Atlas Lithium Corp quarterly report, Q1 FY2022

Business context and reporting period

This is Brazil Minerals, Inc.’s unaudited Form 10-Q for the three months ended March 31, 2022. Although the request identifies Atlas Lithium Corp., the filing names Brazil Minerals, Inc. as the registrant (ticker BMIX); investors should verify that this is the intended filing. The company is an exploration-stage mineral business focused primarily on hard-rock lithium properties in Brazil and reports that it has no mineral reserves under SEC Regulation S-K, Subpart 1300.

Financial results and liquidity

Revenue was from industrial sand and was described as a residual business line. Gross margin was negative: cost of revenue was $9,855 against $477 revenue. The filing reports no meaningful positive product revenue or profit. Cash and cash equivalents were $54,230 at March 31, 2022, versus $22,776 at December 31, 2021. Total assets were $1.861 million, total liabilities $1.054 million, and stockholders’ equity was $807,664. Working capital was a deficit of $822,917. Current liabilities were $923,659, primarily accounts payable and accrued expenses of $911,719, including $550,075 of mineral-rights payables. Convertible notes and loans payable were reported as zero at quarter-end; related-party notes and other payables were $11,940.

Material changes and operating developments

• Operating expenses fell 25.6%, which management attributed mainly to lower general and administrative costs and reduced stock-based compensation. Stock-based compensation was $388,019, down from $711,446.
• Operating cash flow shifted from $488,711 provided in Q1 2021 to $506,071 used in Q1 2022. Financing included $397,999 in common-stock proceeds and $225,000 from sales of subsidiary stock to noncontrolling interests.
• Common shares increased from approximately 3.109 billion at year-end to 3.199 billion at March 31; the cover reports 3.370 billion issued and outstanding as of May 13, 2022. The company also issued 214,006 Series D preferred shares in 2021, and disclosed that one Series A preferred share carries 51% of total voting power.
• Management said exploration focused on one Minas Gerais lithium claim, where it identified three pegmatitic ore bodies containing spodumene. A sample from one drill hole returned 2.86% Li2O. This is an exploration result, not a disclosed reserve or resource estimate. After quarter-end, the company added 11 nickel mineral rights in Goiás.
• The company reported a March 16 CFO transition, appointing Gustavo Pereira de Aguiar after terminating Jason Baybutt’s consulting agreement.

Outlook, risks and other disclosures

The filing provides no quantified financial guidance. Management described plans to fund operations through mining revenue as projects advance, with equity sales and debt financing as alternatives; it gave no assurance those efforts would succeed. The company states that limited working capital, recurring losses and a lack of material revenues create substantial doubt about its ability to continue as a going concern. Management identifies mineral discovery and project economics, commodity and market fluctuations, regulation, competition, personnel, weather and infrastructure disruption as risks. Brazil-based operations also expose the company to foreign-exchange risk. No material legal proceedings or material subsequent events were disclosed; the company reported no off-balance-sheet arrangements and no material change in previously disclosed risk factors. Management concluded disclosure controls and internal control over financial reporting were effective as of March 31, 2022.

Most important facts for investors to verify

• Confirm that this Brazil Minerals/BMIX filing, rather than an Atlas Lithium filing, is the intended document.
• Reconcile the financing disclosures: the financial statements and equity note report $397,999 in common-stock proceeds, while Part II describes $250,000 of unregistered share sales during the quarter.
• Check the filing’s inconsistent period references: its financial statements show March 31, 2022, but the MD&A liquidity paragraph says March 31, 2021. The balance sheet reports $54,230 cash at March 31, 2022.
• Assess near-term funding needs given the $822,917 working-capital deficit, low cash balance, substantial doubt about going concern, and dependence on additional capital.
• Review the technical basis, sampling context and follow-up work for the 2.86% Li2O result; the filing does not provide a clear resource or reserve estimate.
• Consider dilution and governance implications of the large common-share count, subsequent share count, equity financing, and Series A preferred voting rights.