U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-K/A

(Amendment No. 2)



(Mark One)

| | þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ------------------------------------------------------------------------------------



For the Fiscal Year Ended December
31, 2013



| |  ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ----------------------------------------------------------------------------------------



Commission File Number 333-180624



Brazil Minerals, Inc.

(Exact name of registrant as specified in
its charter)



|Nevada                          |  | 39-2078861         
|------------------------------- |  | -------------------
|(State or other jurisdiction of |  | (IRS Employer      
|incorporation or organization)  |  | Identification No.)



324 South Beverly Drive, Suite 118

Beverly Hills, California 90212

(Address of principal executive offices)



Issuer’s telephone number, including
area code: (213) 590-2500



Securities registered pursuant to Section
12(b) of the Act: None.



Securities registered pursuant to Section
12(g) of the Act: Common Stock, par value $.001 per share



Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  ̈ No
þ



Indicate by check mark if the registrant
is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  ̈
No þ



Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No  ̈



Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). Yes þ
No  ̈



Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K þ



Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. (as defined in
Rule 12b-2 of the Exchange Act). Check one:



|Large accelerated filer   ̈ | Accelerated filer  ̈ | Non-accelerated filer   ̈   | Smaller reporting company  þ
|-------------------------- | ------------------- | -------------------------- | ----------------------------
|                           |                     | (Do not check if a smaller |                             
|                           |                     | reporting company)         |                             



Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ̈    No þ



As of April 10, 2014, the aggregate market
value of the shares of the registrant’s common stock held by non-affiliates (based upon the closing stock price of $0.10
on such date as reported on otcmarkets.com) was approximately $4,386,407. Shares of the Registrant’s common stock held by
each executive officer and director and by each person who owns 10 percent or more of the outstanding common stock have been excluded
in that such persons may be deemed to be affiliates of the Registrant. This determination of affiliate status is not necessarily
a conclusive determination for other purposes.



As of April 10, 2014, there were outstanding
76,409,116 shares of the registrant’s common stock, $.001 par value.



Documents incorporated by reference: None.













EXPLANATORY
NOTE





On April 15, 2014 we filed with the
Securities and Exchange Commission (the “SEC”) an Annual Report on Form 10-K for the fiscal year ended December 31,
2013 and on July 1, 2014 we filed with the SEC an Amendment No. 1 thereto to revise certain disclosures pursuant to a comment
letter we received from the SEC regarding the Form 10-K and a Registration Statement on Form 10 we filed on April 29, 2014. We
are filing this Amendment No. 2 to the Form 10-K to further revise certain disclosures pursuant to a comment letter we received
from the SEC regarding Amendment No. 1 to the Form 10-K.







FORWARD LOOKING STATEMENTS



This
Annual Report on Form 10-K (“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: 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; competition; the loss of services of key personnel; unusual or infrequent weather phenomena, sabotage,
government or other interference in the maintenance or provision of infrastructureas well as general
economic conditions.



PART I



ITEM 1. BUSINESS



Overview







Brazil Minerals, Inc.
(OTCQB: BMIX) (the "Company", "BMIX", “we”, “us”, or “our”) is a U.S. holding
company with investments in Brazil. The primary business of BMIX is to acquire ownership positions in producing mining companies
in Brazil. Currently, Mineração Duas Barras Ltda. (“MDB”), a Brazilian company, is the only producing
mining company in which we have an ownership interest. The secondary business of BMIX is to engage in the creation of new companies
in Brazil with mineral properties for exploration and development.











In 2013, our consolidated
revenues were generated from the sale of rough diamonds and gold by one of the companies in which we had invested. Starting in
2014, our consolidated revenues derived from such subsidiary include sales of polished diamonds as well as rough diamonds and
gold.





General Development of our Business



We were incorporated
under the laws of the State of Nevada under the name of Flux Technologies, Corp. on December 15, 2011. From inception until December
2012, the Company’s operations were limited to the development of a business plan, the completion of sales of our common
stock, discussion with potential customers, and the signing and performance of a service agreement with one company.



Immediately after
the transactions discussed below, the Company discontinued its 3D animation services business and entered its current business
of investment in mining companies and mineral assets in Brazil.



On December 18,
2012, the Company, Iryna Antaniuk, the then sole director and sole officer of the Company (“Antaniuk”), and Brazil
Mining, Inc., a Delaware corporation (“Brazil Mining”) entered into, and on December 19, 2012 they consummated, an
Acquisition Agreement (the “Acquisition Agreement”). Pursuant to the Acquisition Agreement, (a) 3,000,000 shares of
Common Stock held by Antaniuk were cancelled and retired, (b) Brazil Mining paid to the Company $25,000, (c) the Company used
the $25,000 payment from Brazil Mining to pay and satisfy all of the Company’s liabilities and (d) the Company’s sole
officer and director prior to the signing of the Agreement resigned and Marc Fogassa was elected as a director of the Company.



On December 19,
2012, the Company consummated Subscription Agreements with 37 investors pursuant to which the Company issued and sold to these
investors for $33.333 per share an aggregate of 60,002 shares of the Company’s Common Stock for an aggregate purchase price
of $2,000,006.66. Such Common Stock was issued in accordance with an exemption from the registration requirements of the Securities
Act of 1933 as amended (the “Securities Act”), under Section 4(2) of the Securities Act by virtue of compliance with
the provisions of Regulation D under the Securities Act.



As contemplated
by the Subscription Agreements, on December 18, 2012, the Company amended its Articles of Incorporation to authorize 10,000,000
shares of a class of “blank check” preferred stock and filed a Certificate of Designations, Preferences and Rights
of Series A Convertible Preferred Stock. One share of Series A Convertible Preferred Stock (“Series A Stock”) was
designated and issued by the previous management of the Company for $1.00 to Marc Fogassa, who was elected on such date as a director
and as the Chief Executive Officer of the Company. The Certificate of Designations of the Series A Stock, among other things,
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 Common Stock, and the holders of any other class or series of shares entitled to vote with
the Common Stock, with the holders of Series A Preferred Stock being entitled to 51% of the total votes on all such matters regardless
of the actual number of shares of Series A Preferred Stock then outstanding, and the holders of Common Stock and any other shares
entitled to vote being entitled to their proportional share of the remaining 49% of the total votes based on their respective
voting power.



In
connection with the Acquisition Agreement, the Company entered into and consummated a Contribution Agreement with Brazil
Mining (the “Contribution Agreement”) pursuant to which Brazil Mining contributed to the Company by way of an
Assignment of Mineral Rights, the mineral exploration rights on a mining claim with approximately 24,700 acres located in the
municipality of Borba, State of Amazonas, Brazil. Brazil Mining also entered into an Option Agreement with the Company
pursuant to which Brazil Mining granted to the Company an option to purchase for $800,000 a 20% share of the monthly diamond
production that Brazil Mining would actually receive in respect of Brazil Mining’s then anticipated acquisition of a
55% equity interest in a Brazilian entity (the “Option Agreement”). Pursuant to the Contribution Agreement, the
Company issued to Brazil Mining an aggregate of 1,073,511 shares of the Company’s Common Stock, par value $.001 per
share, constituting 51% of the issued and outstanding shares of Common Stock of the Company giving effect to all of the
transactions consummated on December 19, 2012 including issuances of stock and warrants to the placement agent on a fully
diluted basis. On January 2, 2013, the Company exercised the option granted to the Company pursuant to the Option
Agreement.



On January 24,
2013, the Company filed with the Secretary of State of the State of Nevada a Certificate of Amendment to the Articles of Incorporation
of the Company to increase the number of authorized shares of its Common Stock from 75 million to 150 million shares. The Company
declared a 33.333-1 stock dividend payable to holders of record of the Company’s Common Stock as of January 22, 2013. The
payment date for the dividend was January 25, 2013.





On March 23, 2013,
the Company and Brazil Mining entered into, and on April 30, 2013 consummated, an Exchange Agreement (the “Exchange Agreement”)
pursuant to which Brazil Mining sold to a 99.99% owned Brazilian subsidiary of the Company (“BMIXP”), the rights to
all profits, losses and appreciation or depreciation and all other economic and voting interests of any kind in Brazil Mining’s
55% equity interest in MDB in exchange for the issuance to Brazil Mining of 1,000,000 shares of the Company’s Common Stock.





As discussed in
further detail throughout this report, some further significant developments to our business during 2013 were as follows:



| | (1) | Our
                                         revenues increased to $791,780, compared with zero during 2012;
| | --- | ------------------------------------------------------------------------------------------------------------





| | (2) | We
obtained from the Brazilian federal authority the license to export MDB’s production;
| | --- | ----------------------------------------------------------------------------------------



2







| | (3) | We
decided to verticalize our business model and enter the business of cutting and polishing a small part of MDB’s diamond
production;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------



| | (4) | We
graded and certified at the Gemological Institute of America (GIA) our first lot of polished diamonds from MDB’s production
which were exported from Brazil to the U.S.;
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | We
                                         confirmed the geochemical occurrence of gold and copper in our property in the state of Amazonas
                                         in Brazil;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (6) | We
                                         raised $100,000 through the private placement of securities to two accredited investors.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------



Subsequent to the end of our
fiscal year 2013, and through March 31, 2014, the following significant developments have occurred:



| | (1) | We received $1,048,000 in cash without the outright sale of any of our stock; this cash consisted
of $525,000 in revenues from sales of polished diamonds for forward delivery and $523,000 in convertible notes;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | We
                                         paid off and retired $25,000 in principal from a 2013 convertible note;
| | --- | -------------------------------------------------------------------------------------------------------------------



| | (3) | We added a preeminent Brazilian mining lawyer who is also a licensed geologist to our Board of
Directors;
| | --- | ---------------------------------------------------------------------------------------------------------



| | (4) | As of March 31, 2014, we had 2,754 stockholders of record of our common stock.
| | --- | ------------------------------------------------------------------------------



Emerging Growth Company Status



We may be deemed to be an “emerging
growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act. As long as we remain an emerging
growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public
companies that are not “emerging growth companies” including, but not limited to, not being required to comply with
the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive
compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding an annual nonbinding
advisory vote on executive compensation and seeking nonbinding stockholder approval of any golden parachute payments not previously
approved. We may take advantage of these reporting exemptions until we are no longer an “emerging growth company.”



Under the JOBS Act, emerging growth
companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies.
We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore,
will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.



We will remain an “emerging growth
company” for up to five years, although we would cease to be an “emerging growth company” prior to such time
if we have more than $1 billion in annual revenue, more than $700 million in market value of our common stock is held by non-affiliates,
or we issue more than $1 billion of non-convertible debt over a three-year period.



Certain Definitions



As used herein, the
following terms have the meanings indicated:



3









Gemological
Institute of America (GIA): The Gemological Institute of America, or GIA, is a nonprofit institute dedicated to
research and education in the field of gemology and the jewelry arts. Founded in 1931, GIA's mission is to protect all buyers
and sellers of gemstones by setting and maintaining the standards used to evaluate gemstone quality. In 1953 the GIA developed
its International Diamond Grading System and the Four Cs (cut, clarity, color, and carat weight) as a standard to compare and
evaluate the quality of diamonds. GIA is headquartered in Carlsbad, California and operates out of 14 countries, with 12
campuses, seven laboratories and four research centers worldwide. We have had MDB’s polished diamonds graded at GIA’s
Carlsbad laboratory.



SGS-Geosol: SGS-Geosol is
considered the premier company in Brazil that performs analysis of mineral samples. Its clients include most of major global
mining companies operating in Brazil. SGS Geosol has a central laboratory and 6 other branches and units throughout the
country. We have had geochemical studies in samples collected by our geologists in various assignments analyzed at their Belo
Horizonte headquarters facility.



4







2013 Significant Developments



Mineração Duas
Barras Ltda.



On March 23, 2013,
we entered into an agreement with Brazil Mining, Inc. (“BMI”) pursuant to which we acquired, through a subsidiary,
BMI’s 55% interest in MDB for $660,000 in consideration.



Export License



In July 2013, we
obtained the necessary license from the Brazilian federal regulator (Siscomex) allowing the export of rough and polished diamonds
as well as gold from MDB.



Verticalization of Our Business Model



During the third
quarter of 2013, we began to cut and polish a small percentage of the rough diamonds produced from MDB. We have utilized a cutting
and polishing center in Brazil, managed by a very experienced master diamond cutter and polisher with over 30 years of experience.



Exporting and Grading MDB’s
Polished Diamonds



In November
2013, MDB exported some polished diamonds to the U.S. These diamonds were subsequently taken to the Gemological Institute of
America (“GIA”) for grading and certification. Because MDB’s diamonds are not subject to post-extraction
treatment, 100 percent of them were accepted for grading and certification by the GIA.



Confirming Gold and Copper in Our
Property in the State of Amazonas (Borba Project)



In 2013, we confirmed
by a visit of a geologist to the site for inspection and geochemical testing that our project in the municipality of Borba, state
of Amazonas, in Brazil, contains gold and copper.



5







2013 Financings



On September 30,
2013, we received in investment of $100,000 in total from two accredited investors, one a trust for the benefit of two persons
and the other, an individual. We sold such investors a total of four investment units, each unit consisting of a $25,000 convertible
promissory note and warrants to purchase 50,000 shares of our common stock until December 31, 2019.



The notes bear
interest at 10% per annum and may be converted into our common stock at $0.125 per share, a premium of 25% above  our stock
price at the time the transaction was entered into. The notes are due on May 31, 2014. The exercise price of the warrants is
$0.15 per share, a premium of 50% above our stock price at the time.



As of March 31, 2014,
25% of these notes had already been repaid, and the outstanding principal from the unpaid notes was $75,000.



2014 Significant Developments



Polished Diamond Sales



On January 2, 2014,
we received proceeds of $25,000 from a sale of polished and GIA graded diamonds pursuant to an agreement with a buyer in which
the buyer agreed to receive these diamonds over a period of time.



On March 4, 2014,
we received proceeds of $500,000 from a sale of polished and GIA graded diamonds pursuant to an agreement with two buyers that
agreed to receive these diamonds over a period of one year. As part of this transaction, we pledged with a third party collateral
agent an aggregate of 11,000,000 shares of our common stock, valued at approximately $990,000 at the time the transaction was
consummated, in order to secure the delivery of the diamonds. The number of shares pledged is subject to periodic adjustment as
diamonds are delivered and as the market price of our common stock may change. We also issued to the buyers two-year options to
purchase an aggregate of 3,000,000 shares of our common stock at an exercise price (subject to adjustment upon the occurrence
of certain events) of $0.12 per share, a premium of 33% above our stock price when the transaction was consummated.



6







Financings



On January 7, 2014,
we received $244,000 in investment from the Heather U. Baines and Lloyd McAdams AB Living Trust dated 8/1/2001 (the “Trust”)
in exchange for a senior secured convertible promissory note in the principal amount of $244,000 and warrants to purchase an aggregate
of 488,000 shares of our common stock through December 26, 2018 issued to a designee of the Trust. The notes bear interest at
12% per annum and may be converted into common stock at $0.125 per share, a premium of 42% above our stock price at the time the
transaction was entered into. The exercise price of the warrants is $0.125 per share (subject to adjustment upon the occurrence
of certain events), a premium of 79% above our stock price at the time. Interest on the note is payable on September 30,
2014 and on March 31, 2015, the maturity date of the note. The note is secured by certain capital equipment purchased by us with
the proceeds received; this equipment is now being used in MDB and is comprised of an excavator, a bulldozer, a truck, a portable
motor and generator, among other items. Besides this capital equipment, the note is secured by our pledge of common stock having
a value of 200% of the outstanding principal and accrued interest of the note. The note is repaid by depositing $20,000 monthly
to a sinking fund. As of April 3, 2014, we had deposited $40,000 into the sinking fund, and our sinking fund obligation was current;
this amount deposited has been requested by us to be applied to satisfaction of principal and interest of the note; the holder
of the note has 60 days following a deposit into the sinking fund to choose between accepting repayment or converting the amount
deposited to our common stock.



On January 24,
2014, we received proceeds of $25,000 from an investment by Black Mountain Equities, Inc., an accredited investor, in exchange
for an unsecured convertible promissory note in the principal amount of $27,500. The note bears interest at the rate of 10% per
annum. The note must be converted by the holder (unless repaid by us) by December 31, 2014. We retain the option, but not the
obligation, to repay the note in cash. The conversion price is the lesser of (a) $0.07 or (b) 60% of the lowest daily volume weighted
average price of our common stock during the twenty trading days immediately prior the applicable date on which the holder of
the note elects to convert all or part of the note. The note is not secured by any collateral.



On February 21, 2014,
we received proceeds of $200,000 from an investment by St. George Investments, LLC (“St. George”) in exchange for an
unsecured convertible promissory note in the principal amount of $222,500. The difference between the face amount of the note and
the gross proceeds received was comprised of legal costs and origination discount. The note bears interest at 10% per annum and
the conversion price is $0.11 per share, a premium of 38% above our stock price when the transaction was consummated. Principal
and accrued interest on the note are due in five consecutive monthly installments of $44,500 plus accrued interest commencing on
August 21, 2014. The monthly installments are payable in cash or in common stock, at our option, or in diamonds that have been
graded by GIA, upon the request of St. George. All principal and accrued interest on the note is payable on December 21, 2014.
The note is not secured by any collateral.



On March 31, 2014,
we received net proceeds of $54,000, after compensation paid to a broker-dealer, from an investment by Group 10 Holdings LLC,
an accredited investor, in exchange for an unsecured convertible promissory note in the principal amount of $63,000. The note
bears interest at the rate of 10% per annum. The note must be converted by the holder (unless repaid by us) by March 31, 2015.
We retain the option, but not the obligation, to repay the note in cash. The conversion price is the lesser of (a) $0.11 or (b)
60% of the lowest closing price of our common stock during the twenty trading days prior to the maturity date or the date that
a notice of conversion is given by the holder. The note is not secured by any collateral.



7







Our Operational Information



The primary business
of BMIX is to acquire ownership positions in producing mining companies in Brazil. The secondary business of BMIX is to engage
in the creation of new companies in Brazil with mineral properties for exploration and development. For information concerning
our initial investments and assets see Item 2. Properties, which is incorporated herein by reference.





In 2013, our consolidated
revenues were derived almost exclusively from sales of diamonds and gold by MDB. MDB's revenues were approximately 69% from the
sale of rough and polished diamonds and 31% from the sale of gold. All of the buyers were Brazilian institutional buyers.





While our consolidated
financial results are in part tied to the price of diamonds and gold, both commodities that are traded globally, the biggest factor
by far in generating revenues and profits is MDB’s ability to effectively mine diamonds and gold. Alluvial mines, such as
MDB’s, are not homogeneous: some mining fronts have very rich concentration of diamondiferous and auriferous gravel whereas
others do not. Additionally, some areas have easy access, whereas others may be underwater, and thus require water removal prior
to excavation. Our ability to choose the mining fronts to pursue and to provide the necessary equipment, fuel, and labor are a
significant factor in our results.





Competition





Our main source
of revenue is from sales of diamonds and gold produced by MDB. Diamond production is a difficult field to penetrate due to regulatory
and limited availability of new resource areas. However, the market for rough and polished diamonds as well as gold is very large
and the Company has been able to sell and believes for the foreseeable future it will continue to be able to sell with ease at
satisfactory prices, all of the diamonds and gold produced by MDB. The Company does not depend on any one or a few customers to
purchase its diamonds and gold.



Markets and Distribution



The polished diamonds
from MDB are either sold to jewelry chains in Brazil or exported to the U.S. Upon arrival in the U.S., these polished diamonds
are normally graded and certified by the GIA before being sold to private individuals. The market for polished diamonds is very
large, and the Company has received multiple inquiries from prospective buyers of all types. Rough diamonds and gold produced
by MDB are normally sold to Brazilian companies that are subsidiaries of diamond companies headquartered in Belgium and India.
The market for rough diamonds is similarly very large, and the Company has received a large number of inquiries from prospective
buyers of all types.





Seasonality



MDB’s ability
to mine diamonds and gold is highly seasonal. The rainy season in the northern area of the state of Minas Gerais, Brazil, lasts
from December through April. We expect that during these months MDB’s revenues will be substantially lower than during other
periods.



Regulation





General



The Brazilian mining
industry is highly regulated. MDB’s operations in Brazil are in full compliance with federal, state, and municipal regulations.





Export Regulation



The export of rough
diamond from Brazil complies with the United Nations Kimberley Process certification system of which Brazil is a signatory country.
This system was implemented by a large number of member countries of the United Nations to marginalize and prevent entrance to
the diamond marketplace of those gems produced in areas where human exploitation and other specific illicit activities exist.
To the knowledge of the Company Brazil was never a jurisdiction that had any issues of this type.



The implementation
of the Kimberley Process certification system in Brazil was established with the passage of Federal Law 10743 in 2003. The regulations
surrounding the issuance of the Certificate of the Kimberley Process were achieved by the Ordinance 192 of 2007 from Departamento
Nacional de Produção Mineral (“DNPM”), the Brazilian national mining department). According to the current
DNPM regulations, every diamond producer diamond must register itself in the- Cadastro Nacional do Comércio de Diamantes
(“CNCD”), the National Registry of Diamond Commercialization, and update the information on the CNCD online periodically.
Every semester, DNPM visits and inspects the diamond producing property and verifies the information contained in the CNCD. For
a diamond producer that is in compliance with the CNCD, the issuance of a Kimberley Process certificate by the DNPM with respect
to each lot for export usually takes two weeks. As part of the Kimberley Process certification, the exact lot of rough diamonds
to be exported is sealed at DNPM, and receives the necessary paperwork needed for export.



The procedure for
the export of polished diamonds, gold and other commodities is regulated by Receita Federal, the equivalent of the Internal Revenue
Service in Brazil. The exporter must obtain a license to export via SISCOMEX - Sistema Integrado de Comércio Exterior,
or Integrated Foreign Trade System, MDB obtained the SISCOMEX authorization in July 2013. As part of the SISCOMEX procedures,
when MDB exports polished diamonds, it must bring them to an office of Receita Federal in Brazil where the polished diamonds are
weighed and sealed. The sealed container can be exported or carried through ports of exit of Brazil.



Environmental Regulation
and Compliance



Compliance with
environmental laws in Brazil is overseen by state-level government agencies. In Minas Gerais, the Brazilian state where MDB is
located, the duties of the environmental licensing are exercised by Conselho Estadual de Política Ambiental (“COPAM”,
State Environmental Policy Council) of the Secretaria do Meio Ambiente (“SEMAD”, Environmental Secretariat).



Each region of
the state of Minas Gerais has an office of the Superintendência Regional de Meio Ambiente e Desenvolvimento Sustentável
(“SUPRAM”, Environment and Sustainable Development Regional District). SUPRAM, following guidelines from SEMAD, coordinates
the implementation of activities related to environmental compliance of mining projects. A project that is compliance receives
a Licença de Operação (Operational License).



MDB has an Operational
License from SUPRAM. Furthermore, the Company believes that MDB and the local office of SUPRAM in Montes Claros enjoy an excellent
professional relationship and MDB continuously relies on SUPRAMS’s advice for best practices. In 2013, several
additional requests and suggestions from SUPRAM for further enhancements at MDB were carried out, with costs at less than $10,000,
and included an archaeological report (which indicated no archaeological findings), septic tank installation, and new plant and
property placards.



Surface disturbance
from open pit mining at MDB is in full compliance with its mining plan. MDB regularly recuperates areas that have been exploited.
The current environmental regulations state that after all mining has ceased at MDB (however long that may take), there would
still be five years of available time for any necessary recuperation to be performed.



The separation
process for diamonds and gold at MDB does not use any chemical products. Tests are conducted regularly and there are no records
of groundwater contamination.



Exploration



MDB



BMIX currently
has no plans to conduct exploration work on the MDB mining concession, which is in production.



Borba Project



In 2013, a subsidiary
of BMIX performed a preliminary geological surface assessment of an area within its exploration rights to the Borba Project (discussed
in Item 2. Properties) and collected samples for geochemical analysis. These samples were analyzed at the SGS-Geosol laboratory
in Belo Horizonte, Brazil.





Available Information



We maintain an internet
website at www.brazil-minerals.com. On our website, we provide a link to the Securities and Exchange Commission (“SEC”)
webpage that contains all of the public filings of Brazil Minerals. Our SEC filings are also directly available at the SEC’s
website at www.sec.gov or from the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The information
on our website is not, and shall not be deemed to be, a part hereof or incorporated into this or any of our other filings with
the SEC.



Personnel



As of March 31,
2014, the number of employees and consultants working for us or for our subsidiaries was as following. MDB had 11 full-time employees
and four consultants, all of them based in Brazil. BMIXP had three full-time employees and two consultants, all of them based
in Brazil. BMIX had one full-time employee based in the U.S. Therefore, on a consolidated basis the Company had 15 employee in
total, all of which are full-time employees. We also periodically retain consultants and independent contractors to provide services
deemed useful to the operation of our business.



8







ITEM 1A. RISK FACTORS



You
should carefully consider the risks described below before making an investment decision. Our business, financial condition, results
of operations, and cash flows could be materially adversely affected by any of these risks. The market or trading price of our
securities could decline due to any of these risks. In addition, please see our note about forward-looking statements included
in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations of this Annual
Report on Form 10-K.



We operate in a changing environment
that involves numerous known and unknown risks and uncertainties that could materially adversely affect our operations and our
stock price. The following highlights some of the factors that may affect our operations and our stock price.



Risks Related to Our Operations



We have a limited operating history.



The current
business model and management team has been in place only since December 2012. Our limited operating history makes it
difficult to evaluate our business or prospective operations. As an early stage company, we are subject to all of the risks
inherent in the initial organization, financing, expenditures, complications, and delays inherent in a new business.
Investors should evaluate an investment in us in light of the uncertainties encountered by developing companies in a
competitive environment. Our business is dependent upon the implementation of our business plan. There can be no assurance
that our efforts will be successful or that we will ultimately be able to attain profitability.



Our ability to execute our business
plan depends on the continuation of a favorable mining environment in Brazil.



Our
management believes that Brazil has a favorable mining environment for some of the following reasons:



-
Brazil has a strong tradition in production and export of natural resources;

-
Brazil hasa qualified work force for mining and ancillary
services to support mining;

-
Unlike other jurisdictions with defined time horizons, mining concessions in Brazil can be mined in perpetuity as long
as there is continued mining;

-
Most of Brazil’svast territory has not been properly
researchedon a geological basis, and therefore opportunity exists
for new mineralized areas to be identified; and

-
Mineral rights are constitutionally guaranteed and the right to mine in general prevails over surface rights.



Mining operations
in Brazil are heavily regulated. Any significant change in mining legislation or other changes in Brazil’s current mining
environment may slow down or alter our business prospects.





We do not have any reserves compliant with SEC Industry
Guide 7.



Vaaldiam Resources,
Ltd. (“Vaaldiam”), a company which formally owned the mining concession which our indirect subsidiary, Mineração
Duas Barras Ltda. (“MDB”) now owns, performed geological studies in MDB’s mining concession leading to the publication
of an NI 43-101 technical report in 2007, and an updated NI 43-101 technical report in 2008, as required by the rules of the Canadian
securities administrator. These reports differ from the standards generally permitted in reports filed with the SEC. Investors
should be aware that we have no “reserves” as defined by SEC Industry Guide 7 and much or all of our potential target
mineral resources may never be confirmed or converted into SEC Industry Guide 7 compliant “reserves.” The reports
contain estimates based on our inferred resources. However, in accordance with both Canadian statutes and NI 43-101, estimates
of inferred mineral resources cannot form the basis of a feasibility study.





We may be unable to find sources
of funding if and when needed, resulting in the failure of our business.



Even though we
have recently completed several transactions providing financing to us, we will likely require additional sources of funding to
execute our business plan. We will need additional equity or debt financing beyond our existing cash to pursue our strategy, including
the acquisition of additional investments in mining companies or to enter into strategic relationships with third parties to further
study and/or develop mineral properties. Any additional financing that we need may not be available and, if available, may not
be available on terms that are acceptable to us. Our failure to obtain financing on a timely basis, or on economically favorable
terms, could prevent us from pursuing our acquisition strategy or from responding to changing business or economic conditions
and could cause us to experience difficulty in withstanding adverse operating results.



9







If we do obtain alternative
source of capital, the terms and conditions of acquiring such capital may result in dilution and the resultant lessening of value
of the shares of stockholders.



If we are not successful
in raising sufficient capital, we will have to modify our business plans and reduce
operations. In this event,
you could lose a substantial part or all of your investment.



Our quarterly and annual operating
and financial results and our revenue are likely to fluctuate significantly in future periods.



Our quarterly and annual
operating and financial results are difficult to predict and may fluctuate significantly from period to period. Our revenues, net
income, and results of operations may fluctuate as a result of a variety of factors that are outside our control including, but
not limited to, weather phenomena which directly affects the operations of alluvial mining properties, the general global economic
condition which affects demand for  diamonds, and others.



We do not intend to pay regular future
dividends on our common stock and thus stockholders must look to appreciation of our common stock to realize a gain on their investments.



We have never
paid a dividend and we do not have any plans to pay dividends in the foreseeable future. Our future dividend policy is within
the discretion of our Board of Directors and will depend upon various factors, including future earnings, if any, operations,
capital requirements, our general financial condition, and other factors. Accordingly, stockholders must look solely to appreciation
of our common stock to realize a gain on their investment. This appreciation may not occur.



We depend upon Marc Fogassa, our
Chief Executive Officer and Chairman.



Our success is largely
dependent upon the personal efforts of Marc Fogassa. Currently he is our only management team member that is fluent and fully conversant
in both Portuguese, the language of Brazil, and English. The loss of the services of Mr. Fogassa would have a material adverse
effect on our business and prospects. We maintain key-man life insurance on the life of Mr. Fogassa.



10







Risks Related to Our Capital Stock



Our Series A Preferred Stock
has the effect of concentrating voting control over us in Marc Fogassa, our Chairman and Chief Executive Officer.



As of March 31, 2014 one share of our
Series A Preferred Stock was issued, outstanding and held by Marc Fogassa, our Chairman and Chief Executive Officer. The Certificate
of Designations, Preferences and Rights of our Series A Convertible Preferred provides that for so long as Series A Preferred
Stock is issued and outstanding, the holders of Series A Preferred Stock shall vote together as a single class with the holders
of our Common Stock, with the holders of Series A Preferred Stock being entitled to 51% of the total votes on all matters regardless
of the actual number of shares of Series A Preferred Stock then outstanding, and the holders of Common Stock being entitled to
their proportional share of the remaining 49% of the total votes based on their respective voting power.



Our stock price may be volatile.



The market price of
our common stock has been and is likely to continue to be highly volatile and could fluctuate widely in price in response to various
factors, many of which are beyond our control, including the following:



| | ● | our ability to grow and/or maintain revenue;
| | - | --------------------------------------------



| | ● | our ability to achieve profitability;
| | - | -------------------------------------



| | ● | our ability to acquire additional mineral properties;
| | - | -----------------------------------------------------



| | ● | our ability to raise capital when needed;
| | - | -----------------------------------------



| | ● | sales of our common stock;
| | - | --------------------------



| | ● | our ability to execute our business plan;
| | - | -----------------------------------------



| | ● | legislative, regulatory, and competitive developments; and
| | - | ----------------------------------------------------------



| | ● | economic and other external factors.
| | - | ------------------------------------



In addition, the securities
markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance
of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.



Because our common stock trades on
the Over-the-Counter Bulletin Board, you may not be able to buy and sell our common stock at optimum prices and you may face liquidity
issues.



The Over-the-Counter
Bulletin Board ("OTCBB") is a regulated quotation service that displays quotes, last sales prices, and volume in over-the-counter
securities. The trading of our stock on the OTCBB imposes, among others, the following risks:



●           Availability
of quotes and order information – Because OTCBB trades and quotations primarily involve a manual process (over the
telephone) rather than automated or electronically linked execution systems, the market information for our common stock
cannot be guaranteed. In addition, quote information, or even firm quotes, may not be available. The manual execution process
may delay order processing and intervening price fluctuations could result in the failure of a limit order to execute or the
execution of a market order at a significantly different price. Execution of trades, execution reporting, and the delivery of
trade confirmations may be delayed significantly. Consequently, one may not be able to sell shares of our common stock at the
optimum trading prices.



11







●           Liquidity
Risks – Liquidity refers to the ability to freely buy and sell securities at given prices and volumes. In general, the more
activity in a given security, and the more market makers participating in a security, the greater the liquidity in the security.
Because the OTCBB generally has fewer market makers participating in a Bulletin Board security, the liquidity in our common stock
may be significantly less than what might be experienced in the NASDAQ or listed markets. As such, you may only receive a partial
execution or your order may not be executed at all. Additionally, the price received on a market order may be significantly different
from the price quoted at the time of order entry. Additionally, when fewer shares of our common stock are being traded, larger
spreads between bid and ask prices and volatile swings in price may result.



●           Dealer's
Spread – The dealer's spread (the difference between the bid and ask prices) of our common stock may be large and may result
in substantial losses to the seller of our common stock on the OTCBB if the common stock must be sold immediately. Further, purchasers
of our common stock may incur an immediate "paper" loss due to the price spread. Moreover, dealers trading on the OTCBB
may not have a bid price for securities bought and sold through the OTCBB. Due to the foregoing, there may be decreased demand
for our common stock traded through the OTCBB.



The significant number of options
and warrants and convertible debt securities outstanding may adversely affect the market price for our common stock.



As of March 31,
2014 options and warrants to purchase an aggregate of 5,512,560 shares of our common stock were outstanding. In addition, an aggregate
of 5,055,584 shares of our common stock are issuable upon conversion of convertible notes and debentures we have issued. To the
extent that outstanding options and warrants are exercised and convertible debt securities are converted into our common stock,
existing stockholder percentage ownership will be diluted and any sales in the public market of the common stock underlying such
options may adversely affect prevailing market prices for our common stock.



We may seek to raise additional funds,
finance acquisitions or develop strategic relationships by issuing capital stock that would dilute your ownership.



We may largely finance
our operations by issuing equity securities, which would materially reduce the percentage ownership of our existing stockholders.
Furthermore, any newly issued securities could have rights, preferences, and privileges senior to those of our existing common stock.
Moreover, any issuances by us of equity securities may be at or below the prevailing market price of our stock and in any event
may have a dilutive impact on ownership interest of existing common stockholders, which could cause the market price of stock to
decline. We may also raise additional funds through the incurrence of debt or the issuance or sale of other securities or instruments
senior to our common shares. The holders of any debt securities or instruments we may issue could have rights superior to the rights
of our common stockholders.



12







Future sales of shares of our
common stock may cause the prevailing market price of our shares to decline and could harm our ability to raise additional capital.



As of March 31,
2014 in addition to shares of our common stock which are freely tradable, there were outstanding approximately 53 million shares
of common stock, which were subject to restrictions on resale, but which may become eligible for resale under Rule 144 of the
Securities Act of 1933, and may become freely tradable. We have also registered 15,000,000 shares of our Common Stock that have
been or may be issued under our 2013 Stock Incentive Plan. In addition, if holders of options and warrants choose to exercise
their purchase rights and sell shares of common stock in the public market or if holders of currently restricted common stock
or registered common stock sell such shares in the public market, or attempt to publicly sell such shares in a short time period,
the prevailing market price for our common stock may decline. Such decline in the price of our common stock may also adversely
affect our ability to raise additional capital or raise capital on terms acceptable to us.



Our common stock is currently defined
as "penny stock" and the rules imposed on the sale of the shares may affect your ability to resell any shares you may
purchase, if at all.



Our common stock is
defined as a “penny stock” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and
rules of the SEC.  The Exchange Act and such penny stock rules generally impose additional sales practice and disclosure requirements
on broker-dealers who sell our securities to persons other than certain accredited investors who are, generally, institutions with
assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000, or
$300,000 jointly with spouse, or in transactions not recommended by the broker-dealer.  For transactions covered by the penny
stock rules, a broker-dealer must make a suitability determination for each purchaser and receive the purchaser's written agreement
prior to the sale.  In addition, the broker-dealer must make certain mandated disclosures in penny stock transactions, including
the actual sale or purchase price and actual bid and offer quotations, the compensation to be received by the broker-dealer and
certain associated persons, and deliver certain disclosures required by the SEC.  Consequently, the penny stock rules may
affect the ability of broker-dealers to make a market in or trade our common stock and may also affect a stockholder’s ability
to resell any of our shares in the public markets.



ITEM 1B. UNRESOLVED STAFF COMMENTS



None.



ITEM 2. PROPERTIES



Our main assets are:





| | 1) | 55% ownership interest in MDB,
                                         a Brazilian company with diamond and gold revenues and a producing mine located in the
                                         state of Minas Gerais, Brazil; and
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2) | 100% ownership interest in mineral
                                         exploration rights for a gold and copper area in the state of Amazonas, Brazil.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------





These assets are described immediately below.



13







| | 1. | MineraçãoDuas Barras Ltda. (state of Minas Gerais, Brazil) – Diamonds
                                         and Gold
| | -- | -----------------------------------------------------------------------------------------------------------------------





BMIX, through its 99.99%-owned subsidiary
BMIX Participações Ltda. (“BMIXP”), owns title to 55% of
the voting shares of Mineração Duas Barras Ltda. (“MDB”), a Brazilian
company. MDB is the only producing mining company in which the Company has an ownership interest. A Brazilian resident owns the
remaining 45% of MDB.







MDB owns a large alluvial diamond and
gold processing and recovery plant, one mining concession (discussed below) and an additional mineral right (discussed below),
each of which pertains to property located on the left margin of the Jequitinhonha River in the State of Minas Gerais in Brazil.
The Jequitinhonha River valley is a well-known area for diamond and gold production; it has hosted alluvial production on all
scales since the 18th century.



MDB’s plant, mining concession,
and mineral right are all approximately one and half hour drive from Montes Claros, Brazil, a city of 400,000 people. The first
hour of the drive is on asphalt roads followed by a half-hour on dirt roads. Montes Claros has the infrastructure needed by MDB
and also benefits from having an airport with regular carrier service to large Brazilian cities, including São
Paulo and Belo Horizonte. MDB has an office in Montes Claros staffed with a full-time regional manager.



Montes Claros is located 400 kilometers
north of Belo Horizonte, the capital of the State of Minas Gerais. Belo Horizonte is the third largest city in Brazil, with a
population over 2,500,000 people and two airports, including one with international flights. In Belo Horizonte, BMIXP has a fully
staffed office with three full-time employees. From Belo Horizonte to Montes Claros, it takes one hour by regular carrier flight
or five hours by car on asphalt roads.



Synopsis of Operations





MDB believes that there is no need
to, and has no current plans to, conduct further exploration work on its mining concession. Rather, MDB is concentrating all of
its activities on production.



Operationally, MDB has two teams: the
transit team and the processing team. The transit team works in open pits with one excavator and three to four trucks. The exploration
team loads gravel and transports it to the patio area immediately adjacent to the processing and recovery plant. The processing
team works at the plant, processing the gravel and recovering rough diamonds and gold.





Mining Claims



MDB has title to both a mining concession
and a mineral right, further described below. MDB does not own the land or surface rights atop these claims. In Brazil, the mineral
right and the land (surface right) on top of it are commonly held by different owners. Brazilian law protects the rights of the
owner of a mineral right to explore such claim, even when a surface owner is opposed to it.



a) MDB’s mining concession: “Concessão de
Lavra” number 265 awarded to MDB by “Departamento Nacional de Produção Mineral”, the National
Mining Department (“DNPM”) effective on August 25, 2006  with respect to DNPM process number 806.569/1977. This claim
award was published in Brazil’s Official Federal Gazette.



“Concessão de Lavra”
is the highest level of mining claim achievable in Brazil. MDB’s Concessão de Lavra” permits MDB to mine and
sell its production of diamonds and gold. MDB’s mining concession covers an area of 170.89 hectares, or approximately 422
acres.



There are no liens or other encumbrances
on MDB’s mining concession. The mining concession is a federal claim in Brazil, as DNPM is a Brazilian federal entity. This
mining concession has no termination date; it is held in perpetuity by MDB and for as long
as MDB is continually mining in this concession area, this claim will be in good standing. The claim can also be in good standing
even if there is no continued mining, if MDB were to file with DNPM for a hiatus from mining; such requests are normally granted
for periods of up to three years.



“Concessão de Lavra”
requires no fees to be paid to maintain such claim. Therefore, MDB has no payments to maintain MDB’s mining concession.



Brazilian law guarantees the owner
of the land on top of a mining concession the payment of a royalty of at least 0.1% of all revenues from the concession. However,
most Brazilian mining companies negotiate with the landowner and pay a higher royalty rate as an incentive for greater cooperation.
MDB has a contract that pays the landowner a 6% royalty rate on any sales, and management of MDB believes that MDB has enjoyed
excellent cooperation from the landowner at all times.





14







MDB pays royalties to Brazil’s
“Receita Federal” (the equivalent of the Internal Revenue Service in the U.S.) if and when it sells diamonds and gold.
The royalty rates paid are fixed by federal decree and are 0.1% on diamond sales and 1% on gold sales.



MDB is not currently planning to perform
any further exploratory research work in the area of its mining concession.



b) MDB’s mineral right: “Alvará
de Pesquisa” with respect to DNPM process number 832.052/20006 initially awarded by DNMP on February 18, 2009, and renewed
on November 13, 2013 for another two years. It covers an area of 397.42 hectares, or approximately 982 acres.



MDB intends to perform the necessary
research to submit an application to upgrade this claim from “Alvará de Pesquisa” to “Concessão de
Lavra”, and therefore obtain another mining concession for an open pit operation. MDB expects that the exploration research
work needed to submit the necessary request to DNPM will involve drilling for diamonds in a defined sub-area of the mining claim.
MDB expects that this work can be completed well ahead of the deadline of December 13, 2015. MDB projects that the total cost
in performing the necessary exploratory research work and preparing all of the documents for submission to DNPM will be less than
$100,000. MDB owns the drilling equipment and has workers with experience in using it, and therefore field labor and material
costs will be reasonably contained. For this project, MDB has two qualified professionals, a licensed geologist and a licensed
mining engineer with over 20 years of field experience in projects along the Jequitinhonha River valley.



If by December 13, 2015, MDB has not
submitted the necessary research work to DNPM, and has not been granted a valid extension, it will lose this mining claim but
it will not be subject to fines or penalties for not completing the research timely.



“Alvará de Pesquisa”
requires payment of annual fees to DNPM. Currently the fees are R$3.06 (approximately $1.39) per hectare. Therefore, MDB pays
approximately $550 per year to DNPM.



Processing and Recovery Plant



MDB’s diamond and gold processing
plant was built in 2006-2007 by a Canadian company called Vaaldiam Resources, Ltd. (“Vaaldiam”), whose stock at that
time traded on the Toronto Stock Exchange Venture Board. To the best of our knowledge, the diamond and gold processing plant at
MDB is the largest such type of alluvial recovery plant in Latin America. The Company believes that the plant is in very good
condition and MDB performs periodic maintenance and repairs on the plant to keep the plant in good condition.



Mineralization





Vaaldiam performed
detailed geological studies in MDB’s mining concession leading to the publication of an NI 43-101 technical report in 2007,
and an updated NI 43-101 technical report in 2008, as required by the rules of the Canadian securities administrator. The technical
report from 2008 shows mineralized materials amounting to 1,639,200 cubic meters with the following concentrations for diamonds
and gold: 0.16 carats of diamonds per cubic meter and 182 milligrams of gold per cubic meter.





Furthermore,
MDB has submitted its “Plano de Aproveitamento Econômico” (the “Feasibility Study”), a bankable feasibility
study, to DNPM in accordance with the mining regulations of Brazil.









BMIX does
not claim that the NI 43-101 technical report and/or MDB’s Feasibility Study are compliant with the SEC-sanctioned Industry
Guide 7. Under the SEC’s Industry Guide 7, no assertion can be made about reserves; moreover, Industry Guide 7 does not
recognize the term “resources.”











15







Source of Water and Power



The water used in MDB’s processing
and recovery plant for diamonds and gold, and other installations, comes from lagoons that receive water from the Jequitinhonha
River. There is no shortage of water and water is free to MDB.





The power used in MDB’s processing
and recovery plant and other installations, is provided by diesel generators. Normally, MDB purchases diesel on a weekly to bi-weekly
schedule from two local competing distributors, both of which have storage tanks outside of MDB’s plant. There has been
no shortage of fuel available for purchase. The Company believes that the existence of two suppliers ensures that competitive
pricing and other terms will continue to be available to MDB.



Over the next one to two years, MDB’s intention is to work towards obtaining an industrial-strength
electric line extension from the national electric grid, a pathway of approximately 27 kilometers. This would allow MDB to minimize,
if not eliminate, any dependence on fossil fuels. To this extent, MDB has had meetings with CEMIG, the State of Minas Gerais electric
utility company. Furthermore, MDB has obtained a detailed workplan by which the line extension could be built by a CEMIG authorized
contractor in approximately four months and for under $800,000. CEMIG has indicated willingness to contribute 46% of such cost;
other portions of this cost might be borne by farmers along the pathway which would be benefitting from electric energy for irrigation
equipment use. These conversations are ongoing and at this time MDB has not finalized any commitments. Since energy costs are
the largest component of expenses at MDB, and given that electric energy in Brazil is substantially less expensive than energy
derived from fossil fuels on an equivalent basis, MDB believes that its cost of building the line extension would be recouped
within two years or less.



Equipment at MDB



MDB has a large processing and recovery
plant for alluvial diamonds and gold, considered by specialists to be the largest of such type in Latin America. The plant has
a well-equipped spare parts and supply room. For mining, MDB has use of the following mechanized equipment which is owned by BMIXP:
an excavator, a bulldozer, two trucks, a portable industrial-strength generator and pumps. MDB also leases from independent owners
a mechanic shovel and another truck. For transportation of personnel and smaller items, MDB owns a car and a van.



Set forth below is a map of the State
of Minas Gerais showing the location of BMIX’s office and plant.





16













2013 Production





During the
fiscal year ended December 31, 2013 MDB processed an aggregate of 31,738 cubic meters of material and recovered therefrom an aggregate
of 3,994 carats of rough diamonds (.125 carats per cubic meter) and 4,550 grams of gold (,14 grams per cubic meter). During the
fiscal year ended December 31, 2013 MDB had revenues of 1,173,481 real (approximately $500,930 based on the exchange rate as of
December 31, 2013) from the sale of rough diamonds, 21,587 real (approximately $9,215 based on the exchange rate as of December
31, 2013) from the sale of polished diamonds and 529,184 real (approximately $225,895 based on the exchange rate as of December
31, 2013) from the sale of gold.





Gold is a byproduct of diamond
production in alluvial operations along the Jequitinhonha River.





17









| | 2. | Borba
                                         Project (state of Amazonas, Brazil)
| | -- | ----------------------------------------------------------------------------------



The mineral claim for the Borba Project
is “Autorização de Pesquisa” (research permit) with respect to DNPM
process number 880.239/2009 initially awarded by DNMP on October 14, 2009, and renewed on December 4, 2012 for another three years.
It covers an area of 9,999.11 hectares, or approximately 24,708 acres. The title to this mineral claim is held by BMIXP.



BMIXP is evaluating the potential of
the Borba Project. One possibility is for BMIXP to perform the necessary research to submit an application to upgrade this claim
from research permit to mining concession by the submission of a research report in accordance with DNPM standards before December
4, 2015. Another possibility is a transaction by which a partner develops or co-develops this project. No decision on this has
been made yet.



If by December 4, 2015, BMIXP, or a
partner on its behalf, has not submitted the necessary research work to DNPM, and has not been granted a valid extension, BMIXP
will lose this mining claim, but it will not be subject to fines or penalties for not completing the research on a timely basis.



In 2013, BMIXP performed a preliminary
geological surface assessment of this area and collected samples for geochemical analysis. These samples were analyzed at the
SGS-Geosol laboratory in Belo Horizonte, Brazil. Further analytical work continues to date with a senior geologist in Brazil.



Set forth
below is a map from DNPM delineating the Borba Project mineral rights area.







18







ITEM 3. LEGAL PROCEEDINGS.



None.



ITEM 4. MINE SAFETY DISCLOSURES.



Not applicable.



PART II



ITEM 5. MARKET FOR REGISTRANT’S
COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.



Market Information and Current Stockholders



Our
common stock is traded on the Over-the-Counter Bulletin Board ("OTCBB") under the symbol "BMIX". The following
table sets forth, for each of the quarterly periods indicated, the range of high and low sales prices, in U.S. dollars, for our
common stock on OTCBB for each quarter since March 7, 2013. Such over-the-counter market quotations reflect inter-dealer prices,
without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. Prior to March 7, 2013
there were no quotations for our common stock.



|                    |  | Year Ended        |     
|------------------- |  | ----------------- | ----
|Quarters            |  | December 31, 2013 |     
|                    |  | High              |     
|                    |  |                   |     
|First (3/7-3/31)    |  | $                 | 1.10
|Second (4/1-6/30)   |  | $                 | 0.89
|Third (7/1-9/30)    |  | $                 | 0.28
|Fourth (10/1-12/31) |  | $                 | 0.12



As of March 31, 2014,
we had 2,754 stockholders of record of our common stock.



Dividends



We have not paid any
cash dividends since inception and do not expect to declare any cash dividends in the foreseeable future.



Equity Compensation Plan



On February 19, 2013,
our Board of Directors approved our 2013 Stock Incentive Plan under which we can offer eligible employees, consultants, and non-employee
directors cash and stock-based compensation and/or incentives to compensate, attract, retain, or reward such individuals. We have
no other equity compensation plan. The table below sets forth certain information as of December 31, 2013 with respect to our equity
compensation plans.



19







|Plan Category                                                                          |  | Number of securities
    to  be issued upon exercise 
of outstanding options,
    warrants, and rights     (a) |           |  | Weighted-average
    exercise price of outstanding options,  warrants and rights (b) |   |      | Number of securities
    remaining available for future issuance under equity 
compensation plans
    (excluding securities reflected in column "(a)") (c) | 
|-------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------- | --------- |  | ------------------------------------------------------------------------------------ | - | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|                                                                                       |  |                                                                                                                |           |  |                                                                                      |   |      |                                                                                                                                                            | 
|Equity compensation plans approved by security holders                                 |  |                                                                                                                | 0         |  |                                                                                      |   | 0    |                                                                                                                                                            | 
|                                                                                       |  |                                                                                                                |           |  |                                                                                      |   |      |                                                                                                                                                            | 
|Equity compensation plans not approved by security holders (2013 Stock Incentive Plan) |  |                                                                                                                | 1,200,000 |  |                                                                                      | $ | 0.33 |                                                                                                                                                            | 
|                                                                                       |  |                                                                                                                |           |  |                                                                                      |   |      |                                                                                                                                                            | 
|Total                                                                                  |  |                                                                                                                | 1,200,000 |  |                                                                                      | $ | 0.33 |                                                                                                                                                            | 



Sales of Unregistered Securities



On September 30,
2013, we issued and sold to two accredited investors for $100,000 four units of securities, each unit consisting of a $25,000
convertible promissory note and warrants to purchase 50,000 shares of our common stock until December 31, 2019. The notes bear
interest at 10% per annum and are due on the earlier of the close of a $100,000 financing or May 31, 2014.  The note
payable can be converted into common shares at $0.125 per share, a premium of 25% above our common stock price at the time the
transaction was entered into. The exercise price of the warrants is $0.15 per share, a premium of 50% above our common stock
price at the time. The units were issued in accordance with an exemption from the registration requirements of the Securities
Act under Section 4(a)(2) of the Securities Act by virtue of being issued to two purchasers which acquired the units for investment.
As of March 31, 2014, 25% of the notes had already been repaid, and the outstanding principal from the unpaid notes was $75,000.



Item 6. Selected Financial Data.



The information to
be reported under this Item is not required of smaller reporting companies.



ITEM 7. MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.



The following discussion
of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements
and the notes to those financial statements appearing elsewhere in this Report.



20







This Annual Report
contains forward-looking statements. Forward-looking statements for us 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: 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; competition; 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.





Overview



The primary business
of BMIX is to acquire controlling ownership positions (or significant positions with oversight roles) in producing mining companies
in Brazil. The secondary business of BMIX is to engage in the creation of new companies in Brazil with mineral properties for
exploration and development. For information concerning our initial investments and assets see Item 2. Properties, which is incorporated
herein by reference.



In 2013, our consolidated
revenues were derived almost exclusively from sales of diamonds and gold by MDB. MDB's revenues were approximately 69% from the
sale of rough and polished diamonds and 31% from the sale of gold. All of the buyers were Brazilian institutional buyers.



While our consolidated
financial results are in part tied to the price of diamonds and gold, both commodities that are traded globally, the biggest factor
by far in generating revenues and profits is MDB’s ability to effectively mine diamonds and gold. Alluvial mines, such as
MDB’s, are not homogeneous: some mining fronts have very rich concentration of diamondiferous and auriferous gravel whereas
others do not. Additionally, some areas have easy access, whereas others may be underwater, and thus require water removal prior
to excavation. Our ability to choose the mining fronts to pursue and to provide the necessary equipment, fuel, and labor are a
significant factor in our results.



The second biggest
factor in affecting our results is MDB’s ability to mine diamonds and gold is highly seasonal. The rainy season in the northern
area of the state of Minas Gerais, Brazil, lasts from December through April. We expect that during these months MDB’s revenues
will be substantially lower than during other periods.



Overall, diamond
trends are positive given the emergence of new consumers in developing economies such as Brazil, China, and India. Therefore,
the Company does not anticipate any problems in selling the entirety of its production of rough diamonds and polished diamonds,
and expects this operational trend to remain for the foreseeable future.



Over the long term,
the Company’s ability to grow into a diversified holder of mining companies and mineral properties will depend on its ability
to identify such opportunities and be able to acquire, partner, license, or develop such opportunities and assets. Already today,
by virtue of its local presence in the Brazilian mining environment, the Company receives proposals of new opportunities frequently.
Furthermore, the Company has the ability to seek out talented local geologists to identify on a proactive basis any strategic
situations that are desirable of the Company’s involvement. For these two reasons, the Company believes that, over time,
it will be able to continue to have access to a quality deal flow that would allow it to perform on its business plan. The major
issue then will be the type of funding required to acquire or partner on such attractive opportunities. The Company will always
weigh possible dilution versus the aggregate benefit of the opportunity being considered. The Company may opt for less dilutive,
or non-dilutive strategic raises, in which new opportunities are placed in subsidiaries and capital is raised directly into the
subsidiary, not into the Company.





Results of Operations





The Company was
incorporated on December 15, 2011. It commenced operations on March 1, 2012. Until December 2012, the Company’s operations
were limited to developing a business plan, completing sales of common stock, discussing offers by the Company of 3D animation
services with potential customers, and the signing and performance of a service agreement with one company.



The Company changed
its business model and management in December 2012, and simultaneously discontinued its 3D animation services business. From March
1, 2012 to December 31, 2012 (“FY2012”) we had zero revenues as compared to revenues of $791,780 in the period from
January 1, 2013 to December 31, 2013 (“FY2013”). Essentially all of our revenues in FY2013 were derived from the consolidation
of the revenues from MDB, a company in which we own a 55% ownership stake. All of the revenues of MDB in FY2013 were from sale
of rough diamonds and gold mined at MDB.





Our consolidated
cost of goods sold in FY2013, consisting almost entirely of production expenses, was $448,830 or approximately 56.7% of the Company’s
total revenues. The Company’s gross profit in FY2013 was $342,950, or approximately 43.3% of total revenues. By comparison,
the Company had no revenues, costs of goods sold or gross profit in FY2012.



The Company had
an aggregate of $2,073,050 in operating expenses in FY2013, as compared to $152,655 in total operating expenses in FY2012. Exploration
and production costs totaling $834,962 and stock based compensation totaling $504,897 comprised the majority of operating expenses
in FY2013. No exploration and production costs or stock based compensation expense was incurred in FY2012.



General and administrative
expenses increased from $3,885 in FY2012 to $326,908 in FY2013; compensation and related costs increased from $54,112 in FY2012
to $269,168 in FY2013; and professional fees increased from $94,658 in FY2012 to $114,044 in FY2013, in each case primarily as
a result of the change in the Company’s business All of these changes were as a result of the growth of our business.



Primarily as a
result of the $1,920,395 increase in total operating expenses, the Company’s net loss increased by $1,338,916, from $174,463
in FY2012 to $1,513,379 in FY2013.



Net cash used in
operating activities increased from $111,101 in FY2012 to $851,294 in FY2013, primarily as a result of the $1,360,724 increase
in net loss from continuing operations, which was partially offset by non-cash items such as $504,897 in stock based compensation
and $350,830 in increased inventory in FY2013.



Net cash used
in investing activities decreased from $800,000 on FY2012 to $3,413 in FY2013. In December 2012 the Company advanced $800,000
to BMI. This loan was non-interest bearing and had no specified terms of repayment and was an advance related to the exercise
of an option agreement held by the Company for a 20% share of the MDB diamond production. On January 2, 2013, the Company
exercised the option and the advance was deemed payment of the option. The option granted the Company 20% of the diamond
production with respect to BMI’s 55% interest in MDB.



Net cash
provided by financing activities decreased from $1,752,802 in FY2012 to $323,003 in FY2013. In FY2012, the Company received
net cash from continuing financing activities of $1,746,633 as compared to $323,003 in FY2013. In FY2012, the Company
received net proceeds of $2,000,033 from a private placement of its common stock. In FY2013 the primary components of its net
cash provided by continuing financing activities were capital contributions received from non-controlling interests
($165,500), proceeds from the sale of notes ($100,000) and cash acquired upon acquisition of a subsidiary ($56,914).



The effect of the
foregoing changes in cash flows, as well as a $226,700 negative effect on cash in fiscal 2013 as a result of changes in exchange
rates, was a net decrease of $758,404 during FY2013in cash and cash equivalents.





21







Liquidity and Capital Resources



At December 31, 2013, we had current
assets of $340,332 compared to current liabilities of $238,602 for a current ratio of 1.43 to 1. This compares to current assets
of $863,189 and current liabilities of $67,462 at December 31, 2012, resulting in a current ratio of approximately 12.8 to 1.
The decrease in our current ratio was primarily attributable to a decrease in cash and cash equivalents which were used to fund
operations and acquisitions of capital equipment in fiscal 2013



In 2013, our principal
sources of liquidity were our revenues from the sale of diamonds and gold as well as cash remaining from the $2,000,033 gross proceeds
of a private placement of our common stock from December 2012.



On September 30, 2013,
we issued and sold to two accredited investors for $100,000 four units of securities, each unit consisting of a $25,000 convertible
promissory note and warrants to purchase 50,000 shares of our common stock until December 31, 2019.



As of December
31, 2013, our working capital was $101,730. As of December 31, 2013, we had accrued expenses and accounts payable of $171,526,
and $67,076 in indebtedness for borrowed money.



During the first
quarter of 2014, we received an aggregate of $1,048,000 in gross proceeds as a result of various financings and pre-sales of polished
diamonds. A description of such transactions is set forth in Item 1 of this Annual Report.



We believe
that our current financial resources and funds generated from operations will be adequate to cover anticipated expenditures for
debt service, general and administrative expense costs and exploration costs for the foreseeable future.



Our
long-term capital requirements are primarily affected by our ongoing acquisition activities. The Company currently, and
generally at any time, has acquisition opportunities in various stages of review. We may  seek additional financing as
necessary to fund such acquisitions and capital expenditures or for general corporate needs as necessary.



Please refer to our risk factors included in Part 1,
Item 1A of this Annual Report for a discussion of certain risks that may impact the Company's liquidity and capital resources.





The
Company believes that sales and pre-sales of diamonds, whether rough or polished, will provide it with liquidity for operations.
In particular, the Company notes that it pre-sold in the first three months of 2014, over $1 million in polished diamonds, and
received such cash in advance.



The
Company may rely on financing from the issuance of convertible notes or convertible preferred stock if it believes that it needs
to close any gaps that are not covered by revenues or pre-revenues. Given that production in the MDB property is highly dependent
on the particular mining front being worked on, it is difficult for the Company to predict the extent of need, if any, of any
supplemental funding. In the best estimate, for operational use, the need should be $500,000 or less over 12 months. Separately,
and in addition to this amount, if the Company is able to purchase an additional stake in MDB, it may need to rely on a combination
of revenues from sales or pre-sales of diamonds and gold and convertible notes or preferred stock. The Company estimates that
the purchase price for the remaining 45% portion of MDB not currently owned by the BMIX Subsidiary would be approximately $1.2
million. If the Company acquires ownership interests in other mineral properties it will likely have to fund any cash portion
of the purchase price with equity or secured or unsecured debt financing.



Off-Balance Sheet Arrangements



We currently have no
off-balance sheet arrangements.



Critical Accounting Policies and Estimates



Our
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, 2013, it could negatively affect our financial position and liquidity and could result in our having
understated our net loss.



22







Recent Accounting Pronouncements



Our
consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles.  Our significant
accounting policies are described in Note 1 of the financial statements. We have reviewed all recent accounting pronouncements
issued to the date of the issuance of these financial statements, and we do not believe any of these pronouncements will have a
material impact on us.



Additional
Comments



In
2013, we achieved revenues of $791,780 and had losses of $1,513,379. As of December 31, 2013, we had cash and cash equivalents
of $104,992. However, as described elsewhere in this Annual Report, we received $1,048,000 in cash during the first quarter of
2014, thereby substantially increasing our liquidity.



ITEM 7A. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK.



The information to
be reported under this Item is not required of smaller reporting companies.



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA.



Our financial statements,
including the notes thereto, together with the report from our independent registered public accounting firm are presented beginning
at page F-1.



ITEM 9. CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.



None.



ITEM 9A. CONTROLS AND PROCEDURES.



(a) Evaluation of Disclosure Controls and
Procedures



Our management,
with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the design, operation, and effectiveness
of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of December 31,
2013. Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to
be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported, within
the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be disclosed by us in our reports that we file or submit
under the Exchange Act is accumulated and communicated to management, including our chief executive officer and chief financial
officer, as appropriate to allow timely decisions regarding our required disclosure. In designing and evaluating our disclosure
controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control objectives, and management was required to apply its judgment
in evaluating and implementing possible controls and procedures. As described below, material weaknesses were identified in our
internal control over financial reporting. The Public Company Accounting Oversight Board’s Auditing Standard No. 212 defines
a material weakness as a significant deficiency, or combination of significant deficiencies, that results in more than a remote
likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. As a
result of the material weaknesses, our chief executive officer and chief financial officer has concluded that, as of December
31, 2013, the end of the period covered by this Annual Report, our disclosure controls and procedures were not effective at a
reasonable assurance level.



We intend to remedy
the material weaknesses in our internal control over financial reporting and thereby make our disclosure controls and procedures
effective by the actions described in Item 9A(b).



23









(b) Management’s Report on Internal
Control Over Financial Reporting



Management is responsible
for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).
Our internal control system is designed to provide reasonable assurance to management and to our Board of Directors regarding the
preparation and fair presentation of published financial statements. Our Chief Executive Officer and Chief Financial Officer, conducted
an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on his evaluation under the
framework in Internal Control—Integrated Framework, he concluded that our internal control over financial reporting
was not effective as of December 31, 2013 in certain respects as described below.



As of December
31, 2013, the Company had the following material weaknesses in internal control over financial reporting. While MDB, the source
of substantially all of the Company’s consolidated revenues and the vast majority of its transactions, did have adequate
segregation of accounting functions, there was less segregation elsewhere due to the Company’s small size. The
Company has no dedicated internal accounting staff and relies on outsourced accountants in both Brazil, where the majority of
its operations are located, as well as in North America. As a result, financial information has sometimes not been
accumulated and communicated to management, including our chief executive officer and chief financial officer, in a timely enough
manner for decisions regarding our required disclosure to be made and financial statements to be prepared and delivered to our
independent accountants for their audit or review to be conducted in a timely and efficient manner. Additionally, during 2013,
the Company performed an analysis of its inventory only at year end.



Management believes
that these material weaknesses set forth above did not have a material effect on our financial results. However, in an effort
to remediate them and to enhance our internal controls, we plan to initiate the following series of measures: We will seek to
identify and hire accountants that are bilingual in English and Portuguese, versed in both US GAAP and Brazil’s International
Financial Reporting Standards (IFRS), and experienced in making the necessary transformations between IFRS to GAAP. We will also
perform analysis of the fair value of our inventory on a regular basis.



This Annual Report
does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.
Since we are a non-accelerated filer, management’s report is not subject to attestation by our registered public accounting
firm pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002. As a result, this Annual Report contains only management’s
report on internal controls.



(c)Changes in Internal Control
over Financial Reporting



There were no changes
in our internal control over financial reporting that occurred in the fourth quarter of 2013 that materially affected, or would
be reasonably likely to materially affect, our internal control over financial reporting.



24







ITEM 9B. OTHER INFORMATION.



None.



PART III



ITEM 10. DIRECTORS, EXECUTIVE OFFICERS
AND CORPORATE GOVERNANCE.



The following table sets forth certain
information as of March 31, 2014 concerning our directors and executive officers:



|Name                                      |  | Age |  | Position                                                                                                        
|----------------------------------------- |  | --- |  | ----------------------------------------------------------------------------------------------------------------
|                                          |  |     |  |                                                                                                                 
|Marc Fogassa                              |  | 47  |  | Director, Chairman, Chief Executive Officer,
        President, Chief Financial Officer, Treasurer and Secretary
|                                          |  |     |  |                                                                                                                 
|Ambassador Roger Noriega                  |  | 54  |  | Director                                                                                                        
|                                          |  |     |  |                                                                                                                 
|Ambassador Paul Durand                    |  | 72  |  | Director                                                                                                        
|                                          |  |     |  |                                                                                                                 
|Luis Mauricio Ferraiuoli de Azevedo, Esq. |  | 50  |  | Director                                                                                                        



Marc Fogassa







Marc Fogassa, age 47,
has been a director and our Chairman and Chief Executive Officer since December 2012. He has over 15 years of investment experience
in venture capital, and private and public equity investing, and has served on boards of directors of multiple private companies.
Mr. Fogassa has worked at Goldman Sachs & Co. (1997), Atlas Venture (1998-2000), and Axiom Ventures (2000-2005). He also worked
as investment manager with Hedgefort Capital Management LLC from May 2005 to June 2012, and as an investment banker from November
2011 to January 2014 with Hunter Wise Financial Group, LLC. He has been Chairman and CEO of Brazil Mining, Inc. since March 2012.
Mr. Fogassa has been invited numerous times to speak about investment issues, particularly as related to Brazil. Mr. Fogassa double
majored at the Massachusetts Institute of Technology (M.I.T.), graduating with two Bachelor of Science degrees in 1990. He later
graduated from the Harvard Medical School with a Doctor of Medicine degree in 1995, and also from the Harvard Business School with
a Master in Business Administration degree in 1999. Mr. Fogassa was born in Brazil and is fluent in Portuguese and English. We
appointed Mr. Fogassa as a director and our Chairman of the Board and President because of his substantial management and fundraising
skills, prior experience as a director of several private companies, venture capital and private equity experience, judgment and
his knowledge of, and contacts in, Brazil.















25







Ambassador Roger Noriega



Ambassador Roger
Noriega, age 54, has been a director since 2012. He has extensive experience in Latin America. Ambassador Noriega was appointed
by President George W. Bush and confirmed by the U.S. Congress as U.S. Assistant Secretary of State, and served from July 2003
to October 2005. In that capacity, Ambassador Noriega managed a 3,000-person team of professionals in Washington and in 50 diplomatic
posts to design and implement political and economic strategies in Canada, Latin America, and the Caribbean. Prior to this
assignment, Ambassador Noriega served as U.S. Ambassador to the Organization of American States (“OAS”) from August
2001 to July 2003. Since February 2009 Ambassador Noriega has been the Managing Director
of VisionAmericas, a Latin America-focused consulting group that he founded.Ambassador Noriega has a Bachelor of Arts
degree from Washburn University of Topeka, Kansas.We appointed Ambassador Noriega as a
director because of hisextensive experience in Latin America, business and government contacts, management skills and
judgment.



Ambassador Paul Durand



Ambassador Paul
Durand, age 72, has been a director since 2012. He has had extensive experience in Latin America. From August 2001 to August 2006,
Ambassador Durand was Canada’s Ambassador to the OAS. From August 2000 to July 2001 he was Canada’s Ambassador to
Chile, and from August 1992 to August 1995 he was Canada’s Ambassador to Costa Rica, with concurrent accreditation to Honduras,
Nicaragua, and Panama. For the past five years, Ambassador Durand has also personally provided consulting services to several
businesses and organizations, including the University of Ottawa advising the executive student class on political and economic
conditions in Brazil and Chile; the OAS on elections and a referendum in Chile; and Infinito Gold Inc. on negotiations with the
government of Costa Rica regarding the development of a gold mine. He has a Bachelor of Arts degree in Political Economy from
the University of Toronto, and has pursued further studies in International Relations and Economics at Northwestern University
in Chicago and Carleton University in Ottawa. Ambassador Durand joined the Canadian government after working in international
banking in Latin America (Colombia, El Salvador), the Caribbean (Bahamas) and the U.S. We
appointed Ambassador Durand as a director because of hisextensive experience in Latin America, business and government
contacts, management skills and judgment.



Luis Mauricio Ferraiuoli de Azevedo,
Esq.



On January 7, 2014,
our Board of Directors elected Luis Mauricio Ferraiuoli de Azevedo, Esq. as a director. Mr. Azevedo, age 50, is both a licensed
lawyer and geologist with 25 years of business and mining experience in Brazil. Since October 1997 he has been the Managing Partner
at FFA Legal, a legal firm he founded and based in Rio de Janeiro, Brazil, and which is focused solely on natural resources companies.
Mr. Azevedo’s practice is highly active in mergers in acquisitions for companies owning mineral assets and/or operating
mining enterprises in Brazil. His experience spans industrial minerals, diamonds, and precious metals, and he continually works
in contact with the highest federal levels of all branches of government in Brazil. Prior to his election to our Board of Directors,
Mr. Azevedo had served on our Board of Advisors since July 2013. Mr. Azevedo previously worked for Western Mining, Barrick Gold,
and Harsco. He assembled land packages that resulted in five initial public offerings of Canadian companies in Brazil (Avanco,
Avenue, Carnavale, Rio Verde, and Talon) since 2004. In addition to his directorship in our Board of Directors, he is currently
on the Board of Directors of three mining companies: Avanco, Avenue, and Talon Metals. Mr. Azevedo received a Geology degree from
UERJ - Universidade do Estado do Rio de Janeiro in 1986, a Law degree from Faculdade Integradas Cândido Mendes in 1992,
and a Master of Law degree from PUC-Rio, Pontifícia Universidade Católica of Rio de Janeiro in 1995. We
appointed Mr. Azevedo as a director because of hisextensive experience in Brazilian geology, Brazilian mining law, mergers
and acquisitions of mining companies in Brazil and his experience as a director in publicly traded companies listed in Canada.



26







Board Composition



Our Board of Directors
is currently composed of four members – Marc Fogassa, Ambassador Roger Noriega, Ambassador Paul Durand, and Luis Mauricio
Ferraiuoli de Azevedo, Esq.



There are no family
relationships among our directors and executive officers. There is no arrangement or understanding between or among our executive
officers and directors pursuant to which any director or officer was or is to be selected as a director or officer, and there is
no arrangement, plan, or understanding as to whether non-management shareholders will exercise their voting rights to continue to
elect the current board of directors.



Our directors and executive
officers have not, during the past ten years:



| | · | had any bankruptcy petition filed by or against any business of which such person was a
                                                                                                               general
                                                                                                               partner or executive officer, either at the time of the bankruptcy or within two years prior to that time,
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | been convicted in a criminal proceeding and is not subject to a pending criminal proceeding,
| | - | --------------------------------------------------------------------------------------------



| | · | been subject to any order, judgment, or decree, not subsequently reversed, suspended, or vacated,
of any court of competent jurisdiction, permanently, or temporarily enjoining, barring, suspending, or otherwise limiting his involvement
in any type of business, securities, futures, commodities, or banking activities; or
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | been found by a court of competent jurisdiction (in a civil action), the Securities Exchange Commission,
or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment
has not been reversed, suspended, or vacated.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



We do not have standing
audit, nominating, or compensation committees. Currently, our entire Board of Directors is responsible for the functions that would
otherwise be handled by these committees.



Code of Ethics



Our Board of
Directors will adopt a new code of ethics that applies to all of our directors, officers, and employees, including our
principal executive officer, principal financial officer, and principal accounting officer. The new code will address, among other
things, honesty and ethical conduct, conflicts of interest, compliance with laws, regulations and policies, including
disclosure requirements under the federal securities laws, confidentiality, trading on inside information, and reporting of
violations of the code.



27







Audit Committee Financial Expert



Our Board of Directors
currently acts as our audit committee. We do not currently have an independent member of our Board of Directors who qualifies
as an “audit committee financial expert” as defined in Item 407(e)(5) of Regulation S-K.



ITEM 11. EXECUTIVE COMPENSATION.



The following table
sets forth information concerning cash and non-cash compensation paid by us to our Chief Executive Officer for each of the two
years ended December 31, 2012 and December 31, 2013. No other employee or independent contractor received compensation in excess
of $100,000 for either of those two years.



Summary Compensation Table



|Name and
    Principal Position |  | Year Ended |            |  | Salary ($) |   |         | Bonus 
    ($) |  |   | Stock
    Awards    ($) |  |  | Option 
    Awards |         |     | Non-Equity
    Incentive Plan
    Compensation
    (S) |  |   | Non-Qualified
    Deferred Compensation Earnings ($) |  |  | All Other
    Compensation ($) |  |  | Total ($) |  
|------------------------------- |  | ---------- | ---------- |  | ---------- | - | ------- | -------------- |  | - | ----------------------- |  |  | ------------------ | ------- | --- | ------------------------------------------------------ |  | - | ---------------------------------------------------- |  |  | ------------------------------ |  |  | --------- | -
|Marc Fogassa                    |  |            | 12/31/2012 |  |            |   | -       |                |  | $ | 50,000                  |  |  |                    | -       |     |                                                        |  | - |                                                      |  |  | -                              |  |  |           | -
|                                |  |            | 12/31/2013 |  |            | $ | 125,000 |                |  |   | -                       |  |  | $                  | 210,234 | (A) |                                                        |  | - |                                                      |  |  | -                              |  |  |           | -



| | (A) | On November 30, 2013, the Board of Directors
    of the Company rescinded and cancelled a grant to Mr. Fogassa of options to purchase 2,000,000 shares of the Company’s
    Common Stock (which options had a value of $741,766 as of the date of grant of the option), and instead issued to him 2,000,000
    shares with a deemed value of $180,000. The value of the options rescinded has been calculated in accordance with FASB ASC
    Topic 718.  See Note 6 to our consolidated financial statements included in this Annual Report on Form 10-K for
    the year ended December 31, 2013 for a discussion of all assumptions made in the calculation of this amount. The value of
    the 2,000,000 shares issued to Mr. Fogassa in lieu of the options is based on the closing price of the Company’s Common
    Stock of $.09 per share on November 29, 2013. In addition, in lieu of cash payments of salary and other compensation, the
    Company issued to Mr. Fogassa additional shares of common stock having an aggregate market value of $30,234 as of the dates
    of issuance
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------







Employment Agreement with Marc Fogassa







Marc Fogassa was
hired by the Company as the Company’s Chief Executive Officer, Chairman, Chief Financial Officer, Treasurer and Secretary
under an Employment Agreement dated December 31, 2012 (the “Agreement”). Under the Agreement Mr. Fogassa receives
a salary of $150,000 per annum. Such annual salary shall be increased to $175,000 and $200,000 upon consummation of private placements
of Company securities of at least $2,500,000 and $5,000,000, respectively. In addition, Mr. Fogassa is entitled to reimbursement
of expenses incurred by him in the performance of his duties, a maximum allowable SEP IRA contribution, four weeks of paid vacation
time, and the payment by the Company of certain insurance-related expenses. The agreement further provides that the Company shall
pay to Mr. Fogassa severance in case of termination or change in control with demotion.







Director Compensation



The
following table sets forth a summary of compensation for the fiscal year ended December 31, 2013 that we paid to each director
other than its Chief Executive Officer, whose compensation is fully reflected in the Summary Compensation Table.  We
do not sponsor a pension benefits plan, a non-qualified deferred compensation plan, or a non-equity incentive plan for  directors;
therefore, these columns have been omitted from the following table.  No other or additional compensation for services
were paid to any of the directors.



Director Compensation Table



|Name          |  | Fees Earned or Paid
    in Cash ($) |   |  | Option
    Awards ($) (1) |  |        | Total
    ($) | 
|------------- |  | ----------------------------------- | - |  | ------------------------- |  | ------ | ------------- | 
|Roger Noriega |  |                                     | - |  |                           |  | 85,407 |               | 
|Paul  Durand  |  |                                     | - |  |                           |  | 85,407 |               | 
|John Bell (2) |  |                                     | - |  |                           |  | 80,401 |               | 



| | (1) | The amounts in this column reflect the aggregate grant date fair value of stock options granted
in 2013 to each director calculated in accordance with FASB ASC Topic 718.  See the notes to our consolidated financial
statements included in this Annual Report on Form 10-K for the year ended December 31, 2013 for a discussion of all assumptions
made in the calculation of this amount.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Mr. Bell served as a
director of the Company from April 23, 2013 to January 7, 2014.
| | --- | ------------------------------------------------------------------------------------





28







ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.



The following table
sets forth information regarding beneficial ownership of our Common Stock and Series A Preferred Stock as of April 10, 2014 by
(i) any person or group with more than 5% of any class of voting securities, (ii) each director, (iii) our chief executive officer
and each other executive officer whose cash compensation for the most recent fiscal year exceeded $100,000 and (iv) all executive
officers and directors as a group.   Except as indicated in the footnotes to this table and subject to applicable community
property laws, the persons named in the table to our knowledge have sole voting and investment power with respect to all shares
of securities shown as beneficially owned by them. The Certificate of Designations, Preferences and Rights of our Series A Convertible
Preferred provides that for so long as Series A Preferred Stock is issued and outstanding, the holders of Series A Preferred Stock
shall vote together as a single class with the holders of our Common Stock, with the holders of Series A Preferred Stock being
entitled to 51% of the total votes on all matters regardless of the actual number of shares of Series A Preferred Stock then outstanding,
and the holders of Common Stock being entitled to their proportional share of the remaining 49% of the total votes based on their
respective voting power.



|Name and Address
    (1)                                        |  | Office |                                                                                                                                                                                            |  | Shares
    Beneficially Owned (2) |  |            | Percent of Class (3)(4) | 
|--------------------------------------------------------------- |  | ------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------------------- |  | ---------- | ----------------------- | 
|Common Stock                                                    |  |        |                                                                                                                                                                                            |  |                                   |  |            |                         | 
|Marc Fogassa                                                    |  |        | Director,
                                         Chairman, Chief Executive Officer, President, Chief Financial Officer, Secretary and
                                         Treasurer |  |                                   |  | 36,567,812 | (5)                     | 
|Brazil Mining, Inc.                                             |  |        | -                                                                                                                                                                                          |  |                                   |  | 29,426,849 |                         | 
|Ambassador Paul  Durand                                         |  |        | Director                                                                                                                                                                                   |  |                                   |  | 425,750    | (6)                     | 
|Ambassador Roger Noriega                                        |  |        | Director                                                                                                                                                                                   |  |                                   |  | 419,125    | (6)                     | 
|Luis Mauricio Ferraiuoli de Azevedo, Esq.                       |  |        | Director                                                                                                                                                                                   |  |                                   |  | 5,000      |                         | 
|All executive officers and directors as a group
    (4 persons) |  |        |                                                                                                                                                                                            |  |                                   |  | 37,417,687 | (5) (7)                 | 
|                                                                |  |        |                                                                                                                                                                                            |  |                                   |  |            |                         | 
|Series A Preferred Stock                                        |  |        |                                                                                                                                                                                            |  |                                   |  |            |                         | 
|Marc Fogassa                                                    |  |        | Director                                                                                                                                                                                   |  |                                   |  | 1          |                         | 
|All executive officers and directors as a group
    (4 persons) |  |        |                                                                                                                                                                                            |  |                                   |  | 1          |                         | 



(1) Unless otherwise specified, the address
of each of the officers and directors set forth below is in care of Brazil Minerals, Inc., 324 South Beverly Drive, Suite 118,
Beverly Hills, California 90212.



(2) Beneficial ownership is determined
in accordance with rules promulgated by the Commission.



(3) Based on 76,409,116 shares of common
stock outstanding and computed in accordance with rules promulgated by the Commission.





(4) The holders of our Series A Preferred
Stock vote together as a single class with the holders of our Common Stock, with the holders of Series A Preferred Stock being
entitled to 51% of the total votes on all matters regardless of the actual number of shares of Series A Preferred Stock then outstanding,
and the holders of Common Stock being entitled to their proportional share of the remaining 49% of the total votes based on their
respective voting power. Based on their direct ownership of shares of Series A Preferred Stock and Common Stock as of April 10,
2014 (not including shares which such persons are deemed to beneficially own, but which are not outstanding or owned directly),
each person set forth in the table had the following approximate percentages of the voting power of the common and preferred stock
voting together as a single class as of such date: Marc Fogassa – 51%; Brazil Mining, Inc. – 19%; and each of Messrs.
Durand, Noriega and Azevedo, less than 1%.





(5) Includes 29,426,849 shares of our
common stock owned by Brazil Mining, Inc. (“Brazil Mining”), a Delaware corporation of which Mr. Fogassa is a director
and officer, shares owned by entities that could be deemed to be controlled by Mr. Fogassa or his immediate family, and options
owned by Mr. Fogassa to purchase 79,999 shares of our common stock at $1.00 per share.



(6) Includes options to purchase 200,000
shares of our common stock at $0.58 per share and options to purchase 200,000 shares of our common stock at $0.09 per share.



29







(7) Includes options to purchase 400,000
shares of our common stock at $0.58 per share, options to purchase 400,000 shares of our common stock at $0.09 per share, and
options to purchase 79,999 shares of our common stock at $1.00 per share.



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE.



On January 1, 2013,
the Company and Brazil Mining entered into an administrative services agreement under which Brazil Mining provided, at cost to
us, personnel and facilities to carry out our business activities in Brazil. We paid Brazil Mining $228,463 pursuant to the agreement.
This agreement was terminated in 2013 as we implemented our infrastructure in Brazil. During the period in which the agreement
was in effect Brazil Mining owned a majority of the outstanding shares of our common stock, three of its directors were also directors
of the Company and Marc Fogassa, our Chairman and Chief Executive Officer was also Chairman and Chief Executive Officer of Brazil
Mining.



On December 19,
2012 the Company entered into and consummated a Contribution Agreement with Brazil Mining (the “Contribution Agreement”)
pursuant to which Brazil Mining contributed to the Company by way of an Assignment of Mineral Rights, certain mineral exploration
rights on an approximately 10,000 hectare property located in the municipality of Borba, State of Amazonas, Brazil. Brazil Mining
also entered into an Option Agreement with the Company pursuant to which Brazil Mining granted to the Company an option to purchase
for $800,000 a 20% share of the monthly diamond production that Brazil Mining would actually receive in respect of Brazil Mining’s
then anticipated acquisition of a 55% equity interest in a Brazilian entity (the “Option Agreement”). Pursuant to
the Contribution Agreement, the Company issued to Brazil Mining an aggregate of 1,073,511 shares of the Company’s Common
Stock, par value $.001 per share, constituting 51% of the issued and outstanding shares of Common Stock of the Company giving
effect to all of the transactions consummated on December 19, 2012. On January 2, 2013, the Company exercised the option granted
to the Company pursuant to the Option Agreement and acquired 20% of the diamond production due BMI from BMI’s 55% interest
in MDB.



On March 23, 2013,
our Board of Directors and the Board of Directors of BMI, each having obtained all necessary authority, celebrated an agreement
pursuant to which our Brazilian subsidiary acquired Brazil Mining’s 55% interest in MDB for $660,000 in consideration.



Director Independence



We believe that each
of Ambassador Roger Noriega, Ambassador Paul Durand, and Luis Mauricio Ferraiuoli de Azevedo, Esq. are “independent”
as such term is defined by the NASDAQ Stock Market Rules.



ITEM 14. PRINCIPAL ACCOUNTING FEES AND
SERVICES.



Audit Fees



The aggregate fees
that have been, or are expected to be, billed by Silberstein Ungar, PLLC ("Silberstein"), our principal accountant,
to us for the audit of our financial statements as of December 31, 2012 and as of December 31, 2013 were $16,000 and $21,500,
respectively. In addition, Silberstein was paid an aggregate of $3,750 for its reviews of our quarterly financial statements during
2012 and an aggregate of $5,250 for its reviews of our quarterly financial statements during 2013. In 2013, Silberstein was also
paid $12,000 for an audit of MDB from January 1, 2011 through December 31, 2012, and $1,500 for the review of a Form 8-K filing.



30









Audit-Related Fees



During 2012 and 2013
there were no fees paid to Silberstein in connection with our compliance with Section 404 of the Sarbanes-Oxley Act of 2002.



No other fees were
billed by Silberstein for the last two years that were reasonably related to the performance of the audit or review of our financial
statements and not reported under "Audit Fees" above.



Tax Fees



There were no fees
billed by Silberstein during the last two fiscal years for professional services rendered for tax compliance, tax advice, or tax
planning. Accordingly, none of such services were approved pursuant to pre-approval procedures or permitted waivers thereof.



All Other Fees



There were no other
non-audit-related fees billed to us by Silberstein in 2012 or 2013.



Pre-Approval Policies and Procedures



Engagement of accounting
services by us is not made pursuant to any pre-approval policies and procedures. Rather, we believe that our accounting firm is
independent because all of its engagements by us are approved by our Board of Directors prior to any such engagement.



Our Board of Directors
will meet periodically to review and approve the scope of the services to be provided to us by its independent registered public
accounting firm, as well as to review and discuss any issues that may arise during an engagement. The Board is responsible for
the prior approval of every engagement of our independent registered public accounting firm to perform audit and permissible non-audit
services for us, such as quarterly financial reviews, tax matters, and consultation on new accounting and disclosure standards.



Before the auditors
are engaged to provide those services, our Chief Financial Officer and Controller will make a recommendation to the Board of Directors
regarding each of the services to be performed, including the fees to be charged for such services. At the request of the Board
of Directors, the independent registered public accounting firm and/or management shall periodically report to the Board of Directors
regarding the extent of services being provided by the independent registered public accounting firm, and the fees for the services
performed to date.



31









PART IV



ITEM 15. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES



| | (a) | Documents filed as part of this report.
| | --- | ---------------------------------------



| | (i) | Financial Statements - see Item 8. Financial Statements and Supplementary Data
| | --- | ------------------------------------------------------------------------------



| | (ii) | Financial Statement Schedules – None
| | ---- | ------------------------------------



(Financial statement schedules have been omitted
either because they are not applicable, not required, or the information required to be set forth therein is included in the financial
statements or notes thereto.)



| | (iii) | Report of Independent Registered Public Accounting Firm.
| | ----- | --------------------------------------------------------



| | (iv) | Notes to Financial Statements.
| | ---- | ------------------------------



| | (b) | Exhibits
| | --- | --------



The exhibits listed on the accompanying Exhibit Index are filed
as part of this Annual Report.



32













BRAZIL MINERALS, INC.



TABLE OF CONTENTS



DECEMBER 31, 2013





|Report of Independent Registered Public Accounting Firm                    | F-1     
|-------------------------------------------------------------------------- | --------
|                                                                           |         
|Consolidated Balance Sheets as of December 31, 2013 and 2012               | F-2     
|                                                                           |         
|Consolidated Statements of Operations for the Year Ended December 31, 2013 |         
|and for the period from March 1, 2012 to December 31, 2012                 | F-3     
|                                                                           |         
|Consolidated Statements of Other Comprehensive Income (Loss) for the Year  |         
|Ended December 31, 2013 and for the period from March 1, 2012 to           |         
|December 31, 2012                                                          | F-4     
|                                                                           |         
|Consolidated Statement of Stockholders’ Equity                             | F-5     
|                                                                           |         
|Consolidated Statements of Cash Flows for the Year Ended December 31, 2013 |         
|and for the period from March 1, 2012 to December 31, 2012                 | F-6     
|                                                                           |         
|Notes to the Consolidated Financial Statements                             | F-7-F-16















Silberstein
Ungar, PLLC CPAs and Business Advisors

Phone
(248) 203-0080

Fax (248) 281-0940

30600 Telegraph
Road, Suite 2175

Bingham Farms,
MI 48025-4586

www.sucpas.com





To the Board of Directors of

Brazil Minerals, Inc.

Beverly Hills, California



We have audited the accompanying consolidated
balance sheets of Brazil Minerals, Inc. (the “Company”) as of December 31, 2013 and 2012, and the related consolidated
statements of operations, stockholders’ deficit, and cash flows for the year ended December 31, 2013 and the period from
March 1, 2012 through December 31, 2012. These financial statements are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on our audits.



We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The
Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our
audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.



In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the financial position of Brazil Minerals, Inc. as of December
31, 2013 and 2012, and the results of its operations and its cash flows for the year ended December 31, 2013 and the period from
March 1, 2012 through December 31, 2012, in conformity with accounting principles generally accepted in the United States of America.



/s/ Silberstein Ungar, PLLC



Bingham Farms, Michigan

April 13, 2014





F-1









BRAZIL MINERALS, INC.

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2013 AND DECEMBER
31, 2012



|                                                                                                                                             |  | December
    31, 2013 |             |   | December
    31, 2012 |  
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------- | ----------- | - | --------------------- | -
|ASSETS                                                                                                                                       |  |                       |             |   |                       |  
|Current Assets                                                                                                                               |  |                       |             |   |                       |  
|Cash and cash equivalents                                                                                                                    |  | $                     | 104,785     |   |                       | $
|Taxes recoverable                                                                                                                            |  |                       | 43,224      |   |                       |  
|Inventory                                                                                                                                    |  |                       | 146,172     |   |                       |  
|Deposits                                                                                                                                     |  |                       | 5,501       |   |                       |  
|Loan receivable-related
    party                                                                                                            |  |                       | 40,650      |   |                       |  
|Total Current Assets                                                                                                                         |  |                       | 340,332     |   |                       |  
|                                                                                                                                             |  |                       |             |   |                       |  
|Capital Assets                                                                                                                               |  |                       |             |   |                       |  
|Property,
    plant & equipment, net of accumulated depreciation                                                                             |  |                       | 430,074     |   |                       |  
|                                                                                                                                             |  |                       |             |   |                       |  
|Other Assets                                                                                                                                 |  |                       |             |   |                       |  
|Intangible assets                                                                                                                            |  |                       | 139,653     |   |                       |  
|Loan receivable-related
    party                                                                                                            |  |                       | -           |   |                       |  
|                                                                                                                                             |  |                       |             |   |                       |  
|Total
    Assets                                                                                                                             |  | $                     | 910,059     |   |                       | $
|                                                                                                                                             |  |                       |             |   |                       |  
|LIABILITIES AND STOCKHOLDERS'
    EQUITY                                                                                                     |  |                       |             |   |                       |  
|Liabilities                                                                                                                                  |  |                       |             |   |                       |  
|Current Liabilities                                                                                                                          |  |                       |             |   |                       |  
|Accrued expenses and accounts
    payable                                                                                                    |  | $                     | 171,526     |   |                       | $
|Convertible notes payable,
    net of debt discount of $33,563                                                                               |  |                       | 66,437      |   |                       |  
|Loan from
    director                                                                                                                       |  |                       | 639         |   |                       |  
|Total
    Liabilities                                                                                                                        |  |                       | 238,602     |   |                       |  
|                                                                                                                                             |  |                       |             |   |                       |  
|Stockholders’ Equity                                                                                                                         |  |                       |             |   |                       |  
|                                                                                                                                             |  |                       |             |   |                       |  
|Series A Preferred Stock,
    $0.001 par value, 10,000,000 shares authorized; 1 share issued and outstanding                                 |  |                       | -           |   |                       |  
|Common stock, $0.001 par value,
    150,000,000 shares authorized; 74,639,834  shares issued and outstanding (December 31, 2012- 69,963,434) |  |                       | 74,640      |   |                       |  
|Additional paid-in-capital                                                                                                                   |  |                       | 38,629,290  |   |                       |  
|Accumulated other comprehensive
    loss                                                                                                     |  |                       | (226,700    | ) |                       |  
|Stock warrants                                                                                                                               |  |                       | 129,772     |   |                       |  
|Deferred stock compensation                                                                                                                  |  |                       | (69,611     | ) |                       |  
|Non-controlling interest                                                                                                                     |  |                       | 409,962     |   |                       |  
|Deficit
    accumulated during the development stage                                                                                         |  |                       | (38,275,896 | ) |                       |  
|Parent
    company shareholders equity                                                                                                       |  |                       | 261,495     |   |                       |  
|Non-controlling
    interest equity                                                                                                          |  |                       | 409,962     |   |                       |  
|Total
    Stockholders’ Equity                                                                                                               |  |                       | 671,457     |   |                       |  
|                                                                                                                                             |  |                       |             |   |                       |  
|Total
    Liabilities and Stockholders’ Equity                                                                                               |  | $                     | 910,059     |   |                       | $



The accompanying notes are an integral part
of these financial statements.





F-2









BRAZIL MINERALS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2013
AND

FOR THE PERIOD FROM MARCH 1, 2012 TO
DECEMBER 31, 2012



|                                                                     |  | Year
    ended December
    31, 2013 |            |   | Period
    from March
    1, 2012
    to December 31,
    2012 |  
|-------------------------------------------------------------------- |  | ------------------------------------ | ---------- | - | -------------------------------------------------------------- | -
|                                                                     |  |                                      |            |   |                                                                |  
|REVENUES                                                             |  | $                                    | 791,780    |   |                                                                | $
|                                                                     |  |                                      |            |   |                                                                |  
|COST OF
    GOODS SOLD                                               |  |                                      |            |   |                                                                |  
|Production expenses                                                  |  |                                      | 445,262    |   |                                                                |  
|Mining
    tax                                                       |  |                                      | 3,568      |   |                                                                |  
|                                                                     |  |                                      | 448,830    |   |                                                                |  
|GROSS
    PROFIT                                                     |  |                                      | 342,950    |   |                                                                |  
|                                                                     |  |                                      |            |   |                                                                |  
|OPERATING
    EXPENSES                                               |  |                                      |            |   |                                                                |  
|Professional fees                                                    |  |                                      | 114,044    |   |                                                                |  
|General and administrative
    expenses                              |  |                                      | 326,908    |   |                                                                |  
|Compensation and related
    costs                                   |  |                                      | 269,168    |   |                                                                |  
|Stock based compensation                                             |  |                                      | 504,897    |   |                                                                |  
|Exploration and production
    costs                                 |  |                                      | 834,962    |   |                                                                |  
|Interest on promissory
    notes                                     |  |                                      | 2,500      |   |                                                                |  
|Amortization of debt
    discount                                    |  |                                      | 20,138     |   |                                                                |  
|Depreciation                                                         |  |                                      | 433        |   |                                                                |  
|TOTAL
    OPERATING EXPENSES                                         |  |                                      | 2,073,050  |   |                                                                |  
|                                                                     |  |                                      |            |   |                                                                |  
|INTEREST
    INCOME                                                  |  |                                      | 470        |   |                                                                |  
|                                                                     |  |                                      |            |   |                                                                |  
|LOSS FROM
    CONTINUING OPERATIONS                                  |  |                                      | (1,729,630 | ) |                                                                |  
|                                                                     |  |                                      |            |   |                                                                |  
|LOSS
    FROM DISCONTINUED OPERATIONS                                |  |                                      | -          |   |                                                                |  
|                                                                     |  |                                      |            |   |                                                                |  
|LOSS BEFORE
    PROVISION FOR INCOME TAXES                           |  |                                      | (1,729,630 | ) |                                                                |  
|                                                                     |  |                                      |            |   |                                                                |  
|PROVISION
    FOR CORPORATE INCOME TAXES                             |  |                                      | 0          |   |                                                                |  
|                                                                     |  |                                      |            |   |                                                                |  
|NET LOSS                                                             |  |                                      | (1,729,630 | ) |                                                                |  
|                                                                     |  |                                      |            |   |                                                                |  
|LOSS
    ATTRIBUTABLE TO NON CONTROLLING INTEREST                    |  |                                      | (216,251   | ) |                                                                |  
|                                                                     |  |                                      |            |   |                                                                |  
|LOSS
    ATTRIBUTABLE TO BRAZIL MINERALS, INC.                       |  | $                                    | (1,513,379 | ) |                                                                | $
|                                                                     |  |                                      |            |   |                                                                |  
|NET
    LOSS PER SHARE: BASIC AND DILUTED                            |  | $                                    | (0.02      | ) |                                                                | $
|                                                                     |  |                                      |            |   |                                                                |  
|WEIGHTED
    AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED |  |                                      | 71,072,232 |   |                                                                |  



The accompanying notes are an integral part
of these financial statements.





F-3









BRAZIL MINERALS, INC.

CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE
(LOSS)

FOR THE YEAR ENDED DECEMBER 31, 2013
AND

FOR THE PERIOD FROM MARCH 1, 2012 TO
DECEMBER 31, 2012



|                                                                          |  | Year
    Ended
    December 31, 2013 |            |   | Period
    from
    March 1,
    2012 to
    December
    31, 2012 |  
|------------------------------------------------------------------------- |  | ------------------------------------ | ---------- | - | ------------------------------------------------------------------ | -
|                                                                          |  |                                      |            |   |                                                                    |  
|Net
    Loss                                                              |  | $                                    | (1,729,630 | ) |                                                                    | $
|                                                                          |  |                                      |            |   |                                                                    |  
|Foreign
    Currency Translation:                                         |  |                                      |            |   |                                                                    |  
|Change
    in cumulative translation adjustment                           |  |                                      | 226,700    |   |                                                                    |  
|Income
    tax benefit (expense)                                          |  |                                      | -          |   |                                                                    |  
|Total
    Comprehensive Net Loss                                          |  |                                      | 1,956,330  |   |                                                                    |  
|Total
    Comprehensive Net Loss attributable to Non Controlling Interest |  |                                      | 318,266    |   |                                                                    |  
|Total
    Comprehensive Net Loss attributable to Brazil Minerals, Inc.    |  | $                                    | 1,638,064  |   |                                                                    | $





The accompanying notes are an integral part
of these financial statements.





F-4









BRAZIL MINERALS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’
EQUITY

AS OF DECEMBER 31, 2013



|                                                                                   |  | Preferred
    Stock |   |  | Common
    Stock |   |   |                   |  |  |             |   |  |                                |        |   |                    |   |            |                              |  |   |                                |  |  |                           |         
|---------------------------------------------------------------------------------- |  | ------------------- | - |  | ---------------- | - | - | ----------------- |  |  | ----------- | - |  | ------------------------------ | ------ | - | ------------------ | - | ---------- | ---------------------------- |  | - | ------------------------------ |  |  | ------------------------- | --------
|                                                                                   |  | Shares              |   |  | Amount           |   |   | Common
    shares |  |  | Amount      |   |  | Additional
    Paid in Capital |        |   | Stock
    Warrants |   |            | Non-controlling
    interest |  |   | Other
    comprehensive income |  |  | Deferred
    compensation |         
|Balance, February 29, 2012                                                         |  |                     | - |  |                  | $ | - |                   |  |  | 129,332,040 |   |  | $                              | 3,880  |   |                    | $ | 18,320     |                              |  | $ | -                              |  |  | $                         | -       
|Common shares voluntarily
    surrendered                                          |  |                     | - |  |                  |   | - |                   |  |  | (99,999,000 | ) |  |                                | (3,000 | ) |                    |   | 3,000      |                              |  |   | -                              |  |  |                           | -       
|Forgiveness of debt
    from prior director                                        |  |                     | - |  |                  |   | - |                   |  |  | -           |   |  |                                | -      |   |                    |   | 6,169      |                              |  |   | -                              |  |  |                           | -       
|Common shares issued
    for mining option and exploration rights                  |  |                     | - |  |                  |   | - |                   |  |  | 35,783,342  |   |  |                                | 1,073  |   |                    |   | 35,782,269 |                              |  |   | -                              |  |  |                           | -       
|Deemed dividend related
    to acquisition of mining option and exploration rights |  |                     | - |  |                  |   | - |                   |  |  | -           |   |  |                                | -      |   |                    |   | -          |                              |  |   | -                              |  |  |                           | -       
|Preferred share issued                                                             |  |                     | 1 |  |                  |   | - |                   |  |  | -           |   |  |                                | -      |   |                    |   | 1          |                              |  |   | -                              |  |  |                           | -       
|Common shares issued as share offering
    costs                                   |  |                     | - |  |                  |   | - |                   |  |  | 2,847,005   |   |  |                                | 85     |   |                    |   | 2,846,920  |                              |  |   | -                              |  |  |                           | -       
|Warrants issued as share
    offering costs                                        |  |                     | - |  |                  |   | - |                   |  |  | -           |   |  |                                | -      |   |                    |   | -          |                              |  |   | 117,765                        |  |  |                           | -       
|Common shares issued
    for cash                                                  |  |                     | - |  |                  |   | - |                   |  |  | 2,000,047   |   |  |                                | 61     |   |                    |   | 1,999,972  |                              |  |   | -                              |  |  |                           | -       
|Share offering costs
    including cash, stock and warrants                        |  |                     | - |  |                  |   | - |                   |  |  | -           |   |  |                                | -      |   |                    |   | (3,218,271 | )                            |  |   | -                              |  |  |                           | -       
|Par value adjustment
    for stock split (33.333:1)                                |  |                     | - |  |                  |   | - |                   |  |  | -           |   |  |                                | 67,864 |   |                    |   | (67,864    | )                            |  |   | -                              |  |  |                           | -       
|Net
    loss for the period                                                        |  |                     | - |  |                  |   | - |                   |  |  | -           |   |  |                                | -      |   |                    |   | -          |                              |  |   | -                              |  |  |                           | -       
|                                                                                   |  |                     |   |  |                  |   |   |                   |  |  |             |   |  |                                |        |   |                    |   |            |                              |  |   |                                |  |  |                           |         
|Balance, December
    31, 2012                                                     |  |                     | 1 |  |                  |   | - |                   |  |  | 69,963,434  |   |  |                                | 69,963 |   |                    |   | 37,370,516 |                              |  |   | 117,765                        |  |  |                           | -       
|                                                                                   |  |                     |   |  |                  |   |   |                   |  |  |             |   |  |                                |        |   |                    |   |            |                              |  |   |                                |  |  |                           |         
|Shares issued for acquisition
    of subsidiary                                    |  |                     | - |  |                  |   | - |                   |  |  | 1,000,000   |   |  |                                | 1,000  |   |                    |   | 659,000    |                              |  |   | -                              |  |  |                           | -       
|Common shares issued
    for consulting                                            |  |                     | - |  |                  |   | - |                   |  |  | 1,188,548   |   |  |                                | 1,189  |   |                    |   | 112,061    |                              |  |   | -                              |  |  |                           | -       
|Common shares issued
    for  mineral  exploration costs                           |  |                     | - |  |                  |   | - |                   |  |  | 5,000       |   |  |                                | 5      |   |                    |   | 2,745      |                              |  |   | -                              |  |  |                           | -       
|Shares issued for compensation-directors                                           |  |                     | - |  |                  |   | - |                   |  |  | 50,000      |   |  |                                | 50     |   |                    |   | 4,450      |                              |  |   | -                              |  |  |                           | -       
|Shares issued for compensation-officer                                             |  |                     | - |  |                  |   | - |                   |  |  | 2,382,852   |   |  |                                | 2,383  |   |                    |   | 202,617    |                              |  |   | -                              |  |  |                           | -       
|Shares issued in connection
    with note payable                                  |  |                     | - |  |                  |   | - |                   |  |  | 50,000      |   |  |                                | 50     |   |                    |   | 5,450      |                              |  |   | -                              |  |  |                           | -       
|Debt discount on issuance
    of convertible note                                  |  |                     | - |  |                  |   | - |                   |  |  | -           |   |  |                                | -      |   |                    |   | 20,694     |                              |  |   | -                              |  |  |                           | -       
|Warrants issued in connection
    with convertible note                            |  |                     | - |  |                  |   | - |                   |  |  | -           |   |  |                                | -      |   |                    |   | -          |                              |  |   | 12,007                         |  |  |                           | -       
|Stock options-director
    and officer                                             |  |                     | - |  |                  |   | - |                   |  |  | -           |   |  |                                | -      |   |                    |   | 993,523    |                              |  |   | -                              |  |  |                           | -       
|Non-controlling interest
    on acquisition of subsidiary                          |  |                     | - |  |                  |   | - |                   |  |  | -           |   |  |                                | -      |   |                    |   | -          |                              |  |   | -                              |  |  |                           | 466,063 
|Additional capital contributions
    by non-controlling interest                   |  |                     | - |  |                  |   | - |                   |  |  | -           |   |  |                                | -      |   |                    |   | -          |                              |  |   | -                              |  |  |                           | 160,150 
|Cancellation of stock options-director                                             |  |                     | - |  |                  |   | - |                   |  |  | -           |   |  |                                | -      |   |                    |   | (741,766   | )                            |  |   | -                              |  |  |                           | -       
|Deemed dividend related
    to acquisition of mining option and exploration rights |  |                     | - |  |                  |   | - |                   |  |  | -           |   |  |                                | -      |   |                    |   | -          |                              |  |   | -                              |  |  |                           | -       
|Non
                                         controlling interest                  |  |                     |   |  |                  |   |   |                   |  |  |             |   |  |                                |        |   |                    |   |            |                              |  |   |                                |  |  |                           | (216,251
|Net
    loss for the period                                                        |  |                     | - |  |                  |   | - |                   |  |  | -           |   |  |                                | -      |   |                    |   | -          |                              |  |   | -                              |  |  |                           |         
|                                                                                   |  |                     |   |  |                  |   |   |                   |  |  |             |   |  |                                |        |   |                    |   |            |                              |  |   |                                |  |  |                           |         
|Balance, December
    31, 2013                                                     |  |                     | 1 |  |                  | $ | - |                   |  |  | 74,639,834  |   |  | $                              | 74,640 |   |                    | $ | 38,629,290 |                              |  | $ | 129,772                        |  |  | $                         | 409,962 



The accompanying notes are an integral
part of these financial statements.





F-5









BRAZIL MINERALS,
INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2013
AND

FOR THE PERIOD FROM MARCH 1, 2012 TO
DECEMBER 31, 2012



|                                                                                                   |  | For
    the year ended December 31, 2013 |            |   | For
    the period from March 1, 2012 to  December 31, 2012 |  
|-------------------------------------------------------------------------------------------------- |  | ---------------------------------------- | ---------- | - | ----------------------------------------------------------- | -
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                              |  |                                          |            |   |                                                             |  
|Loss
                                         for the period attributable to Brazil Minerals, Inc. |  | $                                        | (1,513,379 | ) |                                                             | $
|Net loss
    from discontinuing operations                                                         |  |                                          | -          |   |                                                             |  
|Net loss from continuing operations                                                                |  |                                          | (1,513,379 | ) |                                                             |  
|Adjustments to Reconcile Net
    Loss to Net Cash Used in Operating Activities:                    |  |                                          |            |   |                                                             |  
|Non-controlling interest in
    income of subsidiary                                               |  |                                          | (216,251   | ) |                                                             |  
|Stock issued for mineral property
    option                                                       |  |                                          | 2,749      |   |                                                             |  
|Stock based compensation                                                                           |  |                                          | 504,897    |   |                                                             |  
|Amortization of debt discount                                                                      |  |                                          | 20,138     |   |                                                             |  
|Depreciation                                                                                       |  |                                          | 433        |   |                                                             |  
|Change in assets and liabilities:                                                                  |  |                                          |            |   |                                                             |  
|(Increase) in taxes recoverable                                                                    |  |                                          | (43,224    | ) |                                                             |  
|(Increase) in loan receivable-related
    party                                                    |  |                                          | (40,650    | ) |                                                             |  
|(Increase) in deposits                                                                             |  |                                          | (5,501     | ) |                                                             |  
|(Increase) in inventory                                                                            |  |                                          | 350,830    |   |                                                             |  
|Increase
    in accrued expenses and accounts payable                                              |  |                                          | 88,664     |   |                                                             |  
|Net Cash Provided (Used) by
    Continuing Operating Activities                                    |  |                                          | (851,294   | ) |                                                             |  
|Net Cash
    Used in Discontinued Operations                                                       |  |                                          | -          |   |                                                             |  
|Net Cash
    Provided (Used) in Operating Activities                                               |  |                                          | (851,294   | ) |                                                             |  
|                                                                                                   |  |                                          |            |   |                                                             |  
|CASH FLOWS FROM INVESTING
    ACTIVITIES:                                                          |  |                                          |            |   |                                                             |  
|Acquisition of capital asset                                                                       |  |                                          | (3,413     | ) |                                                             |  
|Advances
    to related party                                                                      |  |                                          | -          |   |                                                             |  
|Net Cash
    Used in Investing Activities                                                          |  |                                          | (3,413     | ) |                                                             |  
|                                                                                                   |  |                                          |            |   |                                                             |  
|CASH FLOWS FROM FINANCING
    ACTIVITIES:                                                          |  |                                          |            |   |                                                             |  
|Loan from director                                                                                 |  |                                          | 539        |   |                                                             |  
|Net proceeds from sale of
    common stock                                                         |  |                                          | -          |   |                                                             |  
|Cash paid for share offering
    costs                                                             |  |                                          | -          |   |                                                             |  
|Cash acquired on acquisition
    of subsidiary                                                     |  |                                          | 56,914     |   |                                                             |  
|Capital contributions received
    from non-controlling interests                                  |  |                                          | 165,550    |   |                                                             |  
|Proceeds
    from note payable                                                                     |  |                                          | 100,000    |   |                                                             |  
|Net Cash Provided by Continuing
    Financing Activities                                           |  |                                          | 323,003    |   |                                                             |  
|Net Cash
    Provided by Discontinued Financing Activities                                         |  |                                          | -          |   |                                                             |  
|Net Cash
    Provided by Financing Activities                                                      |  |                                          | 323,003    |   |                                                             |  
|                                                                                                   |  |                                          |            |   |                                                             |  
|Effect
    of exchange rate changes on cash                                                        |  |                                          | (226,700   | ) |                                                             |  
|                                                                                                   |  |                                          |            |   |                                                             |  
|Net Increase (decrease) in
    Cash and Cash Equivalents                                           |  |                                          | (758,404   | ) |                                                             |  
|                                                                                                   |  |                                          |            |   |                                                             |  
|Cash and
    equivalents, beginning of period                                                      |  |                                          | 863,189    |   |                                                             |  
|                                                                                                   |  |                                          |            |   |                                                             |  
|Cash
    and equivalents, end of period                                                            |  | $                                        | 104,785    |   |                                                             | $
|                                                                                                   |  |                                          |            |   |                                                             |  
|SUPPLEMENTAL CASH FLOW
    INFORMATION:                                                            |  |                                          |            |   |                                                             |  
|Cash
    paid for interest                                                                         |  | $                                        | 0          |   |                                                             | $
|Cash
    paid for income taxes                                                                     |  | $                                        | 0          |   |                                                             | $
|                                                                                                   |  |                                          |            |   |                                                             |  
|SUPPLEMENTAL NON-CASH
    INVESTING AND FINANCING INFORMATION:                                     |  |                                          |            |   |                                                             |  
|Loan
    receivable converted to interest in mineral property rights                               |  | $                                        | 800,000    |   |                                                             | $
|Shares issued for acquisition
    of 55% of subsidiary                                             |  | $                                        | 660,000    |   |                                                             | $
|Debt
    discount on convertible notes                                                             |  | $                                        | 32,701     |   |                                                             | $
|Stock
    and warrants issued as share offering costs                                              |  | $                                        | 0          |   |                                                             | $
|Forgiveness
    of shareholder debt recorded as contributed capital                                |  | $                                        | 0          |   |                                                             | $
|Stock
    options issued with convertible notes                                                    |  | $                                        | 5,500      |   |                                                             | $



The accompanying notes are an integral part
of these financial statements.





F-6











BRAZIL MINERALS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013



NOTE 1 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES



Organization and Description of Business

Brazil Minerals, Inc. (“BMIX”
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, through subsidiaries, mines and sells diamonds and gold, and owns or has options on other mineral assets
in Brazil.



On December 18, 2012, the Company
entered into and consummated an acquisition agreement with Brazil Mining, Inc. (“BMI”) whereby BMI agreed to
transfer to the Company certain mining and exploration rights, in exchange for 35,783,342 shares of the Company. At the same
time, the previous sole director surrendered for voluntary cancellation, 99,999,000 common shares of stock of the Company
such that, upon the transaction and a simultaneous private placement by the Company of its common stock, BMI owned 51% of the
outstanding common stock of the Company. The Company changed its name to Brazil Minerals, Inc. on December 24, 2012.Also see Note 3.





Principles of Consolidation

These financial statements include
the accounts of the Company and its 99.99% subsidiary, BMIX Participações Ltda. (“BMIXP”), which owns
55% of Mineração Duas Barras Ltda. (“MDB”). All material intercompany accounts and transactions have
been eliminated in consolidation.



Basis of Presentation

The financial statements of
the Company have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles
(“GAAP accounting”) in the United States of America and are presented in U.S. dollars.  In 2013, the Company elected to change its year end date from February 28 to December 31.





Fair Value of Financial Instruments

The Company’s financial instruments
consist of cash and cash equivalents, loans, 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 these financial statements.



Cash and Cash Equivalents

The Company considers all highly liquid
instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held
for investment purposes. The Company's bank accounts are deposited in insured institutions. The funds held in U.S. banks are insured
up to $250,000, and funds held in Brazilian banks are insured up to 250,000 Brazilian reais (approximately $106,719 as of December
31, 2013). As of December 31, 2013 and 2012, the Company’s bank deposits were $104,785 and $863,189, respectively.



Revenue Recognition

The Company recognizes revenues from diamond sales when
delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has
been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection
of any related receivable is probable.



The Company recognizes revenues from gold sales when delivery
of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved
by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any
related receivable is probable.





Inventory

Inventory consists of diamonds and gold and related production costs, and is stated at lower of cost or
market.





F-7











BRAZIL MINERALS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013



NOTE 1 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)



Mineral Properties

Costs of exploration, carrying
and retaining unproven mineral lease properties are expensed as incurred. Mineral property acquisition costs are capitalized including
licenses and lease payments. Although the Company has taken steps to verify title to mineral properties in which it has an interest,
these procedures do not guarantee the Company's rights. Such properties may be subject to prior agreements or transfers and title
may be affected by undetected defects.



Impairment losses are recorded on mineral
properties used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated
by those assets are less than the assets’ carrying amount. As of December 31, 2013 and 2012, the Company did not recognize
any impairment losses related to mineral properties held.



Capital Assets

Capital assets consisting of the diamond
and gold processing plant and other machinery are recorded at cost and depreciated over their estimated useful life of 10 years,
on a straight-line basis. Capital assets consisting of computer and other office equipment are recorded at cost and depreciated
over their estimated useful life of 3 years, on a straight-line basis. During the year ended December 31, 2013, depreciation expense
of $59,077 had been capitalized to inventory and expensed through exploration and production costs and $433 had been expensed through
depreciation expenses.



Basic Income (Loss) Per Share

The Company computes loss per share in
accordance with FASB ASC 260, which requires presentation of both basic and diluted earnings per share on the face of the statement
of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number
of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding
during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.



Dividends

The Company has not adopted any policy
regarding payment of dividends. No dividends have been paid during any of the periods shown.



Income Taxes

The Company follows the liability method
of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated
tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis
(temporary differences). The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date.



Impairment of Long-Lived Assets

The Company continually monitors events
and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events
or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the
carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash
flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying
amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair
value less costs to sell.



F-8









BRAZIL MINERALS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013



Use of Estimates

The preparation of financial statements
in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements
and the reported amount of revenues and expenses during the reporting period.  Actual results could differ from those
estimates.



Stock-Based Compensation

Stock-based compensation is accounted
for at fair value in accordance with FASB ASC 718. The Company has adopted a stock plan to attract, retain and motivate its directors,
officers, employees, consultants and advisors. The Company’s stock plan provides for the issuance of up to 15,000,000 common
shares for employees, consultants, directors, and advisors. The Company issued $504,897 and $Nil in stock based compensation to
employees, consultants, directors, and advisors during the years ended December 31, 2013 and 2012, respectively.



Recent Accounting Pronouncements

The Company has reviewed all recent
accounting pronouncements issued to the date of the issuance of these financial statements, and the Company does not believe
any of these pronouncements will have a material impact on the Company.



NOTE 2 – LOAN RECEIVABLE-RELATED PARTY AND OPTION EXERCISE



In 2012, the Company issued a loan
receivable to BMI for $800,000. The loan was non-interest bearing and had no specified terms of repayment and was an advance related
to the exercise of an option agreement held by the Company for a 20% share of the MDB diamond production. On January 2, 2013,
the Company exercised the option and the advance was deemed payment of the option. The option granted the Company 20% of the diamond
production with respect to BMI’s 55% interest in MDB.



NOTE 3 –ACQUISITION OF MDB INTEREST



On March 23, 2013, upon approval
by its Board of Directors, the Company entered into an agreement pursuant to which BMI sold to BMIXP the rights to all
profits, losses and appreciation or depreciation and all other economic and voting interests of any kind in respect of the
BMI’s interest in MDB in exchange for the issuance to BMI of 1,000,000 shares of the Company’s common stock. The
shares were valued at their fair market value of $0.66 per share as of March 23, 2013, the date that the agreement was
entered into. As a result of the acquisition, a deemed dividend of $800,000 was recorded related to the acquisition of the
option as discussed in Note 2. The net assets of MDB at the date of the acquisition of the 55% equity interest in MDB were
$1,035,695. The acquisition was accounted for using the purchase method. As a result of the transaction, non-controlling
interest of $460,663 was recognized in the financial statements.



The net assets upon the above acquisition consisted of the following:





|Cash                |  | $ | 56,914    |  
|------------------- |  | - | --------- | -
|Inventory           |  |   | 497,002   |  
|Equipment           |  |   | 508,105   |  
|Intangible assets   |  |   | 163,918   |  
|Liabilities assumed |  |   | (190,244  | )
|                    |  |   |           |  
|Net assets          |  | $ | 1,035,695 |  







F-9







BRAZIL MINERALS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013



NOTE 4 – CONVERTIBLE PROMISSORY
NOTES PAYABLE



On September 30, 2013, the Company issued and sold to two accredited investors for $100,000 four units
of securities, each unit consisting of a $25,000 convertible promissory note and warrants to purchase 50,000 shares of the Company’s
common stock until December 31, 2019. The notes bear interest at 10% per annum and are due on the earlier of the close of a $100,000
financing or May 31, 2014. The notes can be converted into common shares of the Company at $0.125 per share. The conversion price
of the warrants is $0.15 per share. The Company recorded a debt discount of $53,701 related to the issuance of the convertible
notes. As of December 31, 2013, $20,138 of the debt discount has been amortized during the life of the notes.





The total debt discount was comprised of the debt discount related to the warrants, the convertible notes,
and stock and cash given in exchange for issuing the convertible notes. The fair value of the debt discount related to the warrants
granted was $12,007 and was calculated using the Black-Scholes option pricing model with the following assumptions: the Company’s
common stock price on date of grant ($0.11), expected dividend yield of 0%, expected volatility of 76.15%, risk-free interest rate
of 1.43%, and expected term of 6.25 years. The fair value of the debt discount related to the convertible notes was $20,694 and
was calculated using the Black-Scholes option pricing model with the following assumptions: the Company’s common stock price
on the date of grant ($0.11), expected dividend yield of 0%, expected volatility of 87.67%, risk-free interest rate of 0.07%, and
expected term of .67 years. The fair value of the stock and cash given in consideration for issuing the convertible notes was $11,000
and $10,000, respectively. The convertible notes called for the payment of one-half of the stock and cash upon issuing the notes
and the remainder upon the repayment of the notes. As of December 31, 2013, $5,500 in stock and $5,000 in cash had been satisfied
and the remainder due is reflected in accounts payable.



NOTE 5 – LOANS FROM DIRECTORS



During the period ended December
31, 2012, the former director loaned $6,169 to the Company to pay for business expenses. The loan was non-interest bearing, due
upon demand and unsecured. The loan was forgiven on December 19, 2012 and the balance has been recorded as an increase in additional
paid-in capital.



On December 19, 2012,
a director loaned $100 to the Company to facilitate a bank account opening. This loan was non-interest bearing, due upon demand
and unsecured. The balance due to the director was $100 as of December 31, 2012. This loan was repaid in 2013.



During the year
ended December 31, 2013, a director loaned $80 to the Company to facilitate a bank account opening. During the period, a
director paid expenses of $559 on behalf of the Company. These loans are non-interest bearing, due upon demand and
unsecured.



NOTE 6 – COMMON STOCK



As of December 31, 2013, the Company had
150,000,000 common shares authorized with a par value of $0.001 per share and 10,000,000 series A preferred stock authorized with
a par value of $0.001.



On January 18, 2012, the Company issued
99,999,000 shares of its common stock for total proceeds of $3,000. For the period from January 24, 2012 to February 14, 2012,
the Company issued 23,999,760 shares of its common stock for total proceeds of $14,400. For the period from February 21, 2012 to
February 29, 2012, the Company issued 5,333,280 shares of its common stock for total proceeds of $4,800.





F-10









BRAZIL MINERALS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013



NOTE 6 – COMMON STOCK (continued)



On December 18, 2012, a shareholder and
former director of the Company surrendered for voluntary cancellation 99,999,000 shares of common stock of the Company.



On December 18, 2012, the Company issued
35,783,342 shares of its common stock in exchange for an assignment of certain exploration rights and a mining property option.



On December 19, 2012, the Company consummated a private placement with 37 accredited investors and the
Company issued 2,000,047 shares of the Company’s common stock for total consideration of $2,000,033.



As part of the private placement, 2,847,005
shares of common stock were issued as part of share offering costs.



Pursuant to the issuance of shares in the
private placement, the Company incurred costs related to the share issuance of $3,218,171. Of this $253,500 was paid in cash and
the balance of $2,964,771 was paid through the issuance of shares and warrants with a deemed value of $2,847,005 and $117,765,
respectively.



On December 18, 2012, the Company amended its Articles of Incorporation to authorize 10,000,000 shares
of series A convertible preferred stock. On December 18, 2012, the Company issued and sold for $1.00, one share of series A convertible
preferred stock.



The Company amended its articles of incorporation
to increase the authorized common stock to 150,000,000 shares. On January 22, 2013, the Company declared a 33.333:1 stock dividend
(treated as a stock split) payable to shareholders of record as of January 25, 2013. All share and per share data has been retrospectively
adjusted for the stock split.



On April 30, 2013, the Company issued
1,000,000 shares of common stock to BMI pursuant to an agreement to purchase BMI’s equity interest in MDB. The shares were
valued at $660,000, the fair market value of the shares on the date the agreement was entered into.



On May 28, 2013, the Company issued 5,000
shares of common stock with a deemed value of $2,750 pursuant to an option agreement on a mineral property. The Company has since
abandoned the option.



On September 30, 2013, the Company issued
50,000 shares of common stock with a deemed value of $5,500 pursuant to the issuances of convertible notes. An additional 50,000
shares of common stock are to be issued when the debt has been repaid. The deemed value of these shares of $5,500 has been recorded
as an accrued liability until they have been issued. See note 5.



On November 25, 2013, the Company issued
300,000 shares of common stock with a deemed value of $27,000 for consulting services. Prepaid stock compensation of $22,500 was
recorded to be amortized over the remaining term of the consulting contract.



On November 30, 2013, the Company issued
50,000 shares to non-management directors with a deemed value of $4,500.





F-11









BRAZIL MINERALS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013



NOTE 6 – COMMON STOCK (continued)



On December 6, 2013, the Company issued
400,000 shares of common stock with a deemed value of $32,000 for consulting services. Prepaid stock compensation of $23,111 was
recorded to be amortized over the remaining term of the consulting contract.



On December 9, 2013, the Company issued
400,000 shares of common stock with a deemed value of $36,000 for consulting services. Prepaid stock compensation of $24,000 was
recorded to be amortized over the remaining term of the consulting contract.



During the period ended December 31, 2013,
the Company issued 2,000,000 shares to an officer and director of the Company pursuant to a stock based compensation with a deemed
value of $180,000 In addition the Company issued 382,852 shares of common stock to an officer in lieu of cash compensation of $25,000.



During the period ended December 31, 2013,
the Company issued 88,548 shares of common stock with a deemed value of $18,250 for consulting services, mostly related to geological
studies and analysis.



Common Stock Options



On April 18, April 23, and November 30,
2013, the Board of Directors of the Company granted options to purchase an aggregate of 2,400,000, 200,000, and 600,000, respectively,
shares of common stock to non-management directors and an officer. The options were valued at $890,119 $69,711, and $33,691, respectively,
using the Black-Scholes option pricing model with the following assumptions:



|                        |  | April 18, 2013 |  | April 23, 2013 |  | November 30, 2013
|----------------------- |  | -------------- |  | -------------- |  | -----------------
|Stock price             |  | $0.60          |  | $0.57          |  | $0.09            
|Exercise price          |  | $0.58          |  | $0.57          |  | $0.09            
|Expected life (years)   |  | 5 years        |  | 5 years        |  | 5 years          
|Risk free interest rate |  | .71%           |  | .71%           |  | 1.37%            
|Volatility              |  | 76%            |  | 76%            |  | 77%              



On November 30, 2013, the Board of
Directors of the Company rescinded and cancelled the grant to the Chief Executive Officer of 2,000,000 options with a deemed
value of $741,766, and instead issued to him 2,000,000 shares with a deemed value of $180,000. This resulted in a net
reversal of stock-based compensation of $561,766.



Common Stock Warrants



During the year ended December 31, 2013, 200,000 warrants were
issued in connection with convertible notes. These warrants expire on December 31, 2019 and have an exercise price of $0.15. The
fair value of the warrants was $12,007 and was calculated using the Black-Scholes option pricing model with the following assumptions:
the Company’s common stock price on date of grant ($0.11), expected dividend yield of 0%, expected volatility of 76.15%, risk-free interest rate
of 1.43%, and expected term of 6.25 years.



During the year ended December 31, 2012, 200,000 warrants
were issued as part of the private placement that occurred on December 19, 2012. These warrants expire on December 31, 2017
and have an exercise price of $1.00. The fair value of the warrants was $117,765 and was calculated using the Black-Scholes
option pricing model with the following assumptions: the Company’s common stock price on date of grant  ($1.00),
expected dividend yield of 0%, expected volatility of 72.24%, risk-free interest rate of 0.78%, and expected term of 5
years.





F-12









BRAZIL MINERALS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013



NOTE 7 – COMMITMENTS AND CONTINGENCIES



The Company leases an office in Pasadena,
California, and has had use of offices in Belo Horizonte andSão Paulo, Brazil, through an agreement with an affiliate. Such costs are immaterial to the financial statements
and accordingly are not reflected herein.







NOTE 8 - INCOME TAXES



As of December 31, 2013, the Company had
net operating loss carry forwards of approximately $1,729,630 that may be available to reduce future years’ taxable income
through 2032. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements,
and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.



The provision for Federal income tax consists
of the following for the periods ended December 31, 2013 and December 31, 2012.



|                                            |  | December
31, 2013 |          |   | December
31, 2012 |  
|------------------------------------------- |  | ----------------- | -------- | - | ----------------- | -
|Federal income tax benefit attributable to: |  |                   |          |   |                   |  
|Current Operations                          |  | $                 | 588,074  |   |                   | $
|Less: valuation allowance                   |  |                   | (588,074 | ) |                   |  
|Net provision for Federal income taxes      |  | $                 | 0        |   |                   | $





The cumulative tax effect at the expected rate of 34% of significant items comprising the Company’s
net deferred tax amount is as follows as of December 31, 2013 and December 31, 2012:



|                                    |  | December
31, 2013 |          |   | December
31, 2012 |  
|----------------------------------- |  | ----------------- | -------- | - | ----------------- | -
|Deferred tax asset attributable to: |  |                   |          |   |                   |  
|Net operating loss carryover        |  | $                 | 648,993  |   |                   | $
|Less: valuation allowance           |  |                   | (648,993 | ) |                   |  
|Net deferred tax asset              |  | $                 | 0        |   |                   | $



Due to the change in ownership provisions
of the Tax Reform Act of 1986, net operating loss carry forwards of $1,729,630 for Federal income tax reporting purposes are subject
to annual limitations. Should a change in ownership occur net operating loss carry forwards may be limited as to use in future
years.



F-13









BRAZIL MINERALS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013



NOTE 9 - RELATED PARTY TRANSACTIONS



On January 18, 2012, the Company issued
99,999,000 shares of its common stock for total proceeds of $3,000. On December 18, 2012, these shares were returned for voluntary
cancellation.



During the period ended December
31, 2012, the former director loaned $6,169 to the Company to pay for business expenses. The loan was non-interest bearing, due
upon demand and unsecured. The loan was forgiven on December 19, 2012 and the balance has been recorded as an increase in additional
paid-in capital.



On December 19, 2012, a director
loaned $100 to the Company to facilitate the bank account opening. The loan is non-interest bearing, due upon demand and unsecured.
The balance due to the director was $100 as of December 31, 2012. This loan was repaid in 2013.



Pursuant to the issuance of shares in
the 2012 private placement, the Company incurred costs related to the share issuance of $3,218,171. Of this $253,500 was paid
in cash and the balance of $2,964,771 was paid through the issuance of shares and warrants with a deemed value of $2,847,005
and $117,765, respectively.



As of December 31, 2012, accrued compensation
owing to a director of the Company in the amount of $50,000 was included in accrued expenses.



In December 2012, pursuant to an
option purchase agreement between the Company and BMI, the Company advanced $800,000. On January 2, 2013, the Company
exercised the option and the advance was deemed payment of the option. The option granted the Company 20% of the diamond
production with respect to BMI’s 55% interest in MDB. On March 23, 2013, upon approval by its Board of Directors, the
Company entered into an agreement pursuant to which BMI sold to BMIXP the rights to all profits, losses and appreciation or
depreciation and all other economic and voting interests of any kind in respect of the BMI’s interest in MDB in
exchange for the issuance to BMI of 1,000,000 shares of the Company’s common stock. The shares were valued at their
fair market value of $0.66 per share as of March 23, 2013, the date that the agreement was entered into. As a result of the
acquisition, a deemed dividend of $800,000 was recorded related to the acquisition of the option. See Note 3.



On January 1, 2013, the Company and BMI
entered into an administrative services agreement under which BMI provided, at cost, to the Company personnel and facilities to
carry out certain of the Company’s business activities in Brazil. This agreement was terminated in 2013 as the Company implemented
its infrastructure in Brazil. The total amount provided to BMI during the year ended December 31, 2013 was $228,463.



During the year ended December
31, 2013, the Board of Directors of the Company authorized it to loan $40,650 to BMI. The total due from BMI as of December 31,
2013 is $40,650, and the Company expects that the entirety of this amount will be received in 2014.



During the year ended
December 31, 2013, a director loaned $80 to the Company to facilitate a bank account opening. During the period, a director
paid expenses of $559 on behalf of the Company. These loans are non-interest bearing, due upon demand and unsecured.





F-14









BRAZIL MINERALS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013



NOTE 10 - DISCONTINUED OPERATIONS



As a result of the change in control transaction
on December 18, 2012, the Company has abandoned its technology related business. A summary of operations related to the discontinued
operation is presented in the table below:



|                                                           |  | For the year
ended
December
31, 2013 |   |  | For the
period from
March 1,
2012 to
December
31, 2012 |  
|---------------------------------------------------------- |  | ------------------------------------ | - |  | ------------------------------------------------------ | -
|Revenue from discontinued operations                       |  | $                                    | 0 |  |                                                        | $
|Net loss from discontinued operations                      |  |                                      | 0 |  |                                                        |  
|Net loss per share attributable to discontinued operations |  | $                                    | 0 |  |                                                        | $



NOTE 11 - SUBSEQUENT EVENTS



In accordance with FASB ASC 855-10, the
Company has analyzed its operations subsequent to
December 31, 2013 to the date these financial statements were issued, and has determined that it does not have any material subsequent
events to disclose in these financial statements, except as noted below.



On January 2, 2014, the Company received proceeds
of $25,000 from a sale of polished and graded diamonds pursuant to an agreement with a buyer in which the buyer agreed to receive
these diamonds over a period of time.



On January 7, 2014, the Company received
$244,000 in exchange for a senior secured convertible promissory note in the principal amount of $244,000 and warrants to purchase
an aggregate of 488,000 shares of the Company’s common stock through December 26, 2018. The notes bear interest at 12% per
annum and may be converted into common stock at $0.125 per share, a premium of 42% above the stock price at the time the transaction
was entered into. The exercise price of the warrants is $0.125 per share (subject to adjustment upon the occurrence of certain
events), a premium of 79% above the stock price at the time. Interest on the note is payable on September 30, 2014 and on
March 31, 2015, the maturity date of the note. The note is secured by certain capital equipment purchased by us with the proceeds
received. This equipment is now being used in MDB and is comprised of an excavator, a bulldozer, a truck, a portable motor and
generator, and other items. Besides this capital equipment, the note is secured by a pledge of common stock the Company having
a value of 200% of the outstanding principal and accrued interest of the note. The note is repaid by depositing $20,000 monthly
to a sinking fund. As of April 3, 2014, the Company had deposited $40,000 into the sinking fund, and the Company’s sinking
fund obligation was current.



F-15









BRAZIL MINERALS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013



NOTE 11 - SUBSEQUENT EVENTS (continued)



On January 24, 2014, the Company received proceeds of $25,000 from an investment by an accredited investor
in exchange for an unsecured convertible promissory note in the principal amount of $27,500. The note bears interest at the rate
of 10% per annum. The note must be converted by the holder (unless repaid by us) by December 31, 2014. The note may also be converted
into the Company’s common stock at the option of the holder commencing 180 days after the note was issued. The Company retains
the option, but not the obligation, to repay the note in cash. The conversion price is the
lesser of (a) $0.07 or (b) 60% of the lowest daily volume weighted average price of the Company’s common stock during the
twenty trading days immediately prior the applicable date on which the holder of the note elects to convert all or part of the
note.



On February 21, 2014, the Company received proceeds of $200,000 from an investment by St. George Investments,
LLC (“St. George”) in exchange for an unsecured convertible promissory note in the principal amount of $222,500. The
difference between the face amount of the note and the gross proceeds received was comprised of legal costs and origination discount.
The note bears interest at 10% per annum and the conversion price is $0.11 per share, a premium of 38% above the stock price when
the transaction was consummated. Principal and accrued interest on the note are due in five consecutive monthly installments of
$44,500 plus accrued interest commencing on August 21, 2014. The monthly installments are payable in cash or in common stock, at
the option of the Company, or in graded diamonds, upon the request of St. George. All principal and accrued interest on the note
is payable on December 21, 2014.



On March 4, 2014, the Company received proceeds of $500,000 from a sale of polished and GIA graded diamonds
pursuant to an agreement with two buyers that agreed to receive these diamonds over a period of one year. As part of this transaction,
the Company pledged with a third party collateral agent an aggregate of 11,000,000 shares of the Company’s common stock,
valued at approximately $990,000 at the time the transaction was consummated, in order to secure the delivery of the diamonds.
The number of shares pledged is subject to periodic adjustment as diamonds are delivered and as the market price of the Company’s
common stock may change. The Company also issued to the buyers two-year options to purchase an aggregate of 3,000,000 shares of
the Company’s common stock at an exercise price (subject to adjustment upon the occurrence of certain events) of $0.12 per
share, a premium of 33% above the stock price when the transaction was consummated.



On March 31, 2014, the Company received net proceeds of $54,000, after compensation paid to a broker-dealer,
from an investment by an accredited investor in exchange for an unsecured convertible promissory note in the principal amount of
$63,000. The note bears interest at the rate of 10% per annum. The note must be converted by the holder (unless repaid by us) by
March 31, 2015. The Company retains the option, but not the obligation, to repay the note in cash. The conversion price is the
lesser of (a) $0.11 or (b) 60% of the lowest closing price of the Company’s common stock during the twenty trading days prior
to the maturity date or the date that a notice of conversion is given by the holder.







F-16









SIGNATURES



Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.



|                    | BRAZIL MINERALS, INC.
|------------------- | ---------------------
|                    |                      
|                    | By:                  
|                    |                      
|Date: July 29, 2014 |                      



Pursuant to the requirements
of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.



|Signature                                    |  | Title                                                                                                               |  | Date         
|-------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------- |  | -------------
|                                             |  |                                                                                                                     |  |              
|/s/
    Marc Fogassa                         |  |                                                                                                                     |  |              
|Marc
    Fogassa                             |  | Chief Executive
    Officer                                                                                         |  | July 29, 2014
|                                             |  | and
                                         Director; Chief Financial
        Officer and Chief Accounting Officer |  |              
|                                             |  |                                                                                                                     |  |              
|/s/  Roger
    Noriega                       |  | Director                                                                                                            |  | July 29, 2014
|Roger
    Noriega                            |  |                                                                                                                     |  |              
|                                             |  |                                                                                                                     |  |              
|/s/
    Paul Durand                          |  | Director                                                                                                            |  | July 29, 2014
|Paul
    Durand                              |  |                                                                                                                     |  |              
|                                             |  |                                                                                                                     |  |              
|/s/  Luis
    Mauricio Ferraiuoli de Azevedo |  | Director                                                                                                            |  | July 29, 2014
|Luis
    Mauricio Ferraiuoli de Azevedo      |  |                                                                                                                     |  |              











EXHIBIT INDEX



|ExhibitNumber | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1           | Exchange Agreement dated as of March 23, 2013 between the Company and Brazil Mining. Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the “Commission”) on March 28, 2013.                                                                                                                                                                                                                                                                                                                                
|3.1           | Articles of Incorporation of the Company filed with the Secretary of State of Nevada on December 15, 2011. Incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 filed by the Company on April 6, 2012 (the “S-1”).                                                                                                                                                                                                                                                                                                                                                 
|3.2           | Certificate of Amendment to the Articles of Incorporation of the Company filed with the Secretary of State of the State of Nevada on December 18, 2012. Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on December 26, 2012 (the “December 2012 8-K”).                                                                                                                                                                                                                                                                           
|3.3           | Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock filed with the Secretary of State of the State of Nevada on December 18, 2012.  Incorporated by reference to Exhibit 3.2 to the December 2012 8-K.                                                                                                                                                                                                                                                                                                                                                   
|3.4           | Certificate of Amendment to the Articles of Incorporation of the Company filed with the Secretary of State of the State of Nevada on December 24, 2012. Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on January 28, 2013 (the “January 2013 8-K”).                                                                                                                                                                                                                                                                             
|3.5           | Certificate of Amendment to the Articles of Incorporation of the Company filed with the Secretary of State of the State of Nevada on January 24, 2013. Incorporated by reference to Exhibit 3.2 to the January 2013 8-K.                                                                                                                                                                                                                                                                                                                                                                         
|3.6           | By-laws of the Company. Incorporated by reference to Exhibit 3.2 to the S-1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4.1           | Senior
                                         Secured Convertible Promissory Note of the Company dated September 30, 2013 in the principal
                                         amount of $75,000 to the order of Heather U. Baines and Lloyd McAdams AB Living Trust
                                         dated 8/1/2001. Incorporated by reference to Exhibit 4.1 to Amendment No. 1 to the Company’s
                                         Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (the “2013
                                         10-K/A-1”).
|4.2           | Senior
                                         Secured Convertible Promissory Note of the Company dated September 30, 2013 in the principal
                                         amount of $75,000 to the order of Heather U. Baines and Lloyd McAdams AB Living Trust
                                         dated 8/1/2001. Incorporated by reference to Exhibit 4.1 to Amendment No. 1 to the Company’s
                                         Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (the “2013
                                         10-K/A-1”).
|4.3           | Stock Purchase Warrant to purchase 50,000 Shares
    of the Company’s Common Stock Issued to Michael Dimeo on September 30, 2013. Incorporated by reference to Exhibit 4.3
    to the 2013 10K/A-1.                                                                                                                                                                                                                                                                                                                                                                                              
|4.4           | Senior Secured Convertible Promissory Note
    of the Company dated January 8, 2014 in the principal amount of $244,000 to the order of Heather U. Baines and Lloyd McAdams
    AB Living Trust dated 8/1/2001. Incorporated by reference to Exhibit 4.4 to the 2013 10K/A-1.                                                                                                                                                                                                                                                                                                                    
|4.5           | Convertible
Promissory Note of the Company dated February 21, 2014 in the principal amount of $222,500 to the order of St George Investments,
LLC. Incorporated by reference to Exhibit 4.5 to the 2013 10K/A-1.                                                                                                                                                                                                                                                                                                                                                                                 
|4.6           | Option to Purchase 1,500,000 shares of the
    Company’s Common Stock Issued to the Nazari & Associates International Group, Inc. Defined Benefit Pension Plan
    on March 4, 2014. Incorporated by reference to Exhibit 4.6 to the 2013 10K/A-1.                                                                                                                                                                                                                                                                                                                                               
|4.7           | Option to Purchase 1,500,000 shares of the
    Company’s Common Stock Issued to the Suter Family Trust u/t/a April 12, 2002, as amended and restated on March 4, 2014.
    Incorporated by reference to Exhibit 4.7 to the 2013 10K/A-1.                                                                                                                                                                                                                                                                                                                                                         













|4.8  | Warrant
                                         to Purchase 488,000 Shares of the Company’s Common Stock Issued to Una Hannah,
                                         LP on January 8, 2014. Incorporated by reference to Exhibit 4.8 to the 2013 10K/A-1.                                                               
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.9  | Convertible
                                         Debenture of the Company dated March 28, 2014 in the principal amount of $63,000 to the
                                         order of Group 10 Holdings LLC. Incorporated by reference to Exhibit 4.9 to the 2013
                                         10K/A-1.
|10.1 | Acquisition Agreement dated as of December 18, 2012 between the Company, Antaniuk and Brazil Mining. Incorporated by reference to Exhibit 10.1 to the December 2012 8-K.                                                                                                                                                    
|10.2 | Assignment of Mineral Rights from Brazil Mining, Inc. to the Company, dated December 18, 2012. Incorporated by reference to Exhibit 10.2 to the December 2012 8-K.                                                                                                                                                          
|10.3 | Option Agreement between the Company and Brazil Mining, Inc., dated December 18, 2012. Incorporated by reference to Exhibit 10.3 to the December 2012 8-K.                                                                                                                                                                  
|10.4 | Contribution Agreement dated December 18, 2012
    between the Company and Brazil Mining, Inc. Incorporated by reference to Exhibit 10.4 to the 2013 10K/A-1.                                                                                                                                                               
|10.5 | Employment
Agreement between the Company and Marc Fogassa. Incorporated by reference to Exhibit 10.6 to the Annual Report on Form 10-K for
the fiscal year ended December 31, 2012 (the “2012 10-K”).                                                                                                                       
|10.6 | 2013 Stock Incentive Plan. Incorporated by reference to Exhibit 10.7 to the 2012 10-K.                                                                                                                                                                                                                                      
|10.7 | Securities Purchase Agreement dated as of February
    21, 2014 between the Company and St George Investments LLC. Incorporated by reference to Exhibit 10.7 to the 2013 10K/A-1.                                                                                                                                           
|21.1 | Subsidiaries of the Company. Incorporated by
    reference to Exhibit 21.1 to the 2013 10K/A-1.                                                                                                                                                                                                                             
|31.1 | Certification of the Chief Executive Officer pursuant to Section 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*                                                                                                                       
|31.2 | Certification of Chief Financial Officer pursuant to Section 15d-14(a) of the Securities
    Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*                                                                                                                       
|32.1 | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 135, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*                                                                                                                                          
|101  | Interactive
Data files pursuant to Rule 405 of Regulation S-T. Incorporated by reference to Exhibit 101 to the 2013 10K/A-1.                                                                                                                                                                                                



*Filed herewith