Business context and reporting period
The supplied filing is Jupiter Gold Corporation’s audited Form 20-F annual report for the fiscal year ended December 31, 2018, filed May 15, 2019. It is not a quarterly report. The request identifies Atlas Critical Minerals Corp.; that name does not match the issuer named in the filing and should be verified.
Jupiter Gold is a Brazil-focused gold and precious-metals exploration and development company, with a modular gold-recovery plant and mineral rights in Brazil. The company reported no SEC-defined mineral reserves. Financial statements are prepared under U.S. GAAP and presented in U.S. dollars.
Financial results and liquidity
| Metric | FY 2018 | FY 2017 |
|---|---|---|
| Revenue | $8,525 | $0 |
| Cost of revenue / gross margin | $0 / $8,525 | $0 / $0 |
| Operating expenses | $410,290 | $436,141 |
| Net loss | $401,765 | $437,635 |
| Operating cash flow | $(82,989) | $(166,230) |
| Investing cash flow | $(803) | $(6,552) |
| Financing cash flow | $5,000 | $250,100 |
Revenue came from selling a gold bar produced through exploratory mining. The filing reports no interest expense or income-tax provision. Operating expenses included $204,319 of stock-based compensation and $194,561 of general and administrative expense.
At year-end 2018, cash was $1,277; current assets were $177,034, including $172,095 due from related parties; current liabilities and total debt-like liabilities were $10,454, with no long-term liabilities. Reported working capital was $166,580 and the current ratio was 16.9 to 1, but most current assets were related-party receivables. Total assets were $277,698 and stockholders’ equity was $267,244.
Changes versus the prior year
- Revenue increased from zero to $8,525, while the company remained substantially loss-making.
- Net loss narrowed by $35,870, or 8.2%, and operating expenses declined 5.9%, principally due to lower stock-based compensation.
- Operating cash use improved from $166,230 to $82,989, but cash fell from $80,353 to $1,277. Financing proceeds dropped from $250,100 to $5,000.
- Related-party receivables increased from $119,599 to $172,095. Common shares outstanding rose from 4,429,599 to 4,634,599 during 2018.
Outlook, risks and unusual items
- Management expected increased gold and mineral sales from projects planned to become operational in 2019, as well as potential royalty income from the Pindaíba project. It also anticipated relying on equity sales and, potentially, debt financing. The filing gives no quantified revenue or earnings guidance and cautions that these plans may not succeed.
- The auditor issued an unqualified opinion but highlighted substantial doubt about the company’s ability to continue as a going concern, citing operating losses, limited working capital and lack of material revenue. Management’s plans depend on generating operating cash and obtaining financing; no assurance is given that funding will be available.
- Jupiter Gold reported positive gold findings from 18 of 23 Paracatu drill holes and positive visual gold findings from 35 Pindaíba holes reported by Brazil Minerals. These are exploration results, not established reserves or proof of commercial production.
- The company’s liquidity and operating arrangements involve Brazil Minerals and its affiliates. Jupiter Gold reported $172,095 in related-party receivables; agreements also include infrastructure fees, a 10% royalty stream to Brazil Minerals on certain project receipts, and a 50/50 split of gold sales from gold-retrieval units.
- Key risks include exploration and permitting uncertainty, Brazilian mining and environmental regulation, exchange-rate and political risk, limited trading liquidity, and dependence on CEO Marc Fogassa. One Series A preferred share held by Mr. Fogassa carries 51% of total voting rights. The filing also describes a broad shareholder fee-shifting bylaw provision.
- The company reported effective disclosure controls and no identified material weaknesses in internal control over financial reporting; the auditor was not engaged to audit internal controls. Management said it expected adoption of the new lease standard to add approximately $22,000–$43,000 in operating lease liabilities, with corresponding right-of-use assets.
Most important facts for investors to verify
- Confirm the issuer and period: the filing is for Jupiter Gold Corporation, FY 2018, not Atlas Critical Minerals Corp. or a stand-alone 2018 Q4 filing.
- Review the audited statements and going-concern disclosure, particularly the $1,277 cash balance and the company’s financing needs.
- Assess collectability, terms and repayment history for the $172,095 due from related parties, and the implications of the company’s related-party agreements.
- Verify project permits, exploration data, operating status and any subsequent evidence of commercial production; the filing reports no SEC-defined reserves.
- Reconcile share-count and trading disclosures: the filing gives different share totals around May 2019 and describes OTC Pink trading while elsewhere saying the stock was not traded on a market.
- Review voting control, option dilution, related-party ownership, and the practical effect of the fee-shifting provision.