Business context and reporting period
This is Brazil Minerals, Inc.’s Form 10-K for the fiscal year ended December 31, 2021, comparing results with 2020. The filing identifies the issuer as Brazil Minerals, Inc.; the supplied metadata names Atlas Lithium Corp, so the entity relationship should be confirmed. The company’s principal focus was exploration and development of hard-rock lithium properties in Brazil, alongside early-stage battery-metal projects and interests in iron, gold, and quartzite. Its only reported 2021 revenue came from industrial sand. The company reported no mineral reserves.
Financial performance and liquidity
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | $10,232 | $23,446 |
| Gross loss | $235,578 | $106,497 |
| Operating expenses | $3,280,514 | $1,175,056 |
| Net loss attributable to Brazil Minerals shareholders | $2,772,358 | $1,141,663 |
| Consolidated net loss | $4,025,465 | $1,546,035 |
| Net cash used in operating activities | $1,914,503 | $996,781 |
| Cash and cash equivalents at year-end | $22,776 | $253,598 |
| Working capital deficit | $800,253 | $2,021,744 |
Revenue declined 56.4%, attributed to reduced sand demand amid pandemic restrictions in Brazil. Cost of revenue rose to $245,810 and included a $135,656 write-off of unprocessed gold- and diamond-bearing gravel; gross loss consequently exceeded revenue. Operating expenses increased 179.2%, principally from public-company and financing costs and non-cash stock compensation ($1,470,346). Other expense was $509,373, including interest and a debt-extinguishment loss.
Investing cash outflow was $288,761, compared with $13,643 in 2020; financing provided $1,789,938, compared with $1,104,549. Year-end current assets were $57,930 against current liabilities of $998,405. No convertible notes or loans payable were reported on the year-end balance sheet, but accounts payable and accrued expenses were $988,238, and total liabilities were $1,107,331. Parent-company stockholders’ deficit was $1,094,469; total consolidated equity was $456,866, including non-controlling interests.
Material changes and notable items
- Common shares outstanding increased from about 2.0 billion at year-end 2020 to about 3.1 billion at year-end 2021, reflecting equity sales, debt conversions, option exercises, and shares issued for services. The filing reports 3,192,942,056 common shares outstanding as of March 21, 2022.
- The company converted or settled significant debt during 2021, including related-party notes converted into Series D preferred stock. It said all convertible debt had been removed from the books by year-end.
- Intangible assets, principally mineral rights, increased to $1,302,440 from $407,467; the company reported no impairment of mineral rights in either year.
- Brazil Minerals consolidated Apollo Resources and Jupiter Gold as variable-interest entities because it concluded it had power over significant activities, despite owning 46.17% and 24.56%, respectively.
- The auditor issued an unqualified opinion on the financial statements but highlighted substantial doubt about the company’s ability to continue as a going concern. Management also reported disclosure controls and internal control over financial reporting were effective; the auditor did not attest to internal-control effectiveness.
Outlook, risks, and contingencies
Management said ongoing operations and growth depend on generating operating cash and raising capital through equity or debt; it gave no quantified financial guidance. It stated plans to bring a newly authorized second sand mine online in the second quarter of 2022. The filing projected quartzite operations and revenue in 2022 and Apollo Resources iron revenue in early 2023; elsewhere it gives a fourth-quarter 2022 expected start for the iron mine, so the timing is not consistent. Lithium and other strategic-mineral projects remained exploratory, with no demonstrated commercial deposits or reserves.
Principal risks include going-concern uncertainty, continued cash burn and reliance on external financing, potential shareholder dilution, mineral-price volatility, exploration and permitting uncertainty, Brazilian regulatory and environmental requirements, foreign-exchange exposure, and dependence on key management. COVID-related municipal restrictions had delayed some exploration work. The filing reports no material legal proceedings and no off-balance-sheet arrangements. It also says the company does not expect to pay dividends in the foreseeable future.
Important facts for investors to verify
- Confirm that this Brazil Minerals, Inc. 2021 filing is the intended filing for Atlas Lithium Corp and reconcile the issuer-name difference.
- Review the going-concern disclosure, available financing, subsequent cash position, and near-term funding requirements.
- Verify the amount and accounting for the 2021 debt-extinguishment loss: the MD&A cites $224,812, while the financial statements report $255,991.
- Reconcile project schedules, especially the stated iron-mine start and revenue timing, and track required permits and actual commercial progress.
- Assess dilution and control: share issuance was substantial, one Series A preferred share held by the CEO carries 51% of total voting power, and the filing describes additional potentially dilutive securities.
- Confirm whether exploration results support economic resources or reserves; the filing states the company had no reserves.