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Item 7. Management’s Discussion and Analysis

2023-03-30 compared with 2022-03-25 · 122 added, 138 removed, 201 unchanged (56% of the section changed)

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financial statements and the notes to those financial statements appearing elsewhere in this Annual Report.

Annual Report contains forward-looking statements.

Forward-looking statements for Brazil Minerals, Inc.

reflect current expectations,

as of the date of this Annual Report, and involve certain risks and uncertainties.

Actual results could differ materially from those

anticipated in these forward- looking statements as a result of various factors.

Factors that could cause future results to materially

differ from the recent results or those projected in forward-looking statements include, among others:

unprofitable efforts resulting

not only from the failure to discover mineral deposits, but also from finding mineral deposits that, though present, are insufficient

in quantity and quality to return a profit from production;

market fluctuations;

government regulations, including regulations relating

to royalties, allowable production, importing and exporting of minerals, and environmental protection;

the loss of services

of key personnel;

unusual or infrequent weather phenomena, sabotage, government or other interference in the maintenance or provision

of infrastructure as well as general economic conditions.

Minerals, Inc.

(“Brazil Minerals”, the “Company”, “we”, “us”, or “our”) is

mineral exploration and mining company with projects and properties in essentially all battery metals to power the Green Energy

Revolution – lithium, rare earths, graphite, nickel, cobalt, and titanium.

Our current focus is on developing our hard-rock lithium

project located in a premier pegmatitic district in Brazil – as lithium is essential for batteries in electric vehicles.

Additionally,

through subsidiaries, we participate in iron, gold, and quartzite projects.

We also own multiple mining concessions for gold, diamond,

and industrial sand.

of our mineral projects and properties are located in Brazil and, as of the date of this Report, our mineral rights portfolio

for battery metals includes approximately 60,077 acres (243 km 2 ) for lithium, 30,009 acres (121 km 2 ) for rare earths,

22,050 acres (89 km 2 ) for titanium, 14,507 acres (59 km 2 ) for graphite, and 7,509 acres (30 km 2 ) for

nickel and cobalt We believe we are among the largest listed companies by size and breadth in exploration projects for strategic minerals

in Brazil, a premier mineral jurisdiction.

discussion and analysis below includes forward-looking statements that are subject to risks, uncertainties and other factors described

in the “Risk Factors” section that could cause actual results could differ materially from those anticipated in these forward-

looking statements as a result of various factors.

Additionally, our historical results are not

necessarily indicative of the results that may be expected for any period in the future.

We caution you to read the “Forward

Looking Statements” section of our Annual Report.

Lithium Corporation (“Atlas Lithium,” “Brazil Minerals,” the “Company,” “we,” “us,”

or “our”) is a mineral exploration and mining company with lithium projects and properties in other critical and battery

minerals to power the Green Energy Revolution - nickel, rare earths, graphite, and titanium.

Our current focus is on developing our hard-rock

lithium project located in Minas Gerais State in Brazil at a well-known, premier pegmatitic district in Brazil.

We intend to produce

and sell lithium concentrate, a key ingredient for battery supply chain.

Lithium is essential for batteries in electric vehicles and

demand is expected to outstrip supply.

are in the initial stages of planning to develop and own 100% of a lithium concentration facility capable of producing 150,000 tons of

lithium concentrate annually.

there can be no assurance that we will have the necessary capital resources to develop such facility or, if developed, that we will reach

the production capacity necessary to commercialize our products and with the quality needed to meet market demand.

of our mineral projects and properties are located in Brazil and our mineral rights portfolio for critical and battery minerals includes

approximately 75,040 acres (304 km 2 ) for lithium in 64 mineral rights, 54,950 acres for nickel (222 km 2 ) in 15

mineral rights, 30,054 acres (122 km 2 ) for rare earths in seven mineral rights, 22,050 acres (89 km 2 ) for titanium

in seven mineral rights, and 13,766 acres (56 km 2 ) for graphite in three mineral rights.

We believe that we hold the largest

portfolio of lithium mineral exploration properties in Brazil, a premier and well-established jurisdiction for hard-rock lithium.

are primarily focused on advancing and developing our hard-rock lithium project located in the state of Minas Gerais, Brazil, where some

of our high-potential mineral rights are adjacent to or near large lithium deposits that belong to a large, publicly traded competitor.

Our Minas Gerais Lithium Project is our largest endeavor and consists of 44 mineral rights spread over 45,456 acres (184 km 2 )

of our high-potential mineral rights are adjacent to or near large lithium deposits that belong to Sigma Lithium Corporation (Nasdaq:

Our Minas Gerais Lithium Project is our largest project and consists of 52 mineral rights spread over 56,078 acres (227 km 2 )

and predominantly located within the Brazilian Eastern Pegmatitic Province which has been surveyed by the Brazilian Geological Survey

and is known for the presence of hard rock formations known as pegmatites which contain lithium-bearing minerals such as spodumene and

In general, lithium derived from pegmatites is less costly to purify for uses in high technology applications than lithium

obtained from brine.

Such applications include the battery supply chain for electric vehicles (“EVs”), an area of expected

high growth for the next several decades.

Generally, lithium derived from pegmatites is less costly to purify for uses in high technology applications than lithium obtained

Such applications include the battery supply chain for EVs, an area of expected high growth for the next several decades.

believe that we can materially increase our value by the acceleration of our exploratory work and quantification of our lithium mineralization.

Our initial commercial goal is to be able to enter production of lithium-bearing concentrate, a product which is highly sought after

in the battery supply chain for EVs.

Our initial commercial goal is to be able to enter production of lithium-bearing concentrate, a product which is highly sought

after in the battery supply chain for EVs.

also have 100%-ownership of early-stage projects and properties in other minerals that are needed in the battery supply chain and high

technology applications such as rare earths, titanium, nickel, and cobalt.

Our goal is to become “the Mineral Resources Company

for the Green Energy Revolution”.

We believe that the shift from fossil fuels to battery power will yield long-term opportunities

for us not only in lithium but also in such other minerals.

technology applications such as nickel, rare earths, graphite, and titanium.

We believe that the shift from fossil fuels to battery power

will yield long-term opportunities for us not only in lithium but also in such other minerals.

Additionally,

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Historically, we have had revenues from mining and selling

gold and diamonds.

More recently we have had revenues from mining and selling industrial sand for the local construction industry, which

is at the time of this Report our primary source of revenues.

Such endeavors have given us the critical management experience

needed to take early-stage projects in Brazil from the exploration phase through successful licensing from regulators and to revenues.

of the date of this Report we also own 46.17% of the common shares of Apollo Resources Corporation (“Apollo Resources”),

a private company currently primarily focused on the development of its initial iron mine, expected to start operations and revenues

in early 2023.

of the date of this Report, we also own approximately 24.56% of Jupiter Gold Corporation (“Jupiter Gold”), a company

focused on the development of gold projects and of a quartzite mine, and whose common shares are quoted on the OTCQB under the symbol

The quartzite mine is expected to start operations and revenues in 2022.

results of operations from both Apollo Resources and Jupiter Gold are consolidated in our financial statements under USGAAP.

the “Mineral Resources Company for the Green Energy Revolution” we are deeply committed to Environmental, Social, and Corporate

Governance (“ESG”) causes.

We have an ESG Chief who coordinates our efforts in these important matters.

Within the last few

years, we planted more than 6,000 trees of diverse types for the benefit of local populations in areas in which we operate and constructed

over 1,000 small retention walls to preserve and enhance dirt access roads used by such communities.

Separately, many of our work needs

have been specifically delegated to firms owned or managed by women and minorities.

gold, diamonds, and industrial sand.

Such endeavors have given us the critical management experience needed to take early-stage projects

in Brazil from the exploration phase through successful licensing from regulators and to revenues.

As our corporate focus became our

lithium properties and those of other critical minerals, we stopped alluvial gold and diamond exploration efforts in 2018 and the sale

of our industrial sand in 2022.

company owns 45.11% of the shares of common stock of Apollo Resources Corporation (“Apollo Resources”), a private company

currently primarily focused on the development of its initial iron mine.

company also owns approximately 28.72% of Jupiter Gold Corporation (“Jupiter Gold”), a company focused on the development

of gold projects and of a quartzite mine, and whose common stock are quoted on the OTCQB under the symbol “JUPGF.” The quartzite

mine is fully permitted and is expected to start operations mid 2023.

Resources and Jupiter Gold have not generated any revenues to date.

The results of operations from both Apollo Resources and Jupiter

Gold are consolidated in our financial statements under accounting principles generally accepted in the United States (“U.S.

of Operations

Year Ended December 31, 2022 Compared to Fiscal Year Ended December 31, 2021

for the year ended December 31, 2021, totaled $10,232, compared to revenue of $23,446 during

the year ended December 31, 2020, representing a decrease of 56.4%.

Such revenue was comprised solely of sales of industrial sand that we mine

in one of our mineral rights.

The decrease in revnues was attributable to less demand due to prolonged covid-19 pandemic restrictions

in Brazil, resulting in less demand.

for the year ended December 31, 2022, totaled $6,765, compared to revenue of $10,232 during the year ended December 31, 2021, representing

a decrease of 33.9%.

Such revenue was comprised solely of sales of industrial sand that we mine in one of our mineral rights.

sand is a residual business line as we are primarily focused on our lithium exploration program.

In December 2022, the company closed

its sand business.

of goods sold for the year ended December 31, 2022, totaled $63,548, as compared to cost of goods sold of $245,810 during the year ended

December 31, 2020, representing an increase of 89.2%.

December 31, 2021, representing a decrease of 74.15%.

Cost of goods sold is primarily comprised of labor, fuel, repairs and maintenance

on our mining equipment and write down of inventory of $135,656.

on our mining equipment.

As mentioned above, this costs refer to Industrial sand production which is a residual business line as we are

primarily focused on our lithium exploration program.

loss for the year ended December 31, 2022, totaled $56,783, compared to gross loss of $235,578 during the year ended December 31, 2021

representing an increase of 121.2%.

representing decrease of 75.9%.

expenses for the year ended December 31, 2022, totaled $4,608,887, compared to operating expenses of $3,280,514 during the year ended

December 31, 2021 representing an increase of 40.49%.

The increase was mostly due to general and administrative expenses related to public

company costs and increased financing efforts, and non-cash stock-based compensation from issuances of stock options to officers and

The increase was mostly due to general and administrative expenses related to cost

of listing our common stock on Nasdaq and increased financing efforts, and non-cash stock-based compensation from issuances of stock

options to officers and directors.

Increase noted on “other operating expenses” refers to the expenses of the lithium project

drilling campaign.

expenses for the year ended December 31, 2022 totaled $155,812, compared to other expenses of $509,374 during the year ended December

31, 2020 representing an increase of 92.6%.

The Company realized an increase in interest expense on promissory notes due to amortization

debt discounts during the year ended December 31, 2021.

Additionally, the Company recorded a $224,812 loss on the extinguishment of debt

related to common stock purchase warrants issued in a settlement with a noteholder during the year ended December 31, 2021.

31, 2021 representing a decrease of 69,4%.

The decrease is mainly due to interest expense on promissory notes due to amortization debt

discounts and loss on the extinguishment of debt related to common stock purchase warrants issued in a settlement with a noteholder during

the year ended December 31, 2021.

a result, we incurred a net loss attributable to our stockholders of $3,790,423, or $0.82 per share, for the year ended December 31,

2022, compared to a net loss attributable to our stockholders of $2,772,358, or $0.75 per share, during the year ended December 31, 2021.

We anticipate that our largest

expense item for the next twelve months will be drilling expense as we explore lithium targets and delineate our lithium resources.

expenses can vary depending on the number of drills employed and the number of hours per week that each drilling team works.

plan is to continue to have a robust drilling campaign throughout 2023.

However, we are dependent on a number of factors which may alter

such plans, including, among others, financial resources, availability of qualified drills and personnel to operate them, and permitting.

and Capital Resources

of December 31, 2021, we had cash and cash equivalents of $22,776 and a working capital deficit of $800,253, compared to cash and cash

equivalents of $253,598 and a working capital deficit of $2,021,744 as of December 31, 2020.

Despite the decrease in cash and cash equivalents,

the substantial improvement on working capital deficit is a result of the Company’s efforts torwards improving debt position.

convertible debt has been removed from the Company’s books as of December 31, 2021.

of December 31, 2022, we had cash and cash equivalents of $280,525 and a working capital deficit of $2,452,553, compared to cash and

cash equivalents $22,776 and a working capital deficit of $940,475 as of December 31, 2021.

cash used in operating activities totaled $1,480,530 for the year ended December 31, 2022, compared to net cash used of $1,101,680 during

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the year ended December 31, 2021 representing an increase in cash used of $1,884,994 or 196%.

The increase is mainly due to the mining

rights purchases completed in 2022.

cash provided by financing activities totaled $4,502,356 for the year ended December 31, 2022, compared to $1,789,938 during the year

ended December 31, 2021 representing an increase in cash provided of $2.712,418 or 151%.

currently have no off-balance sheet arrangements.

have limited working capital, have historically incurred net operating losses, and have not yet received material revenues from the sale

of products or services.

These factors create substantial doubt about our ability to continue as a going concern.

primary sources of liquidity have been derived through proceeds from the (i) issuance of debt and (ii) sales of our equity and the equity

of one of our subsidiaries.

Our ability to continue as a going concern is dependent upon our capability to generate cash flows from operations

and successfully raise new capital through debt issuances and sales of our equity.

We believe that we will be successful in the execution

of our initiatives, but there can be no assurance.

We have no plans for any significant cash acquisitions in the foreseeable future.

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 generation of revenue from its mining operations and projects.

secondary plan to cover any shortfall is selling its equity securities, including common stock in the Company, or common stock in Apollo

Resources and Jupiter Gold that it owns, and obtaining debt financing.

There can be no assurance the Company will be successful in these

primary sources of liquidity have been derived through proceeds from the (i) issuance of debt and (ii) sales of our equity and the

equity of one of our subsidiaries.

For example, On January 12, 2023, the Company completed its firm underwritten public

offering of 776,250 shares of the Company’s common stock (which includes the shares subject to the over-allotment option, exercised

by the underwriter in full), for aggregate gross proceeds of $4,657,500 (prior to deducting any underwriting discounts, commissions,

and other offering expenses).

Also, on January 30, 2023, the Company raised an aggregate of $4 million in gross proceeds from the

sale of its common stock in transaction exempt under Regulation S of the Securities Act.

We believe our cash on hand will be

sufficient to meet our working capital and capital expenditure requirements for a period of at least twelve months through March

Our future short- and long-term capital requirements will depend on several

factors, including but not limited to, the rate of our growth, our ability to identify areas for mineral exploration and the economic potential of such

areas, the exploration and other drilling campaigns needed to verify and expand our mineral resources, the types of processing facilities

we would need to install to obtain commercial-ready products, and the ability to attract talent to manage our different areas of endeavor.

To the extent that our current resources

are insufficient to satisfy our cash requirements, we may need to seek additional equity or debt financing.

If the needed financing is

not available, or if the terms of financing are less desirable than we expect, we may be forced to scale back our existing operations

and growth plans, which could have an adverse impact on our business and financial prospects and could raise substantial doubt about our

ability to continue as a going concern.

operate primarily in Brazil which exposes us to currency risks.

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the time of the original activity.

condensed consolidated financial statements are denominated in U.S.

Accordingly, changes in exchange rates between the applicable

foreign currency and the U.S.

consolidated financial statements are denominated in U.S.

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.

purposes of reporting in the consolidated financial statements.

Our foreign subsidiaries translate their financial results from the local

currency into U.S.

dollars for purposes

of reporting in the consolidated financial statements.

Our foreign subsidiaries translate their financial results from the local currency

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.

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

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to keep the foreign subsidiaries’ balance sheets in agreement.

Sheet Arrangements

currently have no off-balance sheet arrangements.

Accounting Policies and Estimates

financial instruments consist of cash and cash equivalents, loans to a related party, accrued expenses, and an amount due to a director.

The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate

prevailing market rates unless otherwise disclosed in our financial statements.

If our estimate of the fair value is incorrect at December

31, 2021, it could negatively affect our financial position and liquidity and could result in our having understated our net loss.

financial instruments consist of cash and cash equivalents and accrued expenses.

The carrying amount of these financial instruments approximates

fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in

our financial statements.

If our estimate of the fair value is incorrect at December 31, 2022, it could negatively affect our financial

position and liquidity and could result in our having understated our net loss.

preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates

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we account for the investment under the equity method or cost method in accordance with the applicable GAAP.

have concluded that Apollo Resources, Jupiter Gold and their subsidiaries are VIEs in accordance

with applicable accounting standards and guidance;

and although the operations of Apollo Resources and Jupiter Gold are independent of

ours, through governance rights, we have the power to direct the activities that are most significant to Apollo Resources and Jupiter

Therefore, we concluded that we are the primary beneficiary of both Apollo Resources and Jupiter Gold.

have concluded that Apollo Resources, Jupiter Gold and their subsidiaries are VIEs in accordance with applicable accounting

standards and guidance;

and although the operations of Apollo Resources and Jupiter Gold are independent of ours, because our chief

executive officer, Marc Fogassa, is also the controlling shareholder of both Apollo Resources and Jupiter Gold, we may be considered

to have power to direct the activities that are most significant to Apollo Resources and Jupiter Gold.

Therefore, we concluded that

we are the primary beneficiary of both Apollo Resources and Jupiter Gold.

record stock-based compensation in accordance with ASC Topic 718, Compensation - Stock Compensation.

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statements of operations were negligible for all periods presented.

Reclassifications

prior year amounts have been reclassified to conform to the current period presentation.

These reclassifications had no impact on net

earnings (loss) or and financial position.

Accounting Pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis