Atlas Lithium Corp 10-Q

Item 1 FINANCIAL STATEMENTS ATLAS LITHIUM CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, 2022 and December 31, 2021 September 30, December 31, 2022 2021 ASSETS Current assets: Cash and cash equivalents $ 418,263 $ 22,776 Accounts receivable 247 1,401 Taxes recoverable 17,086 16,507 Prepaid expenses - - Deposits and advances 25,968 17,246 Total current assets 461,564 57,930 Property and equipment, net 117,534 53,827 Intangible assets, net 4,829,276 1,302,440 Equity investments 150,000 150,000 Total assets $ 5,558,374 $ 1,564,197 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable and accrued expenses $ 2,922,439 $ 988,238 Related party notes and other payables 14,785 10,167 Total current liabilities 2,937,224 998,405 Other noncurrent liabilities 25,211 108,926 Total liabilities 2,962,435 1,107,331 Stockholders’ deficit: Series A preferred stock, $ 0.001 par value. 10,000,000 shares authorized; 1 share issued and outstanding as of September 30, 2022 and December 31, 2021, respectively 1 1 Series D preferred stock, $ 0.001 par value. 1,000,000 shares authorized; 214,006 issued and outstanding as of September 30, 2022 and December 31, 2021, respectively 214 214 Preferred stock Common stock, $ 0.001 par value. 4,000,000,000 and 3,250,000,000 shares authorized; 3,654,524,113 and 3,109,178,852 shares as of September 30, 2022 and December 31, 2021, respectively 3,654,524 3,109,179 Additional paid-in capital 55,614,243 51,466,376 Accumulated other comprehensive loss ( 687,951 ) ( 712,810 ) Accumulated deficit ( 57,388,127 ) ( 54,957,429 ) Total Atlas Lithium Corporation stockholders’ equity (deficit) 1,192,904 ( 1,094,469 ) Non-controlling interest 1,403,035 1,551,335 Total stockholders’ equity 2,595,939 456,866 Total liabilities and stockholders’ equity $ 5,558,374 $ 1,564,197 The accompanying notes are an integral part of the condensed consolidated financial statements. F- 1 Table of Contents ATLAS LITHIUM CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) For the Three and Nine Months Ended September 30, 2022 and 2021 2022 2021 2022 2021 Three months ended September 30 Nine months ended September 30 2022 2021 2022 2021 Revenue 3,301 2,984 6,145 9,088 Cost of revenue 27,534 27,382 63,732 74,476 Gross loss ( 24,233 ) ( 24,398 ) ( 57,587 ) ( 65,388 ) Operating expenses Professional fees 45,978 150,510 189,999 252,307 General and administrative 478,899 318,368 1,101,290 851,525 Compensation and related costs 172,730 47,272 559,319 227,741 Stock based compensation 386,287 191,185 1,029,476 1,228,598 Other operating expenses 163,800 - 184,221 - Total operating expenses 1,247,694 707,335 3,064,305 2,560,171 Loss from operations ( 1,271,927 ) ( 731,733 ) ( 3,121,892 ) ( 2,625,559 ) Other expense (income) Interest on promissory notes - 77,856 - 239,099 Amortization of debt discounts and other fees - 11,005 - 12,839 Extinguishment of debt - - - 224,812 Other expense (income) ( 1,917 ) ( 3 ) ( 3,883 ) ( 218 ) Total other expense ( 1,917 ) 88,858 ( 3,883 ) 476,532 Loss before provision for income taxes ( 1,270,010 ) ( 820,591 ) ( 3,118,009 ) ( 3,102,091 ) Provision for income taxes - - - - Net loss ( 1,270,010 ) ( 820,591 ) ( 3,118,009 ) ( 3,102,091 ) Loss attributable to non-controlling interest ( 241,818 ) ( 201,452 ) ( 687,311 ) ( 940,256 ) Net loss attributable to Atlas Lithium Corporation stockholders ( 1,028,192 ) ( 619,139 ) $ ( 2,430,698 ) $ ( 2,161,835 ) Basic and diluted loss per share Net loss per share attributable to Atlas Lithium Corporation common stockholders $ - $ - $ - $ - Weighted-average number of common shares outstanding: Basic and diluted 3,434,765,947 2,946,874,985 3,434,765,947 2,659,344,430 Comprehensive loss: Net loss $ ( 1,270,010 ) $ ( 820,591 ) $ ( 3,118,009 ) $ ( 3,102,091 ) Foreign currency translation adjustment ( 267,594 ) 6,794 38,870 25,498 Comprehensive loss ( 1,537,604 ) ( 813,797 ) ( 3,079,139 ) ( 3,076,593 ) Comprehensive loss attributable to noncontrolling interests ( 472,483 ) ( 185,647 ) ( 673,300 ) ( 940,450 ) Comprehensive loss attributable to Atlas Lithium Corporation stockholders $ ( 1,065,121 ) $ ( 628,150 ) $ ( 2,405,839 ) $ ( 2,136,143 ) The accompanying notes are an integral part of the condensed consolidated financial statements. F- 2 Table of Contents ATLAS LITHIUM CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED) For the Three Months Ended September 30, 2022 and 2021 Shares Value Shares Value Shares Value Capital Loss Deficit Interests (Deficit) Accumulated Total Series A Series D Additional Other Stockholders’ Preferred Stock Preferred Stock Common Stock Paid-in Comprehensive Accumulated Noncontrolling Equity Shares Value Shares Value Shares Value Capital Loss Deficit Interests (Deficit) Balance, June 30, 2021 1 $ 1 - $ - 2,925,793,327 $ 2,925,793 $ 49,932,050 $ ( 740,410 ) $ ( 53,727,767 ) $ 1,490,677 $ ( 119,656 ) Conversion of related party convertible notes and other indebtedness into Series D preferred stock - - 214,006 214 - - 641,804 - - - 642,018 Issuance of common stock in connection with the exercise of common stock options - - - - 26,086,958 26,087 123,913 - - - 150,000 Issuance of common stock warrants in connection with the issuance of convertible notes - - - - 83,863,837 83,864 ( 83,864 ) - - 1,950 1,950 Conversion of convertible notes and accrued interest payable into common stock - - - - - - - - - - - Issuance of common stock in exchange for consulting, professional and other services - - - - 14,954,949 14,955 136,592 - - - 151,547 Stock based compensation - - - - - - 191,185 - - - 191,185 Change in foreign currency translation - - - - - - - ( 9,011 ) - 15,805 6,794 Sale of Apollo Resources common stock in connection with equity offerings - - - - - - - 217,500 217,500 Net loss - - - - - - - - ( 619,139 ) ( 201,452 ) ( 820,591 ) Balance, September 30, 2021 1 $ 1 214,006 $ 214 3,050,699,071 $ 3,050,699 $ 50,941,680 $ ( 749,421 ) $ ( 54,346,906 ) $ 1,524,480 $ 420,747 Shares Value Shares Value Shares Value Capital Loss Deficit Interests (Deficit) Accumulated Total Series A Series D Additional Other Stockholders’ Preferred Stock Preferred Stock Common Stock Paid-in Comprehensive Accumulated Noncontrolling Equity Shares Value Shares Value Shares Value Capital Loss Deficit Interests (Deficit) Balance, June 30, 2022 1 $ 1 214,006 $ 214 3,385,151,300 $ 3,385,151 $ 53,219,553 $ ( 651,022 ) $ ( 56,359,935 ) $ 1,603,630 $ 1,197,592 Issuance of common stock in connection with sales made under private offerings - - - - 181,653,513 181,654 1,046,122 - - - 1,227,776 Issuance of common stock in connection with purchase of mining rights - - - - 87,719,300 87,719 912,281 - - - 1,000,000 Stock based compensation - - - - - - 386,287 - - 271,888 658,175 Change in foreign currency translation - - - - - - - ( 36,929 ) - ( 230,665 ) ( 267,594 ) Sale of Jupiter Gold common stock in connection with equity offerings - - - - - - 50,000 - - - 50,000 Sale of Apollo Resources common stock in connection with equity offerings - - - - - - - - - - - Net loss - - - - - - - - ( 1,028,192 ) ( 241,818 ) ( 1,270,010 ) Balance, September 30, 2022 1 $ 1 214,006 $ 214 3,654,524,113 $ 3,654,524 $ 55,614,243 $ ( 687,951 ) $ ( 57,388,127 ) $ 1,403,035 $ 2,595,939 The accompanying notes are an integral part of the condensed consolidated financial statements. F- 3 Table of Contents ATLAS LITHIUM CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) (UNAUDITED) For the Nine Months Ended September 30, 2022 and 2021 Shares Value Shares Value Shares Value Capital Loss Deficit Interests (Deficit) Accumulated Total Series A Series D Additional Other Stockholders’ Preferred Stock Preferred Stock Common Stock Paid-in Comprehensive Accumulated Noncontrolling Equity Shares Value Shares Value Shares Value Capital Loss Deficit Interests (Deficit) Balance, December 31, 2020 1 $ 1 - $ - 1,997,930,297 $ 1,997,930 $ 47,489,116 $ ( 775,113 ) $ ( 52,185,071 ) $ 1,976,885 $ ( 1,496,252 ) Conversion of related party convertible notes and other indebtedness into Series D preferred stock - - 214,006 214 - - 641,804 - - - 642,018 Issuance of common stock in connection with sales made under private offerings - - - - 136,219,930 136,220 680,430 - - - 816,650 Issuance of common stock in connection with the exercise of common stock options and warrants - - - - 396,917,702 396,918 ( 321,918 ) - - 70,700 145,700 Issuance of common stock in exchange for consulting, professional and other services - - - - 14,954,949 14,955 136,592 - - 31,845 183,392 Issuance of common stock warrants in connection with the issuance of convertible notes - - - - - - 356,827 - - - 356,827 Conversion of convertible notes and accrued interest payable into common stock - - - - 504,676,193 504,676 730,231 - - - 1,234,907 Stock based compensation - - - - - - 1,228,598 - - - 1,228,598 Change in foreign currency translation - - - - - - - 25,692 - ( 194 ) 25,498 Sale of Jupiter Gold common stock in connection with equity offerings - - - - - - - - - 118,000 118,000 Sale of Apollo Resources common stock in connection with equity offerings - - - - - - - - - 267,500 267,500 Net loss - - - - - - - - ( 2,161,835 ) ( 940,256 ) ( 3,102,091 ) Balance, September 30, 2021 1 $ 1 214,006 $ 214 3,050,699,071 $ 3,050,699 $ 50,941,680 $ ( 749,421 ) $ ( 54,346,906 ) $ 1,524,480 $ 420,747 Shares Value Shares Value Shares Value Capital Loss Deficit Interests (Deficit) Accumulated Total Series A Series D Additional Other Stockholders’ Preferred Stock Preferred Stock Common Stock Paid-in Comprehensive Accumulated Noncontrolling Equity Shares Value Shares Value Shares Value Capital Loss Deficit Interests (Deficit) Balance, December 31, 2021 1 $ 1 214,006 $ 214 3,109,178,852 $ 3,109,179 $ 51,466,376 $ ( 712,810 ) $ ( 54,957,429 ) $ 1,551,335 $ 456,866 Issuance of common stock in connection with sales made under private offerings - - - - 457,625,961 457,626 2,156,110 - - - 2,613,736 Issuance of common stock in connection with purchase of mining rights - - - - 87,719,300 87,719 912,281 - - - 1,000,000 Stock based compensation - - - - - - 1,029,476 - - - 1,029,476 Change in foreign currency translation - - - - - - - 24,859 - 14,011 38,870 Sale of Jupiter Gold common stock in connection with equity offerings - - - - - - 50,000 - - - 50,000 Sale of Apollo Resources common stock in connection with equity offerings - - - - - - - - 525,000 525,000 Net loss - - - - - - - - ( 2,430,698 ) ( 687,311 ) ( 3,118,009 ) Balance, September 30, 2022 1 $ 1 214,006 $ 214 3,654,524,113 $ 3,654,524 $ 55,614,243 $ ( 687,951 ) $ ( 57,388,127 ) $ 1,403,035 $ 2,595,939 The accompanying notes are an integral part of the condensed consolidated financial statements. F- 4 Table of Contents ATLAS LITHIUM CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Nine Months Ended September 30, 2022 and 2021 2022 2021 Nine months ended September 30 2022 2021 Cash flows from operating activities of continuing operations: Net loss $ ( 3,118,009 ) ( 3,102,091 ) Adjustments to reconcile net loss to cash used in operating activities: Stock based compensation and services 1,029,476 1,442,377 Amortization of debt discounts - 12,839 Common stock issued in satisfaction of other financing costs - 91,996 Convertible debt issued in satisfaction of other financing costs - 37,212 Preferred stock issued in satisfaction of interest and other financing costs - 75,276 Loss on extinguishment of debt - 224,812 Depreciation and amortization ( 16,717 ) 28,128 Changes in operating assets and liabilities: Accounts receivable 1,154 19,238 Taxes recoverable ( 579 ) - Deposits and advances ( 8,722 ) ( 16,285 ) Accounts payable and accrued expenses 1,938,819 ( 14,244 ) Other noncurrent liabilities ( 83,715 ) ( 535 ) Net cash used in operating activities ( 258,293 ) ( 1,201,277 ) Cash flows from investing activities: Acquisition of capital assets ( 46,990 ) ( 6,574 ) Increase in intangible assets ( 2,526,836 ) ( 265,579 ) Net cash used in investing activities ( 2,573,826 ) ( 272,153 ) Cash flows from financing activities: Net proceeds from sale of common stock 2,613,736 891,650 Proceeds from sale of subsidiary common stock to noncontrolling interests 575,000 456,200 Proceeds from convertible notes payable - 125,000 Repayment of loans payable - ( 235,308 ) Net cash provided by financing activities 3,188,736 1,237,542 Effect of exchange rates on cash and cash equivalents 38,870 422 Net increase (decrease) in cash and cash equivalents 395,487 ( 235,466 ) Cash and cash equivalents at beginning of period 22,776 253,598 Cash and cash equivalents at end of period $ 418,263 $ 18,132 Supplemental disclosure of non-cash investing and financing activities: Related party convertible note payable exchanged for stock $ - $ 566,743 Shares issued in connection with conversion of debt and accrued interest $ - $ 1,234,907 Common stock warrants issued in connection with convertible promissory notes $ - $ 40,019 The accompanying notes are an integral part of the condensed consolidated financial statements. F- 5 Table of Contents ATLAS LITHIUM CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 – ORGANIZATION, BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Description of Business Atlas Lithium Corporation (“Atlas Lithium” or the “Company”) was incorporated as Flux Technologies, Corp. under the laws of the State of Nevada on December 15, 2011. The Company changed its management and business on December 18, 2012 to focus on mineral exploration. The Company was formally known as Brazil Minerals, Inc. from January 22, 2013 through September 26, 2022. Atlas Lithium, through subsidiaries, owns mineral rights in Brazil for lithium, nickel, rare earths, titanium, graphite, gold, diamonds, and sand, and through subsidiaries, iron, gold and quartzite. Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”) and are expressed in United States dollars. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of September 30, 2022, and the results of operations and cash flows for the periods presented. The results of operations for the three and nine months ended September 30, 2022 and 2021, are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC on March 29, 2022. The condensed consolidated financial statements include the accounts of the Company; its 99.99 % owned subsidiary, BMIX Participações Ltda. (“BMIXP”), which includes the accounts of BMIXP’s wholly-owned subsidiary, Mineração Duas Barras Ltda. (“MDB”), and BMIXP’s 50 % owned subsidiary, RST Recursos Minerais Ltda. (“RST”); its 99.99 % owned subsidiary, Hercules Resources Corporation (“HRC”), which includes the accounts of HRC’s wholly-owned subsidiary, Hercules Brasil Comercio e Transportes Ltda. (“Hercules Brasil”) and Lancaster Investimentos Ltda; its 44.41 % equity interest in Apollo Resources Corporation (“Apollo Resources”) and its subsidiary Mineração Apollo, Ltda.; and its 24.56 % equity interest in Jupiter Gold Corporation (“Jupiter Gold”), which includes the accounts of Jupiter Gold’s wholly-owned subsidiary, Mineração Jupiter Ltda. The Company has concluded that Apollo Resources, Jupiter Gold and their subsidiaries are variable interest entities (“VIE”) in accordance with applicable accounting standards and guidance. As such, the accounts and results of Apollo Resources, Jupiter Gold and their subsidiaries have been included in the Company’s condensed consolidated financial statements. All material intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingencies at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results may differ from those estimates. F- 6 Table of Contents ATLAS LITHIUM CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 – ORGANIZATION, BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Going Concern The condensed consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company has limited working capital, has incurred losses in each of the past two years, and has not yet received material revenues from sales of products or services. These factors create substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company generating cash from its operations, the sale of its stock and/or obtaining debt financing. Historically, the Company has funded its operations primarily through the issuance of debt and equity securities. Management’s plan to fund its capital requirements and ongoing operations include the sale of common stock in the Company, and, over time, generation of revenue from its mining operations and projects. Management’s secondary plan to cover any shortfall is to sell some of its common stock holdings of Apollo Resources or Jupiter Gold. There can be no assurance the Company will be successful in these efforts. Recent Accounting Pronouncements The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new pronouncements that have been issued that might have a material impact on its financial position or results of operations except as noted below: In February 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-02, Financial Instruments-Credit Losses (Topic 326) and Leases (Topic 842) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842), which amends the effective date of the original pronouncement for smaller reporting companies. ASU 2016-13 and its amendments will be effective for the Company for interim and annual periods in fiscal years beginning after December 15, 2022. The Company believes the adoption will modify the way the Company analyzes financial instruments, but it does not anticipate a material impact on results of operations. The Company is in the process of determining the effects the adoption will have on its consolidated financial statements. F- 7 Table of Contents ATLAS LITHIUM CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS Property and Equipment The following table sets forth the components of the Company’s property and equipment at September 30, 2022 and December 31, 2021: SCHEDULE OF PROPERTY AND EQUIPMENT September 30, 2022 December 31, 2021 Cost Accumulated Depreciation Net Book Value Cost Accumulated Depreciation Net Book Value Computers and office equipment $ 3,880 $ ( 3,380 ) $ - $ 3,880 $ ( 2,778 ) $ 1,063 Machinery and equipment 407,534 ( 351,036 ) 56,498 334,253 ( 281,489 ) 52,764 Vehicles 76,230 ( 76,230 ) - 118,653 ( 118,653 ) - Land 61,037 - 61,037 Total fixed assets $ 548,680 $ ( 431,146 ) $ 117,534 $ 456,747 $ ( 402,920 ) $ 53,827 For the three and nine months ended September 30, 2022, the Company recorded depreciation expense of $ 1,086 and $ 16,717 , respectively, and for the three and nine months ended September 30, 2021, the Company recorded depreciation expense of $ 4,518 and $ 28,128 , respectively. Intangible Assets Intangible assets consisting of mining rights are not amortized as the mining rights are perpetual. The carrying value was $ 4,829,276 and $ 1,302,440 at September 30, 2022 and December 31, 2021, respectively. Equity Investments without Readily Determinable Fair Values On October 2, 2017, the Company entered into an exchange agreement whereby it issued 25,000,000 shares of its common stock in exchange for 500,000 shares of Ares Resources Corporation. The Company’s chief executive officer also serves as an officer of Ares Resources Corporation, thus making it a related party under common ownership and control. The shares were recorded at $ 150,000 , or $ 0.006 per share. The shares were valued based upon the lowest market price of the Company’s common stock on the date of the agreement. On March 11, 2020, the Company issued 53,947,368 shares of common stock to Lancaster Brazil Fund pursuant to an addendum to a share exchange agreement dated September 28, 2018. The Company recorded a loss on exchange of equity with a related party of $ 76,926 representing the fair value of the additional shares of common stock issued. Under ASC 321-10, the Company elected to use a measurement alternative for its equity investment that does not have a readily determinable fair value. As such, the Company measured its investment at cost, less any impairment, plus or minus any changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. The Company owns less than 5 % of the total shares outstanding of Ares Resources Corporation. F- 8 Table of Contents ATLAS LITHIUM CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS (CONTINUED) Accounts Payable and Accrued Liabilities SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES September 30, 2022 December 31, 2021 Accounts payable and other accruals $ 441,714 $ 310,047 Mineral rights payable 2,480,725 672,601 Accrued interest - 5,590 Total $ 2,922,439 $ 988,238 NOTE 3 – OTHER NONCURRENT LIABILITIES Other noncurrent liabilities are comprised solely of social contributions and other employee-related costs at operating subsidiaries located in Brazil. The Company has been funding these amounts upon the termination of a worker or employee. The balance of these employee related costs as of September 30, 2022 and December 31, 2021 amounted to $ 25,211 and $ 108,926 , respectively. NOTE 4 – STOCKHOLDERS’ EQUITY Authorized and Amendments As of September 30, 2022, the Company had 4,000,000,000 shares of common stock authorized with a par value of $ 0.001 per share. F- 9 Table of Contents ATLAS LITHIUM CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Series A Preferred Stock On December 18, 2012, the Company filed with the Nevada Secretary of State a Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock (“Series A Stock”) to designate one share of a new series of preferred stock. The Certificate of Designations, Preferences and Rights of the Series A Stock provides that for so long as Series A Stock is issued and outstanding, the holders of Series A Stock shall vote together as a single class with the holders of the Company’s common stock, whereby the holders of Series A Stock is entitled to 51% of the total votes on all such matters regardless of the actual number of shares of Series A Stock then outstanding, and the holders of common stock are entitled to their proportional share of the remaining 49% of the total votes based on their respective voting power . Series D Preferred Stock On September 14, 2021, the Company filed with the Nevada Secretary of State a Certificate of Designations, Preferences and Rights of Series D Convertible Preferred Stock (“Series D Stock”) to designate 1,000,000 shares of a new series of preferred stock. The Certificate of Designations, Preferences and Rights of Series D Stock provides that for so long as Series D Stock is issued and outstanding, the holders of Series D Stock shall have no voting power until such time as the Series D Stock is converted into shares of common stock. One share of Series D Stock is convertible into 10,000 shares of common stock and may be converted at any time at the election of the holder. Holders of the Series D Stock are not entitled to any liquidation preference over the holders of common stock, and are entitled to any dividends or distributions declared by the Company on a pro rata basis. On September 15, 2021, the Company issued 214,006 shares of Series D Stock to Marc Fogassa for the conversion of $ 566,743 in convertible note principal and $ 75,276 of interest expense. Nine Months Ended September 30, 2022 Transactions During the nine months ended September 30, 2022, the Company issued 457,625,961 shares of common stock for gross proceeds of $ 2,613,736 pursuant to subscription agreements with accredited investors. Additionally, the Company issued 87,719,300 shares of common stock valued at $ 1,000,000 as part of a payment for a lithium mining rights purchase. Nine Months Ended September 30, 2021 Transactions During the nine months ended September 30, 2021, the Company issued 136,219,930 shares of common stock for gross proceeds of $ 816,650 pursuant to subscription agreements with accredited investors. Additionally, the Company issued 504,676,193 shares of common stock upon conversion of $ 1,234,906 in convertible notes payable and accrued interest. Further, the Company issued 396,917,702 shares of common stock for net proceeds of $ 75,000 upon the exercise of 423,816,100 stock options and warrants. Lastly, the Company issued 14,954,949 shares of common stock valued at $ 183,393 to contractors for services provided. Common Stock Options During the nine months ended September 30, 2022, the Company granted options to purchase an aggregate of 279,187,906 shares of common stock to officers and non-management directors. The options were valued at $ 675,478 in total. The options were valued using the Black-Scholes option pricing model with the following average assumptions: the stock price on the date of the grant ranged from $ 0.0016 to $ 0.01 , expected dividend yield of 0.0 % , historical volatility calculated between 79.0 % and 206 % , risk-free interest rate ranging between 1.51 % and 3.19 % , and an expected term of ten years . As of September 30, 2022, the Company has 421,271,661 outstanding common stock options and warrants, with an average exercise price of $ 0.0111 , an average time to expiration of 1.61 years and an aggregated intrinsic value of $ 469,610,442 . Series D Stock Options During the nine months ended September 30, 2022, the Company granted options to purchase an aggregate of 27,000 shares of Series D stock to officers and directors. The options were valued at $ 597,978 in total. The options were valued using the Black-Scholes option pricing model with the following average assumptions: the common stock price on the date of the grant ranged from $ 0.0016 to $ 0.01 , expected dividend yield of 0.0 % , historical volatility calculated between 79.0 % and 206 % , risk-free interest rate ranging between 1.51 % and 3.19 % , and an expected term of ten years . As of September 30, 2022, the Company has 63,000 outstanding series D stock options, with an average exercise price of $ 9,86 , an average time to expiration of 9.17 years and an aggregated intrinsic value of $ 621,228 . F- 10 Table of Contents ATLAS LITHIUM CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 5 – COMMITMENTS AND CONTINGENCIES Operating Leases The Company leases office space in the U.S. for approximately $ 3,833 on a month-to-month basis. The Company also leases office space in Brazil. Such costs are immaterial to the condensed consolidated financial statements. NOTE 6 - RELATED PARTY TRANSACTIONS Jupiter Gold Corporation During the nine months ended September 30, 2022, Jupiter Gold granted options to purchase an aggregate of 420,000 shares of its common stock to Marc Fogassa at prices ranging between $ 0.01 to $ 1.00 per share. The options were valued at $ 77,982 and recorded to stock-based compensation. The options were valued using the Black-Scholes option pricing model with the following average assumptions: the Company’s stock price on the date of the grant which ranged from $ 0.2525 to $ 0.275 expected dividend yield of 0 % , historical volatility calculated at 227 % , risk-free interest rate between a range of 1.51 % to 3.19 % , and an expected term between five and ten years . Apollo Resource Corporation During the nine months ended September 30, 2022, Apollo Resources granted options to purchase an aggregate of 225,000 shares of its common stock to Marc Fogassa at a price of $ 1.22 per share. The options were valued at $ 275,858 and recorded to stock-based compensation. The options were valued using the Black-Scholes option pricing model with the following average assumptions: the Company’s stock price on the date of the grant which ranged from $ 1.00 to $ 1.25 , expected dividend yield of 0 % , historical volatility calculated at 71 % , risk-free interest rate between a range of 1.51 % to 3.19 % , and an expected term between five and ten years F- 11 Table of Contents ATLAS LITHIUM CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 7 – RISKS AND UNCERTAINTIES Currency Risk The Company operates primarily in Brazil which exposes it to currency risks. The Company’s business activities may generate intercompany receivables or payables that are in a currency other than the functional currency of the entity. Changes in exchange rates from the time the activity occurs to the time payments are made may result in the Company receiving either more or less in local currency than the local currency equivalent at the time of the original activity. The Company’s condensed consolidated financial statements are denominated in U.S. dollars. Accordingly, changes in exchange rates between the applicable foreign currency and the U.S. dollar affect the translation of each foreign subsidiary’s financial results into U.S. dollars for purposes of reporting in the consolidated financial statements. The Company’s foreign subsidiaries translate their financial results from the local currency into U.S. dollars in the following manner: (a) income statement accounts are translated at average exchange rates for the period; (b) balance sheet asset and liability accounts are translated at end of period exchange rates; and (c) equity accounts are translated at historical exchange rates. Translation in this manner affects the shareholders’ equity account referred to as the foreign currency translation adjustment account. This account exists only in the foreign subsidiaries’ U.S. dollar balance sheets and is necessary to keep the foreign subsidiaries’ balance sheets in agreement. NOTE 8 - SUBSEQUENT EVENTS In accordance with FASB ASC 855-10 Subsequent Events, the Company has analyzed its operations subsequent to September 30, 2022 to the date these consolidated financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these consolidated financial statements. F- 12 Table of Contents