Filing summary
Entity and period: The supplied filing is Brazil Minerals, Inc.’s unaudited Form 10-Q for the quarter and nine months ended September 30, 2021—not a filing under the name Atlas Lithium Corp. The registrant reported as BMIX on OTCQB. Amounts below are in U.S. dollars.
Business context and financial performance
Brazil Minerals described itself as a Brazil-focused mineral exploration company, with interests in lithium and other mineral rights, and interests in iron-focused Apollo Resources and gold-focused Jupiter Gold. Management said it was prioritizing exploration and development of higher-potential mineral rights over near-term production.
| Metric | Q3 2021 | Nine months 2021 | Comparison |
|---|---|---|---|
| Revenue | $2,984 | $9,088 | Down 72.1% and 59.2%, respectively, from 2020 |
| Gross loss | $24,398 | $65,388 | Prior-year losses were $16,220 and $64,551 |
| Operating expenses | $707,335 | $2,560,171 | Up 133.1% and 198.6%, respectively |
| Net loss attributable to Brazil Minerals shareholders | $619,139 | $2,161,835 | Prior-year losses were $271,203 and $1,109,491 |
| Operating cash used | Not presented separately | $1,231,664 in the cash-flow statement | 2020: $701,956 |
| Investing cash used | Not presented separately | $272,153 | 2020: $12,728 |
| Financing cash provided | Not presented separately | $1,237,542 | 2020: $833,884 |
Liquidity, debt and balance sheet
- At September 30, cash was $18,132, current assets were $64,493, and current liabilities were $1,078,923, producing a working-capital deficit of $1,014,430.
- Total liabilities were $1,194,239. Current convertible notes, net of discounts, were $97,820; other noncurrent liabilities were $115,316.
- Cash declined from $253,598 at December 31, 2020. Financing included $891,650 net proceeds from common-stock sales, $456,200 from sales of subsidiary stock to noncontrolling interests, and $125,000 from convertible notes.
- Mining rights and other intangible assets rose to $1,336,173 from $407,467. The filing reports $701,694 of intangible-asset acquisitions via financing as a noncash financing activity.
- Common shares outstanding increased to 3,050,699,071 from 1,997,930,297 at year-end 2020. The filing also reports 214,006 Series D preferred shares issued to settle related-party debt and accrued interest; each Series D share is convertible into 10,000 common shares.
Changes, outlook and risks
- Management attributed the revenue decline to its shift toward exploration and said it anticipated revenue could rise after licensing additional production areas; no quantified guidance or timing was provided.
- Operating-expense growth was primarily attributed to public-company and financing costs and stock-based compensation. Nine-month stock-based compensation was $1,228,598.
- The nine-month results included a $224,812 loss on extinguishment of debt related to warrants issued in a note settlement. Debt was also reduced through repayments and conversions into common or preferred stock.
- Management disclosed limited working capital, recurring losses and immaterial product revenue as conditions creating substantial doubt about the company’s ability to continue as a going concern. Its plans depend on operating cash generation, equity sales and/or debt financing; success is not assured.
- Risks include mineral exploration and permitting outcomes, commodity and market fluctuations, Brazilian regulatory and environmental requirements, currency exposure, and COVID-related delays to some exploration work. The filing reported no material legal proceedings and no material change to previously disclosed risk factors.
- The filing stated disclosure controls were effective at a reasonable-assurance level and that there were no material third-quarter changes in internal control over financial reporting.
Most important facts to verify
- Confirm the issuer: the supplied 10-Q is for Brazil Minerals, Inc., despite the request metadata naming Atlas Lithium Corp.
- Reconcile operating cash used: the cash-flow statement reports $1,231,664 for the nine months, while MD&A reports $1,201,277.
- Review the going-concern disclosure, available funding, and the substantial working-capital deficit.
- Assess dilution and control implications of the expanded common share count, convertible securities, Series D conversion terms, and Series A preferred stock’s 51% voting power.
- Check the status and economics of Brazilian mining rights, licensing, exploration progress, and the assumptions behind management’s revenue outlook.