per share, assuming the number of Units
offered by us, as set forth on the cover page of this prospectus, remains the same, after deducting underwriting discounts and commissions
and estimated offering expenses payable by us. Similarly, each increase (decrease) of [●] in the number of Units offered by us would increase
(decrease) the pro forma net tangible book value per share by approximately $[●] million, or approximately $[●] per share,
assuming the assumed public offering price remains the same, after deducting underwriting discounts and commissions and estimated offering
expenses payable by us.
If
the underwriters exercise their option to purchase additional Units in full in this offering, the net tangible book value after this
offering would be approximately $[●] million, or approximately $[●] per share, the increase in net tangible book value to existing
stockholders would be $[●] per share, and the dilution per share to new investors would be $[●] per share, in each case based
on an assumed public offering price of $[●] per share, the last reported bid price of our common stock as reported on the
OTCQB on [●], 2022.
The
number of common shares that will be outstanding after this offering set forth above is based on shares of our common stock outstanding
as of September 30, 2021, does not give effect to the potential reverse stock split, and excludes the following:
|
●
|
294,610,599 shares of common
stock issuable upon the exercise of outstanding options and warrants with a weighted average exercise price of $0.016 per
share;
|
|
●
|
25,000,000 shares of common stock reserved for the future issuance of awards under our 2017 Stock Incentive Plan;
|
|
●
|
One share of common stock issuable upon the conversion of our outstanding Series A Convertible Preferred Stock; and
|
|
●
|
2,140,060,000 shares of
common stock issuable upon the conversion of our outstanding Series D Convertible Preferred Stock.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You
should read the following discussion and analysis of our financial condition and plan of operations together with “Summary Financial
Data” and our financial statements and the related notes appearing elsewhere in this prospectus. In addition to historical information,
this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results
may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited
to, those identified below, and those discussed in the section titled “Risk Factors” included elsewhere in this prospectus.
All amounts in this report are in U.S. dollars, unless otherwise noted.
Results
of Operations
The
Three Months Ended September 30, 2021 Compared to the Three Months ended September 30, 2020
Revenue
for the three months ended September 30, 2021 totaled $2,984, compared to revenue of $10,688 during the three months ended September
30, 2020 representing a decrease of 72.1%. This decreased is mostly explained by our decision to prioritize the exploration and development
of higher potential mineral rights. We anticipate that revenues will begin to increase with the licensing of new high-quality areas
for production in future periods.
Cost
of goods sold for the three months ended September 30, 2021 totaled $27,382, as compared to cost of goods sold of $26,908 during the
three months ended September 30, 2020 representing an increase of 1.8%. Cost of goods sold is primarily comprised of labor, fuel, and
repairs and maintenance on our mining equipment. The increase is explained by increased production activities and mining costs partially
attributable to the Company’s exploratory efforts.
Gross
loss for the three months ended September 30, 2021 was $24,398, compared to gross loss of $16,220 during the three months ended
September 30, 2020 representing an increase in gross loss of 50.4%.
Operating
expenses for the three months ended September 30, 2021 totaled $707,335, compared to operating expenses of $303,411 during the three
months ended September 30, 2020 representing an increase of 133.1%. The increase was mostly due to general and administrative expenses
related to public company costs and increased financing efforts, and stock-based compensation from issuances of stock options to officers
and directors.
Other
expenses for the three months ended September 30, 2021 totaled $88,858, compared to other expenses of $52,967 during the three months
ended September 30, 2020 representing an increase of 67.8%. The Company realized an increase in interest expense on promissory notes
due to the settlement during the period ended September 30, 2021. Additionally, the Company recorded a $224,812 loss on the extinguishment
of debt related to common stock purchase warrants issued in a settlement with a noteholder during the three months ended September 30,
2021.
As
a result, we incurred a net loss attributable to our stockholders of $619,139, or $0.00 per share, for the three months ended September
30, 2021, compared to a net loss attributable to our stockholders of $271,203, or $0.00 per share, during the three months ended September
30, 2020.
The
Nine Months Ended September 30, 2021 Compared to the Nine Months ended September 30, 2020
Revenue
for the nine months ended September 30, 2021 totaled $9,088, compared to revenue of $22,254 during the nine months ended September 30,
2020 representing a decrease of 59.2%. This decreased is mostly explained by our decision to prioritize the exploration and development
of higher potential mineral rights. We anticipate that revenues will begin to increase with the licensing of new high-quality areas
for production in future periods.
Cost
of goods sold for the nine months ended September 30, 2021 totaled $74,476, as compared to cost of goods sold of $86,805 during the nine
months ended September 30, 2020 representing a decrease of 14.2%. 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 the Company’s exploratory efforts and the risks and uncertainties surrounding COVID-19.
Gross
loss for the nine months ended September 30, 2021 was $65,388, compared to gross loss of $64,551 during the nine months ended
September 30, 2020 representing an increase in gross loss of 1.3%.
Operating
expenses for the nine months ended September 30, 2021 totaled $2,560,171, compared to operating expenses of $857,514 during the nine
months ended September 30, 2020 representing an increase of 198.6%. The increase was mostly due to general and administrative expenses
related to public company costs and increased financing efforts, and stock-based compensation from issuances of stock options to officers
and directors.
Other
expenses for the nine months ended September 30, 2021 totaled $476,532, compared to other expenses of $458,139 during the nine months
ended September 30, 2020 representing an increase of 4.0%. The Company’s interest expense on promissory notes decreased
due to reduced debt levels during the period ended September 30, 2021. Additionally, the Company recorded a $224,812 loss on the
extinguishment of debt related to common stock purchase warrants issued in a settlement with a noteholder during the nine months ended
September 30, 2021, as compared to a $76,178 loss due to a fair market value adjustment provision included in a share exchange agreement
with a related party during the nine months ended September 30, 2020.
As
a result, we incurred a net loss attributable to our stockholders of $2,161,835, or $0.00 per share, for the nine months ended September
30, 2021, compared to a net loss attributable to our stockholders of $1,109,491, or $0.00 per share, during the nine months ended September
30, 2020.
Liquidity
and Capital Resources
As
of September 30, 2021, we had cash and cash equivalents of $18,132 and a working capital deficit of $1,014,430.
Net
cash used in operating activities totaled $1,201,277 for the nine months ended September 30, 2021, compared to net cash used of
$701,956 during the nine months ended September 30, 2020 representing an increase in cash used of $499,321 or 71.1%.
Net cash used in investing activities totaled $272,153 for the nine months ended September 30, 2021, compared to net cash
used of $12,728 during the nine months ended September 30, 2020 representing an increase in cash used of $259,425 or 2,038.2%.
Net cash provided by financing activities totaled $1,237,542 for the nine months ended September 30, 2021, compared to $833,884 during
the nine months ended September 30, 2020 representing an increase in cash provided of $434,045 or 52.1%.
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 believe that we will be successful in the execution
of our initiatives, but there can be no assurance. 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 it 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 September
30, 2021, it could negatively affect our financial position and liquidity and could result in our having understated our net loss.
Recent
Accounting Pronouncements
Our
consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles. Our significant accounting
policies are described in Note 1 of the financial statements. We have reviewed all recent accounting pronouncements issued to the date
of the issuance of these financial statements, and we do not believe any of these pronouncements will have a material impact on us.
Results
of Operations
Fiscal
Year Ended December 31, 2020 Compared to Fiscal Year Ended December 31, 2019
Revenue
for the year ended December 31, 2020 totaled $23,446, compared to revenue of $15,393 during the year ended December 31, 2019 representing
an increase of 52.3%. We anticipate that revenues will begin to increase with the licensing of new high-quality areas for production
in future periods.
Cost
of goods sold for the year ended December 31, 2020 totaled $129,943, compared to cost of goods sold of $182,168 during the year
ended December 31, 2019 representing a decrease of 28.7%. Cost of goods sold is primarily comprised of labor, fuel, and repairs
and maintenance on our mining equipment. The decrease is explained by reduced costs resulting from more efficient mining activities
and the risks and uncertainties surrounding COVID-19.
Gross
loss for the year ended December 31, 2020 totaled $106,497, compared to gross loss of $166,775 for the year ended December 31,
2019 representing a decrease of 36.1%.
Operating
expenses for the year ended December 31, 2020 totaled $1,175,056, compared to operating expenses of $1,097,569 for the year ended
December 31, 2019 representing an increase of $77,487 or 7.1%. This increase was primarily caused by increased general and administrative
expenses and professional services.
Other
expenses for the year ended December 31, 2020 totaled $264,482, compared to other expenses of $821,537 for the year ended December
31, 2019 representing a decrease of $557,055 or 67.8%. The decrease was primarily the result of lower amortization expense related
to debt discounts and the relief of $238,151 in interest expense accrued against a convertible note, offset in part by a $76,926
loss due to a fair market value adjustment provision included in a share exchange agreement with a related party.
As
a result, we incurred a net loss attributable to our shareholders of $1,141,663, or approximately $0.00 per share, for the year
ended December 31, 2020, compared to a net loss attributable to our shareholders of $1,862,077, or approximately $0.00 per share,
for the year ended December 31, 2019.
Liquidity
and Capital Resources
As
of December 31, 2020, we had total current assets of $305,145 compared to total current liabilities of $2,326,890 for a current
ratio of 0.13 to one and a working capital deficit of $2,021,745. By comparison we had total current assets of $193,777 compared
to current liabilities of $2,154,356 for a current ratio of 0.09 to one and a working capital deficit of $1,960,579 as of December
31, 2019. Our principal sources of liquidity were from the sale of equity and issuance of debt for the years ended December 31,
2020 and 2019.
Net
cash used in operating activities totaled $996,781 for the year ended December 31, 2020, compared to $791,072 for the year ended
December 31, 2019 representing an increase in cash used of $205,709 or 26.0%. Net cash used in investing activities totaled $13,643
for the year ended December 31, 2020, compared to $677 for the year ended December 31, 2019 representing a decrease of $12,966
or 1,915.2%. Net cash provided by financing activities totaled $1,104,549 for the year ended December 31, 2020, as compared to
$941,852 for the year ended December 31, 2019 representing an increase of $162,697 or 17.3%.
During
the year ended December 31, 2020, our sources of liquidity were primarily derived from the proceeds of equity sales by the Company
and two of its 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 believe that we will be
successful in the execution of our initiatives, but there can be no assurance. We have no plans for any significant cash acquisitions
in the foreseeable future.
Recent Developments
On March 3, 2021, we provided the necessary
60-day notice of intent to fully redeem a note issued by us in 2014 with $244,000 in original principal and held by a Trust. After
such redemption, past-maturity third-party convertible debt remaining would aggregate $186,736 in principal and we intend to fully
extinguish it within the second quarter of 2021.
Going
Concern
The
accompanying consolidated financial statements have been prepared assuming we will continue as a going concern, which contemplates
realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following
the date of these financial statements. 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
Companys 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.
Off-Balance
Sheet Arrangements
The
Company currently has no off-balance sheet arrangements.
Critical
Accounting Policies and Estimates
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.
Fair Value of Financial Instruments
We follow the guidance of Accounting Standards
Codification (“ASC”) Topic 820 – Fair Value Measurement and Disclosure. Fair value is defined as the exit price,
or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants as of the measurement date. The guidance also establishes a hierarchy for inputs used in measuring fair value that
maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs
be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed
based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our assumptions about
the factors market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that
may be used to measure fair value:
Level 1. Observable inputs such as quoted
prices in active markets;
Level 2. Inputs, other than the quoted
prices in active markets, that are observable either directly or indirectly; and
Level 3. Unobservable inputs in which
there is little or no market data, which require the reporting entity to develop its own assumptions.
As of December 31, 2020 and 2019, our derivative
liabilities were considered a level 2 liability. We do not have any level 3 assets or liabilities.
Our financial instruments consist of cash and
cash equivalents, accounts receivable, taxes receivable, prepaid expenses, deposits and other assets, accounts payable, accrued
expenses and convertible notes payable. The carrying amount of these financial instruments approximates fair value due to either
length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these consolidated
financial statements.
Property and Equipment
Property and equipment are stated at cost,
net of accumulated depreciation. Major improvements and betterments are capitalized. Maintenance and repairs are expensed as incurred.
Depreciation is computed using the straight-line method over the estimated useful life. At the time of retirement or other disposition
of property and equipment, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is
reflected in the statements of operations as other gain or loss, net.
The diamond and gold processing plant and other
machinery are depreciated over an estimated useful life of ten years; vehicles are depreciated over an estimated life of four years;
and computer and other office equipment over an estimated useful life of three years.
Mineral Properties
Costs of exploration,
carrying and retaining unproven mineral lease properties are expensed as incurred. Mineral property acquisition costs, including
licenses and lease payments, are capitalized. Although we have taken steps to verify title to mineral properties in which it has
an interest, these procedures do not guarantee our rights. Such properties may be subject to prior agreements or transfers and
title may be affected by undetected defects.
Impairment losses
are recorded on mineral properties used in operations when indicators of impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than the assets’ carrying amount. As of December 31, 2020 and 2019, we
did not recognize any impairment losses related to mineral properties held.
Impairment of Intangible
Assets with Indefinite Useful Lives
We account for intangible
assets in accordance with Accounting Standards Codification (“ASC”) 350, Intangibles – Goodwill and Other (“ASC
350”). ASC 350 requires that intangible assets with indefinite useful lives no longer be amortized, but instead be evaluated
for impairment at least annually. On an annual basis, in the fourth quarter of the fiscal year, we review our intangible assets
with indefinite useful lives for impairment by first assessing qualitative factors to determine whether the existence of events
or circumstances makes it more-likely-than-not that the fair value of an intangible asset is less than its carrying amount. If
it is determined that it is more-likely-than-not that the fair value of an intangible asset is less than its carrying amount, the
intangible asset is further tested for impairment by comparing the carrying amount to its estimated fair value using a discounted
cash flow. Impairment, if any, is measured as the amount by which an indefinite-lived intangible asset’s carrying amount
exceeds its fair value.
Application of impairment
tests requires significant management judgment, including the determination of fair value of each indefinite-lived intangible asset.
Judgment applied when performing the qualitative analysis includes consideration of macroeconomic, industry and market conditions,
overall financial performance of the entity, composition, or strategy changes affecting the recoverability of asset groups. Judgments
applied when performing the quantitative analysis includes estimating future cash flows, determining appropriate discount rates
and making other assumptions. Changes in these judgments, estimates and assumptions could materially affect the determination of
fair value for each indefinite-lived intangible asset.
Impairment of Long-Lived
Assets
For long-lived assets,
such as property and equipment and intangible assets subject to amortization, we continually monitor 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, we assess 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, we recognize 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.
Convertible Instruments
We evaluate and account for conversion options
embedded in convertible instruments in accordance with ASC 470-20, “Debt with Conversion and Other Options”.
Applicable GAAP requires companies to bifurcate
conversion options from their host instruments and account for them as free-standing derivative financial instruments according
to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative
instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument
that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with
changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative
instrument would be considered a derivative instrument.
We account for convertible instruments (when
it has been determined that the embedded conversion options should not be bifurcated from their host instruments) by recording,
when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based
upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the
effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related
debt to their stated date of redemption.
Variable Interest Entities
We determine at the inception of each arrangement
whether an entity in which we hold an investment or in which we have other variable interests in is considered a variable interest
entity. We consolidate VIEs when we are the primary beneficiary. The primary beneficiary of a VIE is the party that meets both
of the following criteria: (1) has the power to make decisions that most significantly affect the economic performance of the VIE;
and (2) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be significant
to the VIE. Periodically, we assess whether any changes in the interest or relationship with the entity affect the determination
of whether the entity is still a VIE and, if so, whether we are the primary beneficiary. If we are not the primary beneficiary
in a VIE, we account for the investment under the equity method or cost method in accordance with the applicable GAAP.
We have concluded that Apollo Resources,
Jupiter Gold and their subsidiaries are VIEs in accordance with applicable accounting
standards and guidance; and although the operations of Apollo Resources and Jupiter Gold are independent of ours, through governance
rights, we have the power to direct the activities that are most significant to Apollo Resources and Jupiter Gold. Therefore, we
concluded that we are the primary beneficiary of both Apollo Resources and Jupiter Gold.
Stock-Based Compensation
We record stock-based compensation in accordance
with ASC Topic 718, Compensation - Stock Compensation. ASC 718 requires companies to measure compensation cost for stock-based
employee compensation at fair value at the grant date and recognize the expense over the employee’s requisite service period.
Under ASC 718, volatility is based on the historical volatility of our stock or the expected volatility of the stock of similar
companies. The expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination
behavior. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at
the time of grant.
We utilize the Black-Scholes option-pricing
model, which was developed for use in estimating the fair value of options. Option-pricing models require the input of highly complex
and subjective variables including the expected life of options granted and the expected volatility of our stock price over a period
equal to or greater than the expected life of the options. Because changes in the subjective assumptions can materially affect
the estimated value of our employee stock options, it is management’s opinion that the Black-Scholes option-pricing model
may not provide an accurate measure of the fair value of our employee stock options. Although the fair value of employee stock
options is determined in accordance with ASC Topic 718 using an option-pricing model, that value may not be indicative of the fair
value observed in a willing buyer/willing seller market transaction.
On June 20, 2018, the FASB issued ASU 2018-07
which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of
the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees.
Equity classified share-based payments for employees was fixed at the time of grant. Equity-classified nonemployee share-based
payment awards are measured at the grant date of the award which is the same as share-based payments for employees. We adopted
the requirements of the new rule as of January 1, 2019, the effective date of the new guidance.
Foreign Currency
Our foreign subsidiaries use a local currency
as the functional currency. Resulting translation gains or losses are recognized as a component of accumulated other comprehensive
income. Transaction gains or losses related to balances denominated in a currency other than the functional currency are recognized
in the consolidated statements of operations. Net foreign currency transaction losses included in our consolidated statements of
operations were negligible for all periods presented.
Reclassifications
Certain prior year
amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings
(loss) or and financial position.
Recent
Accounting Pronouncements
Our
consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles. Our significant
accounting policies are described in Note 1 of the financial statements. We have reviewed all recent accounting pronouncements
issued to the date of the issuance of these financial statements, and we do not believe any of these pronouncements will have
a material impact on us.
BUSINESS
Overview
Brazil
Minerals, Inc. (“Brazil Minerals”, the “Company”, “we”, “us”, or “our”) is
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, graphite, nickel, cobalt, 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 prospectus, our mineral rights portfolio for
battery metals includes approximately 60,077 acres (243 km2) for lithium, 30,009 acres (121 km2) for rare earths,
22,050 acres (89 km2) for titanium, 14,507 acres (59 km2) for graphite, and 7,509 acres (30 km2) for
nickel and cobalt We believe we are among the largest listed companies by size and breadth in exploration projects for strategic minerals
in Brazil, a premier mineral jurisdiction.
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 believe that we can
materially increase our value by the acceleration of our exploratory work and quantification of our lithium
mineralization. Our initial commercial goal is to be able to enter production of lithium-bearing concentrate, a product which is
highly sought after in the battery supply chain for EVs.
We
also have 100%-ownership of early-stage projects and properties in other minerals that are needed in the battery supply chain and high
technology applications such as rare earths, titanium, nickel, and cobalt. Our goal is to become “the Mineral Resources Company
for the Green Energy Revolution”. We believe that the shift from fossil fuels to battery power will yield long-term opportunities
for us not only in lithium but also in such other minerals.
Additionally,
we have 100%-ownership of several mining concessions for gold and diamonds. Historically we have had revenues from mining and
selling gold and diamonds. More recently we have had revenues from mining and selling industrial sand for the local construction
industry, which is at the time of this prospectus our primary source of revenues. Such endeavors have given us the critical
management experience needed to take early-stage projects in Brazil from the exploration phase through successful licensing from
regulators and to revenues.
As
of the date of this prospectus we also own 48.94% 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.
As
of the date of this prospectus, 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 USGAAP.
As
the “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.
LITHIUM
Market
Lithium
is on the list of the 35 minerals considered critical to the economic and national security of the United States as first published by
the U.S. Department of the Interior on May 18, 2018.
In June 2021, the U.S. Department of Energy published a report titled “National Blueprint for Lithium Batteries 2021-2030”
(henceforth, the “NBLB Report”) which was developed by the Federal Consortium for Advanced Batteries (“FCAB”),
a collaboration by the U.S. Departments of Energy, Defense, Commerce, and State. According to the Report, one of the main
goals of this U.S. government effort is to “secure U.S. access to raw materials for lithium batteries.” In the NBLB Report,
Ms. Jennifer M. Granholm, the U.S. Secretary of Energy, states: “Lithium-based batteries power our daily lives from consumer
electronics to national defense. They enable electrification of the transportation sector and provide stationary grid storage, critical
to developing the clean-energy economy.”
The
NBLB Report summarizes as follows the U.S. government’s views on the needs for lithium and the expected growth
of the lithium battery market:
|
●
|
“A robust, secure,
domestic industrial base for lithium-based batteries requires access to a reliable supply of raw, refined, and processed material inputs…”
|
|
●
|
“The worldwide lithium
battery market is expected to grow by a factor of 5 to 10 in the next decade.”
|
Electric
Vehicle Demand
The
growth in electric vehicles (“EVs”) will provide the greatest needs for lithium-based batteries The
NBLB Report states: “Bloomberg projects worldwide sales of
56 million passenger electric vehicles in 2040, of which 17% (about 9.6 million EVs) will be in the U.S. market.”
The
following graph shows the actual and estimated global annual sales of passenger EVs, including both Battery Electric Vehicles
(“BEVs”) and Plug-in Hybrid Electric Vehicles (“PHEVs”).
Source:
NBLB Report (defined above). Original Source: BloombergNEF Long-Term Electric Vehicle Outlook 2019.
In
a February 2021 report, Canalys, a global technology
market analyst firm, states that global
sales of EVs in 2020 increased by 39% year on year to 3.1 million units. This compares with a sales decline of 14% of the total passenger
car market in 2020. Canalys forecasts that the number of EVs sold will rise to 30 million in 2028 and EVs will represent nearly half
of all passenger cars sold globally by 2030.
Bloomberg’s
Long-Term Electric Vehicle Outlook 2021 report states: “The outlook for EV adoption is getting much brighter, due to a combination
of more policy support, further improvements in battery density and cost, more charging infrastructure being built, and rising commitments
from automakers. Passenger EV sales are set to increase sharply in the next few years, rising from 3.1 million in 2020 to 14 million
in 2025. Globally, this represents around 16% of passenger vehicle sales in 2025, but some countries achieve much higher shares. In Germany,
for example, EVs represent nearly 40% of total sales by 2025, while China – the world’s largest auto market – hits
25%.”
Grid
Storage Demand
Regarding
the lithium battery growth derived from grid storage demands, the NBLB
Report states: “In addition to the EV market, grid storage uses of advanced batteries are also anticipated to grow, with Bloomberg
projecting total global deployment to reach over 1,095 GW by 2040, growing substantially from 9 GW in 2018.;” and “Bloomberg
forecasts 3.2 million EV sales in the U.S. for 2028, and over 200 GW of lithium-ion battery-based grid storage deployed globally by 2028.
With an average EV battery capacity of 100 kWh, 320 GWh of domestic lithium-ion battery production capacity will be needed just to meet
passenger EV demand. Benchmark Mineral Intelligence forecasts U.S. lithium-ion battery production capacity of 148 GWh by 2028 less than
50% of projected demand.”
Growth in Lithium Prices
Directly relevant to our
goal to produce spodumene concentrate for sale, the chart below indicates the price of spodumene concentrate in USD/ton (Source:
Bloomberg LP).
Summary
of Our Opportunity
Minas
Gerais Lithium Project
Our
Minas Gerais Lithium Project currently encompasses
44 mineral rights spread over approximately 45,456 acres (184 km2). Several of our mineral rights are located
adjacent to or near mineral rights that belong to a large publicly traded competitor company (“Competitor”) which has demonstrated
through extensive drilling the presence of lithium deposits totaling over 20 million tons, according to its publicly-available filings.
The map below indicates our mineral rights in our Minas Gerais Lithium Project and those mineral rights that belong to the
Competitor.
Our exploratory work to date
in some mineral rights in our Minas Gerais Lithium Project, including trenching and drilling with subsequent geochemical
analysis of samples, has determined the existence of hard rock pegmatites with lithium mineralization. Given the proximity to
areas of economically significant lithium deposits from the Competitor, our technical experts believe that one or more areas
of our Minas Gerais Lithium Project may also contain similar lithium deposits.
Our
primary goal for the use of proceeds from this Offering is to expand and accelerate our exploration program leading to the identification
and quantitative measurement of our prospective lithium deposits. BNA Mining Solution (“BNA”) and GEO Geologia e Engenharia
(“GEO”), two independent technical advisory firms with expertise in lithium, are planning and supervising the exploration
program for our Minas Gerais Lithium Project. Together, BNA and GEO count in their staff three lithium experts which meet the “Qualified
Persons” definition under Regulation S-K 1300. An independent preliminary exploration technical report of our Minas Gerais Lithium
Project has been prepared by GEO with information related to initial studies, mostly trenching and shallow drilling, performed in certain
of the project areas. This report confirms presence of spodumene and petalite, minerals that contain lithium. Currently, a second phase
of the exploration is underway with deeper drilling of specific targets.
Northeastern
Brazil Lithium Project
Our Northeastern Brazil Lithium
Project encompasses 7 mineral rights spread over approximately 14,621 acres (59 km2) in the States of Paraíba and Rio
Grande do Norte, both located in Brazil’s Northeastern region. We have identified pegmatites in many of our areas, and several
of our mineral rights are located near to or adjacent to areas known to have spodumene, a lithium-bearing mineral. We plan to continue
to explore our areas to assess as to whether we have any economic deposits.
RARE
EARTHS
Market
The
rare earth elements (“REE”) are on the list of the 35 minerals considered critical to the economic and national security
of the United States as first published by the U.S. Department of the Interior on May 18, 2018. REEs consist of the lanthanide series
(lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium,
ytterbium, and lutetium) as well as scandium and yttrium. REEs are classified as “light” and “heavy” based on
atomic number. Light REEs (LREEs) are comprised of lanthanum through gadolinium (atomic numbers 57 through 64). Heavy REEs (HREEs) are
comprised of terbium through lutetium (atomic numbers 65 through 71) and yttrium (atomic number 39), which has similar chemical and physical
attributes to the HREEs. Neodymium and praseodymium are key critical materials in the manufacturing of magnets that have the highest
magnetic strength among commercially available magnets and enable high energy density and high energy efficiency in diverse uses. Dysprosium
and terbium are key critical materials often added to the magnet alloys to increase the operating temperature. HREEs tend to be less
abundant and more expensive than LREEs.
Summary
of Our Opportunity
We
own seven mineral rights for rare earths totaling approximately 30,009 acres (121 km2). These mineral rights are divided in
two sub-types according to geology: Rare Earths I Properties in the States of Goiás and Tocantins, and Rare Earths II
Properties in the State of Bahia. Several of our mineral rights are located near to or adjacent to areas known to have rare earths
deposits. Preliminary geochemical sampling of some of our areas indicated presence of rare earths. We plan to continue to explore
our areas to assess as to whether we have any economic deposits.
TITANIUM
Titanium
is on the list of the 35 minerals considered critical to the economic and national security of the United States as first published by
the U.S. Department of the Interior on May 18, 2018. Titanium can withstand high temperatures and its non-magnetic nature prevents interference
with data storage components. It has widespread use in high-technology and aerospace applications.
Summary
of Our Opportunity
We
own seven mineral rights for titanium totaling approximately 22,050 acres (89 km2). These
mineral rights are all located in the State of Minas Gerais and are referred to as our Titanium Properties. Several of our mineral rights
are located near to or adjacent to areas known to have titanium deposits. We plan to explore our areas to assess as to whether we have
any economic deposits.
GRAPHITE
Graphite
is on the list of the 35 minerals considered critical to the economic and national security of the United States as first published by
the U.S. Department of the Interior on May 18, 2018. Graphite is the most used anode in lithium batteries, benefitting from its high
energy and power density. The global need for high-quality, low impurity graphite is directly related to the growth in EV adoption as
discussed above.
Summary
of Our Opportunity
We
own three mineral rights for graphite totaling approximately 14,507 acres (59 km2). These mineral rights are all located in
the State of Minas Gerais and are referred to as our Graphite Properties. All of our mineral rights are located immediately adjacent
to areas known for graphite deposits. We plan to explore our areas to assess as to whether we have any economic deposits.
NICKEL
& COBALT
Nickel
and cobalt are key battery metals needed for the growth phase in EV production. Cobalt is on the list of the 35 minerals considered critical
to the economic and national security of the United States as first published by the U.S. Department of the Interior on May 18, 2018.
In general, the greater the amount of nickel and cobalt, the greater the energy density of an EV battery, a factor that contributes to
the storage of more energy. As a practical example of the importance of nickel and cobalt, EVs whose batteries have a higher energy density
can run more kilometers before a recharge is needed.
Summary
of Our Opportunity
We
own four mineral rights for nickel and cobalt totaling approximately 7,509 acres (30 km2).
These mineral rights are divided in two sub-groups according to geography: Nickel/Cobalt I Properties in the State of Goiás and
Nickel/Cobalt II Properties in the State of Piauí. Several of our mineral rights are located near to or adjacent to areas known
to have nickel and/or cobalt deposits. We plan to explore our areas to assess as to whether we have any economic deposits.
IRON
(though our partial ownership of Apollo Resources Corporation)
Market
Historically, iron has been an
essential metal to human development and economic growth. According to the U.S. Geological Survey, over 98% of mined iron
ore is used in steel manufacturing. Brazil exported over $20 billion in iron ore in 2019 and is the second biggest iron ore producer
and exporter in the world, after Australia Despite the ongoing COVID-19 pandemic, iron ore prices reached a 6-year high in 2021 primarily
fueled by demand from China, the largest importer, while demand from India continues to increase, according to Trading Economics,
a market intelligence firm.
Summary
of Our Opportunity
Our subsidiary Apollo Resources
is focused on iron projects in Brazil. Apollo Resources currently owns 56,290 acres of mineral rights for iron distributed in
six projects, five of which are in early stage while its Iron Quadrangle Project is being advanced towards an iron mine,
expected to begin operations during the fourth quarter of 2022. As its name indicates, this project is located within the
well-known Iron Quadrangle mining district, one of the premier iron producing regions in the world.
Apollo Resources acquired
from a third-party in 2020 for the equivalent of $925,000 the 641-acre mineral right where its Iron Quadrangle Project is now
located. This mineral right sits immediately adjacent to a producing iron mine from a global iron producing company.
During the first and second
quarters of 2021, detailed drilling and trenching under the supervision of iron geologists was carried out in approximately 10% of the
mineral right area encompassing the Iron Quadrangle Project. In December 2021, BNA Mining Solutions, an independent technical consulting
firm with iron experts that meet the “Qualified Persons” criteria under Regulation S-K 1300, released its independent technical
report on the project under the NI 43-101 industry format. This report presents BNA’s estimate of 7.7 million tons of iron ore
in inferred resources for the 10% of the Iron Quadrangle Project area which was studied. While the NI 43-101 format shares many similarities
to the Regulation S-K 1300 format, this report was not prepared according to Regulation S-K 1300, and therefore this property does not
have resources under Regulation S-K 1300.
In 2021, SGS-Geosol, an independent
analytical laboratory and technical advisory firm, conducted initial studies on the processing route for a representative sample of iron
ore collected from deeper layers during drilling at the Iron Quadrangle Project. The initial results, obtained by a combination
of crushing and dry magnetic separation, with no water involvement, has been concentration to 64.4% iron. Such level of iron on a commercial
product would constitute what is known in the industry as a “premium” product.
During 2021, Geoline, an independent
engineering and environmental licensing consultancy, worked on detailed technical studies, both in “dry” and “wet”
climate seasons of the year, needed to file Apollo Resources’ standard petition to the applicable local regulatory body
for an operation license for an open pit iron mire at its Iron Quadrangle Project.
According to the aforementioned
independent technical report, the primary mineable iron ore at the Iron Quadrangle Project exists on a continual basis, and
almost without interruptions, from the surface down to a level of approximately 150 feet. Apollo Resources’ technical
team believes ore retrieval should be a straightforward process though standard open pit excavation. As of the date of this prospectus,
Apollo Resources expects to have its first iron ore revenues from its Iron Quadrangle Project mine during the first quarter of
2023. While selling raw iron ore is the easiest pathway to cash flows, Apollo Resources is also considering verticalization of its business,
and processing of its iron ore to a higher concentration product prior to sale at possibly substantially higher margins. As indicated
by the initial result of 64.4% iron obtained by SGS-Geosol from project samples, there is a possibility of production of a “premium”
iron product.
As
of the date of this prospectus, Brazil Minerals owns 48.94% of the common shares of Apollo Resources.
QUARTZITE
(though our partial ownership of Jupiter Gold Corporation)
Market
Quartzite
is a very hard rock composed predominantly of an interlocking mosaic of quartz crystals. Recently polished quartzite slabs have become
sought after as a higher-end substitute to granite in kitchen countertops and tiles. Brazil has a flourishing quartzite mining industry
centered in the neighboring the states of Minas Gerais and Espírito Santo with
smaller producers being the norm. Each quarry produces quartzite of different color and texture and therefore stones are unique to their
location. Mining is via simple open pit procedures, not particularly labor intensive, and with the mined product normally prepared as
cubes of raw quartzite measuring ten meters in each diameter. Buyers are normally responsible for the logistics of transporting such
raw quartzite blocks from the mine. Buyers for quartzite mined in Brazil are primarily from four locations: Brazil itself, United States,
China, and Italy. It is common for mines to develop an exclusive selling relationship to a buyer.
Summary
of Our Opportunity
While
our subsidiary Jupiter Gold is primarily focused on gold in Brazil, in one of its mineral rights, measuring 233 acres, a greenfield deposit
of quartzite was identified by its exploration team and became its “Quartzite Project”. The Quartzite Project is in the state
of Minas Gerais in Brazil, in a region known for quartzite mining.
In 2021, Jupiter Gold studied
the Quartzite Project with detailed drilling and a preliminary estimate of a deposit with mineralization of 3.7 million tons of quartzite
was obtained. In 2021, Yan Taffner Binda, a mining engineer with vast experience in quartzite who meets the “Qualified Person”
criteria under Regulation S-K 1300, prepared the mining plan for an open pit quarry at the Quartzite Project. An initial
mining license from the Brazilian mining department, has been obtained.
In 2021, Geoline, an independent
engineering and environmental licensing consultancy, performed the field studies needed to file Jupiter Gold’s petition
to the applicable regulatory body for an operation license. Jupiter Gold’s expectation is to obtain such approval within
the next three to six months, which would allow it to start operations and thereafter revenues in 2022. Jupiter Gold anticipates
that its quartzite quarry will require five on-site full-time employees; expected prices for the type of color and texture of the quartzite
anticipated to be mined range from $1,200 to $2,000 per cubic meter.
As
of the date of this prospectus, Brazil Minerals owns 24.56% of the common shares of Jupiter Gold.
GOLD
(though our partial ownership of Jupiter Gold Corporation)
Market
Currently it is estimated that,
of the gold being produced, 50% is used in jewelry, 40% in investments, and 10% in industry. Brazil has been a gold producer for over
two hundred years ago. According to the World Gold Council, in 2020 Brazil produced 107 tons of gold and was the 7th
largest gold producer country. Minas Gerais was the largest gold producing state in the
country, accounting for around 34% of the gold output that year according to Statista, a market intelligence firm.
Summary
of Our Opportunity
Our
subsidiary Jupiter Gold owns 142,017 acres of mineral rights for gold distributed in seven projects, six of which are in early stage
while one of them, the Alpha Project, has been preliminarily researched and is being developed towards a gold mine. The Alpha
Project is located in the state of Minas Gerais at the eastern edge of the Iron Quadrangle mining district, the number one gold-producing
region in Brazil.
Jupiter
Gold’s 100%-owned Alpha Project encompasses 31,650 acres distributed in twelve mineral rights for gold. Approximately 2% of
this total area has been studied over fifteen years ago by a prior owner, by drilling superficial terrain layers of
saprolite and colluvium and identifying gold in multiple targets. The technical report produced at that time under the
local mining department standard estimated gold mineralization of 64,000 ounces in the researched area with an average gold
density of 1.54 g/t; the cutoff used in such report was 0.8 g/t.
In 2020, detailed trenching
under the supervision of gold geologists was carried out in approximately 2% of the mineral right area encompassing the Alpha Project.
In 2021, Oxford Geoconsultants, a technical consulting firm with a geologist that meets the “Qualified Person” criteria for
gold under Regulation S-K 1300, released its independent technical report on the project under the NI 43-101 industry format. This report
presents Oxford’s estimate of 75,018 ounces of gold in indicated and inferred resources for the 2% of the Alpha Project area which
was studied. While the NI 43-101 format shares many similarities to the Regulation S-K 1300 format, this report was not prepared according
to Regulation S-K 1300, and therefore this property does not have resources under Regulation S-K 1300.
Jupiter
Gold’s technical team has performed additional work in existing shafts located within the 2% of the property that had been previously
researched. In 2021, a revised NI 43-101 technical report indicated gold mineralization of 84,000 ounces with a cutoff at 0.8 g/t. RCS,
an independent advisory firm, has indicated that the gold deposits at the Alpha Project are of greenstone belt type. Further work is
ongoing at the Alpha Project to expand the knowledge of and the measured size of the deposit.
As
of the date of this prospectus, Brazil Minerals owns 24.56% of the common shares of Jupiter Gold.
ALLUVIAL
GOLD AND DIAMONDS
We
own several mining concessions for gold and diamonds along the banks of the Jequitinhonha River in the State of Minas Gerais, in a region
where gold and diamonds have been mined for more than 200 years.
The
predecessor owner of one of our current mining concessions for gold and diamonds was a TSXV-listed company. Such company performed detailed
drilling and other studies leading to the publication of an NI 43-101 technical report in 2007, with an update in 2008. The 2008 NI 43-101
report presents 1.843 million m3 of
indicated resources grading 0.16 ct/m3 of diamonds and 182 mg/m3 of gold, plus 0.856 million m3 of inferred
resources with the same grades, for an aggregate total of 392,000 carats of diamonds and 14,309 ounces of gold. While the NI 43-101 format
shares many similarities to the Regulation S-K 1300 format, this report was not prepared according to Regulation S-K 1300, and therefore
this property does not have resources under Regulation S-K 1300.
We
own an alluvial diamond and gold processing plant which was built by the prior owner at an estimated cost of $2.5 million. To the
best of our knowledge, this plant is the largest such type of alluvial recovery plant in Brazil.
We
are not currently engaged in alluvial diamond and gold mining as we are focusing our limited capital and team on lithium and other strategic
minerals because of the exceptional growth drivers for these minerals at the present time.
INDUSTRIAL
SAND
We
mine and sell sand for construction usage from a sand mine located on the banks of the Jequitinhonha River in the State of Minas Gerais.
Our deposit had an estimated mineralization volume of 1,140,400 cubic meters of sand when initially assessed by an independent mining
engineer in 2014.
On
January 19, 2022, Diário Oficial da União (the Brazilian Government’s
official gazette) published the formal authorization for operations at our second sand mine in another one of our mineral rights. Such
authorization permits us to mine and sell sand for the next ten years, after which we can apply for renewal an unlimited number of times.
For this operation, sand retrieval will be by a dredge boat on the river. Since the logistics of this operation are simple and sand is
continuously replaced by the river, this mine could become an attractive source of revenues. We plan to have this new sand mine online
by early second quarter 2022.
Future
Production and Sales
We
expect the demand for our strategic minerals, once in production, to be facilitated by Brazil’s strong mining tradition and its
substantial annual trade with China, the United States, and the European Union. We intend on utilizing intermediaries for sales as to
focus on our core competencies of exploration and extraction.
Raw
Materials
We
do not have any material dependence on any raw materials or raw material supplier. All of the raw materials that we need are available
from numerous suppliers and at market-driven prices.
Intellectual
Property
We
do not own or license any intellectual property which we consider to be material.
Government
Regulation
Mining
Regulation and Compliance
Mining
regulation in Brazil is carried out by the mining department, a federal entity, and each state in Brazil has an office of this federal
entity. For each mineral right that we own, we file any paperwork related to it in the office of the mining department in the state in
which such mineral right is located. We believe that we maintain a good relationship with the mining department and that our methods
of monitoring are adequate for our current needs.
The
mining department normally inspects our operations once a year via an unannounced visit. We estimate that it costs us $25,000-$50,000
annually to maintain compliance with various mining regulations.
Environmental
Regulation and Compliance
Environmental
regulation in Brazil is carried out by a state-level agency, which may have multiple offices, one for each region of the state. For each
mineral right that we own, we file any paperwork related to it in the local office of the environmental agency that has the applicable
geographical jurisdiction. We believe that we maintain a good relationship with the offices of the environmental agency and believe that
our methods of monitoring are adequate for our current needs.
The
environmental agency normally inspects our operations once every one or two years which is the standard practice for companies in good
standing. We estimate that it costs us $25,000-$50,000 annually to maintain compliance with various environmental regulations.
Surface
disturbance from any open pit mining performed by us is in full compliance with our mining plan as approved by the local regulatory agencies.
We regularly restore areas that have been exploited by us. The current environmental regulations state that after all mining has ceased
(however long that may take), there would still be five years of available time for any necessary recuperation to be performed. Our mining
and recovery processing for diamonds and gold does not use any chemical products. Tests are conducted regularly and there are no records
of groundwater contamination that has occurred to date.
Employees
and Independent Contractors
As
of the date of this prospectus, we have 11 full-time employees. We also retain consultants to provide specific services deemed necessary.
We consider our employee relations to be very good.
Form
and Year of Organization & History to Date
We
were incorporated in the State of Nevada on December 15, 2011 under the name Flux Technologies, Corp. From inception until December 2012,
we were focused on the software business, which was discontinued when the current management team and business focus began.
Legal
Proceedings
We
are not a party to any material legal proceedings.
MINERAL
PROPERTIES
Our
lithium projects are listed in the following table with respective maps below.
Mineral
|
|
Name
|
|
Location
in Brazil
|
|
Total
Area
(acres)
|
|
Lithium
|
|
Minas Gerais
Lithium Project
|
|
State of
Minas Gerais
|
|
|
45,456
|
|
Lithium
|
|
Northeastern Brazil
Lithium Project
|
|
States of Paraíba
and Rio Grande do Norte
|
|
|
14,621
|
|
Our
other strategic minerals properties are listed in the following table with respective maps below.
Mineral(s)
|
|
Name
|
|
Location
in Brazil
|
|
Total
Area
(acres)
|
|
Rare Earths
|
|
Rare Earths I Properties
|
|
States of Goiás and Tocantins
|
|
|
11,001
|
|
Rare Earths
|
|
Rare Earths II Properties
|
|
State of Bahia
|
|
|
19,009
|
|
Titanium
|
|
Titanium Properties
|
|
State of Minas Gerais
|
|
|
22,050
|
|
Graphite
|
|
Graphite Properties
|
|
State of Minas Gerais
|
|
|
14,507
|
|
Nickel, Cobalt
|
|
Nickel/Cobalt I Properties
|
|
State of Goiás
|
|
|
5,961
|
|
Nickel, Cobalt
|
|
Nickel/Cobalt II Properties
|
|
State of Piauí
|
|
|
1,548
|
|
Our
alluvial gold and diamonds, and industrial sand properties are listed in the following table with respective maps below.
Mineral(s)
|
|
Name
|
|
Location
in Brazil
|
|
Total
Area
(acres)
|
|
Alluvial Gold and Diamonds
|
|
Alluvial Gold and Diamonds Mine
|
|
State of Minas Gerais
|
|
|
23,088
|
|
Industrial Sand
|
|
Industrial Sand Mine I & Mine II
|
|
State of Minas Gerais
|
|
|
1,128
|
|
Maps
of Our Properties
Map Above: Minas Gerais Lithium Project
Map Above: Northeastern
Brazil Lithium Project
Map Above: Rare Earths
I Properties
Map Above: Rare Earths
II Properties
Map Above: Titanium Properties
Graphite
Properties
Map Above: Nickel/Cobalt
I Properties
Map Above: Nickel/Cobalt II Properties
Map
Above: Titanium Properties
Map Above: Alluvial Gold and Diamond Properties
Map Above: Industrial
Sand Properties
Mineral
Properties Owned by Jupiter Gold Corporation
The
mineral properties owned by Jupiter Gold Corporation are summarized in the table below. Jupiter Gold Corporation has provided details
of its properties in its Annual Report on Form 20-F for the year ended December 31, 2020, which report has been filed with the Securities
and Exchange Commission on April 30, 2021.
Mineral
|
|
Project Name & Location in Brazil
|
|
Total Area
(acres)
|
|
Gold
|
|
Alpha – State of Minas Gerais
|
|
|
34,899
|
|
Gold
|
|
Alta Floresta – State of Mato Grosso
|
|
|
24,395
|
|
Gold
|
|
Apuí – State of Amazonas
|
|
|
69,330
|
|
Gold
|
|
Brotas – State of Bahia
|
|
|
4,821
|
|
Gold
|
|
Cavalcante – State of Goiás
|
|
|
4,771
|
|
Gold
|
|
Crixás
– State of Goiás
|
|
|
3,068
|
|
Gold
|
|
Paracatu – State of Minas Gerais
|
|
|
733
|
|
Quartzite
|
|
Quartzite – State of Minas Gerais
|
|
|
233
|
|
Mineral
Properties Owned by Apollo Resources Corporation
The
mineral properties owned by Apollo Resources Corporation are summarized in the table below:
Mineral
|
|
Project
Name & Location in Brazil
|
|
Total
Area
(acres)
|
|
Iron
|
|
Iron Quadrangle – State of Minas Gerais
|
|
|
641
|
|
Iron
|
|
Barão de Cocais– State of Minas Gerais
|
|
|
363
|
|
Iron
|
|
Itabira – State of Minas Gerais
|
|
|
3,792
|
|
Iron
|
|
Nova Aurora – State of Minas Gerais
|
|
|
16,727
|
|
Iron
|
|
Alagoas– State of Alagoas
|
|
|
31,173
|
|
Iron
|
|
Corumbá – State of Mato Grosso do Sul
|
|
|
4,869
|
|
MANAGEMENT
The
following table sets forth certain information as of December 31, 2021, concerning our directors and executive officers:
Name
|
|
Age
|
|
Position
|
Marc
Fogassa
|
|
55
|
|
Chairman,
Chief Executive Officer, and Treasurer
|
Ambassador
Robert Noriega
|
|
62
|
|
Independent
Director, Member of the Audit Committee
|
Cassiopeia
Olson, Esq.
|
|
44
|
|
Independent
Director, Member of the Audit Committee
|
Stephen
R. Petersen, CFA
|
|
65
|
|
Independent
Director, Member of the Audit Committee
|
Jason
Baybutt
|
|
50
|
|
Chief
Financial Officer, Treasurer, Principal Accounting Officer
|
Brian
W. Bernier
|
|
63
|
|
Vice-President,
Corporate Development and Investor Relations
|
Joel
de Paiva Monteiro, Esq.
|
|
31
|
|
Chief of Environmental, Social and Corporate Governance (ESG), Vice-President,
Administration and Operations, and Secretary
|
Volodymyr Myadzel, PhD, Geol.
|
|
46
|
|
Senior Vice-President, Geology
|
Areli
Nogueira da Silva Júnior, Geol.
|
|
41
|
|
Vice-President,
Mineral Exploration
|
Marc Fogassa, age 55,
has been a director and our Chairman and Chief Executive Officer since 2012. He has extensive experience in venture capital and
public company chief executive management. He has served on boards of directors of multiple private companies in various industries,
and has been invited to speak about investment issues, particularly as related to Brazil. Mr. Fogassa double majored at the Massachusetts
Institute of Technology (M.I.T.), graduating with two Bachelor of Science degrees in 1990. He later graduated from the Harvard Medical
School with a Doctor of Medicine degree in 1995, and also from the Harvard Business School with a Master of Business Administration degree
in 1999 with Second-Year Honors. At Harvard Business School, he was Co-President of the Venture Capital and Private Equity Club. Mr.
Fogassa was born in Brazil and is fluent in Portuguese and English. Mr. Fogassa is also the Chairman and Chief Executive Officer of Jupiter
Gold Corporation, and Chairman and Chief Executive Officer of Apollo Resources Corporation, two companies in which we own equity
positions.
Ambassador
Roger Noriega, age 62, has been an independent director since 2012, and member of the Audit Committee of the Board of Directors since
2021. He has extensive experience in Latin America. Amb. Noriega was appointed by President George W. Bush and confirmed by the U.S.
Senate as U.S. Assistant Secretary of State and served from 2003 to 2005. In that capacity, Amb. Noriega managed a 3,000-person team
of professionals in Washington and in 50 diplomatic posts to design and implement political and economic strategies in Canada, Latin
America, and the Caribbean. Prior to this assignment, Amb. Noriega served as U.S. Ambassador to the Organization of American States from
2001 to 2003. Since 2009, Amb. Noriega has been the Managing Director of Vision Americas, a Latin America-focused consulting group that
he founded. Amb. Noriega has a Bachelor of Arts degree from Washburn University of Topeka, Kansas.
Cassiopeia
Olson, Esq., age 44, has been an independent director since 2021, and member of the Audit Committee
of the Board of Directors since 2021. She is an attorney with extensive experience in international contracts and venture negotiations.
She has represented or engaged in transactions with leading companies, including Credit Suisse, UBS, Apollo Group, Universal Music Group,
Sony, Chrysler/Jeep, Stella Artois, Miller Brewing Company, General Motors, McDonald’s, Verizon, among others. From 2013 to 2017,
Ms. Olson was at Brighton Capital Ltd, and from 2017 to January, 2021, she was an attorney with Kaplowitz Firm, PC. Since February,
2021, Ms. Olson has been an attorney with Ellenoff Grossman & Schole LP. She received a B.A. in Economics and Finance from Loyola
University in Chicago, and a J.D. from The John Marshall School of Law.
Stephen
R. Petersen, CFA, age 65, has been an independent director since 2021, and member of the Audit Committee of the Board of Directors
since 202. Mr. Petersen over 40 years of experience in the capital markets and investment management. Since 2013, he has been a Managing
Director and member of the Investment Committee at Prio Wealth, an independent investment management firm with over $3 billion in assets
under management. Previously, Mr. Petersen served as Senior Vice President, Investments at Fidelity Investments for approximately 32
years. During his tenure at Fidelity, Mr. Petersen served as a Portfolio Manager and Group Leader of The Fidelity Management Trust Company
and was responsible for managing several equity income and balanced mutual funds such as Fidelity Equity Income Fund (1993-2011), Fidelity
Balanced Fund (1996-1997), Fidelity VIP Equity-Income Fund (1997-2011), Fidelity Puritan Fund (2000-2007), Fidelity Advisor Equity-Income
Fund (2009-2011), and Fidelity Equity-Income II (2009-2011). He
began his career at Fidelity as an Equity Analyst. Mr. Petersen received a B.B.A. in Finance and
an M.S. in Finance from the University of Wisconsin-Madison. Mr. Petersen serves on the Board of the University of Wisconsin Foundation
and Chairs its Investment Committee. He also is Co-Chair of the Executive Committee for the Catholic Schools Foundation Inner-City
Scholarship Fund. Mr. Petersen is a Chartered Financial Analyst.
Jason
Baybutt, age 50, has been our Chief Financial Officer, Principal Accounting Officer, and Treasurer since 2021. Mr. Baybutt has been
the Chief Operating Officer of PubCo Reporting Solutions, Inc. since 2015 and has been providing financial, operational, strategic, and
capital market advisory services to both private and public companies for over 20 years. Mr. Baybutt is Senior Vice President, Finance
of Artelo Biosciences, Inc., a Nasdaq listed company, and director of Artelo Biosciences Corporation, a subsidiary of Artelo Biosciences,
Inc. From July 2019 to September 2020, Mr. Baybutt also served as Chief Financial Officer and Corporate Secretary of Pepcap Resources,
Inc., a TSXV listed company. Mr. Baybutt’s areas of specialty include financial reporting, business combinations, and acquisitions.
Brian
W. Bernier, age 63, has been our Vice-President, Corporate Development and Investor Relations since 2019. From 2010 to 2017, Mr.
Bernier was at Four Spring Capital Trust, and from 2017 to 2019, he was at Noble Capital Markets. Mr. Bernier graduated with a degree
in Management from Boston University.
Joel de Paiva Monteiro, Esq.,
age 31, has our Vice-President, Administration and Operations, since 2020, and our Chief of Environmental, Social, and Corporate Governance
(“ESG”) matters since 2021. Previously he was a partner of the Brazilian law firm PRA Advogados with three offices and headquarters
in Belo Horizonte, state of Minas Gerais. Mr. Monteiro has worked with all aspects of Brazilian business law and has extensive experience
in a wide range of areas from strategic business planning to litigation. His prior clients included large corporations in a variety of
economic sectors in diverse states in Brazil. Mr. Monteiro has a law degree from the Milton Campos Faculty in Belo Horizonte, Brazil.
Subsequently he achieved a post-graduate degree in Business and Civil Law from the Pontifical Catholic University of Minas Gerais. Mr.
Monteiro is also a director of Jupiter Gold Corporation and of Apollo Resources Corporation, two companies in which we own equity
positions.
Volodymyr Myadzel,
PhD, Geol., age 46, has been a consultant to us since 2021 and became our Senior Vice-President, Geology, in 2022. Under
Regulation S-K 1300, he is a Qualified Person for lithium, iron, and gold, among other minerals. Mr. Myadzel is a geologist with
over 23 years’ experience acquired in mines and projects in Russia, Ukraine, Guinea, Uruguay, and Brazil in a variety of
minerals including lithium, iron, and gold. His primary expertise entails geological modeling, resource estimation, and QA/QC
analysis. Mr. Myadzel has extensive experience in auditing mineral projects on behalf of investors or acquiring companies. He is a
principal at VMG Consultoria e Soluções Ltda, a company that has provided geological expertise to large global
companies with mines and projects in Brazil. Mr. Myadzel received Bachelor and Master degrees in Geological Engineering and a PhD
degree in Geology, all from Kryvyi Rih National University in Ukraine.
Areli
Nogueira da Silva Júnior, Geol., age 41, has been a consultant to us since 2018 and became our Vice-President, Mineral Exploration,
in 2021. Under Regulation S-K 1300, he is a Qualified Person for lithium, iron, and gold, He is the Founder and was the Chief
Technical Officer of MineXplore, a consultancy focused on mineral rights in Brazil. Mr. da Silva Júnior has been a consultant
geologist with GeoEspinhaço, a firm that undertakes geological studies in a variety
of minerals across Brazil. Mr. da Silva Júnior has also been a college faculty member teaching geology. Previously, he worked
at the Brazilian mining department and before that as a geologist at Usiminas Mineração.
Mr. da Silva Júnior has a Master of Geology degree from the Federal University of Rio de Janeiro, and an undergraduate degree
in Geological Engineering from the School of Mines of the Federal University of Ouro Preto, the oldest mining college in Brazil. Mr.
da Silva is also a director of Jupiter Gold Corporation, a company in which we own an equity position.
Board
Composition
Our
Board of Directors is composed of four members, Ambassador Roger Noriega, Cassiopeia Olson, Esq., Stephen R. Petersen, CFA, and Marc
Fogassa.
There
are no family relationships among our directors and executive officers. There is no arrangement or understanding between or among our
executive officers and directors pursuant to which any director or officer was or is to be selected as a director or officer, and there
is no arrangement, plan, or understanding as to whether non-management shareholders will exercise their voting rights to continue to
elect the current board of directors.
Our
directors and executive officers have not, during the past ten years:
●
|
had
any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer, either
at the time of the bankruptcy or within two years prior to that time,
|
|
|
●
|
been
convicted in a criminal proceeding and is not subject to a pending criminal proceeding,
|
|
|
●
|
been
subject to any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any court of competent jurisdiction,
permanently, or temporarily enjoining, barring, suspending, or otherwise limiting his involvement in any type of business, securities,
futures, commodities, or banking activities; or
|
|
|
●
|
been
found by a court of competent jurisdiction (in a civil action), the Securities Exchange Commission, or the Commodity Futures Trading
Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended,
or vacated.
|
We
do not have standing audit, nominating, or compensation committees. Currently, our entire Board of Directors is responsible for the functions
that would otherwise be handled by these committees.
Director
Independence
Our
Board of Directors has determined that Ambassador Roger Noriega, Cassiopeia Olson, Esq., and Stephen R. Petersen, CFA are independent
directors within the meaning of Nasdaq Listing Rule 5605(a)(2).
Audit
Committee Financial Expert
Our
director Mr. Stephen R. Petersen, CFA, is an independent member of our Audit Committee who qualifies as an “audit committee
financial expert” as defined in Item 407(e)(5) of Regulation S-K.
Controlled
Company
Marc
Fogassa, our Chief Executive Officer and Chairman, currently controls approximately [●]% of the voting power of our capital stock
and will control approximately [●]% of the combined voting power of our capital stock upon completion of this offering, and we
believe may be a “controlled company,” as such term is defined under the Nasdaq Listing Rules or the NYSE Listing Standards
. We currently intend to rely on the controlled
company exemptions provided under either the Nasdaq Listing Rules of the NYSE Listing Standards, which may permit
us to rely on certain exemptions from corporate governance rules, including: (a) an exemption from the rule that a majority of our board
of directors must be independent directors; (b) an exemption from the rule that the compensation of our chief executive officer must
be determined or recommended solely by independent directors; and (c) an exemption from the rule that our director nominees must be selected
or recommended solely by independent directors.
EXECUTIVE
AND DIRECTOR COMPENSATION
Management
Compensation
The
following table sets forth information concerning cash and non-cash compensation paid by us to our chief executive officer for each of
the two years ended December 31, 2020, and 2021. No employee or independent contractor 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 ($) (1)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
|
Non-Qualified
Deferred
Compensation
Earnings
($)
|
|
|
All
Other
Compensation
($)
|
|
|
Total
($)
|
|
Marc
Fogassa, Chairman and
|
|
12/31/2021
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
901,940
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
901,940
|
|
Chief
Executive
Officer
|
|
12/31/2020
|
|
|
37,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
37,500
|
|
(1)
|
The
amounts in this column reflect the aggregate grant date fair value of stock options granted in 2021 to our Chief Executive Officer
calculated in accordance with FASB ASC Topic 718. Please see Note 7 to the consolidated financial statements for the year ended December
31, 2020 contained in this prospectus for the assumptions used in the calculation of grant date fair value pursuant to FASB ASC Topic
718.
|
On
January 7, 2021, we filed a Current Report on Form 8-K indicating that on December 31, 2020, our Board approved an amendment and
restatement of the employment agreement between the Company and Marc Fogassa, its chief executive officer. The material changes in the
agreement are as follows. Under the prior agreement, Mr. Fogassa had the right to receive an annual cash salary of $250,000 per annum.
Under the amended and restated agreement, Mr. Fogassa will not receive any cash as salary. Instead, he will be granted each month ten-year
non-qualified stock options to purchase up to 25 million shares of our common stock at an exercise price equal to $0.00001 per
share, such price and shares being subject to customary adjustments for any dividends, etc. If and when such options are exercised, the
stock to be received will be restricted by the provisions of Rule 144, which currently limits any sales of affiliates with respect to
the Company to 1% of the total outstanding shares per every 90-day period. In addition, the amended and restated agreement contains a
provision which states that, if there is growth of our shareholder equity or book value above a high-water mark, calculated one
time per year, then and only then Mr. Fogassa will receive a performance bonus payable half in cash and half in our common stock. The amended and restated employment agreement between Mr. Fogassa and the Company is filed as an exhibit to this prospectus.
On
September 17, 2021, we filed a Current Report on Form 8-K indicating that on September 15, 2021,
our Board approved resolutions that allow directors the choice to direct the option compensation described
in the Board resolutions dated December 31, 2020 (the “2020 Resolutions”, reported in the Form 8-K filed with the Securities
and Exchange Commission on January 7, 2021) to either options to purchase Common Stock as originally described in the 2020 Resolutions
or to an equivalent number of options to purchase Series D Convertible Preferred Stock.
Director
Compensation
The
following table sets forth a summary of compensation for the fiscal year ended December 31, 2021, that we paid to each director other
than its Chief Executive Officer, whose compensation is fully reflected in the compensation table above. We do not sponsor a pension
benefits plan, a non-qualified deferred compensation plan, or a non-equity incentive plan for directors; therefore, these columns have
been omitted from the following table. No other or additional compensation for services were paid to any of the directors.
Name
|
|
Fees
Earned
or Paid
in Cash
($)
|
|
|
Option
Awards
($) (1)
|
|
|
Stock
Awards
($)
|
|
|
Total
($)
|
|
Ambassador Roger Noriega
|
|
|
—
|
|
|
|
160,276
|
|
|
|
|
|
|
|
160,276
|
|
Cassi Olson, Esq.
|
|
|
1,000
|
|
|
|
16,762
|
|
|
|
|
|
|
|
17,772
|
|
Stephen Petersen, CFA
|
|
|
500
|
|
|
|
26,691
|
|
|
|
|
|
|
|
27,191
|
|
(1)
|
The
amounts in this column reflect the aggregate grant date fair value of stock options granted in 2021 to each director calculated in
accordance with FASB ASC Topic 718. Please see Note 7 to the consolidated financial statements for the year ended December 31, 2020
contained in this prospectus for the assumptions used in the calculation of grant date fair value pursuant to FASB ASC Topic 718.
|
On
December 31, 2020, our Board of Directors approved an amendment and restatement of the compensation agreement between the Company
and Ambassador Roger Noriega, its independent director. The material change in the agreement is as follows. Under the prior agreement,
Ambassador had the right to receive an annual compensation of $50,000 payable quarterly through the issuance of such number of five-year
options on our common stock as needed to make their Black-Scholes aggregate valuation equal to $12,500; such options had a strike price
equal to the average market price of the common stock during such quarter. Under the amended and restated agreement, Ambassador Noriega
will receive, on a quarterly basis, ten-year non-qualified stock options to purchase up to 15 million shares of our common stock at an exercise price equal to $0.00001 per share, such price and shares being subject to customary adjustments for any
dividends, etc. If and when such options are exercised, the stock to be received will be restricted by the provisions of Rule 144, which
currently limits any sales of affiliates with respect to the Company to 1% of the total outstanding shares per every 90-day period.
On
September 17, 2021, we filed a Current Report on Form 8-K indicating that on September 15, 2021,
our Board approved resolutions that allow directors the choice to direct the option compensation described
in the Board resolutions dated December 31, 2020 (the “2020 Resolutions”, reported in the Form 8-K filed with the Securities
and Exchange Commission on January 7, 2021) to either options to purchase Common Stock as originally described in the 2020 Resolutions
or to an equivalent number of options to purchase Series D Convertible Preferred Stock.
RELATED PARTY TRANSACTIONS
On
September 17, 2021, we filed a Current Report on Form 8-K indicating that on September 15, 2021,
our Board approved the satisfaction and cancellation of the convertible debt owed to Marc Fogassa,
our chief executive officer, in exchange for the issuance to Mr. Fogassa of shares of our Series D Stock. These securities were issued
in a transaction exempt from registration pursuant to an exemption provided by Section 4(a)(2) under the Securities Act of 1933, as amended.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following information tables prepared in accordance with Section 13d-3 of the Securities Exchange
Act of 1934, as amended, for the determination of beneficial owner set forth certain
information regarding our Common Stock owned on January 21, 2022, by: (i) each person who is known by us to own beneficially
more than 5% of its outstanding Common Stock; (ii) each director and officer; and (iii) all officers and directors as a group.
Name and
Address (1)
|
|
Office
|
|
Shares
Owned
|
|
|
Percent
of
Class
(2)
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marc Fogassa
|
|
Chief Executive Officer and Chairman
|
|
|
2,704,799,053
|
(3)
|
|
|
48.36
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Ambassador Roger Noriega
|
|
Director
|
|
|
172,578,096
|
(4)
|
|
|
5.37
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Cassiopeia
Olson, Esq.
|
|
Director
|
|
|
2,000,000
|
(5)
|
|
|
0.06
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Stephen Petersen, CFA
|
|
Director
|
|
|
2,000,000
|
(5)
|
|
|
0.06
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Jason Baybutt
|
|
Chief Financial Officer, Principal Accounting
Officer, and Treasurer
|
|
|
1,295,641
|
(5)
|
|
|
0.04
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Brian
W. Bernier
|
|
Vice-President, Corporate Development
|
|
|
29,960,723
|
|
|
|
0.95
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Joel Monteiro, Esq.
|
|
Chief of Environmental, Social and Corporate
Governance (ESG), Vice-President, Administration and Operations,
and Secretary
|
|
|
9,290,151
|
|
|
|
0.29
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Volodymyr Myadzel, PhD, Geol.
|
|
Senior Vice-President, Geology
|
|
|
0
|
|
|
|
0.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Areli
Nogueira, Geol.
|
|
Vice-President, Mineral Exploration
|
|
|
2,779,627
|
|
|
|
0.09
|
%
|
|
|
|
|
|
|
|
|
|
|
|
All executive officers and directors
|
|
|
|
|
2,923,407,649
|
|
|
|
51.66
|
%
|
(1)
The mailing address of each of the officers and directors as set forth above is c/o Brazil Minerals, Inc., 433 North Camden Drive, Suite
810, Beverly Hills, CA 90212.
(2)
As of January 21, 2022, 3,153,007,115 shares of our common stock were issued and outstanding.
(3)
Includes 79,198,982 shares of our common stock owned by entities controlled by Marc Fogassa and 2,440,060,001 shares of
our common stock which may be issued upon the conversion of Series A Preferred Stock and Series D Preferred Stock into common stock.
(4)
Includes shares of our common stock which may be issued upon the conversion of Series D Preferred Stock into common stock.
(5)
Includes shares of our common stock which may be issued upon the exercise of stock options on common stock.
Securities
Authorized for Issuance Under Equity Compensation Plans
In
2017, our Board of Directors approved our 2017 Stock Incentive Plan under which we can offer eligible employees, consultants, and non-employee
directors cash and stock-based compensation and/or incentives to compensate, attract, retain, or reward such individuals. We have no
other equity compensation plan. The table below sets forth certain information as of December 31, 2021 with respect to the 2017 Stock
Incentive Plan.
Plan Category
|
|
Number
of
securities
to
be issued
upon
exercise
of
outstanding
options,
warrants,
and rights
(a)
|
|
|
Weighted-
average
exercise
price of
outstanding
options,
warrants
and rights
(b)
|
|
|
Number
of
securities
remaining
available for
future
issuance
under equity
compensation
plans
(excluding
securities
reflected in
column “(a)”)
(c)
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans approved
by security holders
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation
plans not approved by security holders (2017 Stock Incentive Plan)
|
|
|
25,000,000
|
|
|
$
|
n/a
|
|
|
|
25,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
25,000,000
|
|
|
$
|
n/a
|
|
|
|
25,000,000
|
|
DESCRIPTION
OF SECURITIES
General
The
following description summarizes the most important terms of our capital stock, as they will be in effect upon the closing of this offering.
Because it is only a summary, it does not contain all of the information that may be important to you. For a complete description of
the matters set forth in this “Description of Capital Stock,” you should refer to our Articles of Incorporation and Amended
and Restated Bylaws, to be effective immediately prior to the closing of this offering, and the registration rights agreements, each
of which will be included as exhibits to the registration statement of which this prospectus forms a part, and to the applicable provisions
of Nevada law.
Immediately
prior to the closing of this offering, our authorized capital stock will consist of 4,000,000,000 shares of common stock, $0.001 par
value per share, and 10,000,000 shares of preferred stock, $0.001 par value per share.
As
of January 21, 2022, 3,153,007,115 shares of our common stock were issued and outstanding, held by 207 holders of record,
one share of our Series A Convertible Preferred Stock, and 214,006 shares of our Series D Convertible Preferred Stock were issued and
outstanding.
Common
Stock
Each
share of our common stock entitles the holder to receive notice of and to attend all meetings of our stockholders with the entitlement
to one vote. Holders of common stock are entitled, subject to the rights, privileges, restrictions and conditions attaching to any other
class of shares ranking in priority to the common stock, to receive any dividend declared by the board of directors. If we are
voluntarily or involuntarily liquidated, dissolved or wound-up, the holders of common stock will be entitled to receive, after distribution
in full of the preferential amounts, if any, all of the remaining assets available for distribution ratably in proportion to the number
of shares of common stock held by them. Holders of common stock have no redemption or conversion rights. The rights, preferences and
privileges of holders of shares of common stock are subject to, and may be adversely affected by, the rights of the holders of shares
of any series of preferred stock that we may designate and issue in the future.
On January 7, 2022, our Board
and Marc Fogassa, our Chief Executive Officer and the holder of a majority of our outstanding voting securities, approved of an amendment
to our Articles of Incorporation to increase the shares of common stock authorized for issuance from 3,250,000,000 to 4,000,000,000 (the
“Authorized Share Increase”), and, on January 21, 2022, the Board and Mr. Fogassa approved of a reverse split of our issued
and outstanding shares of common stock within the range of 1-for-500 to 1-for-1,000 of our issued and outstanding shares of
common stock (the “Reverse Split”) and authorized the Board, in its sole discretion, to determine the final ratio any time
before December 31, 2022.
We expect the Authorized Share Increase and the
Reverse Split to take effect prior to the consummation of this offering.
Preferred
Stock
We
are authorized to issue 10,000,000 shares of Preferred Stock, par value $0.001 per share, in one or more series. Each holder of shares
of a series of Preferred Stock shall be entitled to such preferences and rights and be subject to such limitations as our Board of Directors
shall determine.
Series
A Convertible Preferred Stock
As
of January 21, 2022, only one share of our Series A Convertible Preferred Stock (“Series A Stock”) was outstanding.
This share was issued in 2012, prior to the date in which the Company registered its common stock under Section 12(g) of the Exchange
Act.
Such
Series A Stock issuance a was condition precedent for Marc Fogassa, our Chairman and Chief Executive Officer, to enter into a merger
transaction with us (the “Merger”). On December 12, 2012, our shareholders approved the issuance and sale
of the only share of Series A Stock to Mr. Fogassa. Thereafter, the Merger was consummated with the Company as the surviving
entity. Approximately four months after the issuance of the Series A Stock, we filed with the SEC a registration statement on
Form 10 to register its common stock under Section 12(g) of the Exchange Act.
One
share of our Series A Stock is outstanding and held by Marc Fogassa, our Chairman and Chief Executive Officer. The Certificate of Designations,
Preferences and Rights of our Series A 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 our common stock, with the holders of Series A Stock being entitled
to 51% of the total votes on all matters regardless of the actual number of shares of Series A Stock then outstanding, and the holders
of common stock being entitled to their proportional share of the remaining 49% of the total votes based on their respective voting power.
Series
D Convertible Preferred Stock
On
September 14, 2021, our Board of Directors designated a new class of preferred stock called Series D Convertible Preferred Stock (“Series
D Stock”) which has no voting rights, except on matters, the approval of which would have an adverse effect on such class. A Certificate
of Designation for the Series D Stock was filed with the State of Nevada on September 16, 2021.
The
Certificate of Designation of the Series D Stock allows for the issuance of up to one million shares of Series D Stock. One share of
Series D Stock is convertible into 10,000 shares of our common stock.. As of January 21, 2022, 214,006 shares of Series
D Stock are issued and outstanding.
Undesignated
Preferred Stock
As
of the date of this prospectus, our Board of Directors has the authority to issue up to 8,999,999 additional shares of preferred stock
in one or more series and fix the number of shares constituting any such series, the voting powers, designations, preferences and relative,
participating, optional or other special rights and qualifications, limitations or restrictions thereof, including the dividend rights,
dividend rate, terms of redemption (including sinking fund provisions), redemption price or prices, conversion rights and liquidation
preferences of the shares constituting any series, without any further vote or action by the stockholders. For example, the Board of
Directors is authorized to issue preferred stock that would have the right to vote, separately or with any other stockholder of preferred
stock, on any proposed amendment to our certificate of incorporation, or on any other proposed corporate action, including business combinations
and other transactions.
We
will not offer preferred stock unless the offering is approved by a majority of our independent directors. The independent directors
will have access, at our expense, to our counsel or independent counsel.
Options
and Warrants
As
of January 21, 2022, options to purchase up to 36,000 shares of our Series D Stock were issued and outstanding, with a weighted-average
time of exercise of 9.44 years, and a weighted-average exercise price of $0.10.
As
of January 21, 2022, options and warrants to purchase up to 294,610,599 shares of our common stock were issued and outstanding,
with a weighted-average time of exercise of 2.08 years, and a weighted-average exercise price of $0.016, subject to adjustment
for stock dividends, stock splits, pro rata distributions and upon the occurrence of fundamental transactions. Of this total number,
warrants to purchase up to 51,250,000 shares of our common stock may only be exercised on a cash basis, whereas the remaining warrants
may also be exercised on a cashless basis if at any time following the issuance date of such warrants there is no registration statement
registering for resale the shares of common stock issuable upon exercise of such warrants.
Equity
Awards
None.
Registration
and Piggyback Rights
Certain
holders of our common stock may be contractually entitled to certain “piggyback” registration rights. The piggyback registration
rights are not applicable to certain shares that may be sold pursuant to Rule 144 of the Securities Act and shares that are subject to
an effective registration statement. The piggyback registration rights are subject to customary underwriter cutbacks applicable to all
holders of registration rights, pursuant to which the underwriters of any underwritten offering will have the right to limit the number
of shares having registration rights to be included in such registration statement.
Securities
Offered in this Offering
We
are offering of Units each consisting of one share of common stock and one warrant to purchase one share of common stock. The common
stock and accompanying warrant will be split from the Units immediately upon issuance. We are also registering the common stock issuable
from time to time upon exercise of the warrants offered hereby. The description of our common stock is set forth above in this section.
The following summary of certain terms and provisions of the warrants offered hereby is not complete and is subject to, and qualified
in its entirety by, the provisions of the form of warrant, which is filed as an exhibit to the registration statement of which this prospectus
is a part. Prospective investors should carefully review the terms and provisions set forth in the form of warrant.
Exercisability.
The warrants are exercisable at any time after their issuance and at any time up to the date that is five years after their issuance.
The warrants will be exercisable, at the option of each holder, in whole or in part by delivering to us a duly executed exercise notice
and, at any time a registration statement registering the issuance of the common shares underlying the warrants under the Securities
Act is effective and available for the issuance of such common shares, or an exemption from registration under the Securities Act is
available for the issuance of such common shares, by payment in full in immediately available funds for the number of common shares purchased
upon such exercise. If a registration statement registering the issuance of the common shares underlying the warrants under the Securities
Act is not effective or available and an exemption from registration under the Securities Act is not available for the issuance of such
shares, the holder may, in its sole discretion, elect to exercise the warrant through a cashless exercise, in which case the holder would
receive upon such exercise the net number of common shares determined according to the formula set forth in the warrant. No fractional
common shares will be issued in connection with the exercise of a warrant. In lieu of fractional shares, we will round up to the next
full share.
Exercise
Limitation. A holder will not have the right to exercise any portion of the warrant if the holder (together with its affiliates)
would beneficially own in excess of [●]% of the number of our common shares outstanding immediately after giving effect to the exercise,
as such percentage ownership is determined in accordance with the terms of the warrants.
Exercise
Price. The assumed exercise price per whole common share purchasable upon exercise of the warrants is $[●] per share or [●]%
of the public offering price of our common shares and warrants. The exercise price is subject to appropriate adjustment in the event
of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting our common
shares and also upon any distributions of assets, including cash, stock or other property to our shareholders.
Transferability.
Subject to applicable laws, the warrants may be offered for sale, sold, transferred or assigned without our consent.
Warrant
Agent. The warrants will be issued in registered form under a warrant agency agreement between VStock Transfer, LLC, as warrant agent,
and us. The warrants shall initially be represented only by one or more global warrants deposited with the warrant agent, as custodian
on behalf of The Depository Trust Company (DTC) and registered in the name of Cede & Co., a nominee of DTC, or as otherwise directed
by DTC.
Fundamental
Transactions. In the event of a fundamental transaction, as described in the warrants and generally including any reorganization,
recapitalization or reclassification of our common shares, the sale, transfer or other disposition of all or substantially all of our
properties or assets, our consolidation or merger with or into another person, the acquisition of more than 50% of our outstanding common
shares, or any person or group becoming the beneficial owner of 50% of the voting power represented by our outstanding common shares,
the holders of the warrants will be entitled to receive upon exercise of the warrants the kind and amount of securities, cash or other
property that the holders would have received had they exercised the warrants immediately prior to such fundamental transaction.
Rights
as a Stockholder. Except as otherwise provided in the warrants or by virtue of such holder’s ownership of our common stock,
the holder of a warrant does not have the rights or privileges of a holder of our common shares, including any voting rights, until the
holder exercises the warrants.
Governing
Law. The warrants and the warrant agency agreement are governed by New York law. The courts of the State of New York and federal
courts with jurisdiction in the State New York have jurisdiction for all matters brought under the warrants, except that any claims under
the Securities Act and/or the Exchange Act must be brought in federal court. Section 27 of the Exchange Act creates exclusive federal
jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.
Section 22 of the Securities Act, however, creates concurrent jurisdiction for federal and state courts over all suits brought to enforce
any duty or liability created by the Securities Act or the rules and regulations thereunder. Thus, there may be uncertainty as to whether
a court will enforce such a provision included in the warrant with regard to claims under the Securities Act. This forum provision may
limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our
directors, officers or other employees, which may discourage such lawsuits against the Company and its directors, officers and other
employees. Alternatively, if a court were to find the choice of forum provision contained in the warrant to be inapplicable or unenforceable
in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm its
business, results of operations, and financial condition.
Transfer
Agent
The
transfer agent and registrar for our common stock is VStock Transfer, LLC.
Exchange
Listing
Our
common stock is currently quoted on the OTCQB under the symbol “BMIX”. We intend to apply to list our common stock
under the proposed symbol “BMIX” and our warrants under the symbol “BMIXW”, both on a national securities exchange
such as the Nasdaq Capital Market or NYSE American. No assurance can be given that our application will be approved by any national securities
exchange, and we will not consummate this offering unless our common stock and warrants are approved for listing on a national securities
exchange.
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION OF SECURITIES ACT LIABILITIES
We
have entered into indemnification agreements with each of our directors, executive officers and other key employees. The indemnification
agreements will require us to indemnify our directors to the fullest extent permitted by Nevada law. We have agreed to indemnify each
of our directors and certain officers against certain liabilities, including liabilities under the Securities Act. Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the
provisions described above, or otherwise, we have been advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than our payment of expenses incurred or paid by our director, officer or controlling person in the successful
defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities
being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act
and will be governed by the final adjudication of such issue.
SHARES
ELIGIBLE FOR FUTURE SALE
Future
sales of substantial amounts of our common stock in the public market, including shares issued upon the exercise of outstanding options
or warrants, or upon debt conversion, or the anticipation of these sales, could adversely affect market prices prevailing from time to
time and could impair our ability to raise capital through sales of equity securities.
Upon
completion of this offering we estimate that we will have [●] outstanding shares of our common stock, calculated as of [●],
2022, assuming no further conversions of preferred stock, no exercise of outstanding options or warrants, and no sale of shares reserved
for the underwriter for over-allotment allocation, if any.
Sale
of Restricted Securities
The
shares of our common stock sold pursuant to this offering will be registered under the Securities Act of 1933, as amended, and therefore
freely transferable, except for our affiliates. Our affiliates will be deemed to own “control” securities that are not registered
for resale under the registration statement covering this prospectus. Individuals who may be considered our affiliates after this offering
include individuals who control, are controlled by or are under common control with us, as those terms generally are interpreted for
federal securities law purposes. These individuals may include some or all of our directors and executive officers. Individuals who are
our affiliates are not permitted to resell their shares of our common stock unless such shares are separately registered under an effective
registration statement under the Securities Act or an exemption from the registration requirements of the Securities Act is available,
such as Rule 144.
Rule
144
In
general, under Rule 144 as currently in effect, a person (or persons whose shares are aggregated), including an affiliate, who beneficially
owns “restricted securities” (i.e. securities that are not registered by an effective registration statement) of a “reporting
company” may not sell these securities until the person has beneficially owned them for at least six months. Thereafter, affiliates
may not sell within any three-month period a number of shares in excess of the greater of: (i) 1% of the then outstanding shares of Common
Stock as shown by the most recent report or statement published by the issuer; and (ii) the average weekly reported trading volume in
such securities during the four preceding calendar weeks.
Sales
under Rule 144 by our affiliates will also be subject to restrictions relating to manner of sale, notice and the availability of current
public information about us and may be affected only through unsolicited brokers’ transactions.
Persons
not deemed to be affiliates who have beneficially owned “restricted securities” for at least six months but for less than
one year may sell these securities, provided that current public information about us is “available,” which means
that, on the date of sale, we have been subject to the reporting requirements of the Exchange Act for at least 90 days and are current
in our Exchange Act filings. After beneficially owning “restricted securities” for one year, our non-affiliates may engage
in unlimited re-sales of such securities.
Shares
received by our affiliates in this offering or upon exercise of stock options or upon vesting of other equity-linked awards may be “control
securities” rather than “restricted securities.” “Control securities” are subject to the same volume limitations
as “restricted securities” but are not subject to holding period requirements.
Two of our directors
own 100% of our outstanding Series A and Series D Preferred Stock. At all times, one share of Series A Preferred and one share
of Series D Preferred are convertible, respectively, into one share and 10,000 shares of our common stock. Following any such conversion,
there would exist a six-month holding period required by Rule 144 for such shares of our common stock.
MATERIAL
U.S. FEDERAL INCOME TAX CONSIDERATIONS
The
following is a summary of the material U.S. federal income tax considerations relating to the purchase, ownership and disposition of
our Units, common stock and warrants purchased in this offering, which we refer to collectively as our securities, but is for general
information purposes only and does not purport to be a complete analysis of all the potential tax considerations. The holder of a Unit
generally should be treated, for U.S. federal income tax purposes, as the owner of the underlying one share of common stock and one warrant
to purchase one share of common stock that underlie the Unit, as the case may be. As a result, the discussion below with respect to actual
holders of common stock and warrants should also apply to holders of Units (as the deemed owners of the underlying common stock and warrants
that comprise the Units). This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended (the “Code”),
existing and proposed Treasury regulations promulgated thereunder, administrative rulings and judicial decisions, all as of the date
hereof. These authorities may be changed, possibly retroactively, so as to result in U.S. federal income and estate tax consequences
different from those set forth below. There can be no assurance that the Internal Revenue Service (the “IRS”) will not challenge
one or more of the tax consequences described herein, and we have not obtained, and do not intend to obtain, an opinion of counsel or
ruling from the IRS with respect to the U.S. federal income tax considerations relating to the purchase, ownership or disposition of
our securities.
This
summary does not address any alternative minimum tax considerations, any considerations regarding the tax on net investment income, or
the tax considerations arising under the laws of any state, local or non-U.S. jurisdiction, or under any non-income tax laws, including
U.S. federal gift and estate tax laws, except to the limited extent set forth below. In addition, this summary does not address tax considerations
applicable to an investor’s particular circumstances or to investors that may be subject to special tax rules, including, without
limitation:
|
●
|
banks,
insurance companies or other financial institutions;
|
|
●
|
tax-exempt
organizations or governmental organizations;
|
|
●
|
regulated
investment companies and real estate investment trusts;
|
|
●
|
controlled
foreign corporations, passive foreign investment companies and corporations that accumulate earnings to avoid U.S. federal income
tax;
|
|
●
|
brokers
or dealers in securities or currencies;
|
|
●
|
traders
in securities that elect to use a mark-to-market method of accounting for their securities holdings;
|
|
●
|
persons
that own, or are deemed to own, more than five percent of our capital stock (except to the extent specifically set forth below);
|
|
●
|
tax-qualified
retirement plans;
|
|
●
|
certain
former citizens or long-term residents of the United States;
|
|
●
|
partnerships
or entities or arrangements classified as partnerships for U.S. federal income tax purposes and other pass-through entities (and
investors therein);
|
|
●
|
persons
who hold our securities as a position in a hedging transaction, “straddle,” “conversion transaction” or other
risk reduction transaction or integrated investment;
|
|
●
|
persons
who do not hold our securities as a capital asset within the meaning of Section 1221 of the Code;
|
|
●
|
persons
deemed to sell our securities under the constructive sale provisions of the Code.
|
In
addition, if a partnership (or entity or arrangement classified as a partnership for U.S. federal income tax purposes) holds our securities,
the tax treatment of a partner generally will depend on the status of the partner and upon the activities of the partnership. Accordingly,
partnerships that hold our securities, and partners in such partnerships, should consult their tax advisors.
You
are urged to consult your own tax advisors with respect to the application of the U.S. federal income tax laws to your particular situation,
as well as any tax consequences of the purchase, ownership and disposition of our securities arising under the U.S. federal estate or
gift tax laws or under the laws of any state, local, non-U.S., or other taxing jurisdiction or under any applicable tax treaty.
Allocation
of Purchase Price and Characterization of a Unit
No
statutory, administrative or judicial authority directly addresses the treatment of a Unit or instruments similar to a Unit for U.S.
federal income tax purposes and, therefore, that treatment is not entirely clear. The acquisition of a Unit should be treated for U.S.
federal income tax purposes as the acquisition of one share of common stock and one warrant to purchase one share of common stock. For
U.S. federal income tax purposes, each holder of a Unit must allocate the purchase price paid by such holder for such Unit between such
one share of common stock and one warrant to purchase one share of common stock based on their relative fair market values at the time
of issuance. Under U.S. federal income tax law, each investor must make his or her own determination of such value based on all the relevant
facts and circumstances. Therefore, we strongly urge each investor to consult his or her tax adviser regarding the determination of value
for these purposes. The price allocated to each share of common stock and each warrant should be the stockholder’s tax basis in
such share or warrant, as the case may be. Any disposition of a Unit should be treated for U.S. federal income tax purposes as a disposition
of the one share of common stock and one warrant to purchase one share of common stock comprising the Unit, and the amount realized on
the disposition should be allocated between the one share of common stock and one warrant to purchase one share of common stock based
on their respective relative fair market values (as determined by each such Unit holder on all the relevant facts and circumstances)
at the time of disposition. The separation of the common stock and warrants comprising Units should not be a taxable event for U.S. federal
income tax purposes.
The
foregoing treatment of the common stock and warrants and a holder’s purchase price allocation are not binding on the IRS or the
courts. Because there are no authorities that directly address instruments that are similar to the Units, discussion below. Accordingly,
each prospective investor is urged to consult its own tax advisors regarding the tax consequences of an investment in a Unit (including
alternative characterizations of a Unit). The balance of this discussion assumes that the characterization of the Units described above
is respected for U.S. federal income tax purposes.
Consequences
to U.S. Holders
The
following is a summary of the U.S. federal income tax consequences that will apply to a U.S. holder of our securities. For purposes of
this discussion, you are a U.S. holder if, for U.S. federal income tax purposes, you are a beneficial owner of our securities, other
than a partnership, that is:
|
●
|
an
individual citizen or resident of the United States;
|
|
●
|
a
corporation or other entity taxable as a corporation created or organized in the United States or under the laws of the United States,
any State thereof or the District of Columbia;
|
|
●
|
an
estate whose income is subject to U.S. federal income tax regardless of its source; or
|
|
●
|
a
trust (x) whose administration is subject to the primary supervision of a U.S. court and which has one or more “United States
persons” (within the meaning of Section 7701(a)(30) of the Code) who have the authority to control all substantial decisions
of the trust or (y) which has made a valid election to be treated as a “United States person.”
|
Distributions
As
described in the section titled “Market for Our Common Stock - Dividend Policy,” we have never declared or paid cash dividends
on our common stock and do not anticipate paying any dividends on our common stock in the foreseeable future. However, if we do make
distributions on our common stock, those payments will constitute dividends for U.S. tax purposes to the extent paid from our current
or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent those distributions exceed
both our current and our accumulated earnings and profits, the excess will constitute a return of capital and will first reduce your
basis in our common stock, but not below zero, and then will be treated as gain from the sale of stock as described below under “-Sale,
Exchange or Other Taxable Disposition of Common Stock.”
Dividend
income may be taxed to an individual U.S. holder at rates applicable to long-term capital gains, provided that a minimum holding period
and other limitations and requirements are satisfied. Any dividends that we pay to a U.S. holder that is a corporation will qualify for
a deduction allowed to U.S. corporations in respect of dividends received from other U.S. corporations equal to a portion of any dividends
received, subject to generally applicable limitations on that deduction. U.S. holders should consult their own tax advisors regarding
the holding period and other requirements that must be satisfied in order to qualify for the reduced tax rate on dividends or the dividends-received
deduction.
Constructive
Distributions
The
terms of the warrants allow for changes in the exercise price of the warrants under certain circumstances. A change in exercise price
of a warrant that allows holders to receive more shares of common stock on exercise may increase a holder’s proportionate interest
in our earnings and profits or assets. In that case, such holder may be treated as though it received a taxable distribution in the form
of our common stock. A taxable constructive stock distribution would generally result, for example, if the exercise price is adjusted
to compensate holders for distributions of cash or property to our stockholders.
Not
all changes in the exercise price that result in a holder’s receiving more common stock on exercise, however, would be considered
as increasing a holder’s proportionate interest in our earnings and profits or assets. For instance, a change in exercise price
could simply prevent the dilution of a holder’s interest upon a stock split or other change in capital structure. Changes of this
type, if made pursuant to bona fide reasonable adjustment formula, are not treated as constructive stock distributions for these purposes.
Conversely, if an event occurs that dilutes a holder’s interest and the exercise price is not adjusted, the resulting increase
in the proportionate interests of our stockholders could be treated as a taxable stock distribution to our stockholders.
Any
taxable constructive stock distributions resulting from a change to, or a failure to change, the exercise price of the warrants that
is treated as a distribution of common stock would be treated for U.S. federal income tax purposes in the same manner as distributions
on our common stock paid in cash or other property, resulting in a taxable dividend to the recipient to the extent of our current or
accumulated earnings and profits (with the recipient’s tax basis in its common stock or warrants, as applicable, being increased
by the amount of such dividend), and with any excess treated as a return of capital or as capital gain. U.S. holders should consult their
own tax advisors regarding whether any taxable constructive stock dividend would be eligible for tax rates applicable to long-term capital
gains or the dividends-received deduction described under “Distributions,” as the requisite applicable holding period requirements
might not be considered to be satisfied.
Sale,
Exchange or Other Taxable Disposition of Common Stock
A
U.S. holder will generally recognize capital gain or loss on the sale, exchange or other taxable disposition of our common stock. The
amount of gain or loss will equal the difference between the amount realized on the sale and such U.S. holder’s tax basis in such
common stock. The amount realized will include the amount of any cash and the fair market value of any other property received in exchange
for such common stock. Gain or loss will be long-term capital gain or loss if the U.S. holder has held the common stock for more than
one year. Long-term capital gains of non-corporate U.S. holders are generally taxed at preferential rates. The deductibility of capital
losses is subject to certain limitations.
Sale,
Exchange, Redemption, Lapse or Other Taxable Disposition of a Warrant
Upon
a sale, exchange, redemption, lapse or other taxable disposition of a warrant, a U.S. holder generally will recognize capital gain or
loss in an amount equal to the difference between the amount realized (if any) on the disposition and such U.S. holder’s tax basis
in the warrant. The amount realized will include the amount of any cash and the fair market value of any other property received in exchange
for the warrant. The U.S. holder’s tax basis in the warrant generally will equal the amount the holder paid for the warrant. Gain
or loss will be long-term capital gain or loss if the U.S. holder has held the warrant for more than one year. Long-term capital gains
of non-corporate U.S. holders are generally taxed at preferential rates. The deductibility of capital losses is subject to certain limitations.
Exercise
of a Warrant
The
exercise of a warrant for shares of common stock generally will not be a taxable event for the exercising U.S. holder, except with respect
to cash, if any, received in lieu of a fractional share. A U.S. holder will have a tax basis in the shares of common stock received on
exercise of a warrant equal to the sum of the U.S. holder’s tax basis in the warrant surrendered, reduced by any portion of the
basis allocable to a fractional share, plus the exercise price of the warrant. A U.S. holder generally will have a holding period in
shares of common stock acquired on exercise of a warrant that commences on the date of exercise of the warrant.
Consequences
to Non-U.S. Holders
The
following is a summary of the U.S. federal income tax consequences that will apply to a non-U.S. holder of our securities. A “non-U.S.
holder” is a beneficial owner of our securities (other than a partnership or an entity or arrangement treated as a partnership
for U.S. federal income tax purposes) that, for U.S. federal income tax purposes, is not a U.S. holder.
Distributions
Subject
to the discussion below regarding effectively connected income, any dividend, including any taxable constructive stock dividend resulting
from certain adjustments, or failure to make adjustments, to the exercise price of a warrant (as described above under “Consequences
to U.S. Holders-Constructive Distributions”), paid to a non-U.S. holder generally will be subject to U.S. withholding tax either
at a rate of 30% of the gross amount of the dividend or such lower rate as may be specified by an applicable income tax treaty. In order
to receive a reduced treaty rate, a non-U.S. holder must provide us with an IRS Form W-8BEN, IRS Form W-8BEN-E or other applicable IRS
Form W-8 properly certifying qualification for the reduced rate. These forms must be updated periodically. A non-U.S. holder eligible
for a reduced rate of U.S. withholding tax pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by timely
filing an appropriate claim for refund with the IRS. If a non-U.S. holder holds our securities through a financial institution or other
agent acting on the non-U.S. holder’s behalf, the non-U.S. holder will be required to provide appropriate documentation to the
agent, which then may be required to provide certification to us or our paying agent, either directly or through other intermediaries.
Dividends
received by a non-U.S. holder that are effectively connected with its conduct of a U.S. trade or business (and, if required by an applicable
income tax treaty, attributable to a permanent establishment or fixed base maintained by the non-U.S. holder in the United States) are
generally exempt from such withholding tax if the non-U.S. holder satisfies certain certification and disclosure requirements. In order
to obtain this exemption, the non-U.S. holder must provide us with an IRS Form W-8ECI or other applicable IRS Form W-8 properly certifying
such exemption. Such effectively connected dividends, although not subject to withholding tax, are taxed at the same graduated U.S. federal
income tax rates applicable to U.S. holders, net of certain deductions and credits. In addition, dividends received by a corporate non-U.S.
holder that are effectively connected with its conduct of a U.S. trade or business may also be subject to a branch profits tax at a rate
of 30% or such lower rate as may be specified by an applicable income tax treaty. Non-U.S. holders should consult their own tax advisors
regarding any applicable tax treaties that may provide for different rules.
Gain
on Sale, Exchange, or other Taxable Disposition of Common Stock or Warrants
Subject
to the discussion below regarding backup withholding and foreign accounts, a non-U.S. holder generally will not be required to pay U.S.
federal income tax on any gain realized upon the sale, exchange or other taxable disposition of our common stock or a warrant unless:
|
●
|
the
gain is effectively connected with the non-U.S. holder’s conduct of a U.S. trade or business (and, if required by an applicable
income tax treaty, the gain is attributable to a permanent establishment or fixed base maintained by the non-U.S. holder in the United
States);
|
|
●
|
the
non-U.S. holder is a non-resident alien individual who is present in the United States for a period or periods aggregating 183 days
or more during the calendar year in which the sale or disposition occurs and certain other conditions are met; or
|
|
●
|
shares
of our common stock or our warrants, as applicable, constitute U.S. real property interests by reason of our status as a “United
States real property holding corporation” (a USRPHC) for U.S. federal income tax purposes at any time within the shorter of
the five-year period preceding the non-U.S. holder’s disposition of, or the non- U.S. holder’s holding period for, our
common stock or warrants, as applicable.
|
We
believe that we are not currently and will not become a USRPHC for U.S. federal income tax purposes, and the remainder of this discussion
so assumes. However, because the determination of whether we are a USRPHC depends on the fair market value of our U.S. real property
relative to the fair market value of our other business assets, there can be no assurance that we will not become a USRPHC in the future.
Even if we become a USRPHC, however, as long as our common stock is regularly traded on an established securities market, such common
stock will be treated as U.S. real property interests only if the non-U.S. holder actually or constructively hold more than five percent
of such regularly traded common stock at any time during the shorter of the five-year period preceding the non-U.S. holder’s disposition
of, or the non-U.S. holder’s holding period for, our common stock. In addition, provided that our common stock is regularly traded
on an established securities market, a warrant will not be treated as a U.S. real property interest with respect to a non-U.S. holder
if such holder did not own, actually or constructively, warrants whose total fair market value on the date they were acquired (and on
the date or dates any additional warrants were acquired) exceeded the fair market value on that date (and on the date or dates any additional
warrants were acquired) of 5% of all our common stock.
If
the non-U.S. holder is described in the first bullet above, it will be required to pay tax on the net gain derived from the sale, exchange
or other taxable disposition under regular graduated U.S. federal income tax rates, and a corporate non-U.S. holder described in the
first bullet above also may be subject to the branch profits tax at a rate of 30%, or such lower rate as may be specified by an applicable
income tax treaty. An individual non-U.S. holder described in the second bullet above will be required to pay a flat 30% tax (or such
lower rate specified by an applicable income tax treaty) on the gain derived from the sale, exchange or other taxable disposition, which
gain may be offset by U.S. source capital losses for the year (provided the non-U.S. holder has timely filed U.S. federal income tax
returns with respect to such losses). Non-U.S. holders should consult their own tax advisors regarding any applicable income tax or other
treaties that may provide for different rules.
Federal
Estate Tax
Common
stock or warrants beneficially owned by an individual who is not a citizen or resident of the United States (as defined for U.S. federal
estate tax purposes) at the time of their death will generally be includable in the decedent’s gross estate for U.S. federal estate
tax purposes. Such shares, therefore, may be subject to U.S. federal estate tax, unless an applicable estate tax treaty provides otherwise.
Backup
Withholding and Information Reporting
Generally,
we must report annually to the IRS the amount of dividends paid to you, your name and address and the amount of tax withheld, if any.
A similar report will be sent to you. Pursuant to applicable income tax treaties or other agreements, the IRS may make these reports
available to tax authorities in your country of residence.
Payments
of dividends on or of proceeds from the disposition of our securities made to you may be subject to information reporting and backup
withholding at a current rate of 24% unless you establish an exemption, for example, by properly certifying your non-U.S. status on an
IRS Form W-8BEN or IRS Form W-8BEN-E or other applicable IRS Form W-8. Notwithstanding the foregoing, backup withholding and information
reporting may apply if either we or our paying agent has actual knowledge, or reason to know, that you are a U.S. person.
Backup
withholding is not an additional tax; rather, the U.S. federal income tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund or credit may generally be obtained
from the IRS, provided that the required information is furnished to the IRS in a timely manner.
Foreign
Account Tax Compliance
The
Foreign Account Tax Compliance Act (“FATCA”) generally imposes withholding tax at a rate of 30% on dividends on and gross
proceeds from the sale or other disposition of our securities paid to a “foreign financial institution” (as specially defined
under these rules), unless such institution enters into an agreement with the U.S. government to, among other things, withhold on certain
payments and to collect and provide to the U.S. tax authorities substantial information regarding the U.S. account holders of such institution
(which includes certain equity and debt holders of such institution, as well as certain account holders that are foreign entities with
U.S. owners) or otherwise establishes an exemption. FATCA also generally imposes a U.S. federal withholding tax of 30% on dividends on
and gross proceeds from the sale or other disposition of our securities paid to a “non-financial foreign entity” (as specially
defined for purposes of these rules) unless such entity provides the withholding agent with a certification identifying certain substantial
direct and indirect U.S. owners of the entity, certifies that there are none or otherwise establishes an exemption. The withholding provisions
under FATCA generally apply to dividends (including constructive dividends) on our common stock and warrants. The Treasury Secretary
has issued proposed regulations providing that the withholding provisions under FATCA do not apply with respect to payment of gross proceeds
from a sale or other disposition of our common stock or warrants, which may be relied upon by taxpayers until final regulations are issued.
Under certain circumstances, a non-U.S. holder might be eligible for refunds or credits of such taxes. An intergovernmental agreement
between the United States and an applicable foreign country may modify the requirements described in this paragraph. Non-U.S. holders
should consult their own tax advisors regarding the possible implications of this legislation on their investment in our securities.
Each
prospective investor should consult its own tax advisor regarding the particular U.S. federal, state and local and non-U.S. tax consequences
of purchasing, owning and disposing of our securities, including the consequences of any proposed changes in applicable laws.
UNDERWRITING
We
have entered into an underwriting agreement dated [●], 2022 with EF Hutton, division of Benchmark Investments,
LLC, as the sole underwriter, with respect to the shares and warrants being offered. Subject to the terms and conditions of the underwriting
agreement, we have agreed to sell to the underwriter, and the underwriter has agreed to purchase, at the public offering price less the
underwriting discounts set forth on the cover page of this prospectus, the number of shares of common stock and warrants listed next
to its name in the following table:
Name of
Underwriter
|
|
Number
of Shares
|
|
|
Number
of Warrants
|
|
EF Hutton
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
The
underwriter is committed to purchase all the shares of common stock and warrants offered by this prospectus if it purchases any shares
of common stock and warrants. The underwriter is not obligated to purchase the shares of common stock and/or warrants covered by the
underwriter’s over-allotment option described below. The underwriter is offering the shares of common stock and warrants, subject
to prior sale, when, as and if issued to and accepted by it, subject to approval of legal matters by its counsel, and other conditions
contained in the underwriting agreement, such as the receipt by the underwriter of officer’s certificates and legal opinions. A
copy of the underwriting agreement has been filed as an exhibit to the registration statement of which this prospectus is part. The underwriter
reserves the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.
Over-Allotment
Option
We
have granted to the underwriter an option, exercisable no later than 45 calendar days after the date of the underwriting
agreement, to purchase up to [●] additional shares of common stock and/or warrants (an amount equal to 15% of the Units
sold in the offering, assuming a total of [●] units are sold at the public offering
price per Unit of $[●] (which is the last reported closing price of our common
stock, as reported on the OTCQB [●], 2022)) at the public offering
price listed on the cover page of this prospectus, less underwriting discounts and commissions. The underwriter may exercise this
option only to cover over-allotments, if any, made in connection with this offering. To the extent the option is exercised and the
conditions of the underwriting agreement are satisfied, we will be obligated to sell to the underwriter, and the underwriter will be
obligated to purchase, these additional shares of common stock and/or warrants. The underwriter will offer these additional shares
of common stock and/or warrants on the same terms as those on which the other shares of common stock and/or warrants are being
offered hereby.
Discounts,
Commissions, and Representative’s Warrants
We have agreed to sell the Units
to the Representative at a discount equal to seven percent (7.0%) of the aggregate gross proceeds raised in this offering. We
have also agreed to (i) grant to the Representative warrants to purchase a number of shares equal to five percent (5.0%)
of the total number of shares of common stock sold in this offering at an exercise price equal to 125% of the public offering
price in this offering. The Representative’s Warrants will be non-exercisable for six months after the closing of this offering
(“Closing Date”) and will expire five (5) years after such Closing Date. The Representative’s Warrants
will contain provisions for (i) one demand registration of the shares underlying the Underwriter’s Warrants at our expense, (ii)
one additional demand registration for such shares at the warrant holders’ expense for a period of [●] years from the closing
Date, and (iii) unlimited piggyback registration rights for a period of five (5) years after the Closing Date at our expense.
The number of shares subject to Representative’s Warrants outstanding, and the exercise price of those securities, will
be adjusted proportionately, as permitted by FINRA Rule 5110(f)(2)(G).
The
underwriter has advised us that it proposes to offer the Units directly to the public at the public offering price set forth on the cover
of this prospectus. In addition, the underwriter may offer some of the shares and warrants to other securities dealers at such price
less a concession of up to $[●] per Unit. After this offering to the public, the offering price and other selling terms may be
changed by the underwriter without changing our proceeds from the underwriter’s purchase of the Units.
The
following table summarizes the public offering price, underwriting commissions and proceeds before expenses to us assuming both no exercise
and full exercise of the underwriter’s option to purchase additional Units. The underwriting discount is equal to the public offering
price per Unit less the amount per Unit the underwriter pays us for the Units.
|
|
Per
Unit(1)
|
|
|
Total
Without Over
Allotment
|
|
|
Total
With Over
Allotment
|
|
|
|
|
|
|
|
|
|
|
|
Public offering price
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Underwriting discounts and commissions
|
|
$
|
|
|
|
|
|
|
|
|
|
|
Non-accountable expense allowance (0.75%)
|
|
$
|
|
|
|
|
|
|
|
|
|
|
Proceeds, before expenses, to us
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The
fees shown do not include the warrant to purchase shares of common stock issuable to the underwriter at closing.
|
We
have paid an expense deposit of $25,000 to (or on behalf of) the representative, which will be applied against the actual
out-of-pocket accountable expenses that will be paid by us to the underwriters in connection with this offering, and will be
reimbursed to us to the extent not incurred.
In
addition, we have also agreed to pay the following expenses of the underwriters relating to the offering: (a) all fees, expenses and
disbursements relating to background checks of our officers and directors in an amount not to exceed $5,000 in the aggregate; (b) all
filing fees and communication expenses associated with the review of this offering by FINRA; (c) all fees, expenses and disbursements
relating to the registration, qualification or exemption of securities offered under the securities laws of foreign jurisdictions designated
by the underwriter, including the reasonable fees and expenses of the underwriter’s blue sky counsel; (d) $29,500 for the underwriters’
use of Ipreo’s book-building, prospectus tracking and compliance software for this offering; (e) the costs associated with bound
volumes of the public offering materials as well as commemorative mementos and lucite tombstones not to exceed $5,000; (f) the fees and
expenses of the representatives’ legal counsel incurred in connection with this offering in an amount up to $135,000; and (g) up
to $20,000 of the representative’s actual accountable road show expenses for the offering.
We estimate the expenses of
this offering payable by us, not including underwriting discounts and commissions, will be approximately $[●],
which includes a maximum of $175,000 of out-of-pocket expenses for “road show,” diligence, and reasonable legal fees
and disbursements for underwriters’ counsel, subject to a maximum of $50,000 in the event that this offering is not consummated.
We have also agreed to reimburse the underwriters, subject to compliance with FINRA Rule 5110(g).
Lock-Up
Agreements
We
and each of our officers, directors, affiliates and certain existing stockholders aggregating at least 5.0% of our outstanding shares
have agreed, subject to certain exceptions, not to offer, issue, sell, contract to sell, encumber, grant any option for the sale of or
otherwise dispose of any shares of our common stock or other securities convertible into or exercisable or exchangeable for shares of
our common stock for a period of 180 days after this offering is completed without the prior written consent of the underwriter.
The
underwriter may in its sole discretion and at any time without notice release some or all of the shares subject to lock-up agreements
prior to the expiration of the lock-up period. When determining whether or not to release shares from the lock-up agreements, the underwriter
will consider, among other factors, the security holder’s reasons for requesting the release, the number of shares for which the
release is being requested and market conditions at the time.
Indemnification
We
have agreed to indemnify the underwriter against certain liabilities, including liabilities under the Securities Act, and to contribute
to payments that the underwriter may be required to make for these liabilities.
OTCQB
and Nasdaq or NYSE American
Our
common stock is presently quoted on the OTCQB marketplace under the symbol “BMIX”. We intend to apply to list our
common stock under the proposed symbol “BMIX” and our warrants under the symbol “BMIXW”, both on a national securities
exchange such as the Nasdaq Capital Market or NYSE American. No assurance can be given that our application will be approved by any national
securities exchange, and we will not consummate this offering unless our common stock and warrants are approved for listing on a national
securities exchange.
Price
Stabilization, Short Positions, and Penalty Bids
In
connection with this offering, the underwriter may engage in transactions that stabilize, maintain or otherwise affect the price of our
common stock. Specifically, the underwriter may over-allot in connection with this offering by selling more shares and warrants than
are set forth on the cover page of this prospectus. This creates a short position in our common stock for the underwriter’s own
account. The short position may be either a covered short position or a naked short position. In a covered short position, the number
of shares common stock or warrants over-allotted by the underwriter is not greater than the number of shares of common stock or warrants
that they may purchase in the over-allotment option. In a naked short position, the number of shares of common stock or warrants involved
is greater than the number of shares common stock or warrants in the over-allotment option. To close out a short position, the underwriter
may elect to exercise all or part of the over-allotment option. The underwriter may also elect to stabilize the price of our common stock
or reduce any short position by bidding for, and purchasing, common stock in the open market. Since the warrants will not be listed and
are not expected to trade, the underwriter cannot purchase the warrants in the open market and, as a result, the underwriter cannot and
will not enter into naked short positions.
The
underwriter may also impose a penalty bid. This occurs when a particular underwriter or dealer repays selling concessions allowed to
it for distributing a security in this offering because the underwriter repurchases that security in stabilizing or short covering transactions.
Finally,
the underwriter may bid for, and purchase, shares of our common stock in market making transactions, including “passive”
market making transactions as described below.
These
activities may stabilize or maintain the market price of our common stock at a price that is higher than the price that might otherwise
exist in the absence of these activities. The underwriter is not required to engage in these activities, and may discontinue any of these
activities at any time without notice. These transactions may be effected on Nasdaq or NYSE American, in the over-the-counter
market, or otherwise.
In
connection with this offering, the underwriter and selling group members, if any, or their affiliates may engage in passive market making
transactions in our common stock immediately prior to the commencement of sales in this offering, in accordance with Rule 103 of Regulation
M under the Exchange Act. Rule 103 generally provides that:
|
●
|
a
passive market maker may not effect transactions or display bids for our common stock in excess of the highest independent bid price
by persons who are not passive market makers;
|
|
●
|
net
purchases by a passive market maker on each day are generally limited to 30% of the passive market maker’s average daily trading
volume in our common stock during a specified two-month prior period or 200 shares, whichever is greater, and must be discontinued
when that limit is reached; and
|
|
●
|
passive
market making bids must be identified as such.
|
Electronic
Distribution
A
prospectus in electronic format may be made available on a website maintained by the underwriter. The underwriter may agree to allocate
a number of shares to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the
underwriter to underwriters that may make Internet distributions on the same basis as other allocations. In connection with this offering,
the underwriter or syndicate members may distribute prospectuses electronically. No forms of electronic prospectus other than prospectuses
that are printable as Adobe® PDF will be used in connection with this offering.
The
underwriter has informed us that it does not expect to confirm sales of shares and warrants offered by this prospectus to accounts over
which they exercise discretionary authority.
Other
than the prospectus in electronic format, the information on the underwriter’s website and any information contained in any other
website maintained by the underwriter is not part of the prospectus or the registration statement of which this prospectus forms a part,
has not been approved and/or endorsed by us or any underwriter in its capacity as underwriter and should not be relied upon by investors.
Certain
Relationships
The
underwriters and their affiliates are full service financial institutions engaged in various activities, which may include securities
trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging,
financing and brokerage activities. The underwriters have in the past, and may in the future, engage in investment banking and other
commercial dealings in the ordinary course of business with us or our affiliates. The underwriters have in the past, and may in the future,
receive customary fees and commissions for these transactions.
In
the ordinary course of their various business activities, the underwriters and their affiliates may make or hold a broad array of investments
and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for
their own account and for the accounts of their customers, and such investment and securities activities may involve securities and/or
instruments of the issuer. The underwriters and their affiliates may also make investment recommendations and/or publish or express independent
research views in respect of such securities or instruments and may at any time hold, or recommend to clients that it acquires, long
and/or short positions in such securities and instruments.
LEGAL
MATTERS
The
validity of the issuance of the shares of common stock covered by this prospectus will be passed upon for us by Jay Weil, Esq. Disclosure
Law Group, a Professional Corporation, San Diego, California is acting as counsel for the underwriter in this offering.
EXPERTS
Our
financial statements as of and for the year ended December 31, 2019, and December 31, 2020, appearing in this prospectus, have been audited
by BF Borgers CPA, PC, an independent registered public accounting firm, as set forth in such reports thereon, included herein. Such
financial statements are included herein in reliance in reliance upon the authority of said firm as experts in auditing and accounting
in giving said report.
INTERESTS
OF NAMED EXPERTS AND COUNSEL
No
expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon
the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the Common
Stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct
or indirect, in the registrant. Nor was any such person connected with the registrant as a promoter, managing or principal underwriter,
voting trustee, director, officer, or employee.
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed with the SEC a registration statement on Form S-1 (File No. 333-[●]) under the Securities Act, with respect to the securities
offered by this prospectus. This prospectus, which is part of the registration statement, omits certain information, exhibits, schedules
and undertakings set forth in the registration statement. For further information pertaining to us and our common stock, reference is
made to the registration statement and the exhibits and schedules to the registration statement. Statements contained in this prospectus
as to the contents or provisions of any documents referred to in this prospectus are not necessarily complete, and in each instance where
a copy of the document has been filed as an exhibit to the registration statement, reference is made to the exhibit for a more complete
description of the matters involved. You may read registration statements and certain other filings made with the SEC electronically
are publicly available through the SEC’s website at https://www.sec.gov.
We
file periodic reports, proxy statements, and other information with the SEC in accordance with requirements of the Exchange Act. These
periodic reports, proxy statements, and other information are available at the SEC’s website address referred to above. In addition,
you may request a copy of any of our periodic reports filed with the SEC at no cost, by writing or telephoning us at the following address:
Brazil
Minerals, Inc.
433
North Camden Drive
Suite
810
Beverly
Hills, CA 90210
(833)
661-7900
Information
contained on our website is not a prospectus and does not constitute a part of this prospectus.
You
should rely only on the information contained in or incorporated by reference or provided in this prospectus. We have not authorized
anyone else to provide you with different information. We are not making an offer of these securities in any state where the offer is
not permitted. You should not assume the information in this prospectus is accurate as of any date other than the date on the front of
this prospectus.
`
INDEX
TO FINANCIAL STATEMENTS
BRAZIL
MINERALS, INC.
PART
I - FINANCIAL INFORMATION
Item
1 FINANCIAL STATEMENTS
BRAZIL
MINERALS, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
The
accompanying notes are an integral part of the condensed consolidated financial statements.
BRAZIL
MINERALS, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)
The
accompanying notes are an integral part of the condensed consolidated financial statements.
BRAZIL
MINERALS, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
|
|
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, June 30, 2020
|
|
|
1
|
|
|
$
|
1
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
1,387,463,317
|
|
|
$
|
1,387,463
|
|
|
$
|
47,774,143
|
|
|
$
|
(772,084
|
)
|
|
$
|
(51,881,696
|
)
|
|
$
|
1,849,734
|
|
|
$
|
(1,642,439
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock in connection with sales made under private
offerings
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(62,500,000
|
)
|
|
|
(62,500
|
)
|
|
|
162,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100,000
|
|
Issuance of common stock in
connection with the exercise of common stock options and warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock in
connection with the exercise of common stock options and warrants, shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock in
connection with the exercise of common stock options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock in
connection with the exercise of common stock options, Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock in
exchange for consulting, professional and other services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock in
exchange for consulting, professional and other services, Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock to
related parties in lieu of cash for loans payable and other accrued obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock to related parties in lieu of cash for loans payable
and other accrued obligations,shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock warrants
in connection with the issuance of convertible debenture(s)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of convertible notes and other indebtedness into common
stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
134,805,534
|
|
|
|
134,806
|
|
|
|
(79,890
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
54,916
|
|
Exchange of common stock for
Jupiter Gold common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange of common stock for Jupiter Gold common stock,shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock in
connection with share exchange agreement with related party
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock in
connection with share exchange agreement with related party ,shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of related party
convertiblenotes and other indebtedness into Series D preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of related party
convertiblenotes and other indebtedness into Series D preferred stock, shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock in
exchange for consulting, professional and other services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock in
exchange for consulting, professional and other services,shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognition of beneficial conversion
features related to convertible debentures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
25,684
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
25,684
|
|
Change in foreign currency translation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(43,978
|
)
|
|
|
-
|
|
|
|
8,244
|
|
|
|
(35,734
|
)
|
Sale of Jupiter Gold common stock in connection with equity
offerings
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
125,000
|
|
|
|
125,000
|
|
Issuance
of common stock purchase warrants in connection with sales of Jupiter Gold common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of Apollo Resources common stock in connection with equity offerings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of related party convertible notes and
other indebtedness into Series D preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of related party convertible notes and
other indebtedness into Series D preferred stock, shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in noncontrolling interest(s)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock options in lieu of cash for extinguishment of convertible notes with related party
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(271,203
|
)
|
|
|
(101,395
|
)
|
|
|
(372,598
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2020
|
|
|
1
|
|
|
$
|
1
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
1,459,768,851
|
|
|
$
|
1,459,769
|
|
|
$
|
47,882,437
|
|
|
$
|
(816,062
|
)
|
|
$
|
(52,152,899
|
)
|
|
$
|
1,881,583
|
|
|
$
|
(1,745,171
|
)
|
|
|
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, June 30, 2021
|
|
|
1
|
|
|
$
|
1
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
2,925,793,327
|
|
|
$
|
2,925,793
|
|
|
$
|
49,932,050
|
|
|
$
|
(740,410
|
)
|
|
$
|
(53,727,767
|
)
|
|
$
|
1,490,677
|
|
|
$
|
(119,656
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock in connection with sales made under private offerings
|
|
|
-
|
|
|
|
-
|
|
|
|
214,006
|
|
|
|
214
|
|
|
|
-
|
|
|
|
-
|
|
|
|
641,804
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
642,018
|
|
Issuance of common stock in connection with the exercise of common stock
options and warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
26,086,958
|
|
|
|
26,087
|
|
|
|
123,913
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
150,000
|
|
Issuance of common stock in connection with the exercise of common stock
options
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
83,863,837
|
|
|
|
83,864
|
|
|
|
(83,864
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
1,950
|
|
|
|
1,950
|
|
Issuance of common stock in exchange for consulting, professional and other
services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,954,949
|
|
|
|
14,955
|
|
|
|
136,592
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
151,547
|
|
Stock based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
191,185
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
191,185
|
|
Change in foreign currency translation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(9,011
|
)
|
|
|
-
|
|
|
|
15,805
|
|
|
|
6,794
|
|
Sale of Apollo Resources common stock in connection with equity offerings
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
217,500
|
|
|
|
217,500
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(619,139
|
)
|
|
|
(201,452
|
)
|
|
|
(820,591
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2021
|
|
|
1
|
|
|
$
|
1
|
|
|
|
214,006
|
|
|
$
|
214
|
|
|
|
3,050,699,071
|
|
|
$
|
3,050,699
|
|
|
$
|
50,941,680
|
|
|
$
|
(749,421
|
)
|
|
$
|
(54,346,906
|
)
|
|
$
|
1,524,480
|
|
|
$
|
420,747
|
|
The
accompanying notes are an integral part of the condensed consolidated financial statements.
BRAZIL
MINERALS, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
|
|
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, 2019
|
|
|
1
|
|
|
$
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,132,435,380
|
|
|
$
|
1,132,435
|
|
|
$
|
47,724,570
|
|
|
$
|
(580,957
|
)
|
|
$
|
(51,043,408
|
)
|
|
$
|
1,446,715
|
|
|
$
|
(1,320,644
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock in connection with sales made under private offerings
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
232,500,000
|
|
|
|
232,500
|
|
|
|
87,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
320,000
|
|
Issuance of common stock in exchange for consulting, professional and other
services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,666,594
|
|
|
|
5,667
|
|
|
|
333
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,000
|
|
Issuance of common stock in connection with share exchange agreement with
related party
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
53,947,368
|
|
|
|
53,947
|
|
|
|
22,979
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
76,926
|
|
Issuance of common stock to related parties in lieu of cash for loans payable
and other accrued obligations
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
200,000
|
|
|
|
200
|
|
|
|
80
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
280
|
|
Conversion of convertible notes and other indebtedness into common
stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
235,019,509
|
|
|
|
235,020
|
|
|
|
(126,943
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
108,077
|
|
Exchange of common stock for Jupiter Gold common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(200,000,000
|
)
|
|
|
(200,000
|
)
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100,000
|
|
|
|
-
|
|
Stock based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
73,918
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
73,918
|
|
Change in foreign currency translation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(235,105
|
)
|
|
|
-
|
|
|
|
80,581
|
|
|
|
(154,524
|
)
|
Sale of Jupiter Gold common stock in connection with equity offerings
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
525,000
|
|
|
|
525,000
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,109,491
|
)
|
|
|
(270,713
|
)
|
|
|
(1,380,204
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2020
|
|
|
1
|
|
|
$
|
1
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
1,459,768,851
|
|
|
$
|
1,459,769
|
|
|
$
|
47,882,437
|
|
|
$
|
(816,062
|
)
|
|
$
|
(52,152,899
|
)
|
|
$
|
1,881,583
|
|
|
$
|
(1,745,171
|
)
|
|
|
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
|
)
|
Beginning Balance, Value
|
|
|
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
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
136,219,930
|
|
|
|
136,220
|
|
|
|
680,430
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
816,650
|
|
Issuance of common stock in connection with the exercise of common stock
options and warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
396,917,702
|
|
|
|
396,918
|
|
|
|
(321,918
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
70,700
|
|
|
|
145,700
|
|
Issuance of common stock in exchange for consulting, professional and
other services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,954,949
|
|
|
|
14,955
|
|
|
|
136,592
|
|
|
|
-
|
|
|
|
-
|
|
|
|
31,845
|
|
|
|
183,392
|
|
Issuance of common stock warrants in connection with the issuance of
convertible debenture(s)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
356,827
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
356,827
|
|
Conversion of convertible notes and other indebtedness into
common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
504,676,193
|
|
|
|
504,676
|
|
|
|
730,231
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,234,907
|
|
Stock based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,228,598
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,228,598
|
|
Change in foreign currency translation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
25,692
|
|
|
|
-
|
|
|
|
(194
|
)
|
|
|
25,498
|
|
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
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
267,500
|
|
|
|
267,500
|
|
Net income (loss)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,161,835
|
)
|
|
|
(940,256
|
)
|
|
|
(3,102,091
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2021
|
|
|
1
|
|
|
$
|
1
|
|
|
|
214,006
|
|
|
$
|
214
|
|
|
|
3,050,699,071
|
|
|
$
|
3,050,699
|
|
|
$
|
50,941,680
|
|
|
$
|
(749,421
|
)
|
|
$
|
(54,346,906
|
)
|
|
$
|
1,524,480
|
|
|
$
|
420,747
|
|
Ending Balance, Value
|
|
|
1
|
|
|
$
|
1
|
|
|
|
214,006
|
|
|
$
|
214
|
|
|
|
3,050,699,071
|
|
|
$
|
3,050,699
|
|
|
$
|
50,941,680
|
|
|
$
|
(749,421
|
)
|
|
$
|
(54,346,906
|
)
|
|
$
|
1,524,480
|
|
|
$
|
420,747
|
|
The
accompanying notes are an integral part of the condensed consolidated financial statements.
BRAZIL
MINERALS, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For
the Nine Months Ended September 30, 2021 and 2020
|
|
2021
|
|
|
2020
|
|
|
|
Nine Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(3,102,091
|
)
|
|
$
|
(1,380,204
|
)
|
Adjustments to reconcile net loss to cash used in operating activities:
|
|
|
|
|
|
|
|
|
Stock based compensation and services
|
|
|
1,411,990
|
|
|
|
79,918
|
|
Amortization of debt discounts
|
|
|
12,839
|
|
|
|
249,270
|
|
Common stock issued in satisfaction of other financing costs
|
|
|
91,996
|
|
|
|
-
|
|
Convertible debt issued in satisfaction of other financing costs
|
|
|
37,212
|
|
|
|
18,402
|
|
Preferred stock issued in satisfaction of interest and other financing costs
|
|
|
75,276
|
|
|
|
-
|
|
Loss on share exchange agreement with related party
|
|
|
-
|
|
|
|
76,926
|
|
Loss on extinguishment of debt
|
|
|
224,812
|
|
|
|
-
|
|
Depreciation and amortization
|
|
|
28,128
|
|
|
|
29,393
|
|
Forgiveness of accrued interest payable on note payable
|
|
|
|
|
|
|
|
|
Provision for excess or obsolete inventory
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
19,238
|
|
|
|
(30,612
|
)
|
Deposits and advances
|
|
|
(16,285
|
)
|
|
|
2,765
|
|
Accounts payable and accrued expenses
|
|
|
(14,244
|
)
|
|
|
97,912
|
|
Accrued salary due to officer
|
|
|
30,387
|
|
|
|
147,643
|
|
Other noncurrent liabilities
|
|
|
(535
|
)
|
|
|
6,631
|
|
Net cash used in operating activities
|
|
|
(1,231,664
|
)
|
|
|
(701,956
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Acquisition of property and equipment
|
|
|
(6,574
|
)
|
|
|
(788
|
)
|
Acquisition of capital assets
|
|
|
|
|
|
|
|
|
Acquisition of intangible assets
|
|
|
(265,579
|
)
|
|
|
(11,940
|
)
|
Net cash used in investing activities
|
|
|
(272,153
|
)
|
|
|
(12,728
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Loan from officer
|
|
|
-
|
|
|
|
(37,296
|
)
|
Repayment of loans from officer
|
|
|
|
|
|
|
|
|
Net proceeds from sale of common stock
|
|
|
891,650
|
|
|
|
320,000
|
|
Proceeds from sale of subsidiary common stock to noncontrolling interests
|
|
|
456,200
|
|
|
|
525,000
|
|
Proceeds from convertible notes payable
|
|
|
125,000
|
|
|
|
-
|
|
Proceeds from loans payable
|
|
|
-
|
|
|
|
26,180
|
|
Repayment of loans payable
|
|
|
(235,308
|
)
|
|
|
-
|
|
Net cash provided by financing activities
|
|
|
1,237,542
|
|
|
|
833,884
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rates on cash and cash equivalents
|
|
|
422
|
|
|
|
13,703
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(235,466
|
)
|
|
|
132,903
|
|
Cash and cash equivalents at beginning of period
|
|
|
253,598
|
|
|
|
151,088
|
|
Cash and cash equivalents at end of period
|
|
$
|
18,132
|
|
|
$
|
283,991
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
-
|
|
|
$
|
-
|
|
Cash paid for income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
Related party convertible notes payable exchanged for stock
|
|
$
|
566,743
|
|
|
$
|
-
|
|
Shares issued in connection with conversion of debt and accrued interest
|
|
$
|
1,234,907
|
|
|
$
|
108,077
|
|
Shares issued in connection with relief of related party payable
|
|
$
|
-
|
|
|
$
|
280
|
|
Common stock warrants issued in connection with convertible promissory notes
|
|
$
|
40,019
|
|
|
$
|
-
|
|
Conversion of related party payables into convertible notes payable
|
|
|
|
|
|
|
|
|
Discount for beneficial conversion features on convertible notes
|
|
|
|
|
|
|
|
|
Acquisition of intangible assets via financing
|
|
$
|
701,694
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of the condensed consolidated financial statements.
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 September 30, 2021, and the results of operations and cash flows for the periods presented. The results of operations
for the three and nine months ended September 30, 2021 and 2020, 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, 2020 filed with the Securities
and Exchange Commission (the “SEC”) on March 31, 2021.
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 10.0% 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.
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
August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and
Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s
Own Equity. ASU 2020-06 will simplify the accounting for convertible instruments by reducing the number of accounting models for
convertible debt instruments and convertible preferred stock. Limiting the accounting models will result in fewer embedded conversion
features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be
subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract,
that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible
debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. ASU 2020-06 also amends the
guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting
conclusions. ASU 2020-06 will be effective January 1, 2024, for the Company. Early adoption is permitted, but no earlier than January
1, 2021, including interim periods within that year. The Company is evaluating the effect of the adoption of ASU 2020-06 on the consolidated
financial statements, but currently does not believe ASU 2020-06 will have a significant impact on the Company’s accounting for
its convertible debt instruments. The effect will largely depend on the composition and terms of the financial instruments at the time
of adoption.
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.
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 September 30, 2021 and December 31, 2020:
SCHEDULE OF PROPERTY AND EQUIPMENT
|
|
September 30, 2021
|
|
|
December 31, 2020
|
|
|
|
Cost
|
|
|
Accumulated Depreciation
|
|
|
Net
Book Value
|
|
|
Cost
|
|
|
Accumulated Depreciation
|
|
|
Net
Book Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computers and office equipment
|
|
$
|
3,854
|
|
|
$
|
(1,597
|
)
|
|
$
|
2,257
|
|
|
$
|
3,880
|
|
|
$
|
(573
|
)
|
|
$
|
3,307
|
|
Machinery and equipment
|
|
|
341,348
|
|
|
|
(279,285
|
)
|
|
|
62,063
|
|
|
|
348,376
|
|
|
|
(271,107
|
)
|
|
|
77,269
|
|
Vehicles
|
|
|
121,731
|
|
|
|
(121,731
|
)
|
|
|
–
|
|
|
|
127,416
|
|
|
|
(118,716
|
)
|
|
|
8,700
|
|
Total fixed assets
|
|
$
|
466,933
|
|
|
$
|
(402,613
|
)
|
|
$
|
64,320
|
|
|
$
|
479,672
|
|
|
$
|
(390,396
|
)
|
|
$
|
89,276
|
|
For
the three and nine months ended September 30, 2021, the Company recorded depreciation expense of $4,518 and $28,126, respectively, and
for the three and nine months ended September 30, 2020, the Company recorded depreciation expense of $4,271 and $29,393, respectively.
Intangible
Assets
Intangible
assets consist of mining rights are not amortized as the mining rights are perpetual. The carrying value was $1,336,173 and $407,467
at September 30, 2021 and December 31, 2020, 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.
As
of September 30, 2021, no change in the value of the Ares common stock was recorded as the recorded value still approximated fair value.
Accounts
Payable and Accrued Liabilities
SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
|
|
September 30, 2021
|
|
|
December 31, 2020
|
|
Accounts payable and other accruals
|
|
$
|
291,254
|
|
|
$
|
327,704
|
|
Mineral rights payable
|
|
|
686,839
|
|
|
|
–
|
|
Accrued interest
|
|
|
3,010
|
|
|
|
324,415
|
|
Total
|
|
$
|
981,103
|
|
|
$
|
652,119
|
|
NOTE
3 – CONVERTIBLE PROMISSORY NOTES PAYABLE
The
following tables set forth the components of the Company’s convertible debentures as of September 30, 2021 and December 31, 2020:
SCHEDULE OF CONVERTIBLE DEBENTURES
|
|
September 30,2021
|
|
|
December 31, 2020
|
|
Convertible notes payable – fixed conversion price
|
|
$
|
129,000
|
|
|
|
244,000
|
|
Convertible notes payable – variable conversion price
|
|
|
–
|
|
|
|
628,720
|
|
Discounts on convertible notes payable
|
|
|
(31,180
|
)
|
|
|
—
|
|
Less: loan discounts
|
|
|
(31,180
|
)
|
|
|
—
|
|
Total convertible notes
|
|
$
|
97,820
|
|
|
$
|
872,720
|
|
Total convertible notes, net
|
|
$
|
97,820
|
|
|
$
|
872,720
|
|
The
following table sets forth a summary of change in our convertible notes payable for the nine months ended September 30, 2021:
SUMMARY OF CHANGE IN CONVERTIBLE NOTES PAYABLE
Beginning balance
|
|
$
|
872,720
|
|
New issuances of convertible notes payable
|
|
|
399,000
|
|
Lender adjustments for penalties or defaults
|
|
|
37,212
|
|
Debt discounts recorded on new issuances
|
|
|
(44,019
|
)
|
Amortization of debt discounts associated with convertible debt
|
|
|
12,839
|
|
Conversion of convertible note principal into common stock
|
|
|
(909,932
|
)
|
Increase in principal amounts outstanding due to lender adjustments per terms of the note agreements
|
|
|
-
|
|
Repayments of convertible notes payable
|
|
|
(270,000
|
)
|
Total convertible notes
|
|
$
|
97,820
|
|
Convertible
Notes Payable - Fixed Conversion Price
On
January 7, 2014, the Company issued to a family trust a senior secured convertible promissory note in the principal amount, and received
gross proceeds, of $244,000 and warrants to purchase an aggregate of 488,000 shares of the Company’s common stock at an exercise
price of $62.50 per share through December 26, 2018. The Company received gross proceeds of $244,000 for the sale of such securities.
The outstanding principal of the note bears interest at the rate of 12% per annum. The note is convertible at the option of the holder
into common stock of the Company at a conversion rate of one share for each $50.00 of principal and interest converted. As of September
30, 2021, all warrants issued in connection with this note had expired.
The
outstanding principal on the note was payable on March 31, 2015, which as of the date of these financial statements is past due and in
technical default. The Company is in negotiations with the note holder to satisfy, amend the terms or otherwise resolve the obligation
in default. No demand for payment has been made. As a result of the default, the interest rate on the note increased to 30% per annum.
Interest was payable on September 30, 2014 and on the maturity date. In December 2020, the lender agreed to reduce the interest rate
from the default rate of 30% to the stated rate of 10% retroactively. As a result, the Company recorded gain of $238,151 from the relief
of interest expense to other income.
On
February 3, 2021, the Company issued 20,000,000 shares of common stock upon conversion of $80,000 in convertible notes payable and accrued
interest. On May 6, 2021, the Company issued 86,246,479 shares of common stock upon conversion of $334,986 in convertible notes payable
and accrued interest. As of September 30, 2021, the balance of the note was $0.
On
June 18, 2021, Company issued to one noteholder a $129,000 convertible promissory note for $125,000 in proceeds. The note bears interest
at 8.0% per annum and matures one year from issuance on June 18, 2022. After six months from issuance, the note is convertible at the
option of the holder at a price of $0.001. A debt discount of $4,000 for issuance costs was recorded and is being amortized over the
life of the note.
ASC
470-20 requires proceeds from the sale of a debt instrument with stock purchase warrants be allocated to the two elements based on the
relative fair values of the debt instrument without the warrants and of the warrants themselves at the time of issuance. In connection
with the warrant issuance, the Company allocated an aggregate fair value of $40,019 to the stock warrants and recorded a debt discount
which will be amortized to interest expense over the term of the loan using the effective interest method so the debt, at its term, is
recorded at its face value. The Company estimated the fair value of this the warrant warrants at date of grant using the Black-Scholes
option pricing model using the following inputs: (i) stock price on the date of grant of $0.0122, (ii) the contractual term of the warrant
of 4 years, (iii) a risk-free interest rate of 0.89% and (iv) an expected volatility of the price of the underlying common stock of 443.3%.
As
of September 30, 2021, the outstanding principal balance on the note was $129,000, and the associated unamortized discounts totaled $31,180.
Convertible
Notes Payable - Variable Conversion Price
At
various times to fund operations, the Company issues convertible notes payable in which the conversion features are variable. In addition,
some of these convertible notes payable have on issuance discounts and other fees withheld.
During
the year ended December 31, 2016, the Company issued to one noteholder, in various transactions, $242,144 in convertible promissory notes
with fixed floors and received an aggregate of $232,344 in proceeds. The convertible promissory notes each bear interest at 8.0% per
annum and mature one year from issuance ranging from July to December 2017. After six months from issuance, each convertible promissory
note is convertible at the option of the holder at a 50% discount to the lowest traded price of the Company’s common stock over
the previous 20 days. In addition, each note’s conversion rate has a floor of $0.0001. Total debt discounts related to the beneficial
conversion features of $241,852 were recorded and are being amortized over the life of the notes. On April 9, 2021, the Company agreed
to settle all outstanding principal and interest on these notes in exchange for common stock and common stock purchase warrants. See
settlement disclosure below for more information. As of September 30, 2021, the outstanding principal balance on these notes total $0,
and all discounts were fully amortized.
During
the year ended December 31, 2017, the Company issued to one noteholder in various transactions $477,609 in convertible promissory notes
with fixed floors and received an aggregate of $454,584 in proceeds. The convertible promissory notes each bear interest at 8.0% per
annum and mature one year from issuance ranging from January to August 2018. After six months from issuance, each convertible promissory
note is convertible at the option of the holder at a 50% discount to the lowest traded price of the Company’s common stock over
the previous 20 days. In addition, each note’s conversion rate has a floor of $0.0001. Total debt discounts related to the beneficial
conversion features of $447,272 were recorded and are being amortized over the life of the notes. During the nine months ended September
30, 2021, the Company issued 182,872,798 shares of its common stock upon the conversion of $50,000 and $ 14,004, respectively, in note
principal and accrued interest. On April 9, 2021, the Company agreed to settle all outstanding principal and interest on these notes
in exchange for common stock and common stock purchase warrants. See settlement disclosure below for more information. As of September
30, 2021, the outstanding principal balance on these notes total $0, and all discounts were fully amortized.
During
the year ended December 31, 2018, the Company issued to one noteholder in various transactions $137,306 in convertible promissory notes
with fixed floors and received an aggregate of $130,556 in proceeds. The convertible promissory notes each bear interest at 8.0% per
annum and mature one year from issuance ranging from August 2018 to April 2019. After six months from issuance, each convertible promissory
note is convertible at the option of the holder at a 50% discount to the lowest traded price of the Company’s common stock over
the previous 20 days. In addition, each note’s conversion rate has a floor of $0.0001. Total debt discounts related to the beneficial
conversion features of $122,755 were recorded and are being amortized over the life of the notes. During the nine months ended September
30, 2021, the Company issued 23,118,645 shares of its common stock upon the conversion of $118,996 and $27,496, respectively, in note
principal and accrued interest. On April 9, 2021, the Company agreed to settle all outstanding principal and interest on these notes
in exchange for common stock and common stock purchase warrants. See settlement disclosure below for more information. As of September
30, 2021, the outstanding principal balance on these notes total $0, and all discounts were fully amortized.
During
the year ended December 31, 2019, the Company issued to one noteholder in various transactions $282,000 in convertible promissory notes
with fixed floors and received an aggregate of $276,000 in proceeds. The convertible promissory notes each bear interest at 8.0% per
annum and mature one year from issuance in July 2020. After six months from issuance, each convertible promissory note is convertible
at the option of the holder at a 50% discount to the lowest traded price of the Company’s common stock over the previous 20 days.
In addition, each note’s conversion rate has a floor of $0.0001. Total debt discounts related to the beneficial conversion features
of $276,000 and $6,000 for issuance costs were recorded and are being amortized over the life of the notes. During the nine months ended
September 30, 2021, the Company issued 156,438,271 shares of its common stock upon the conversion of $310,200 and $40,186, respectively,
in note principal and accrued interest. As of September 30, 2021, the principal balance on these notes was $0, and all discounts were
fully amortized.
On
April 9, 2021, the Company issued 36,000,000 shares of its common stock upon the conversion of $186,736 and $62,302, respectively, in
note principal and accrued interest to settle all outstanding balances with the lender. In connection with the settlement, the Company
agreed to issue 15,000,000 common stock purchase warrants with a cashless exercise price of $0.0125. The warrants expire on December
31, 2021. The Company allocated an aggregate fair value of $224,812 to the stock warrants and recorded a loss on the extinguishment of
debt. The Company estimated the fair value of this the warrant warrants at date of grant using the Black-Scholes option pricing model
using the following inputs: (i) stock price on the date of grant of $0.0158, (ii) the contractual term of the warrant of 0.7 years, (iii)
a risk-free interest rate of 0.35% and (iv) an expected volatility of the price of the underlying common stock of 440.5%.
On
January 19, 2021, the Company issued to one noteholder a $270,000 convertible promissory note. The note bears interest at 8.0% per annum
and matures on January 19, 2025. After six months from issuance, the note is convertible at the option of the holder at a 50% discount
to the lowest traded price of the Company’s common stock over the previous 20 days. The note’s conversion rate has a floor
of $0.0001.
On
May 7, 2021, the Company repaid $270,000 in note principal and $6,391 in accrued interest to the holder. As of September 30, 2021, the
principal balance on the note was $0.
Future
Potential Dilution
As
of September 30, 2021, the Company’s convertible note is convertible into an aggregate of approximately 129,000,000 shares of common
stock.
NOTE
4 – LOANS PAYABLE
As
of December 31, 2020, the Company had $235,308 in principal outstanding from bridge loans. The loans payable bear interest at 8.0% per
annum and are payable upon demand. In February 2021, the Company repaid the full principal balance of $235,308 and accrued interest of
$24,654. As of September 30, 2021, the balance of these notes was $0.
NOTE
5 – 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 September 30, 2021 and December 31, 2020 amounted to $115,316 and $121,250, respectively.
NOTE
6 – STOCKHOLDERS’ DEFICIT
Authorized
As
of September 30, 2021, the Company had 3,250,000,000 common shares and 10,000,000 preferred shares authorized with a par value of $0.001
per share.
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.
Series
D Preferred Stock
On
September 14, 2021, the Company filed with the Nevada Secretary of State a Certificate of Designations, Preferences and Rights of Series
D Convertible Preferred Stock (“Series D Stock”) to designate 1,000,000 shares of a new series of preferred stock. The Certificate
of Designations, Preferences and Rights of Series D Convertible Preferred Stock provides that for so long as Series D Stock is issued
and outstanding, the holders of Series D Stock shall have no voting power until such time as the Series D Stock is converted into shares
of common stock. One share of Series D Stock is convertible into 10,000 shares of common stock and may be converted at any time at the
election of the holder. Holders of the Series D Stock are not entitled to any liquidation preference over the holders of common stock,
and are entitled to any dividends or distributions declared by the Company on a pro rata basis.
On
September 15, 2021, the Company issued 214,006 shares of Series D Stock to Marc Fogassa for the conversion of $566,743 in convertible
note principal and $75,276 of interest expense.
Nine
Months Ended September 30, 2021 Transactions
During
the nine months ended September 30, 2021, the Company issued 136,219,930
shares of common stock for gross proceeds
of $816,650
pursuant to subscription agreements with
accredited investors. Additionally, the Company issued 504,676,193
shares of common stock upon conversion of $1,234,906
in convertible notes payable and accrued interest.
Further, the Company issued 396,917,702
shares of common stock for net proceeds of
$75,000
upon the exercise of 423,816,100
stock options and
warrants. Lastly, the Company issued 14,954,949
shares of common stock valued at $183,393
to contractors for services provided.
Nine
Months Ended September 30, 2020 Transactions
During
the nine months ended September 30, 2020, the Company issued 232,500,000 shares of common stock to accredited investors pursuant to subscription
agreements for net proceeds of $320,000. Additionally, the Company issued 5,666,594 shares of common stock to non-employees for services
rendered. Further, the Company issued 235,019,509 shares of common stock upon conversion of $108,077 in convertible notes payable and
accrued interest.
Lastly,
the Company exchanged 200,000,000 shares of common stock returned by an accredited investor for 150,000 shares of Jupiter Gold’s
common stock held as an investment by the Company. The Company used the quoted fair value of each entity’s common stock on the
dates of exchange to determine the exchange ratio.
Stock Options
The
following table reflects all outstanding and exercisable common stock options at September 30, 2021. All common stock options immediately
vest and are exercisable for a period of five to ten years from the date of issuance.
SCHEDULE OF OUTSTANDING AND EXERCISABLE OPTIONS
|
|
Number of Options Outstanding and Vested
|
|
|
Weighted
Average
Exercise Price
|
|
|
Remaining Contractual
Life (Years)
|
|
|
Aggregated Intrinsic
Value
|
|
Outstanding, January 1, 2021
|
|
|
119,917,140
|
|
|
$
|
0.0025
|
|
|
|
3.6
|
|
|
|
|
|
Issued
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
|
|
Exercised
|
|
|
(117,046,100
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
|
|
Forfeited
|
|
|
(691,340
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
|
|
Outstanding and vested, September 30, 2021
|
|
|
2,179,700
|
|
|
$
|
0.0300
|
|
|
|
0.6
|
|
|
$
|
–
|
|
The
following table reflects all outstanding and exercisable preferred stock options at September 30, 2021. All preferred stock options immediately
vest and are exercisable for a period of 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, 2021
|
|
|
–
|
|
|
$
|
–
|
|
|
|
–
|
|
|
|
|
|
Issued
|
|
|
27,000
|
|
|
|
0.10
|
|
|
|
9.6
|
|
|
|
|
|
Exercised
|
|
|
(–
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
|
|
Forfeited
|
|
|
(–
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
|
|
Outstanding and vested, September 30, 2021
|
|
|
27,000
|
|
|
$
|
0.10
|
|
|
|
9.6
|
|
|
$
|
2,508,300
|
|
During the nine months ended September 30, 2021,
the Company granted options to purchase an aggregate of 270,000,000 shares of common stock to officers and non-management directors.
The options were valued at $862,216 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 $0.0004 to $0.008, expected dividend yield of 0.0%, historical
volatility calculated between 44.8% and 124.4%, risk-free interest rate ranging between 0.9% and 1.75%, and an expected term of 10 years.
On September 15, 2021, the Company amended any
stock options granted after December 31, 2020 by changing the underlying security issuable under those options from the Company’s common stock
to its Series D Stock. The Series D Stock has a par value of $0.001, and each share can convert into 10,000 shares of the Company’s
common stock. As such, the Company exchanged options to purchase an aggregate of 270,000,000 shares of common stock for options to purchase
an aggregate of 27,000 shares of Series D Stock. The Company did not record any change in value, as computed above using the Black-Scholes
option pricing model, as the election resulted in an equal exchange of underlying shares of common stock.
See
Note 8 – Related Party Transactions for more information related to stock options issued and outstanding for the Company’s
subsidiaries Jupiter Gold and Apollo Resources.
Common
Stock Purchase Warrants
Common
stock purchase warrants are accounted for as equity in accordance with ASC 480, Accounting for Derivative Financial Instruments Indexed
to, and Potentially Settled in, a Company’s Own Stock, Distinguishing Liabilities from Equity.
The
following table reflects all outstanding and exercisable warrants at September 30, 2021. All warrants are exercisable for a period of
nine months to four years from the date of issuance:
SCHEDULE OF WARRANT ACTIVITY
|
|
Number of Warrants Outstanding
|
|
|
Weighted Average
Exercise Price
|
|
|
Weighted Average Contractual
Life (Yrs.)
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, January 1, 2021
|
|
|
306,770,000
|
|
|
$
|
0.0016
|
|
|
|
0.83
|
|
Warrants issued
|
|
|
123,678,264
|
|
|
$
|
0.0134
|
|
|
|
|
|
Warrants exercised
|
|
|
(306,770,000
|
)
|
|
$
|
0.0016
|
|
|
|
|
|
Warrants forfeited
|
|
|
(– )
|
|
|
$
|
–
|
|
|
|
|
|
Outstanding and exercisable, September 30, 2021
|
|
|
123,678,265
|
|
|
$
|
0.0134
|
|
|
|
2.65
|
|
As of September 30, 2021, the 123,678,265 warrants
outstanding has an aggregated intrinsic value of $0.
NOTE
7 – 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
8 - RELATED PARTY TRANSACTIONS
Chief
Executive Officer
The
following tables set forth the components of the Company’s related party payables as of September 30, 2021 and December 31, 2020:
SCHEDULE OF RELATED PARTY TRASACTIONS
|
|
September 30, 2021
|
|
|
December 31, 2020
|
|
Convertible notes payable to related party
|
|
$
|
–
|
|
|
$
|
566,743
|
|
Less: loan discounts
|
|
|
|
|
|
|
-
|
|
Total convertible notes payable to related party, net
|
|
|
|
|
|
|
566,743
|
|
Total related party payables
|
|
|
|
|
|
|
566,743
|
|
Effective
June 30, 2018, the Company issued a convertible promissory note in the principal amount of $445,628 to its Chief Executive Officer against
a portion of these unpaid compensatory balances. The note bears no interest and is payable on demand. The note is convertible at the
option of the holder at the lower of (i) the average of the five lowest bid prices of the Company’s common stock over the previous
20 trading days or (ii) the lowest price per share at which the Company sold its common stock in a transaction with a person who is not
a manager, officer, or director of the Company during the period from the date hereof until the giving of notice of the election to convert
or the lowest price per share at which a noteholder who is not a manager, officer, or director of the Company converted any debt of the
Company into shares of the Company during the period from the date hereof until the giving of notice of the election to convert. The
note’s conversion rate has a floor of $0.0001. Total debt discounts related to the beneficial conversion features of $445,628 were
recorded and are being amortized over a one-year period consistent with the maturity dates of convertible notes issued to third party
holders. As of September 30, 2021, all discounts were fully amortized.
On
April 7, 2019, the Company’s board of directors approved the issuance of a convertible note in the principal amount of $261,631
to its Chief Executive Officer against a portion
of these unpaid compensatory balances. The note bears interest at an annual rate of 6.0%
and is payable on demand. The note is convertible at the option of the holder at the lower of (i) $0.00045
or (ii) the lowest price per share at which a
noteholder who is not a manager, officer, or director of the Company converted any debt of the Company into common stock of the Company
during the period from the date hereof until the giving of notice of the election to convert. Total debt discounts related to the beneficial
conversion features of $261,631
were recorded and are being amortized over a
one-year period consistent with the maturity dates of convertible notes issued to third party holders. As of September 30, 2021, all
discounts were
fully amortized.
On
June 30, 2019, the Company’s board of directors approved the issuance of a convertible note in the principal amount of $61,724
to its Chief Executive Officer against a portion
of these unpaid compensatory balances. The note bears interest at an annual rate of 6.0%
and is payable on demand. The note is convertible at the option of the holder at the lower of (i) $0.0003
or (ii) the lowest price per share at which a
noteholder who is not a manager, officer, or director of the Company converted any debt of the Company into common stock of the Company
during the period from the date hereof until the giving of notice of the election to convert. Total debt discounts related to the beneficial
conversion features of $61,724
were recorded and are being amortized over a
one-year period consistent with the maturity dates of convertible notes issued to third party holders. As of September 30, 2021, all
discounts were fully amortized.
On
September 15, 2021, the Company issued 214,006
shares of Series D Stock to Marc Fogassa for
the conversion of $566,743
in convertible note principal and $75,276
of interest expense. The conversion rate was
modified from $0.0003 per share of common stock to $3.00 per share of Series D Stock due to the change in the underlying security. The
Company did not record any dividend or expense as the conversion resulted in an equal exchange of underlying shares of common stock.
On
March 11, 2020, the Company issued 200,000 shares of its common stock with a fair value of $280, or $0.0014 per share, to its Chief Executive
Officer in lieu of cash for loans payable and other accrued obligations.
On
December 3, 2020, the Company issued 161,636,427 shares of common stock to its Chief Executive Officer in connection with the exercise
stock options acquired on February 19, 2019 as described above.
Jupiter
Gold Corporation
During
the nine months ended September 30, 2021, Jupiter Gold granted options to purchase an aggregate of 315,000 shares of its common stock
to Marc Fogassa at prices ranging between $0.01 to $1.00 per share. The options were valued at $148,853 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 ($0.19 to $1.45), expected dividend yield of 0%, historical volatility calculated between 97.3% and 211.5%,
risk-free interest rate between a range of 0.81% to 1.75%, and an expected term between 5 and 10 years. On September 30, 2021, Marc Fogassa
exercised 120,000 stock options on a cashless basis and received 20,826 shares of Jupiter Gold common stock. As of September 30, 2021,
an aggregate 2,270,000 Jupiter Gold common stock options were outstanding with a weighted average life of 3.1 years at an average exercise
price of $0.86 and an aggregated intrinsic value of $489,450.
Apollo
Resource Corporation
During
the nine months ended September 30, 2021, Apollo Resources granted options to purchase an aggregate of 150,000 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 between 49.2% and 98.3%, risk-free
interest rate between a range of 0.68% to 1.75%, and an expected term between 5 and 10 years. On September 30, 2021, Marc Fogassa exercised
195,000 stock options for cash proceeds of $1,950 and received 195,000 shares of Apollo Resources common stock. As of September 30, 2021,
there were no Apollo Resource common stock options outstanding.
NOTE
9 – RISKS AND UNCERTAINTIES
In
light of the SEC’s Division of Corporate Finance Disclosure Guidance Topic Number 9, dated March 25, 2020, on the impact of COVID-19,
the Company notes the following:
●
|
The
Company has not had any reports of COVID-19 among its workforce;
|
●
|
The
Company has been able to continue local operations of the Company in Brazil as they are located in a rural area currently unaffected
by any lockdown restrictions implemented elsewhere in Brazil;
|
●
|
Travel
between the U.S. and Brazil has essentially ceased; this is mitigated by the use of live streaming video and other methods as needed;
|
●
|
Some
exploratory research of some of the Company’s projects have been delayed as certain municipalities in Brazil have unilaterally
restricted the entry of outside persons; these actions are being legally challenged by branches of the state administration and the
Company is monitoring all new developments;
|
●
|
The
Company has postponed any expenses which are not critical to it at the moment.
|
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
10 - SUBSEQUENT EVENTS
In
accordance with FASB ASC 855-10 Subsequent Events, the Company has analyzed its operations subsequent to September 30, 2021 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.
BRAZIL
MINERALS, INC.
|
|
TABLE
OF CONTENTS
|
DECEMBER
31, 2020
|
Report
of Independent Registered Public Accounting Firm
To the shareholders
and the board of directors of Brazil Minerals, Inc.
Opinion on the
Financial Statements
We have audited the
accompanying consolidated balance sheets of Brazil Minerals, Inc. (the “Company”) as of December 31, 2020 and 2019, the
related consolidated statements of operations and comprehensive loss, stockholders’ equity (deficit), and cash flows for each of
the two years in the period ended December 31, 2020, and the related notes (collectively referred to as the “financial statements”).
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of
December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the two years in the period ended
December 31, 2020, in conformity with accounting principles generally accepted in the United States.
Going Concern Uncertainty
The accompanying financial
statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt
about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in
Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements
are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements
based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits
in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of
our audits we are required to obtain an understanding of internal control over financial reporting 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.
Our audits included
performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud,
and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe
that our audits provide a reasonable basis for our opinion.
Critical Audit
Matter
The critical audit
matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated
or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the
consolidated financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication
of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole,
and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on
the accounts or disclosures to which they relate.
Valuation of long-lived
assets
As described in the Note
1 to the financial statements, the Company continually monitors events and changes in circumstances that could indicate carrying amounts
of long-lived assets, including property and equipment and definite-life intangible assets, may not be recoverable. In addition,
the Company review the impairment of indefinite-life intangible assets at least annually, or more frequent when impairment indicators
are present. As of December 31, 2020, carrying value of property and equipment and intangible assets were $89,726 and $407,467, respectively.
Auditing the valuation of long-lived assets
involved complex judgment due to the significant estimation required in determining the recoverability or fair value of the long-lived
assets. Specifically, the cash flow forecasts were sensitive to significant assumptions about future market and economic conditions.
Significant assumptions used in the Company’s fair value estimates included sales volume, pricing, cost of labor, marketing
spending, general and administrative expenses, tax rates, as applicable.
We obtained an understanding of the controls
over the Company’s annual impairment assessments for long-lived assets and tested the future cash flows of the long-lived
assets based on our risk assessments. Our audit procedures included, among others, comparing significant inputs to observable third
party and industrial sources, and evaluating the reasonableness of management’s projected financial information by comparing
to observable average market prices of the Company’s products. We reviewed most recent available technical reports about
the Company’s mineral projects. We performed sensitivity analyses of significant assumptions to evaluate the change in the
cash flow or fair value of the long-lived assets and assessed the historical accuracy of management’s estimates. We also
assessed the Company’s disclosure of its annual impairment assessments included in Note 1.
/s/ BF Borgers CPA
PC
We have served as
the Company’s auditor since 2015.
Lakewood, Colorado
March 31, 2021
BRAZIL
MINERALS, INC.
|
CONSOLIDATED
BALANCE SHEETS
|
AS
OF DECEMBER 31, 2020 AND 2019
|
The
accompanying notes are an integral part of these consolidated financial statements.
BRAZIL
MINERALS, INC.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
|
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
|
The
accompanying notes are an integral part of these consolidated financial statements.
BRAZIL
MINERALS, INC.
|
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
|
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
|
The
accompanying notes are an integral part of these consolidated financial statements.
|
BRAZIL
MINERALS, INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
|
|
|
Year Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Cash flows from operating activities of continuing operations:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,546,035
|
)
|
|
$
|
(2,085,881
|
)
|
Adjustments to reconcile net loss to cash used in operating activities:
|
|
|
|
|
|
|
|
|
Stock based compensation and services
|
|
|
168,015
|
|
|
|
175,422
|
|
Forgiveness of accrued interest payable on note payable
|
|
|
(238,151
|
)
|
|
|
—
|
|
Amortization of debt discounts
|
|
|
249,270
|
|
|
|
587,198
|
|
Convertible debt issued in satisfaction of other financing costs
|
|
|
22,314
|
|
|
|
18,981
|
|
Loss on share exchange agreement with related party
|
|
|
76,926
|
|
|
|
—
|
|
Loss on extinguishment of debt
|
|
|
—
|
|
|
|
67,694
|
|
Depreciation and amortization
|
|
|
47,765
|
|
|
|
63,457
|
|
Provision for excess or obsolete inventory
|
|
|
—
|
|
|
|
17,166
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(30,432
|
)
|
|
|
488
|
|
Deposits and advances
|
|
|
1,698
|
|
|
|
(1,285
|
)
|
Accounts payable and accrued expenses
|
|
|
84,776
|
|
|
|
140,555
|
|
Accrued salary due to officer
|
|
|
195,786
|
|
|
|
213,322
|
|
Other noncurrent liabilities
|
|
|
(28,713
|
)
|
|
|
11,811
|
|
Net cash provided by (used in) operating activities
|
|
|
(996,781
|
)
|
|
|
(791,072
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Acquisition of capital assets
|
|
|
(1,902
|
)
|
|
|
(677
|
)
|
Increase in intangible assets
|
|
|
(11,741
|
)
|
|
|
—
|
|
Acquisition of intangible assets
|
|
|
(11,741
|
)
|
|
|
—
|
|
Net cash provided by (used in) investing activities
|
|
|
(13,643
|
)
|
|
|
(677
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Repayment of loans from officer
|
|
|
(16,931
|
)
|
|
|
(96,366
|
)
|
Net proceeds from sale of common stock
|
|
|
320,000
|
|
|
|
123,910
|
|
Proceeds from sale of subsidiary common stock to noncontrolling interests
|
|
|
775,300
|
|
|
|
657,500
|
|
Proceeds from convertible notes payable
|
|
|
—
|
|
|
|
276,000
|
|
Proceeds from loans payable
|
|
|
26,180
|
|
|
|
202,920
|
|
Repayment of loans payable
|
|
|
—
|
|
|
|
(222,112
|
)
|
Net cash provided by (used in) financing activities
|
|
|
1,104,549
|
|
|
|
941,852
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rates on cash and cash equivalents
|
|
|
8,385
|
|
|
|
(1,422
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
|
102,510
|
|
|
|
148,681
|
|
Cash and cash equivalents at beginning of period
|
|
|
151,088
|
|
|
|
2,407
|
|
Cash and cash equivalents at end of period
|
|
$
|
253,598
|
|
|
$
|
151,088
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
—
|
|
|
$
|
8,568
|
|
Cash paid for income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
Related party convertible note payable exchanged for stock options
|
|
$
|
—
|
|
|
$
|
202,240
|
|
Shares issued in connection with conversion of debt and accrued interest
|
|
$
|
164,820
|
|
|
$
|
228,598
|
|
Shares issued in connection with relief of related party payable
|
|
$
|
280
|
|
|
$
|
—
|
|
Common stock warrants issued in connection with convertible promissory notes
|
|
$
|
40,019
|
|
|
$
|
-
|
|
Conversion of related party payables into convertible notes payable
|
|
$
|
—
|
|
|
$
|
323,355
|
|
Discount for beneficial conversion features on convertible notes
|
|
$
|
—
|
|
|
$
|
276,000
|
|
Acquisition of intangible assets via financing
|
|
$
|
701,694
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these 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
Basis
of Presentation and Principles of Consolidation
The
consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles
(GAAP) of the United States of America and are expressed in United States dollars. For the years ended December 31,
2020 and 2019, the consolidated financial statements include the accounts of the Company; its 99.99% owned subsidiary, BMIX Participações
Ltda. (BMIXP), which includes the accounts of BMIXPs wholly-owned subsidiary, Mineração Duas Barras
Ltda. (MDB), and BMIXPs 50% owned subsidiary, RST Recursos Minerais Ltda. (RST); its 99.99% owned
subsidiary, Hercules Resources Corporation (HRC), which includes the accounts of HRCs 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 10.6% equity interest in Jupiter Gold Corporation
(Jupiter Gold), which includes the accounts of Jupiter Golds 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 Companys 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.
Going
Concern
The
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 Companys 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.
|
BRAZIL
MINERALS, INC.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Fair
Value of Financial Instruments
The
Company follows the guidance of Accounting Standards Codification (ASC) Topic 820 – Fair Value Measurement and
Disclosure. Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants as of the measurement date. The guidance also establishes a
hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable
inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would
use in valuing the asset or liability and are developed based on market data obtained from sources independent of our Company.
Unobservable inputs are inputs that reflect our Companys assumptions about the factors market participants would use in valuing
the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value:
Level 1.
Observable inputs such as quoted prices in active markets;
Level 2.
Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3.
Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
As
of December 31, 2020 and 2019, the Companys derivative liabilities were considered a level 2 liability. See Note 4 for a discussion
regarding the determination of the fair market value. The Company does not have any level 3 assets or liabilities.
The
Companys financial instruments consist of cash and cash equivalents, accounts receivable, taxes receivable, prepaid expenses,
deposits and other assets, accounts payable, accrued expenses and convertible notes payable. The carrying amount of these financial
instruments approximates fair value due to either length of maturity or interest rates that approximate prevailing market rates
unless otherwise disclosed in these consolidated 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 that the funds are not being held for investment purposes. The Companys bank accounts are deposited in FDIC insured institutions.
Funds held in U.S. banks are insured up to $250,000 and funds held in Brazilian banks are insured up to $250,000 Brazilian Reais
(translating into approximately $48,107 as of December 31, 2020).
Accounts
Receivable
Accounts
receivable are customer obligations due under normal trade terms which are recorded at net realizable value. The Company establishes
an allowance for doubtful accounts based on managements assessment of the collectability of trade receivables. A considerable
amount of judgment is required in assessing the amount of the allowance. The Company makes judgments about the creditworthiness
of each customer based on ongoing credit evaluations and monitors current economic trends that might impact the level of credit
losses in the future. If the financial condition of the customers were to deteriorate, resulting in their inability to make payments,
a specific allowance will be required.
Recovery
of bad debt amounts previously written off is recorded as a reduction of bad debt expense in the period the payment is collected.
If the Companys actual collection experience changes, revisions to its allowance may be required. After all attempts to
collect a receivable have failed, the receivable is written off against the allowance.
Inventory
Inventory
for the Company consists of ore stockpile, containing auriferous and diamondiferous gravel, which after processing in a recovery
plant yields diamonds and gold, and is stated at lower of cost or market. No value was placed on sand. The amount of any write-down
of inventories to net realizable value and all losses, are recognized in the period the write-down of loss occurs. At December
31, 2020 and 2019, inventory consisted primarily of rough ore stockpiled for further gold and diamonds recovery. During the years
ended December 31, 2020 and 2019, the Company recorded write-downs of $0 and $17,166, respectively, against the value of its inventory.
Taxes Receivable
The
Company records a receivable for value added taxes receivable from Brazilian authorities on goods and services
purchased by its Brazilian subsidiaries. The Company intends to recover the taxes through the acquisition of capital equipment
from sellers who accept tax credits as payments.
|
BRAZIL
MINERALS, INC.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Property
and Equipment
Property
and equipment are stated at cost, net of accumulated depreciation. Major improvements and betterments are capitalized. Maintenance
and repairs are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful life.
At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation are removed from
the accounts and any resulting gain or loss is reflected in the statements of operations as other gain or loss, net.
The
diamond and gold processing plant and other machinery are depreciated over an estimated useful life of ten years; vehicles are
depreciated over an estimated life of four years; and computer and other office equipment over an estimated useful life of three
years.
Mineral
Properties
Costs
of exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. Mineral property acquisition
costs, including licenses and lease payments, are capitalized. Although the Company has taken steps to verify title to mineral
properties in which it has an interest, these procedures do not guarantee the Companys rights. Such properties may be subject
to prior agreements or transfers and title may be affected by undetected defects.
Impairment
losses are recorded on mineral properties used in operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets carrying amount. As of December 31, 2020 and 2019, the
Company did not recognize any impairment losses related to mineral properties held.
Intangible
Assets
For
intangible assets purchased in a business combination, the estimated fair values of the assets received are used to establish
their recorded values. For intangible assets acquired in a non-monetary exchange, the estimated fair values of the assets transferred
(or the estimated fair values of the assets received, if more clearly evident) are used to establish their recorded values, unless
the values of neither the assets received nor the assets transferred are determinable within reasonable limits, in which case
the assets received are measured based on the carrying values of the assets transferred. Valuation techniques consistent with
the market approach, income approach and/or cost approach are used to measure fair value. Intangible assets consist of mineral
rights awarded by the Brazilian national mining department and held by the Companys subsidiaries.
Impairment of
Intangible Assets with Indefinite Useful Lives
The Company accounts
for intangible assets in accordance with Accounting Standards Codification (“ASC”) 350, Intangibles – Goodwill
and Other (“ASC 350”). ASC 350 requires that intangible assets with indefinite useful lives no longer be amortized,
but instead be evaluated for impairment at least annually. On an annual basis, in the fourth quarter of the fiscal year, management
reviews intangible assets with indefinite useful lives for impairment by first assessing qualitative factors to determine whether
the existence of events or circumstances makes it more-likely-than-not that the fair value of an intangible asset is less than
its carrying amount. If it is determined that it is more-likely-than-not that the fair value of an intangible asset is less than
its carrying amount, the intangible asset is further tested for impairment by comparing the carrying amount to its estimated fair
value using a discounted cash flow. Impairment, if any, is measured as the amount by which an indefinite-lived intangible asset’s
carrying amount exceeds its fair value.
Application of impairment
tests requires significant management judgment, including the determination of fair value of each indefinite-lived intangible
asset. Judgment applied when performing the qualitative analysis includes consideration of macroeconomic, industry and market
conditions, overall financial performance of the entity, composition, or strategy changes affecting the recoverability of asset
groups. Judgments applied when performing the quantitative analysis includes estimating future cash flows, determining appropriate
discount rates and making other assumptions. Changes in these judgments, estimates and assumptions could materially affect the
determination of fair value for each indefinite-lived intangible asset.
Impairment
of Long-Lived Assets
For
long-lived assets, such as property and equipment and intangible assets subject to amortization, 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.
Convertible
Instruments
The
Company evaluates and account for conversion options embedded in convertible instruments in accordance with ASC 470-20, Debt
with Conversion and Other Options.
Applicable
GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative
financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics
and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks
of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is
not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate
instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.
|
BRAZIL
MINERALS, INC.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
The
Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated
from their host instruments) by recording, when necessary, discounts to convertible notes for the intrinsic value of conversion
options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment
date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements
are amortized over the term of the related debt to their stated date of redemption.
Variable
Interest Entities
The
Company determines at the inception of each arrangement whether an entity in which the Company holds an investment or in which
the Company has other variable interests in is considered a variable interest entity. The Company consolidates VIEs when it is
the primary beneficiary. The primary beneficiary of a VIE is the party that meets both of the following criteria: (1) has the
power to make decisions that most significantly affect the economic performance of the VIE; and (2) has the obligation to absorb
losses or the right to receive benefits that in either case could potentially be significant to the VIE. Periodically, the Company
assesses whether any changes in the interest or relationship with the entity affect the determination of whether the entity is
still a VIE and, if so, whether the Company is the primary beneficiary. If the Company is not the primary beneficiary in a VIE,
the Company accounts for the investment under the equity method or cost method in accordance with the applicable GAAP.
The
Company has concluded that Apollo Resources, Jupiter Gold and their subsidiaries
are VIEs in accordance with applicable accounting standards and guidance; and although the operations of Apollo Resources and
Jupiter Gold are independent of the Company, through governance rights, the Company has the power to direct the activities that
are most significant to Apollo Resources and Jupiter Gold. Therefore, the Company concluded that it is the primary beneficiary
of both Apollo Resources and Jupiter Gold.
Revenue
Recognition
The
Company recognizes revenue under ASC Topic 606, Revenue from Contracts with Customers (ASC 606). The core principle
of the new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods
or services. The following five steps are applied to achieve that core principle:
|
●
|
Step
1: Identify the contract with the customer
|
|
●
|
Step
2: Identify the performance obligations in the contract
|
|
●
|
Step
3: Determine the transaction price
|
|
●
|
Step
4: Allocate the transaction price to the performance obligations in the contract
|
|
●
|
Step
5: Recognize revenue when the company satisfies a performance obligation
|
In
order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services
in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606s definition
of a distinct good or service (or bundle of goods or services) if both of the following criteria are met:
|
●
|
The
customer can benefit from the good or service either on its own or together with other resources that are readily available to
the customer
|
|
●
|
The
entitys promise to transfer the good or service to the customer is separately identifiable from other promises in the contract
(i.e.,
|
If
a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods
or services is identified that is distinct.
|
BRAZIL
MINERALS, INC.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
The
transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised
goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable
amounts, or both. When determining the transaction price, an entity must consider the effects of all of the following:
|
●
|
Constraining
estimates of variable consideration
|
|
●
|
The
existence of a significant financing component in the contract
|
|
●
|
Consideration
payable to a customer
|
Variable
consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount
of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently
resolved.
The
transaction price is allocated to each performance obligation on a relative standalone selling price basis.
The
transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point
in time or over time as appropriate.
Costs
of Goods Sold
Included
within costs of goods sold are the costs of cutting and polishing rough diamonds and costs of production such as diesel fuel,
labor, and transportation.
Stock-Based
Compensation
The
Company records stock-based compensation in accordance with ASC Topic 718, Compensation - Stock Compensation. ASC 718 requires
companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the
expense over the employees requisite service period. Under ASC 718, volatility is based on the historical volatility of our stock
or the expected volatility of the stock of similar companies. The expected life assumption is primarily based on historical exercise
patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based
on the U.S. Treasury yield curve in effect at the time of grant.
The
Company utilizes the Black-Scholes option-pricing model, which was developed for use in estimating the fair value of options.
Option-pricing models require the input of highly complex and subjective variables including the expected life of options granted
and the expected volatility of our stock price over a period equal to or greater than the expected life of the options. Because
changes in the subjective assumptions can materially affect the estimated value of our employee stock options, it is managements
opinion that the Black-Scholes option-pricing model may not provide an accurate measure of the fair value of our employee stock
options. Although the fair value of employee stock options is determined in accordance with ASC Topic 718 using an option-pricing
model, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction.
On
June 20, 2018, the FASB issued ASU 2018-07 which simplifies the accounting for share-based payments granted to nonemployees for
goods and services. Under the ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements
for share-based payments granted to employees. Equity classified share-based payments for employees was fixed at the time of grant.
Equity-classified nonemployee share-based payment awards are measured at the grant date of the award which is the same as share-based
payments for employees. The Company adopted the requirements of the new rule as of January 1, 2019, the effective date of the
new guidance.
|
BRAZIL
MINERALS, INC.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Foreign
Currency
The
Companys foreign subsidiaries use a local currency as the functional currency. Resulting translation gains or losses are recognized
as a component of accumulated other comprehensive income. Transaction gains or losses related to balances denominated in a currency
other than the functional currency are recognized in the consolidated statements of operations. Net foreign currency transaction
losses included in the Companys consolidated statements of operations were negligible for all periods presented.
Income
Taxes
The
Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. ASC 740 requires a company to use the asset
and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences,
and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between
the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when,
in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. As
of December 31, 2020 and 2019, the Companys deferred tax assets had a full valuation allowance.
Under
ASC 740, a tax position is recognized as a benefit only if it is more likely than not that the tax position would
be sustained in a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is
greater than 50% likely of being realized on examination. For tax positions not meeting the more likely than not test,
no tax benefit is recorded. The Company has identified the United States Federal tax
returns as its major tax jurisdiction.
On
December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (TCJA), which instituted fundamental changes
to the taxation of multinational corporations, including a reduction the U.S. corporate income tax rate to 21% beginning in 2018.
The
TCJA also requires a one-time transition tax on the mandatory deemed repatriation of the cumulative earnings of certain of the
Companys foreign subsidiaries as of December 31, 2017. To determine the amount of this transition tax, the Company must determine
the amount of earnings generated since inception by the relevant foreign subsidiaries, as well as the amount of non-U.S. income
taxes paid on such earnings, in addition to potentially other factors. The Company believes that no such tax will be due since
its Brazilian subsidiaries have, when required, paid taxes locally and that they have incurred a cumulative operating deficit
since inception.
Basic
Income (Loss) Per Share
The
Company computes loss per share in accordance with ASC Topic 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. As of December 31, 2020, the Companys
potentially dilutive securities relate to common stock issuable in connection with convertible notes payable, options and warrants.
As of December 31, 2020, if all holders of preferred stock, convertible notes payable, options and warrants exercised their right
to convert their securities to common stock, the common stock issuable would be in excess of the Companys authorized, but unissued
shares of common stock.
Other
Comprehensive Income
Other
comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events
and circumstances from non-owner sources, other than net income and including foreign currency translation adjustments.
Reclassifications
Certain prior year amounts have been reclassified
to conform to the current period presentation. These reclassifications had no impact on net earnings (loss) or and financial position.
|
BRAZIL
MINERALS, INC.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
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
August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives
and Hedging - Contracts in Entitys Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in
an Entitys Own Equity. ASU 2020-06 will simplify the accounting for convertible instruments by reducing the number
of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models will result
in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible
instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly
and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception
from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded
as paid-in capital. ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entitys
own equity to reduce form-over-substance-based accounting conclusions. ASU 2020-06 will be effective January 1, 2024, for the
Company. Early adoption is permitted, but no earlier than January 1, 2021, including interim periods within that year. The Company
is evaluating the effect of the adoption of ASU 2020-06 on the consolidated financial statements, but currently does not believe
ASU 2020-06 will have a significant impact on the Companys accounting for its convertible debt instruments. The effect
will largely depend on the composition and terms of the financial instruments at the time of adoption.
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.
NOTE
2 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS
Property
and Equipment, Net
The
following table sets forth the components of the Companys property and equipment at December 31, 2020 and December 31, 2019:
SCHEDULE
OF PROPERTY AND EQUIPMENT
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
|
|
Cost
|
|
|
Accumulated
Depreciation
|
|
|
Net Book
Value
|
|
|
Cost
|
|
|
Accumulated
Depreciation
|
|
|
Net Book
Value
|
|
Capital assets subject to depreciation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computers and office equipment
|
|
$
|
3,880
|
|
|
$
|
(573
|
)
|
|
$
|
3,307
|
|
|
$
|
2,144
|
|
|
$
|
(739
|
)
|
|
$
|
1,405
|
|
Machinery and equipment
|
|
|
348,376
|
|
|
|
(271,107
|
)
|
|
|
77,269
|
|
|
|
435,659
|
|
|
|
(298,845
|
)
|
|
|
136,814
|
|
Vehicles
|
|
|
127,416
|
|
|
|
(118,716
|
)
|
|
|
8,700
|
|
|
|
164,275
|
|
|
|
(129,692
|
)
|
|
|
34,583
|
|
Total fixed assets
|
|
$
|
479,672
|
|
|
$
|
(390,396
|
)
|
|
$
|
89,276
|
|
|
$
|
602,078
|
|
|
$
|
(429,276
|
)
|
|
$
|
172,802
|
|
For
the years ended December 31, 2020 and 2019, the Company recorded depreciation expense of $47,765 and $63,457, respectively.
Intangible
Assets
Intangible
assets consist of mining rights are not amortized as the mining rights are perpetual. The carrying value was $407,467
and $509,862 at December 31, 2020 and 2019, respectively.
|
BRAZIL
MINERALS, INC.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
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.
Accounts
Payable and Accrued Liabilities
SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
Accounts payable and other accruals
|
|
$
|
327,704
|
|
|
$
|
153,693
|
|
Accrued interest
|
|
|
324,415
|
|
|
|
496,448
|
|
Total
|
|
$
|
652,119
|
|
|
$
|
650,141
|
|
NOTE
3 – CONVERTIBLE PROMISSORY NOTES PAYABLE
The
following tables set forth the components of the Companys convertible debentures as of December 31, 2020 and December 31,
2019:
SCHEDULE OF CONVERTIBLE DEBENTURES
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
Convertible notes payable – fixed conversion price
|
|
$
|
244,000
|
|
|
|
244,000
|
|
Convertible notes payable – variable conversion price
|
|
|
628,720
|
|
|
|
733,614
|
|
Less: loan discounts
|
|
|
—
|
|
|
|
(153,000
|
)
|
Total convertible notes, net
|
|
$
|
872,720
|
|
|
$
|
824,614
|
|
The
following table sets forth a summary of change in our convertible notes payable for the years ended December 31, 2020 and 2019:
SUMMARY OF CHANGE IN CONVERTIBLE NOTES PAYABLE
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
Beginning balance
|
|
$
|
824,614
|
|
|
|
866,624
|
|
Amortization of debt discounts associated with convertible debt
|
|
|
153,000
|
|
|
|
137,300
|
|
Conversion of convertible note principal into common stock
|
|
|
(127,208
|
)
|
|
|
(198,291
|
)
|
Increase in principal amounts outstanding due to lender adjustments per terms of the note agreements
|
|
|
22,314
|
|
|
|
18,981
|
|
Issuance of convertible notes payable
|
|
|
—
|
|
|
|
282,000
|
|
Loan discounts recorded related to issuance of convertible notes payable
|
|
|
(—
|
)
|
|
|
(282,000
|
)
|
Total convertible notes, net
|
|
$
|
872,720
|
|
|
$
|
824,614
|
|
|
|
|
|
|
|
|
|
|
|
BRAZIL
MINERALS, INC.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Convertible
Notes Payable - Fixed Conversion Price
On
January 7, 2014, the Company issued to a family trust a senior secured convertible promissory note in the principal amount, and received
gross proceeds, of $244,000
and warrants to purchase an aggregate of 488,000
shares of the Companys common stock at
an exercise price of $62.50
per share through December 26, 2018. The Company
received gross proceeds of $244,000
for the sale of such securities. The outstanding
principal of the note bears interest at the rate of 12% per annum. The note is convertible at the option of the holder into common stock
of the Company at a conversion rate of one share for each $50.00
of principal and interest converted. As of December
31, 2020, all warrants issued in connection with this note had expired.
The
outstanding principal on the note was payable on March 31, 2015, which as of the date of these financial statements is past due
and in technical default. The Company is in negotiations with the note holder to satisfy, amend the terms or otherwise resolve
the obligation in default. No demand for payment has been made. In December 2020, the lender agreed to reduce the interest rate
from the default rate of 30% to the stated rate of 10% retroactively. As a result, the Company recorded gain of $238,151 from
the relief of interest expense to other income. Interest was payable on September 30, 2014 and on the maturity date. As of December
31, 2020, the Company has accrued interest payable totaling $170,258 in connection with this note.
Convertible
Notes Payable - Variable Conversion Price
At
various times to fund operations, the Company issues convertible notes payable in which the conversion features are variable.
In addition, some of these convertible notes payable have on issuance discounts and other fees withheld.
During
the year ended December 31, 2016, the Company issued to one noteholder, in various transactions, $242,144 in convertible promissory
notes with fixed floors and received an aggregate of $232,344 in proceeds. The convertible promissory notes each bear interest
at 8.0% per annum and mature one year from issuance ranging from July to December 2017. After six months from issuance, each convertible
promissory note is convertible at the option of the holder at a 50% discount to the lowest traded price of the Company’s
common stock over the previous 20 days. In addition, each note’s conversion rate has a floor of $0.0001. Total debt discounts
related to the beneficial conversion features of $241,852 were recorded and are being amortized over the life of the notes. During
the year ended December 31, 2020, the Company issued 238,500,335 shares of its common stock upon the conversion of $75,783 and $23,519,
respectively, in note principal and accrued interest. As of December 31, 2020, the outstanding principal balance on these notes
total $115,500, and all discounts were fully amortized.
During the year ended December 31, 2017, the
Company issued to one noteholder in various transactions $477,609 in convertible promissory notes with fixed floors and received
an aggregate of $454,584 in proceeds. The convertible promissory notes each bear interest at 8.0% per annum and mature one year from issuance ranging from January to August 2018. After six months from issuance, each convertible promissory note is convertible
at the option of the holder at a 50% discount to the lowest traded price of the Company’s common stock over the previous
20 days. In addition, each note’s conversion rate has a floor of $0.0001. Total debt discounts related to the beneficial
conversion features of $447,272 were recorded and are being amortized over the life of the notes. During the year ended December
31, 2020, the Company issued 158,645,272 shares of its common stock upon the conversion of $51,425 and $ 14,097,
respectively, in note principal and accrued interest. As of December 31, 2020, the outstanding principal balance on these notes
total $102,000, and all discounts were fully amortized.
During
the year ended December 31, 2018, the Company issued to one noteholder in various transactions $137,306 in convertible promissory
notes with fixed floors and received an aggregate of $130,556 in proceeds. The convertible promissory notes each bear interest
at 8.0% per annum and mature one year from issuance ranging from August 2018 to April 2019. After six months from issuance, each
convertible promissory note is convertible at the option of the holder at a 50% discount to the lowest traded price of the Companys
common stock over the previous 20 days. In addition, each notes conversion rate has a floor of $0.0001. Total debt discounts
related to the beneficial conversion features of $122,755 were recorded and are being amortized over the life of the notes. As
of December 31, 2020, the outstanding principal balance on these notes total $129,220, and all discounts were fully amortized.
During
the year ended December 31, 2020, the Company issued to one noteholder in various transactions $282,000 in convertible promissory
notes with fixed floors and received an aggregate of $276,000 in proceeds. The convertible promissory notes each bear interest
at 8.0% per annum and mature one year from issuance in July 2020. After six months from issuance, each convertible promissory
note is convertible at the option of the holder at a 50% discount to the lowest traded price of the Companys common stock over
the previous 20 days. In addition, each notes conversion rate has a floor of $0.0001. Total debt discounts related to the beneficial
conversion features of $276,000 and $6,000 for issuance costs were recorded and are being amortized over the life of the notes.
As of December 31, 2020, the outstanding principal balance on these notes total $282,000, and all discounts were fully amortized.
|
BRAZIL
MINERALS, INC.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
While
many of these convertible notes are past their original maturity dates, the Company continues to maintain a favorable relationship
and work with the lender with regard to financing its working capital needs.
As
of December 31, 2020, the Company has accrued interest payable totaling $128,904 in connection with these variable convertible
notes.
During
the years ended December 31, 2020 and 2019, $153,000 and $137,300 of the discounts were amortized to interest expense, respectively.
During
the years ended December 31, 2020 and 2019, the Company issued 397,145,607 and 501,802,789 shares of common stock upon conversion
of $164,815 and $228,598, respectively, in notes payable and accrued interest.
Future
Potential Dilution
Most
of the Companys convertible notes payable contain adjustable conversion terms with significant discounts to market. As of December
31, 2020, the Companys convertible notes are convertible into an aggregate of approximately 1,499,154,286 shares of common stock.
Due to the variable conversion prices on some of the Companys convertible notes, the number of common shares issuable is dependent
upon the traded price of the Companys common stock.
NOTE
4 – LOANS PAYABLE
During
the years ended December 31, 2020 and 2019, the Company received bridge loan proceeds aggregating $26,180 and $202,920, respectively,
from one lender in various transactions. The loans payable bear interest at 8.0% per annum. The loans are payable upon demand.
On
July 8, 2019, the Company repaid $222,112 of bridge loan principal and $17,888 of accrued interest.
As
of December 31, 2020 and 2019, the principal balance outstanding on the loans payable totaled
$235,308 and $209,128, respectively, and the Company accrued interest payable totaling $25,253 and $7,007, respectively, in connection
with the loans payable.
NOTE
5 – 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 December 31, 2020 and December 31, 2019 amounted to $121,250 and $192,729, respectively.
NOTE
6 – STOCKHOLDERS DEFICIT
Authorized
and Amendments
As
of December 31, 2020, the Company had 2,000,000,000 common shares authorized with a par value of $0.001 per share. On January
11, 2021, the Company amended its charter filed with the Secretary of State of Nevada to increase the number of authorized common
shares to 2,500,000,000 with a par value of $0.001 per share.
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
Companys 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.
|
BRAZIL
MINERALS, INC.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Year
Ended December 31, 2020 Transactions
During
the year ended December 31, 2020, the Company received $320,000 in gross proceeds from the sale of 415,000,000 shares of its common
stock to accredited investors. Additionally, the Company issued 5,000,000 shares of common stock to an accredited investor pursuant
to a subscription agreement dated April 18, 2018 for which the funds were received in a prior period.
During
the year ended December 31, 2020, the Company issued 32,565,515 shares of common stock valued at $43,658 to non-employees for
services rendered. Additionally, the Company issued 397,145,607 shares of common stock upon conversion of $164,820 in convertible
notes payable and accrued interest.
During
the year ended December 31, 2020, the Company exchanged 200,000,000 shares of common stock returned by an accredited investor
for 150,000 shares of Jupiter Golds common stock held as an investment by the Company. The Company used the quoted fair
value of each entitys common stock on the dates of exchange to determine the exchange ratio.
See Note
8 – Related Party Transactions for additional disclosures of common stock issuances.
Year
Ended December 31, 2019 Transactions
During
the year ended December 31, 2019, the Company received $652,500 in gross proceeds from the sale of units consisting of common
stock of its subsidiary, Jupiter Gold, and warrants to purchase the Companys common stock to accredited investors. In aggregate,
the securities the Company sold were 846,828 shares of Jupiter Gold and two-year warrants to purchase a total of 241,000,000 shares
of Brazil Minerals at prices ranging from $0.0012 to $0.004 per share.
During
the year ended December 31, 2019, the Company received $5,000 in gross proceeds from the sale of 10,000 shares of Jupiter Gold
common stock to an accredited investor.
During
the year ended December 31, 2019, the Company received $123,500 in gross proceeds from the sale of 235,584,906 shares of our common
stock to accredited investors.
During
the year ended December 31, 2019, the Company issued 501,802,789 shares of common stock upon conversion of $228,598 in convertible
notes payable and accrued interest.
During
the year ended December 31, 2019, the Company issued 1,787,041 shares of common stock valued at $4,327 in exchange for consulting,
professional and other services. Additionally, the Company issued 5,492 shares of Jupiter Gold common stock valued at $5,000 in
exchange for consulting, professional and other services.
Common
Stock Options
During
the year ended December 31, 2020, the Company granted options to purchase an aggregate of 43,915,500 shares of common stock to
non-management directors. The options were valued at $50,000 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 between $0.0009 and
$0.0014, expected dividend yield of 0.0%, historical volatility calculated between 135.35% and 221.07%, risk-free interest rate
between 0.28% and 0.38%, and an expected term of 5 years.
During
the year ended December 31, 2019, the Company granted options to purchase an aggregate of 37,285,500 shares of common stock to
non-management directors. The options were valued at $50,000 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 ($0.0009 to $0.0037), expected
dividend yield of 0%, historical volatility calculated between a range of 199.2% to 223.2%, risk-free interest rate between a
range of 1.55% to 2.31%, and an expected term of 5 years.
As of December 31,
2020, the Company had 119,917,140 common stock options outstanding with a weighted average life of 3.6 years at an average exercise
price of $0.0025.
See Note 8
– Related Party Transactions for additional common stock option disclosures.
|
BRAZIL
MINERALS, INC.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
NOTE
7 – 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 consolidated financial statements.
NOTE
8 - RELATED PARTY TRANSACTIONS
Chief
Executive Officer
The
following tables set forth the components of the Companys related party payables as of December 31, 2020 and December 31,
2019:
SCHEDULE
OF RELATED PARTY TRASACTIONS
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
Convertible notes payable to related party
|
|
$
|
566,743
|
|
|
$
|
566,743
|
|
Less: loan discounts
|
|
|
(—
|
)
|
|
|
(96,270
|
)
|
Total convertible notes payable to related party, net
|
|
$
|
566,743
|
|
|
$
|
470,473
|
|
|
|
|
|
|
|
|
|
|
Total related party payables
|
|
$
|
566,743
|
|
|
$
|
470,473
|
|
Effective
June 30, 2018, the Company issued a convertible promissory note in the principal amount of $445,628 to its Chief Executive Officer
against a portion of these unpaid compensatory balances. The note bears no interest and is payable on demand. The note is convertible
at the option of the holder at the lower of (i) the average of the five lowest bid prices of the Companys common stock over the
previous 20 trading days or (ii) the lowest price per share at which the Company sold its common stock in a transaction with a
person who is not a manager, officer, or director of the Company during the period from the date hereof until the giving of notice
of the election to convert or the lowest price per share at which a noteholder who is not a manager, officer, or director of the
Company converted any debt of the Company into shares of the Company during the period from the date hereof until the giving of
notice of the election to convert. The notes conversion rate has a floor of $0.0001. Total debt discounts related to the beneficial
conversion features of $445,628 were recorded and are being amortized over a one-year period consistent with the maturity dates
of convertible notes issued to third party holders. As of December 31, 2020, all discounts were fully amortized.
On
April 7, 2019, the Companys board of directors approved the issuance of a convertible note in the principal amount of $261,631
to its Chief Executive Officer against a portion of these unpaid compensatory balances. The note bears interest at an annual rate
of 6.0% and is payable on demand. The note is convertible at the option of the holder at the lower of (i) $0.00045 or (ii) the
lowest price per share at which a noteholder who is not a manager, officer, or director of the Company converted any debt of the
Company into common stock of the Company during the period from the date hereof until the giving of notice of the election to
convert. Total debt discounts related to the beneficial conversion features of $261,631 were recorded and are being amortized
over a one-year period consistent with the maturity dates of convertible notes issued to third party holders. As of December 31,
2020, all discounts were fully amortized.
On
April 7, 2019, the Companys board of directors approved the exchange, initiated by a formal notice of conversion dated
February 19, 2019, of $202,240 of convertible note principal due to its Chief Executive Officer for five-year stock options to
purchase 224,711,111 shares of Brazil Minerals at an exercise price of $0.00001 and 505,600 shares of common stock of Jupiter
Gold at an exercise price of $0.001. Per the terms of the convertible note agreement, the conversion notification permitted the
holder, at his election, to receive either an issuance of 224,711,111 shares of Brazil Minerals and 505,600 shares of Jupiter
Gold, or an issuance of stock options to purchase the same numbers of shares at a nominal exercise price. The options were valued
at $270,255 in total. The options were valued using the Black-Scholes option pricing model with the following average assumptions:
our stock price on date of grant of $0.0012, expected dividend yield of 0%, historical volatility ranging from 230.1% to 1,271.2%,
risk-free interest rate of 2.50%, and an expected term of 5.00 years. In connection with the exchange, the Company recorded a
loss on the extinguishment of debt totaling $68,015.
|
BRAZIL
MINERALS, INC.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
On
June 30, 2019, the Companys board of directors approved the issuance of a convertible note in the principal amount of $61,724
to its Chief Executive Officer against a portion of these unpaid compensatory balances. The note bears interest at an annual rate
of 6.0% and is payable on demand. The note is convertible at the option of the holder at the lower of (i) $0.0003 or (ii) the
lowest price per share at which a noteholder who is not a manager, officer, or director of the Company converted any debt of the
Company into common stock of the Company during the period from the date hereof until the giving of notice of the election to
convert. Total debt discounts related to the beneficial conversion features of $61,724 were recorded and are being amortized over
a one-year period consistent with the maturity dates of convertible notes issued to third party holders. As of December 31, 2020,
there were unamortized debt discounts of $30,862 related to this note.
On
March 11, 2020, the Company issued 200,000 shares of its common stock with a fair value of $280, or $0.0014 per share, to its
Chief Executive Officer in lieu of cash for loans payable and other accrued obligations.
On December 3, 2020, the Company issued 161,636,427
shares of common stock to its Chief Executive Officer in connection with the exercise stock options acquired on February 19, 2019
as described above.
Jupiter
Gold Corporation
During
the year ended December 31, 2019, Jupiter Gold granted options to purchase an aggregate of 360,000 shares of its common stock
to Marc Fogassa at a price of $1.00 per share. The options were valued at $116,095 and recorded to stock-based compensation. The
options were valued using the Black-Scholes option pricing model with the following average assumptions: the Companys stock
price on the date of the grant ($0.275 to $1.125), expected dividend yield of 0%, historical volatility calculated between a range
of 63.1%, risk-free interest rate between a range of 1.39% to 2.56%, and an expected term of 5 years.
On
February 12, 2020, the Company sold 900,000 shares of Jupiter Gold common stock that it held as an investment, 180,500 warrants
to purchase up to 180,500 shares of Jupiter Gold common stock at $0.60 per share, and 50,000,000 warrants to purchase up to 50,000,000
shares of Brazil Minerals common stock at $0.0015 per share for gross proceeds of $250,000 to an accredited investor.
On
February 14, 2020, the Company loaned $225,000 to Jupiter Gold in the form of a convertible promissory note. The note
bears interest at 6.0% per annum and matures on December 31, 2023. As an inducement to enter into the transaction, the Company
received 67,000 warrants to purchase up to 67,000 shares of Jupiter Gold common stock at a price of $0.60 per share. At any time
after issuance, the note is convertible at the option of the holder at a rate of one share of Jupiter Gold common stock for each
$0.60 of loan principal. The impact of transaction on the Company’s accounts was eliminated in consolidation. On February
15, 2020, the Company converted the promissory note in return for 375,000 shares of Jupiter Gold common stock.
During the year ended December 31, 2020, Jupiter
Gold granted options to purchase an aggregate of 375,000 shares of its common stock to Marc Fogassa at prices ranging between $0.01
to $1.04 per share. The options were valued at $74,357 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 ($0.30 to $0.53), expected dividend yield of 0%, historical volatility calculated between a range of 63.1%, risk-free interest
rate between a range of 0.21% to 1.69%, and an expected term of 5 years.
As of December 31, 2020, Jupiter Gold had 2,295,000
common stock options outstanding with a weighted average life of 2.5 years at an average exercise price of $1.00.
Investment
in Ares Resources Corporations Common Stock
On
October 2, 2017, the Company entered into a share exchange agreement with 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. Refer to “Note 2 – Composition of Certain Financial Statement Items”
for additional information.
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.
As
of December 31, 2020, no change in the value of the Ares common stock was recorded as the recorded value still approximated fair
value.
|
BRAZIL
MINERALS, INC.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
NOTE
9 – RISKS AND UNCERTAINTIES
In
light of the SECs Division of Corporate Finance Disclosure Guidance Topic Number 9, dated March 25, 2020, on the impact of COVID-19,
the Company notes the following as of March 31, 2021:
|
●
|
The
Company has not had any reports of COVID-19 among its workforce;
|
|
●
|
The
Company has been able to continue local operations of the Company in Brazil as they are located in a rural area currently unaffected
by any lockdown restrictions implemented elsewhere in Brazil;
|
|
●
|
Travel
between the U.S. and Brazil has essentially ceased; this is mitigated by the use of live streaming video and other methods as
needed;
|
|
●
|
Some
exploratory research of some of the Companys projects have been delayed as certain municipalities in Brazil have unilaterally
restricted the entry of outside persons; these actions are being legally challenged by branches of the state administration and
the Company is monitoring all new developments;
|
|
●
|
The
Company has postponed any expenses which are not critical to it at the moment.
|
Currency
Risk
The
Company operates primarily in Brazil which exposes it to currency risks. The Companys 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
Companys 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 subsidiarys financial results
into U.S. dollars for purposes of reporting in the consolidated financial statements. The Companys 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
10 - SUBSEQUENT EVENTS
In
accordance with FASB ASC 855-10 Subsequent Events, the Company has analyzed its operations subsequent to December 31, 2020 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.
[●]
Units
Each
Unit Consisting of
[●]
Share(s) of Common Stock
and
[●]
Warrant(s) to Purchase [●] Share(s) of Common Stock
PROSPECTUS
EF
HUTTON
division
of Benchmark Investments, LLC
,
2022
Through
and including [●], 2022 (the 25th day after the date of this prospectus), all dealers effecting transactions
in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a
dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.
PART
II — INFORMATION NOT REQUIRED IN PROSPECTUS
Item
13. Other Expenses of Issuance and Distribution.
The
following table sets forth all expenses to be paid by the registrant in connection with the issuance and distribution of the securities
to be registered, other than underwriting discounts and commissions. All amounts shown are estimates except for the SEC registration
fee:
Expense
Items
|
|
|
Cost
|
|
SEC registration fee
|
|
$
|
|
|
Legal fees and expenses
|
|
$
|
|
|
Accounting fees and expenses
|
|
$
|
|
|
Miscellaneous fees
and expenses
|
|
$
|
|
|
Total
|
|
$
|
|
|
Item
14. Indemnification of Directors and Officers.
Neither
our Articles of Incorporation nor Bylaws prevent us from indemnifying our officers, directors and agents to the extent permitted under
the Nevada Revised Statute (“NRS”). NRS Section 78.7502 provides that a corporation shall indemnify any director, officer,
employee or agent of a corporation against expenses, including attorneys’ fees, actually and reasonably incurred by him in connection
with any defense to the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise
in defense of any action, suit or proceeding referred to in Section 78.7502(1) or 78.7502(2), or in defense of any claim, issue or matter
therein.
NRS
78.7502(1) provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in
the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with the action, suit or proceeding if he: (a) is not liable pursuant to NRS 78.138;
or (b) acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.
NRS
Section 78.7502(2) provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason
of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses,
including amounts paid in settlement and attorneys’ fees actually and reasonably incurred by him in connection with the defense
or settlement of the action or suit if he: (a) is not liable pursuant to NRS 78.138; or (b) acted in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the corporation. Indemnification may not be made for any claim,
issue or matter as to which such a person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals there
from, to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court
in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the
circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.
NRS
Section 78.747 provides that except as otherwise provided by specific statute, no director or officer of a corporation is individually
liable for a debt or liability of the corporation, unless the director or officer acts as the alter ego of the corporation. The court
as a matter of law must determine the question of whether a director or officer acts as the alter ego of a corporation.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us
pursuant to the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection
with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed hereby
in the Securities Act and we will be governed by the final adjudication of such issue.
Item
15. Recent Sales of Unregistered Securities.
On December 29, 2021, we issued to an investor
an unregistered warrant to purchase up to 2,500,000 unregistered shares of our Common Stock for $0.012 per share until December 31, 2023.
On December 22, 2021, we issued to an investor
an unregistered warrant to purchase up to 30,000,000 unregistered shares of our Common Stock for $0.01 per share until December 31, 2024.
On December 10, 2021, we issued to an investor
an unregistered warrant to purchase up to 3,000,000 unregistered shares of our Common Stock for $0.012 per share until December 31, 2023.
On December 8, 2021, we issued to an investor
an unregistered warrant to purchase up to 5,000,000 unregistered shares of our Common Stock for $0.012 per share until December 31, 2023.
On November 17, 2021, we issued to an investor
an unregistered warrant to purchase up to 6,000,000 unregistered shares of our Common Stock for $0.012 per share until December 31, 2023.
On
November 4, 2021, we sold to an investor 35,714,286 unregistered shares our Common Stock for $250,000; such investor also
received an unregistered warrant to purchase up to 14,285,714 unregistered shares of our Common Stock for $0.011 per share until December
31, 2024.
On October 21, 2021, we issued to an investor
an unregistered warrant to purchase up to 3,000,000 unregistered shares of our Common Stock for $0.012 per share until December 31, 2023.
On
October 12, 2021, we sold to an investor 25,000,000 unregistered shares our Common Stock for $150,000; such investor also received an
unregistered warrant to purchase up to 12,500,000 unregistered shares of our Common Stock for $0.011 per share until December 31, 2023.
On
October 7, 2021, we sold to an investor 3,750,000 unregistered shares our Common Stock for $25,000.
On October 6, 2021, we issued to an investor an
unregistered warrant to purchase up to 7,500,000 unregistered shares of our Common Stock for $0.02 per share until December 31, 2023.
On September 21, 2021, we issued to an investor
an unregistered warrant to purchase up to 1,250,000 unregistered shares of our Common Stock for $0.02 per share until December 31, 2023.
On
August 17, 2021, we sold to two investors an aggregate of 26,086,958 unregistered shares our Common Stock for an aggregate $150,000;
such investors also received unregistered warrants to purchase up to 26,086,958 unregistered shares of our Common Stock for $0.0107 per
share for a period of three years.
On August 10, 2021, we issued to three investors
unregistered warrants to purchase in aggregate up to 3,000,000 unregistered shares of our Common Stock for $0.015 per share until December
31, 2023.
On August 6, 2021, we issued to an investor an
unregistered warrant to purchase up to 5,000,000 unregistered shares of our Common Stock for $0.02 per share until December 31, 2023.
On August 5, 2021, we issued to two investors
unregistered warrants to purchase in aggregate up to 5,000,000 unregistered shares of our Common Stock for $0.02 per share until December
31, 2023.
On August 3, 2021, we issued to an investor an
unregistered warrant to purchase up to 2,500,000 unregistered shares of our Common Stock for $0.02 per share until December 31, 2023.
On July 15, 2021, we issued to an investor an
unregistered warrant to purchase up to 7,500,000 unregistered shares of our Common Stock for $0.02 per share until December 31, 2023.
On
June 21, 2021, we sold to two investors an aggregate of 17,391,306 unregistered shares our Common Stock for an aggregate $100,000; such
investors also received unregistered warrants to purchase up to 17,359,306 unregistered shares of our Common Stock for $0.0119 per share
for a period of three years.
On
June 18, 2021, we sold to an investor a note for $129,000; such investor also received an unregistered warrant to purchase
up to 5,000,000 unregistered shares of our Common Stock for $0.021 per share for a period of four years. On November 15, 2021, we entered
into an agreement with such investor which extinguished the note, including its principal and all of its accrued interest, in return
for the issuance of 19,034,442 unregistered shares our Common Stock and the issuance of an unregistered warrant to purchase up to 5,000,000
unregistered shares of our Common Stock for $0.01 per share until June 15, 2022.
On
June 8, 2021, an investor exercised an unregistered warrant and we sold to such investor 50,000,000 unregistered shares
our Common Stock for $75,000.
On
May 3, 2021, we sold to two investors an aggregate of 52,200,000 unregistered shares our Common Stock for an aggregate $300,150; such
investors also received unregistered warrants to purchase up to 52,200,000 unregistered shares of our Common Stock for $0.0211 per share
for a period of three years.
On
March 10, 2021, we sold to two investors an aggregate of 10,000,000 unregistered shares our Common Stock for an aggregate $100,000.
On
March 9, 2021, we sold to an investor 5,000,000 unregistered shares our Common Stock for $50,000.
On
March 3, 2021, we sold to an investor 3,333,333 unregistered shares our Common Stock for $50,000.
On
February 19, 2021, we sold to an investor 750,000 unregistered shares our Common Stock for $15,000.
On
February 16, 2021, we sold to an investor 625,000 unregistered shares our Common Stock for $12,500.
On
January 22, 2021, we sold to an investor 12,500,000 unregistered shares our Common Stock for $25,000.
On
January 21, 2021, we sold to an investor 8,333,333 unregistered shares our Common Stock for $14,000.
On
January 19, 2021, we sold to an investor $270,000 in unregistered debt in the form of a note convertible into shares our Common Stock
at a conversion price of fifty percent of the lowest trading price during the twenty trading days prior to the conversion date.
On
July 14, 2020, we sold to an investor 125,000,000 unregistered shares our Common Stock for $100,000.
On
June 12, 2020, we sold to an investor 62,500,000 unregistered shares our Common Stock for $50,000.
On
May 5, 2020, we sold to an investor 40,000,000 unregistered shares our Common Stock for $20,000.
On
February 12, 2020, we sold to an investor 900,000 unregistered shares of the common stock of Jupiter Gold Corporation owned by us for $225,000; such investor also received unregistered warrants, exercisable only by cash exercise, to purchase up to 180,500
shares of the common stock of Jupiter Gold Corporation owned by us for $0.60 per share for a period of three years and also unregistered
warrants, exercisable only by cash exercise, to purchase up to 50,000,000 unregistered shares of our Common Stock for $0.0015 per share
for a period of three years.
On
November 25, 2019, we sold to two investors an aggregate of 437,828 unregistered shares of the common stock of Jupiter Gold Corporation
owned by us for an aggregate $250,000; such investors also received unregistered warrants to purchase up to 100,000,000 unregistered
shares of our Common Stock for $0.0022 per share for a period of two years.
On
September 19, 2019, we sold to an investor 20,000 unregistered shares of the common stock of Jupiter Gold Corporation owned by us to
an investor for $25,000; such investor also received unregistered warrants to purchase up to 10,000,000 unregistered shares of our Common
Stock for $0.0036 per share for a period of two years.
On
September 18, 2019, we sold to an investor 10,000 unregistered shares of the common stock of Jupiter Gold Corporation owned by us to
an investor for $12,500; such investor also received unregistered warrants to purchase up to 5,000,000 unregistered shares of our Common
Stock for $0.0036 per share for a period of two years.
On
July 19, 2019, we sold to six investors an aggregate of 108,000 unregistered shares of the common stock of Jupiter Gold Corporation owned
by us for an aggregate $135,000; such investors also received unregistered warrants to purchase up to 54,000,000 unregistered shares
of our Common Stock for $0.0012 per share for a period of two years.
On
July 9, 2019, we sold to an investor $282,000 in unregistered debt in the form of a note convertible into shares our Common Stock at
a conversion price of fifty percent of the lowest trading price during the twenty trading days prior to the conversion date.
On
July 3, 2029, we sold to an investor 10,000,000 unregistered shares our Common Stock for $6,000.
On
May 25, 2029, we sold to an investor 23,584,906 unregistered shares our Common Stock for $12,500.
On
April 25, 2019, we sold to an investor 10,000 unregistered shares of the common stock of Jupiter Gold Corporation owned by us for $12,500;
such investor also received unregistered warrants to purchase up to 4,000,000 unregistered shares of our Common Stock for $0.0012 per
share for a period of two years.
On
April 5, 2029, we sold to an investor 200,000,000 unregistered shares our Common Stock for $100,000.
On
April 2, 2019, we sold to an investor 16,000 unregistered shares of the common stock of Jupiter Gold Corporation owned by us for $20,000;
such investor also received unregistered warrants to purchase up to 4,000,000 unregistered shares of our Common Stock for $0.0012 per
share for a period of two years.
On
February 25, 2019, we sold to an investor 20,000 unregistered shares of the common stock of Jupiter Gold Corporation owned by us for
$25,000; such investor also received unregistered warrants to purchase up to 4,000,000 unregistered shares of our Common Stock for $0.0012
per share for a period of two years.
On
February 22, 2019, we sold to an investor 20,000 unregistered shares of the common stock of Jupiter Gold Corporation owned by us for
$25,000; such investor also received unregistered warrants to purchase up to 4,000,000 unregistered shares of our Common Stock for $0.0012
per share for a period of two years.
On
January 25, 2019, we sold to an investor 40,000 unregistered shares of the common stock of Jupiter Gold Corporation owned by us for $50,000;
such investor also received unregistered warrants to purchase up to 4,000,000 unregistered shares of our Common Stock for $0.0012 per
share for a period of two years.
In
connection with the foregoing, we relied upon the exemption from registration provided by Section 4(a)(2) under the Securities
Act of 1933, as amended, for transactions not involving a public offering.
EXHIBIT
INDEX
Exhibit
|
|
|
Number
|
|
Description
|
1.1
|
|
Form of Underwriting Agreement
by and between Brazil Minerals, Inc. and EF Hutton, division of Benchmark Lending, LLC**
|
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.
|
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.
|
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 Company’s Current Report on Form 8-K filed with the Commission on December 26, 2012.
|
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.
|
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 August 27, 2019. Incorporated by reference to Exhibit 3.11 to the Company’s Annual Report on Form 10-K filed with the Commission on April 14, 2020.
|
3.6
|
|
Certificate of Amendment to the Articles of Incorporation of the Company filed with the Secretary of State of the State of Nevada on July 16, 2020. Incorporated by reference to Exhibit 3.11 to the Company’s Annual Report on Form 10-K filed with the Commission on March 31, 2021.
|
3.7
|
|
Amended and Restated By-laws of the Company. Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on April 12, 2021.
|
3.8
|
|
Certificate of Designations, Preferences and Rights of Series D Convertible Preferred Stock filed with the Secretary of State of the State of Nevada on September 16, 2021.*
|
4.1
|
|
Form of Representative’s
Warrant**
|
4.2
|
|
Form of Warrant Agency Agreement
between Brazil Minerals, Inc. and VStock Transfer, LLC**
|
4.3
|
|
Form of Common Stock Purchase Warrant
**
|
4.4
|
|
Common Stock Purchase Agreement between the Company and Triton Funds LLC dated February 26, 2021. Incorporated by reference to Exhibit 1 to the Form 8-K filed with Commission on March 3, 2021.
|
4.5
|
|
Common Stock Purchase Warrant between the Company and Triton Funds LLC dated February 26, 2021. Incorporated by reference to Exhibit 2 to the Form 8-K filed with Commission on March 3, 2021.
|
4.6
|
|
Form of Warrant between the Company and Warberg Funds.*
|
4.7
|
|
Form of Warrant between the Company and investors other than Warberg Funds.*
|
5.1
|
|
Opinion
of Jay Weil, Esq.**
|
10.1
|
|
Amended and Restated Employment Agreement Between Marc Fogassa and the Company.*
|
10.2
|
|
2017 Stock Incentive Plan incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-8 filed with the Commission on December 8, 2017.
|
10.3
|
|
Agreement between the Company and GW Holdings Group LLC dated November 15, 2021.*
|
10.4
|
|
Form of Securities Purchase Agreement between the Company and funds managed by Warberg Asset Management LLC (“Warberg Funds”).*
|
10.5
|
|
Form of Securities Purchase Agreement between the Company and investors other than Warberg Funds.*
|
|
*
|
Filed
herewith
|
|
**
|
To be filed by amendment
|
Item
17. Undertakings.
(a)
The undersigned registrant hereby undertakes:
(1)
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)
To include any prospectus required by section 10(a)(3) of the Securities Act of 1933, as amended (the “Securities Act”);
(ii)
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration
Fee” table in the effective registration statement; and
(iii)
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2)
That, for the purposes of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3)
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4)
That, for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b)
as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses
filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used
after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration
statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is
part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify
any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such
document immediately prior to such date of first use.
(5)
For the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution
of the securities in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means
of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer
or sell such securities to such purchaser:
(i)
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule
424;
(ii)
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by
the undersigned registrant;
(iii)
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant
or its securities provided by or on behalf of the undersigned registrant; and
(iv)
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(b)
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities, other than the payment by the registrant of expenses incurred
and paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding,
is asserted by such director, officer or controlling person in connection with the securities being registered hereby, the registrant
will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
(c)
The undersigned Registrant hereby undertakes that it will:
(1)
for determining any liability under the Securities Act, treat the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant under Rule 424(b)(1),
or (4) or 497(h) under the Securities Act as part of this registration statement as of the time the Commission declared it effective.
(2)
for determining any liability under the Securities Act, treat each post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement, and that offering of the securities at that time as
the initial bona fide offering of those securities.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Beverly Hills, State of California, on January 28, 2022.
|
Brazil
Minerals, Inc.
|
|
|
|
By:
|
/s/
Marc Fogassa
|
|
|
Marc
Fogassa
|
|
|
Chief
Executive Officer
|
POWER
OF ATTORNEY
KNOW
ALL MEN BY THESE PRESENTS, Each person whose signature appears below constitutes and appoints Marc Fogassa his true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution for him and in his name, place and stead, and in any and all capacities,
to sign for him and in him name in the capacities indicated below any and all amendments (including post-effective amendments) to this
registration statement (or any other registration statement for the same offering that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, as amended), and to file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in and about the premises, as full to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities
indicated below:
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
Marc Fogassa
|
|
|
|
January
28, 2022
|
Marc
Fogassa
|
|
Chief
Executive Officer (Principal Executive Officer)
and Chairman of the Board
|
|
|
|
|
|
|
|
/s/
Jason Baybutt
|
|
|
|
January 28, 2022
|
Jason
Baybutt
|
|
Chief
Financial Officer (Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/
Roger Noriega
|
|
Director
|
|
January
28, 2022
|
Ambassador
Roger Noriega
|
|
|
|
|
|
|
|
|
|
/s/
Cassiopeia Olson
|
|
Director
|
|
January
28, 2022
|
Cassiopeia
Olson, Esq.
|
|
|
|
|
|
|
|
|
|
/s/
Stephen Peterson
|
|
Director
|
|
January 28, 2022
|
Stephen
Peterson, CFA
|
|
|
|
|