Business context and reporting period
Summary of the unaudited Form 10-Q for the quarter and six months ended June 30, 2021. The filing is for Brazil Minerals, Inc. (BMIX), not Atlas Lithium Corp.; the filing describes a diversified Brazil-focused mineral exploration company with interests in lithium and other minerals, as well as subsidiaries or investments involved in iron, gold, and quartzite.
Financial performance and position
Amounts are in U.S. dollars. The company reported minimal revenue and continuing losses.
| Metric | Three months ended June 30, 2021 | Six months ended June 30, 2021 |
|---|---|---|
| Revenue | $1,645 | $6,104 |
| Gross loss | $22,460 | $40,990 |
| Operating expenses | $740,540 | $1,852,836 |
| Operating loss | $763,000 | $1,893,826 |
| Net loss attributable to Brazil Minerals stockholders | $826,674 | $1,542,696 |
| Cash used in operating activities | $(98,400) for six months |
At June 30, 2021, cash was $62,088, current assets were $97,273, current liabilities were $1,762,473, and the working capital deficit was $1,665,200. Total liabilities were $1,887,209, exceeding total assets of $1,767,553; stockholders’ deficit was $119,656. Current convertible notes were $86,815; related-party notes and other payables were $566,743. The filing does not provide a clear consolidated total for all debt separate from other liabilities.
Six-month investing cash outflow was $957,758, primarily for intangible assets; financing provided $873,812. Cash declined by $191,510 from year-end 2020. Gross margin was negative: revenue did not cover cost of revenue.
Changes versus prior comparable periods
- Six-month revenue fell 47.2% from $11,566; quarterly revenue fell 81.6% from $8,936.
- Six-month operating expenses rose 234.4% to $1,852,836, mainly from public-company and financing costs and stock-based compensation. Stock-based compensation was $1,037,413 for the six months.
- Six-month net loss attributable to company stockholders increased to $1,542,696 from $838,288.
- Cash used in operations improved to $98,400 from $460,751, while investing cash use rose to $957,758 from $13,138.
- Intangible assets, consisting of perpetual mining rights, increased to $1,452,952 from $407,467. Accounts payable included $749,750 of mineral-rights payables.
- Common shares outstanding increased to 2,925,793,327 from 1,997,930,297 at December 31, 2020, reflecting equity sales, warrant exercises, and debt conversions.
Outlook, risks, and unusual items
- Management stated it expects revenue to increase as new production areas receive licenses, but gave no quantified guidance or timetable.
- The filing states that limited working capital, recurring losses, and lack of material revenue create substantial doubt about the company’s ability to continue as a going concern. Management expects to rely on mining revenue, equity sales, and debt financing; it gave no assurance these plans will succeed.
- A $224,812 loss on extinguishment of debt arose from warrants issued in a noteholder settlement. The company also issued shares to convert $1,234,906 of debt and accrued interest during the six months.
- One $129,000 convertible note outstanding at quarter-end carried a $0.001 conversion price after six months and could convert into approximately 129 million shares, creating potential dilution. Additional dilution risk arises from the company’s large share issuances and outstanding options and warrants.
- COVID-19-related municipal restrictions delayed some exploration research; the company said local operations continued and noncritical expenses were postponed. Currency movements, mineral discovery and production economics, regulation, infrastructure, weather, and competition were identified as risks.
- A separate older note was past due and in technical default; the company said it was negotiating with the holder and that no payment demand had been made. Management reported disclosure controls effective, and no material legal proceedings or subsequent events were disclosed.
Investor verification points
- Confirm the intended issuer: the supplied filing identifies Brazil Minerals, Inc. (BMIX), not Atlas Lithium Corp.
- Review the going-concern uncertainty, cash balance, working-capital deficit, and ability to raise financing.
- Check mineral-rights licensing, the $749,750 mineral-rights payable, and whether the enlarged mining-rights asset can support future production and revenue.
- Assess dilution from outstanding convertible debt, options, warrants, and the substantial increase in shares outstanding.
- Verify the status and terms of past-due or related-party obligations and the noteholder settlement recorded as a debt-extinguishment loss.