Atlas Lithium Corp 10-Q

Item 1 FINANCIAL STATEMENTS BRAZIL MINERALS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) June 30, 2022 and December 31, 2021 June 30, 2022 December 31, 2021 ASSETS Current assets: Cash and cash equivalents $ 393,864 $ 22,776 Accounts receivable 410 1,401 Taxes recoverable 17,586 16,507 Prepaid expenses 463 - Deposits and advances 21,775 17,246 Total current assets 434,098 57,930 Property and equipment, net 67,306 53,827 Intangible assets, net 1,508,801 1,302,440 Equity investments 150,000 150,000 Total assets $ 2,160,205 $ 1,564,197 LIABILITIES AND STOCKHOLDERS’ EQUITY ( DEFICIT) Current liabilities: Accounts payable and accrued expenses $ 837,875 $ 988,238 Related party notes and other payables 9,317 10,167 Total current liabilities 847,192 998,405 Other noncurrent liabilities 115,421 108,926 Total liabilities 962,613 1,107,331 Stockholders’ deficit: Series A preferred stock, $ 0.001 par value. 10,000,000 shares authorized; 1 share issued and outstanding as of June 30, 2022 and December 31, 2021 1 1 Series D preferred stock, $ 0.001 par value. 1,000,000 shares authorized; 214,006 shares issued and outstanding as of June 30, 2022 and December 31, 2021 214 214 Preferred stock Common stock, $ 0.001 par value. 4,000,000,000 and 3,250,000,000 shares authorized as of June 30 2022 and December 31, 2021, respectively; 3,385,151,300 and 3,109,178,852 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively 3,385,151 3,109,179 Additional paid-in capital 53,219,553 51,466,376 Accumulated other comprehensive loss ( 651,022 ) ( 712,810 ) Accumulated deficit ( 56,359,935 ) ( 54,957,429 ) Total stockholders’ deficit ( 406,038 ) ( 1,094,469 ) Non-controlling interest 1,603,630 1,551,335 Total stockholders’ equity 1,197,592 456,866 Total liabilities and stockholders’ equity $ 2,160,205 $ 1,564,197 The accompanying notes are an integral part of the condensed consolidated financial statements. F- 1 Table of Contents BRAZIL MINERALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) For the Three and Six Months Ended June 30, 2022 and 2021 2022 2021 2022 2021 Three months ended June 30 Six months ended June 30 2022 2021 2022 2021 Revenue 2,367 1,645 2,844 6,104 Cost of revenue 26,343 24,105 36,198 47,094 Gross loss ( 23,976 ) ( 22,460 ) ( 33,354 ) ( 40,990 ) Operating expenses Professional fees 24,180 19,506 144,021 101,797 General and administrative 400,926 260,106 622,391 533,157 Compensation and related costs 288,597 134,961 386,589 180,469 Stock based compensation 255,170 325,967 643,189 1,037,413 Other operating expenses 20,421 - 20,421 - Total operating expenses 989,294 740,540 1,816,611 1,852,836 Loss from operations ( 1,013,270 ) ( 763,000 ) ( 1,849,965 ) ( 1,893,826 ) Other expense (income) Interest on promissory notes - 96,493 - 161,243 Amortization of debt discounts and other fees - 1,834 - 1,834 Extinguishment of debt - 224,812 - 224,812 Other expense (income) ( 14 ) ( 7 ) ( 1,966 ) ( 215 ) Total other expense ( 14 ) 323,132 ( 1,966 ) 387,674 Loss before provision for income taxes ( 1,013,256 ) ( 1,086,132 ) ( 1,847,999 ) ( 2,281,500 ) Provision for income taxes - - - - Net loss ( 1,013,256 ) ( 1,086,132 ) ( 1,847,999 ) ( 2,281,500 ) Loss attributable to non-controlling interest ( 142,240 ) ( 259,458 ) ( 445,493 ) ( 738,804 ) Net loss attributable to stockholders ( 871,016 ) ( 826,674 ) $ ( 1,402,506 ) $ ( 1,542,696 ) Basic and diluted loss per share Net loss per share attributable to common stockholders $ - $ - $ - $ - Weighted-average number of common shares outstanding: Basic and diluted 3,325,443,461 2,513,196,303 3,325,443,461 2,513,196,303 Comprehensive loss: Net loss $ ( 1,013,256 ) $ ( 1,086,132 ) $ ( 1,847,999 ) $ ( 2,281,500 ) Foreign currency translation adjustment 249,649 55,071 306,464 18,704 Comprehensive loss ( 763,607 ) ( 1,031,061 ) ( 1,541,535 ) ( 2,262,796 ) Comprehensive loss attributable to noncontrolling interests 107,924 ( 302,335 ) ( 200,817 ) ( 754,803 ) Comprehensive loss attributable to stockholders $ ( 871,531 ) $ ( 728,726 ) $ ( 1,340,718 ) $ ( 1,507,993 ) The accompanying notes are an integral part of the condensed consolidated financial statements. F- 2 Table of Contents BRAZIL MINERALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED) For the Three Months Ended June 30, 2022 and 2021 Shares Value Shares Value Shares Value Capital Loss Deficit Interests (Deficit) Series A Preferred Stock Series D Preferred Stock Common Stock Additional Paid-in Accumulated Other Comprehensive Accumulated Noncontrolling Total Stockholders’ Equity Shares Value Shares Value Shares Value Capital Loss Deficit Interests (Deficit) Balance, March 31, 2021 1 $ 1 - $ - 2,552,577,359 $ 2,552,577 $ 48,553,298 $ ( 838,358 ) $ ( 52,901,093 ) $ 1,724,262 $ ( 909,313 ) Issuance of common stock in connection with sales made under private offerings - - - - 69,591,306 69,592 330,558 - - - 400,150 Issuance of common stock in connection with the exercise of common stock options - - - - 181,378,183 181,378 ( 106,378 ) - - 68,750 143,750 Issuance of common stock warrants in connection with the issuance of convertible notes - - - - - - 356,827 - - - 356,827 Conversion of convertible notes and accrued interest payable into common stock - - - - 122,246,479 122,246 471,778 - - - 594,024 Stock based compensation - - - - - - 325,967 - - - 325,967 Change in foreign currency translation - - - - - - - 97,948 - ( 42,877 ) 55,071 Net loss - - - - - - - - ( 826,674 ) ( 259,458 ) ( 1,086,132 ) Balance, June 30, 2021 1 $ 1 - $ - 2,925,793,327 $ 2,925,793 $ 49,932,050 $ ( 740,410 ) $ ( 53,727,767 ) $ 1,490,677 $ ( 119,656 ) Shares Value Shares Value Shares Value Capital Loss Deficit Interests (Deficit) Series A Preferred Stock Series D Preferred Stock Common Stock Additional Paid-in Accumulated Other Comprehensive Accumulated Noncontrolling Total Stockholders’ Equity Shares Value Shares Value Shares Value Capital Loss Deficit Interests (Deficit) Balance, March 31, 2022 1 $ 1 214,006 $ 214 3,199,478,004 $ 3,199,478 $ 52,162,095 $ ( 460,316 ) $ ( 55,488,919 ) $ 1,395,111 $ 807,664 Issuance of common stock in connection with sales made under private offerings - - - - 185,673,296 185,673 802,288 - - - 987,961 Stock based compensation - - - - - - 255,170 - - ( 80,865 ) 174,305 Change in foreign currency translation - - - - - - - ( 190,706 ) - 131,624 ( 59,082 ) Sale of Jupiter Gold common stock in connection with equity offerings - - - - - - - - - - - Sale of Apollo Resources common stock in connection with equity offerings - - - - - - - - - 300,000 300,000 Net loss - - - - - - - - ( 871,016 ) ( 142,240 ) ( 1,013,256 ) Balance, June 30, 2022 1 $ 1 214,006 $ 214 3,385,151,300 $ 3,385,151 $ 53,219,553 $ ( 651,022 ) $ ( 56,359,935 ) $ 1,603,630 $ 1,197,592 The accompanying notes are an integral part of the condensed consolidated financial statements. F- 3 Table of Contents BRAZIL MINERALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED) For the Six Months Ended June 30, 2022 and 2021 Shares Value Shares Value Shares Value Capital Loss Deficit Interests (Deficit) Series A Preferred Stock Series D Preferred Stock Common Stock Additional Paid-in Accumulated Other Comprehensive Accumulated Noncontrolling Total Stockholders’ Equity Shares Value Shares Value Shares Value Capital Loss Deficit Interests (Deficit) Balance, December 31, 2020 1 $ 1 - $ - 1,997,930,297 $ 1,997,930 $ 47,489,116 $ ( 775,113 ) $ ( 52,185,071 ) $ 1,976,885 $ ( 1,496,252 ) Issuance of common stock in connection with sales made under private offerings - - - - 110,132,972 110,133 556,517 - - - 666,650 Issuance of common stock in connection with sales made under private offerings - - - - 313,053,865 313,054 ( 238,054 ) - - 68,750 143,750 Issuance of common stock in exchange for consulting, professional and other services - - - - - - - - - 31,845 31,845 Issuance of common stock warrants in connection with the issuance of convertible notes - - - - - - 356,827 - - - 356,827 Conversion of convertible notes and accrued interest payable into common stock - - - - 504,676,193 504,676 730,231 - - - 1,234,907 Stock based compensation - - - - - - 1,037,413 - - - 1,037,413 Change in foreign currency translation - - - - - - - 34,703 - ( 15,999 ) 18,704 Sale of Jupiter Gold common stock in connection with equity offerings - - - - - - - - - 118,000 118,000 Sale of Apollo Resources common stock in connection with equity offerings - - - - - - - - - 50,000 50,000 Net loss - - - - - - - - ( 1,542,696 ) ( 738,804 ) ( 2,281,500 ) Balance, June 30, 2021 1 $ 1 - $ - 2,925,793,327 $ 2,925,793 $ 49,932,050 $ ( 740,410 ) $ ( 53,727,767 ) $ 1,490,677 $ ( 119,656 ) Shares Value Shares Value Shares Value Capital Loss Deficit Interests (Deficit) Series A Preferred Stock Series D Preferred Stock Common Stock Additional Paid-in Accumulated Other Comprehensive Accumulated Noncontrolling Total Stockholders’ Equity Shares Value Shares Value Shares Value Capital Loss Deficit Interests (Deficit) Balance, December 31, 2021 1 $ 1 214,006 $ 214 3,109,178,852 $ 3,109,179 $ 51,466,376 $ ( 712,810 ) $ ( 54,957,429 ) $ 1,551,335 $ 456,866 Issuance of common stock in connection with sales made under private offerings - - - - 275,972,448 275,972 1,109,988 - - - 1,385,960 Stock based compensation - - - - - - 643,189 - - ( 271,888 ) 371,301 Change in foreign currency translation - - - - - - - 61,788 - 244,676 306,464 Sale of Apollo Resources common stock in connection with equity offerings - - - - - - - - - 525,000 525,000 Net loss - - - - - - - - ( 1,402,506 ) ( 445,493 ) ( 1,847,999 ) Balance, June 30, 2022 1 $ 1 214,006 $ 214 3,385,151,300 $ 3,385,151 $ 53,219,553 $ ( 651,022 ) $ ( 56,359,935 ) $ 1,603,630 $ 1,197,592 The accompanying notes are an integral part of the condensed consolidated financial statements. F- 4 Table of Contents BRAZIL MINERALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Six Months Ended June 30, 2022 and 2021 2022 2021 Six months ended June 30 2022 2021 Cash flows from operating activities of continuing operations: Net loss $ ( 1,847,999 ) ( 2,281,500 ) Adjustments to reconcile net loss to cash used in operating activities: Stock based compensation and services 643,189 1,069,258 Amortization of debt discounts - 1,834 Common stock issued in satisfaction of other financing costs - 91,996 Convertible debt issued in satisfaction of other financing costs - 37,212 Loss on extinguishment of debt - 224,812 Depreciation and amortization 27,323 23,608 Changes in operating assets and liabilities: Accounts receivable 991 18,687 Taxes recoverable ( 1,079 ) - Prepaid expenses ( 479 ) - Deposits and advances ( 4,529 ) ( 1,611 ) Accounts payable and accrued expenses ( 151,213 ) 718,461 Other noncurrent liabilities 6,495 ( 1,157 ) Net cash used in operating activities ( 1,327,301 ) ( 98,400 ) Cash flows from investing activities: Acquisition of capital assets ( 40,802 ) - Increase in intangible assets ( 206,361 ) ( 957,978 ) Net cash used in investing activities ( 247,163 ) ( 957,978 ) Cash flows from financing activities: Loan from officer - 5,720 Net proceeds from sale of common stock 1,385,960 741,650 Proceeds from sale of subsidiary common stock to noncontrolling interests 525,000 236,750 Proceeds from convertible notes payable - 399,000 Repayment of convertible notes payable - ( 270,000 ) Repayment of loans payable - ( 235,308 ) Net cash provided by financing activities 1,910,960 872,812 Effect of exchange rates on cash and cash equivalents 34,592 ( 9,164 ) Net increase (decrease) in cash and cash equivalents 371,088 ( 191,510 ) Cash and cash equivalents at beginning of period 22,776 253,598 Cash and cash equivalents at end of period $ 393,864 $ 62,088 Supplemental disclosure of non-cash investing and financing activities: Shares issued in connection with conversion of debt and accrued interest $ - $ 1,234,906 Common stock warrants issued in connection with convertible promissory notes $ - $ 40,019 The accompanying notes are an integral part of the condensed consolidated financial statements. F- 5 Table of Contents BRAZIL MINERALS, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 – ORGANIZATION, BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Description of Business Brazil Minerals, Inc. (“Brazil Minerals” or the “Company”) was incorporated as Flux Technologies, Corp. under the laws of the State of Nevada, U.S. on December 15, 2011. The Company changed its management and business on December 18, 2012, to focus on mineral exploration. Brazil Minerals, through subsidiaries, owns mineral rights in Brazil for lithium, nickel, rare earths, titanium, graphite, gold, diamonds, and sand, and through subsidiaries, iron, gold and quartzite. Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”) and are expressed in United States dollars. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of June 30, 2022, and the results of operations and cash flows for the periods presented. The results of operations for the three and six months ended June 30, 2022 and 2021, are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in Form 10-K for the fiscal year ended December 31, 2021 filed with the Securities and Exchange Commission (the “SEC”) on March 29, 2022. The condensed consolidated financial statements include the accounts of the Company; its 99.99 % owned subsidiary, BMIX Participações Ltda. (“BMIXP”), which includes the accounts of BMIXP’s wholly-owned subsidiary, Mineração Duas Barras Ltda. (“MDB”), and BMIXP’s 50 % owned subsidiary, RST Recursos Minerais Ltda. (“RST”); its 99.99 % owned subsidiary, Hercules Resources Corporation (“HRC”), which includes the accounts of HRC’s wholly-owned subsidiary, Hercules Brasil Comercio e Transportes Ltda. (“Hercules Brasil”); its 44.41 % equity interest in Apollo Resources Corporation (“Apollo Resources”) and its subsidiary Mineração Apollo, Ltda.; and its 24.56 % equity interest in Jupiter Gold Corporation (“Jupiter Gold”), which includes the accounts of Jupiter Gold’s wholly-owned subsidiary, Mineração Jupiter Ltda. The Company has concluded that Apollo Resources, Jupiter Gold and their subsidiaries are variable interest entities (“VIE”) in accordance with applicable accounting standards and guidance. As such, the accounts and results of Apollo Resources, Jupiter Gold and their subsidiaries have been included in the Company’s condensed consolidated financial statements. All material intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingencies at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results may differ from those estimates. F- 6 Table of Contents BRAZIL MINERALS, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 – ORGANIZATION, BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Going Concern The condensed consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company has limited working capital, has incurred losses in each of the past two years, and has not yet received material revenues from sales of products or services. These factors create substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company generating cash from its operations, the sale of its stock and/or obtaining debt financing. Historically, the Company has funded its operations primarily through the issuance of debt and equity securities. Management’s plan to fund its capital requirements and ongoing operations include the sale of of common stock in the Company, and, over time, generation of revenue from its mining operations and projects. Management’s secondary plan to cover any shortfall is selling common stock in Apollo Resources or Jupiter Gold that it owns. There can be no assurance the Company will be successful in these efforts. Recent Accounting Pronouncements The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new pronouncements that have been issued that might have a material impact on its financial position or results of operations except as noted below: In February 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ ASU”) 2020-02, Financial Instruments-Credit Losses (Topic 326) and Leases (Topic 842) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842), which amends the effective date of the original pronouncement for smaller reporting companies. ASU 2016-13 and its amendments will be effective for the Company for interim and annual periods in fiscal years beginning after December 15, 2022. The Company believes the adoption will modify the way the Company analyzes financial instruments, but it does not anticipate a material impact on results of operations. The Company is in the process of determining the effects adoption will have on its consolidated financial statements. F- 7 Table of Contents BRAZIL MINERALS, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS Property and Equipment The following table sets forth the components of the Company’s property and equipment at June 30, 2022 and December 31, 2021: SCHEDULE OF PROPERTY AND EQUIPMENT June 30, 2022 December 31, 2021 Cost Accumulated Depreciation Net Book Value Cost Accumulated Depreciation Net Book Value Computers and office equipment $ 3,880 $ ( 2,980 ) $ 400 $ 3,880 $ ( 2,778 ) $ 1,063 Machinery and equipment 371,954 ( 305,048 ) 66,906 334,253 ( 281,489 ) 52,764 Vehicles 123,032 ( 123,032 ) - 118,653 ( 118,653 ) - Total fixed assets $ 498,366 $ ( 431,060 ) $ 67,306 $ 456,747 $ ( 402,920 ) $ 53,827 For the three and six months ended June 30, 2022, the Company recorded depreciation expense of $ 13,661 and $ 27,323 , respectively, and for the three and six months ended June 30, 2021, the Company recorded depreciation expense of $ 11,518 and $ 23,608 , respectively. Intangible Assets Intangible assets consisting of mining rights are not amortized as the mining rights are perpetual. The carrying value was $ 1,508,801 and $ 1,302,440 at June 30, 2022 and December 31, 2021, respectively. Equity Investments without Readily Determinable Fair Values On October 2, 2017, the Company entered into an exchange agreement whereby it issued 25,000,000 shares of its common stock in exchange for 500,000 shares of Ares Resources Corporation. The Company’s chief executive officer also serves as an officer of Ares Resources Corporation, thus making it a related party under common ownership and control. The shares were recorded at $ 150,000 , or $ 0.006 per share. The shares were valued based upon the lowest market price of the Company’s common stock on the date of the agreement. On March 11, 2020, the Company issued 53,947,368 shares of common stock to Lancaster Brazil Fund pursuant to an addendum to the share exchange agreement dated September 28, 2018. The Company recorded a loss on exchange of equity with a related party of $ 76,926 representing the fair value of the additional shares of common stock issued. Under ASC 321-10, the Company elected to use a measurement alternative for its equity investment that does not have a readily determinable fair value. As such, the Company measured its investment at cost, less any impairment, plus or minus any changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. The Company owns less than 5 % of the total shares outstanding of Ares Resources Corporation. F- 8 Table of Contents BRAZIL MINERALS, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS (CONTINUED) Accounts Payable and Accrued Liabilities SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES June 30, 2022 December 31, 2021 Accounts payable and other accruals $ 342,847 $ 310,047 Mineral rights payable 495,028 672,601 Accrued interest - 5,590 Total $ 837,875 $ 988,238 NOTE 3 – OTHER NONCURRENT LIABILITIES Other noncurrent liabilities are comprised solely of social contributions and other employee-related costs at operating subsidiaries located in Brazil. The Company has been funding these amounts upon the termination of a worker or employee. The balance of these employee related costs as of June 30, 2022 and December 31, 2021 amounted to $ 115,421 and $ 108,926 , respectively. NOTE 4 – STOCKHOLDERS’ EQUITY Authorized and Amendments As of June 30, 2022, the Company had 4,000,000,000 shares of common stock authorized with a par value of $ 0.001 per share. F- 9 Table of Contents BRAZIL MINERALS, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Series A Preferred Stock On December 18, 2012, the Company filed with the Nevada Secretary of State a Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock (“Series A Stock”) to designate one share of a new series of preferred stock. The Certificate of Designations, Preferences and Rights of the Series A Stock provides that for so long as Series A Stock is issued and outstanding, the holders of Series A Stock shall vote together as a single class with the holders of the Company’s Common Stock, whereby the holders of Series A Stock is entitled to 51% of the total votes on all such matters regardless of the actual number of shares of Series A Stock then outstanding, and the holders of Common Stock are entitled to their proportional share of the remaining 49% of the total votes based on their respective voting power. Six Months Ended June 30, 2022 Transactions During the six months ended June 30, 2022, the Company issued 275,972,448 shares of common stock for gross proceeds of $ 1,385,960 pursuant to subscription agreements with accredited investors. Six Months Ended June 30, 2021 Transactions During the six months ended June 30, 2021, the Company issued 110,132,972 shares of common stock for gross proceeds of $ 666,650 pursuant to subscription agreements with accredited investors. Additionally, the Company issued 504,676,193 shares of common stock upon conversion of $ 1,234,906 in convertible notes payable and accrued interest. Lastly, during the six months ended June 30, 2021, the Company issued 313,053,865 shares of common stock for net proceeds of $ 143,750 upon the exercise of 334,385,769 warrants. Common Stock Options During the six months ended June 30, 2022, the Company granted options to purchase an aggregate of 187,276,311 shares of common stock to officers and non-management directors. The options were valued at $ 371,301 in total. The options were valued using the Black-Scholes option pricing model with the following average assumptions: the stock price on the date of the grant ranged from $ 0.05 to $ 0.01 , expected dividend yield of 0.0 %, historical volatility calculated between 79.0 % and 210 %, risk-free interest rate ranging between 0.9 % and 2.85 %, and an expected term of ten years . As of June 30, 2022, the Company has 403,771,662 outstanding common stock options and warrants, with an average exercise price of $ 0.0111 , an average time to expiration of 1.72 years and an aggregated intrinsic value of $ 4,447,624 . F- 10 Table of Contents BRAZIL MINERALS, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 5 – COMMITMENTS AND CONTINGENCIES Operating Leases The Company leases office space in the U.S. for approximately $ 3,833 on a month-to-month basis. The Company also leases office space in Brazil. Such costs are immaterial to the condensed consolidated financial statements. NOTE 6 - RELATED PARTY TRANSACTIONS Jupiter Gold Corporation During the six months ended June 30, 2022, Jupiter Gold granted options to purchase an aggregate of 210,000 shares of its common stock to Marc Fogassa at prices ranging between $ 0.01 to $ 1.00 per share. The options were valued at $ 51,967 and recorded to stock-based compensation. The options were valued using the Black-Scholes option pricing model with the following average assumptions: the Company’s stock price on the date of the grant which ranged from $ 0.8 to $ 1.00 , expected dividend yield of 0 %, historical volatility calculated at 225 %, risk-free interest rate between a range of 1.59 % to 2.85 %, and an expected term between five and ten years . Apollo Resource Corporation During the six months ended June 30, 2022, Apollo Resources granted options to purchase an aggregate of 180,000 shares of its common stock to Marc Fogassa at a price of $ 1.22 per share. The options were valued at $ 219,921 and recorded to stock-based compensation. The options were valued using the Black-Scholes option pricing model with the following average assumptions: the Company’s stock price on the date of the grant which ranged from $ 1.25 to $ 5.00 , expected dividend yield of 0 %, historical volatility calculated at 71 %, risk-free interest rate between a range of 1.59 % to 2.85 %, and an expected term between five and ten years F- 11 Table of Contents BRAZIL MINERALS, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 7 – RISKS AND UNCERTAINTIES Currency Risk The Company operates primarily in Brazil which exposes it to currency risks. The Company’s business activities may generate intercompany receivables or payables that are in a currency other than the functional currency of the entity. Changes in exchange rates from the time the activity occurs to the time payments are made may result in the Company receiving either more or less in local currency than the local currency equivalent at the time of the original activity. The Company’s condensed consolidated financial statements are denominated in U.S. dollars. Accordingly, changes in exchange rates between the applicable foreign currency and the U.S. dollar affect the translation of each foreign subsidiary’s financial results into U.S. dollars for purposes of reporting in the consolidated financial statements. The Company’s foreign subsidiaries translate their financial results from the local currency into U.S. dollars in the following manner: (a) income statement accounts are translated at average exchange rates for the period; (b) balance sheet asset and liability accounts are translated at end of period exchange rates; and (c) equity accounts are translated at historical exchange rates. Translation in this manner affects the shareholders’ equity account referred to as the foreign currency translation adjustment account. This account exists only in the foreign subsidiaries’ U.S. dollar balance sheets and is necessary to keep the foreign subsidiaries’ balance sheets in agreement. NOTE 8 - SUBSEQUENT EVENTS In accordance with FASB ASC 855-10 Subsequent Events, the Company has analyzed its operations subsequent to June 30, 2022 to the date these consolidated financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these consolidated financial statements. F- 12 Table of Contents