Atlas Lithium Corp 10-Q

Item 1 FINANCIAL STATEMENTS ATLAS LITHIUM CORPORATION CONSOLIDATED BALANCE SHEETS (UNAUDITED) March 31, 2023 and December 31, 2022 March 31, December 31, 2023 2022 ASSETS Current assets: Cash and cash equivalents $ 4,987,751 $ 280,525 Accounts receivable 94 91 Taxes recoverable 18,243 17,705 Deposits and advances 49,829 47,093 Total current assets 5,055,917 345,414 Property and equipment, net 219,325 217,550 Intangible assets, net 6,961,449 4,971,267 Equity investments 150,000 150,000 Total assets $ 12,386,691 $ 5,684,231 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable and accrued expenses $ 2,437,420 $ 2,776,474 Related party notes and other payables 21,554 21,493 Total current liabilities 2,458,974 2,797,967 Other noncurrent liabilities 76,285 78,964 Total liabilities 2,535,259 2,876,931 Stockholders’ deficit: Series A preferred stock, $ 0.001 par value. 10,000,000 shares authorized; 1 share issued and outstanding as of March 31, 2023 and December 31, 2022, respectively 1 1 Series D preferred stock, $ 0.001 par value. 1,000,000 shares authorized; 214,006 issued and outstanding as of March 31, 2023 and December 31, 2022, respectively 214 214 Preferred stock, value Common stock, $ 0.001 par value 4,000,000,000 authorized; 6,728,062 and 5,110,014 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively 6,739 5,111 Additional paid-in capital 73,699,668 62,258,116 Accumulated other comprehensive loss ( 915,224 ) ( 981,040 ) Accumulated deficit ( 63,551,887 ) ( 59,585,949 ) Total Atlas Lithium Co. stockholders’ equity 9,239,511 1,696,453 Non-controlling interest 611,921 1,110,847 Total stockholders’ equity 9,851,432 2,807,300 Total liabilities and stockholders’ equity $ 12,386,691 $ 5,684,231 The accompanying notes are an integral part of the consolidated financial statements. F- 1 Table of Contents ATLAS LITHIUM CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) For the Three Months Ended March 31, 2023 and 2022 2023 2022 Three months ended March 31 2023 2022 Revenue - 477 Cost of revenue - 9,855 Gross loss - ( 9,378 ) Operating expenses Professional fees 141,900 119,841 General and administrative 1,295,963 221,465 Compensation and related costs 883,835 97,992 Stock based compensation 1,128,845 388,019 Exploration 1,028,825 - Total operating expenses 4,479,368 827,317 Loss from operations ( 4,479,368 ) ( 836,695 ) Other expense (income) Other expense (income) ( 14,015 ) ( 1,952 ) Total other expense ( 14,015 ) ( 1,952 ) Loss before provision for income taxes ( 4,465,353 ) ( 834,743 ) Provision for income taxes - - Net loss ( 4,465,353 ) ( 834,743 ) Loss attributable to non-controlling interest ( 499,415 ) ( 303,253 ) Net loss attributable to Atlas Lithium Corporation stockholders $ ( 3,965,938 ) $ ( 531,490 ) Basic and diluted loss per share Net loss per share attributable to Atlas Lithium Corporation common stockholders $ ( 0.60 ) $ ( 0.12 ) Weighted-average number of common shares outstanding: Basic and diluted 6,635,325 4,255,676 Comprehensive loss: Net loss $ ( 4,465,353 ) $ ( 834,743 ) Foreign currency translation adjustment 66,305 56,815 Comprehensive loss ( 4,399,048 ) ( 777,928 ) Comprehensive loss attributable to noncontrolling interests ( 498,926 ) ( 308,741 ) Comprehensive loss attributable to Atlas Lithium Corporation stockholders $ ( 3,900,122 ) $ ( 469,187 ) The accompanying notes are an integral part of the consolidated financial statements. F- 2 Table of Contents ATLAS LITHIUM CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT For the Three Months Ended March 31, 2023 and 2022 Shares Value Shares Value Shares Value Capital Loss Deficit Interests Equity (Deficit) Series A Preferred Stock Series D Preferred Stock Common Stock Additional Paid-in Accumulated Other Comprehensive Accumulated Noncontrolling Total Stockholders’ Shares Value Shares Value Shares Value Capital Loss Deficit Interests Equity (Deficit) Balance, December 31, 2021 1 $ 1 214,006 $ 214 4,145,572 $ 4,146 $ 54,571,409 $ ( 712,810 ) $ ( 54,957,429 ) $ 1,551,335 $ 456,866 Issuance of common stock in connection with sales made under private offerings - - - - 120,399 120 397,879 - - - 397,999 Exercise of warrants - - - - - - - Stock based compensation - - - - - - 388,019 - - ( 191,023 ) 196,996 Change in foreign currency translation - - - - - - - 252,494 - 113,052 365,546 Sale of Apollo Resources common stock in connection with equity offerings - - - - - - - - - 225,000 225,000 Net loss - - - - - - - - ( 531,490 ) ( 303,253 ) ( 834,743 ) Balance, March 31, 2022 1 $ 1 214,006 $ 214 4,265,971 $ 4,266 $ 55,357,307 $ ( 460,316 ) $ ( 55,488,919 ) $ 1,395,111 $ 807,664 Shares Value Shares Value Shares Value Capital Loss Deficit Interests Equity (Deficit) Series A Preferred Stock Series D Preferred Stock Common Stock Additional Paid-in Accumulated Other Comprehensive Accumulated Noncontrolling Total Stockholders’ Shares Value Shares Value Shares Value Capital Loss Deficit Interests Equity (Deficit) Balance, December 31, 2022 1 $ 1 214,006 $ 214 5,110,014 $ 5,111 $ 62,258,116 $ ( 981,040 ) $ ( 59,585,949 ) $ 1,110,847 $ 2,807,300 Issuance of common stock in connection with sales made under private offerings - - - - 1,518,806 1,519 9,487,816 - - - 9,489,335 Issuance of common stock in connection with purchase of mining rights - - - - 77,240 77 749,923 - - - 750,000 Issuance of common stock in exchange for consulting, professional and other services - - - - 32,002 32 191,980 - - - 192,012 Exercise of warrants - - - - - - 197,613 - - - 197,613 Stock based compensation - - - - - - 739,220 - - - 739,220 Change in foreign currency translation - - - - - - - 65,816 - 489 66,305 Sale of Jupiter Gold common stock in connection with equity offerings - - - - - - 75,000 - - - 75,000 Sale of Apollo Resources common stock in connection with equity offerings - - - - - - - - - - - Net loss - - - - - - - - ( 3,965,938 ) ( 499,415 ) ( 4,465,353 ) Balance, March 31, 2023 1 $ 1 214,006 $ 214 6,738,062 $ 6,739 $ 73,699,668 $ ( 915,224 ) $ ( 63,551,887 ) $ 611,921 $ 9,851,432 The accompanying notes are an integral part of the consolidated financial statements. F- 3 Table of Contents ATLAS LITHIUM CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Three Months Ended March 31, 2023 and 2022 2023 2022 Three months ended March 31 2023 2022 Cash flows from operating activities of continuing operations: Net loss $ ( 4,465,353 ) ( 834,743 ) Adjustments to reconcile net loss to cash used in operating activities: Stock based compensation and services 1,128,845 388,019 Depreciation and amortization 4,015 7,571 Intagible assets purchase 720,000 — Other non cash expenses 14,015 — Changes in operating assets and liabilities: Accounts receivable ( 3 ) 1,170 Taxes recoverable ( 538 ) ( 2,948 ) Deposits and advances ( 2,736 ) ( 9,580 ) Accounts payable and accrued expenses ( 1,058,993 ) ( 76,519 ) Other noncurrent liabilities ( 2,679 ) 20,959 Net cash used in operating activities ( 3,663,428 ) ( 506,071 ) Cash flows from investing activities: Acquisition of capital assets ( 5,790 ) ( 30,472 ) Increase in intangible assets ( 1,270,182 ) ( 122,526 ) Net cash used in investing activities ( 1,275,972 ) ( 152,998 ) Cash flows from financing activities: Net proceeds from sale of common stock 9,489,335 397,999 Proceeds from sale of subsidiary common stock to noncontrolling interests 75,000 225,000 Net cash provided by financing activities 9,564,335 622,999 Effect of exchange rates on cash and cash equivalents 82,290 67,524 Net increase (decrease) in cash and cash equivalents 4,707,226 31,454 Cash and cash equivalents at beginning of period 280,525 22,776 Cash and cash equivalents at end of period $ 4,987,751 $ 54,230 The accompanying notes are an integral part of the consolidated financial statements. F- 4 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 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 in Brazil. Basis of Presentation and Principles of Consolidation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and are expressed in United States dollars. For the years ended December 31, 2022 and 2021, the consolidated financial statements include the accounts of the Company; its 99.99 % owned subsidiary, Atlas Litio Brasil Ltda. (“Atlas Brasil”), which includes the accounts of Atlas Brasil’s wholly-owned subsidiary, Mineração Duas Barras Ltda. (“MDB”), and Atlas Brasil’s 50 % owned subsidiary, RST Recursos Minerais Ltda. (“RST”); its 99.99 % owned subsidiary, Hercules Resources Corporation (“HRC”), which includes the accounts of HRC’s wholly-owned subsidiary, Hercules Brasil Comercio e Transportes Ltda. (“Hercules Brasil”); its 45.11 % equity interest in Apollo Resources Corporation (“Apollo Resources”) and its subsidiary Mineração Apollo, Ltda.; and its 28.72 % equity interest in Jupiter Gold Corporation (“Jupiter Gold”), which includes the accounts of Jupiter Gold’s 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 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 generally accepted accounting principles 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- 5 Table of Contents ATLAS LITHIUM CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 – ORGANIZATION, BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. F- 6 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 March 31, 2023 and December 31, 2022: SCHEDULE OF PROPERTY AND EQUIPMENT March 31, 2023 December 31, 2022 Cost Accumulated Depreciation Net Book Value Cost Accumulated Depreciation Net Book Value Capital assets subject to depreciation: Computers and office equipment $ 571 $ ( 571 ) $ - $ 571 $ ( 571 ) $ - Machinery and equipment 426,406 ( 366,155 ) 60,251 419,498 ( 362,140 ) 57,358 Vehicles 80,139 80,139 - 80,139 ( 79,021 ) 1,118 Land 159,074 - 159,074 159,074 - 159,074 Total fixed assets $ 666,190 $ ( 446,865 ) $ 219,325 $ 659,282 $ ( 441,732 ) $ 217,550 For the three months ended March 31, 2023, and 2022, the Company recorded depreciation expense of $ 4,015 and $ 7,571 , respectively. Intangible Assets Intangible assets consist of mining rights which are not amortized as the mining rights are perpetual. The carrying value of these mineral rights at March 31, 2023 and at December 31, 2022 was $ 6,961,449 and $ 4,971,267 , respectively. On January 19, 2023, the Company consummated a transaction in which it acquired five mineral rights (the “Mineral Rights”) totaling 1,090.88 hectares (~ 2,696 acres) owned by an unrelated Brazilian mining enterprise pursuant to a Mineral Rights Purchase Agreement (the “Acquisition Agreement”). The Mineral Rights are located in the municipalities of Araçuaí and Itinga, in a region known as “Lithium Valley” in the state of Minas Gerais in Brazil. The Company has reasons to believe that the acquisition of the Mineral Rights was part of a competitive process. The Company’s obligations under the Acquisition Agreement are: 1) Payment of $ 400,000 , which payment took place on January 19, 2023, and issuance of $ 750,000 worth of restricted shares of common stock of the Company which took place on February 1, 2023 ; 2) Payment of $ 100,000 for each of the five areas comprising the Mineral Rights to be made upon the publication in the official gazette of the government of the title transfer of each such area to the Company; 3) For each of the five areas comprising the Mineral Rights, 30 days after the payment described in item 2 above, the initiation of ten monthly payments of $ 22,000 ; 4) If the Mineral Rights eventually yield at least five million tons of spodumene (a lithium-bearing mineral) containing at least an average of 1.3% Li 2 O, as determined by a technical report prepared by an independent consulting firm pursuant to the requirements of Item 1300 through Item 1305 of Regulation S-K (“SK1300 Report”), then an additional payment of 10 monthly installments of $10,000 and an additional issuance of $500,000 worth of restricted shares of common stock of the Company are to be made; 5) If the Mineral Rights eventually yield at least 10 million tons of spodumene containing at least an average of 1.3% Li 2 O, as determined by an SK1300 Report, then an additional payment of 10 monthly installments of $10,000 and an additional issuance of $500,000 worth of restricted shares of common stock of the Company are to be made; and 6) If the Mineral Rights eventually yield more than 10 million tons of spodumene containing at least an average of 1.3% Li 2 O , as determined by an SK1300 Report, then a payment of $0.20 per each ton above 10 million tons is to be made. F- 7 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 March 31, 2023 December 31, 2022 Accounts payable and other accruals $ 629,379 $ 408,874 Mineral rights payable 1,808,041 2,367,600 Total $ 2,437,420 $ 2,776,474 NOTE 3 – OTHER NONCURRENT LIABILITIES Other noncurrent liabilities are comprised solely of social contributions and other employee-related costs at our operating subsidiaries located in Brazil. The balance of these employee related costs as of March 31, 2023, and December 31, 2022, amounted to $ 76,285 and $ 78,964 , respectively. NOTE 4 – STOCKHOLDERS’ EQUITY Authorized and Amendments As of March 31, 2023, the Company had 4,000,000,000 common shares authorized with a par value of $ 0.001 per share. Reverse Stock Split On December 20, 2022, the Company filed a Certificate of Amendment to our Articles of Incorporation (the “Amendment”) to effect a reverse stock split of our issued and outstanding shares of common stock at a ratio of 1-for-750 (the “Reverse Stock Split”). Following the Reverse Stock Split, each 750 shares of our issued and outstanding shares of common stock were automatically converted into one issued and outstanding share of common stock, without any change in par value per share. No fractional shares were issued as a result of the Reverse Stock Split and no cash or other consideration was paid. Instead, we issued one whole share of the post-split common stock to any stockholder who otherwise would have received a fractional share as a result of the Reverse Stock Split. The Reverse Stock Split did not affect the number of shares of authorized stock. Our common stock began trading on the Over the Courter Bulleting Board on a Reverse Stock Split-adjusted basis on December 23, 2022, and was assigned a new temporary ticker symbol “ATLXD” for the 20 business days following the Reverse Stock Split. In connection with our firm underwritten public offering which closed on January 12, 2023, our common stock started trading on the Nasdaq Capital Market under the ticker symbol “ATLX” on January 10, 2023. All share, equity award, and per share amounts contained in these Condensed Interim Consolidated Financial Statements have been adjusted to reflect the Reverse Stock Split for all prior periods presented. 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 Series A Convertible Preferred 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, with the holders of Series A Stock being 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 . The one outstanding share of our Series A Stock has been held by our Chief Executive Officer and Chairman, Mr. Marc Fogassa since December 18, 2012. F- 8 Table of Contents ATLAS LITHIUM CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 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 Convertible Preferred Stock (the “Series D COD”) 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. Pursuant to the Series D COD, 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 $ 75,275 of interest expense. Three Months Ended March 31, 2023, Transactions On January 9, 2023 (the “Effective Date”), the company, entered into an underwriting agreement (the “Underwriting Agreement”) with EF Hutton (“EF Hutton”), division of Benchmark Investments, LLC, as representative of the underwriters named therein (the “Representative”), pursuant to which the Company agreed to sell an aggregate of 675,000 shares of the Company’s common stock, par value $ 0.001 (“Common Stock”), to the Representative, at a public offering price of $ 6.00 per share (the “Offering Price”) in a firm commitment public offering (the “Offering”). The Company also granted the Representative a 45-day option to purchase up to 101,250 additional shares of the Company’s Common Stock upon the same terms and conditions for the purpose of covering any over-allotments in connection with the Offering (the “Over-Allotment Option”). On January 11, 2023, the Representative delivered its notice to exercise the Over-Allotment Option in full. The shares of common stock were offered by the Company pursuant to a registration statement on Form S-1, as amended (File No. 333-262399) filed with the Securities and Exchange Commission (the “Commission”) and declared effective on January 9, 2023 (the “Registration Statement”). The consummation of the Offering took place on January 12, 2023 (the “Closing”). In connection with the Closing, the Company issued to the Representative, and/or its permitted designees, as a portion of the underwriting compensation payable to the Representative, warrants to purchase an aggregate of 33,750 shares of Common Stock, equal to 5 % of the number of shares of Common Stock sold in the Offering (excluding the Over-Allotment option), at an exercise price of $ 7.50 , equal to 125 % of the Offering Price (the “Representative’s Warrants”). The Representative’s Warrants are exercisable for a period of five years from the effective date of the Registration Statement, provided that they are subject to a mandatory lock-up for 180 days from the commencement of sales of the Offering in accordance with FINRA Rule 5110(e). Aggregate gross proceeds from the Offering were $ 4,657,500 . The “ Intangible Assets ” discussion in Note 2 above, is incorporated herein by reference. F- 9 Table of Contents On January 30, 2023, the company entered into a Securities Purchase Agreement (the “ Purchase Agreement ”) with two investors (the “ Investors ”), pursuant to which the Company agreed to issue and sell to the Investors in a Regulation S private placement (the “ Private Placement ”) an aggregate of 640,000 restricted shares of the Company’s common stock (the “ Shares ”), par value $ 0.001 per share. The purchase price for the Shares was $ 6.25 per share, for total gross proceeds of $ 4,000,000 . The Private Placement transaction closed on February 1, 2023. Additionally, during the three months ended March 31, 2023, the Company sold an aggregate of 91,500 shares of our common stock to Triton Funds, LP (“Triton”) for total gross proceeds of $ 831,834 pursuant to a Common Stock Purchase Agreement (the “CSPA”) entered into between the Company and Triton Funds, LP, dated February 26, 2021. For a description of the transactions contemplated under the CSPA, please refer to our Form 8-K filed with the Commission on March 2, 2021. Three Months Ended March 31, 2022, Transactions During the three months ended March 31, 2022, the Company issued 120.399 shares of common stock for gross proceeds of $ 397,999 pursuant to subscription agreements with accredited investors. Common Stock Options During the three months ended March 31, 2023, and 2022, the Company granted options to purchase common stock to officers and non-management directors. The options were valued using the Black-Scholes option pricing model with the following ranges of assumptions: SCHEDULE OF OPTIONS FAIR VALUE ASSUMPTIONS March 31 2023 March 31 2022 Expected volatility 272.06 % – 280.94 % 79.00 % – 220.00 % Risk-free interest rate 3.42 % – 3.99 % 0.9 % – 1.83 % Stock price on date of grant $ 7.0000 - $ 13.3500 $ 4.50 - $ 6.00 Dividend yield 0.00 % 0.00 % Expected term 10 years 10 years F- 10 Table of Contents Changes in common stock options for the three months ended March 31, 2023, and 2022 were as follows: SCHEDULE OF OUTSTANDING AND EXERCISABLE OPTIONS Number of Options Outstanding and Vested Weighted Average Exercise Price Remaining Contractual Life (Years) Aggregated Intrinsic Value Outstanding and vested, January 1, 2023 178,672 $ 0.012 1.55 $ 1,228,972 Outstanding and vested, March 31, 2023 178,672 $ 0.012 1.30 $ 3,071,031 Number of Options Outstanding and Vested Weighted Average Exercise Price Remaining Contractual Life (Years) Aggregated Intrinsic Value Outstanding and vested, January 1, 2022 6,546 $ 8.250 2.74 $ 19,675 Expired ( 1,164 ) 23.325 Outstanding and vested, March 31, 2022 5,382 $ 4.990 2.74 $ 19,675 Changes in Series D preferred stock options for the three months ended March 31, 2023 and 2022 were as follows: Number of Options Outstanding and Vested Weighted Average Exercise Price 1 Remaining Contractual Life (Years) Aggregated Intrinsic Value Outstanding, January 1, 2023 72,000 $ 75.00 8.94 $ 6,712,912 Issued 9,000 75.00 Outstanding and vested, March 31, 2023 81,000 $ 75.00 8.82 $ 18,687,011 Number of Options Outstanding and Vested Weighted Average Exercise Price 1 Remaining Contractual Life (Years) Aggregated Intrinsic Value Outstanding, January 1, 2022 36,000 $ 75.00 9.44 $ 2,732,400 Issued 9,000 75.00 Outstanding and vested, March 31, 2022 45,000 $ 75.00 9.32 $ 3,483,058 1 This presents the exercise price required to purchase one share of Series D Stock, which is convertible into 13 and 1/3 shares of common stock at any time at the election of the holder. F- 11 Table of Contents All Series D preferred stock options vested immediately upon issuance and are exercisable for a period of ten years from the date of issuance. The Series D preferred stock options issued in the three months ended March 31, 2023, were issued with a total grant date fair value of $ 267,471 . Stock Purchase Warrants Stock purchase warrants are accounted for as equity in accordance with ASC 480, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock, Distinguishing Liabilities from Equity . During the three months ended March 31, 2023, and 2022, the Company issued common stock purchase warrants to EF Hutton. All warrants are vested within 180 days from issuance and are exercisable for a period of two to five years from the date of issuance. Changes in stock purchase warrants for the three months ended March 31, 2023, and 2022 were as follows: SCHEDULE OF WARRANT ACTIVITY Number of Options Outstanding and Vested Weighted Average Exercise Price Weighted Average Contractual Life (Years) Aggregated Intrinsic Value Outstanding and vested, January 1, 2023 321,759 $ 12.8634 1.30 $ - Warrants issued (1) 33,315 7.5000 Outstanding and vested, March 31, 2023 355,074 $ 12.3602 1.65 $ 1,961,534 1) The warrants issued in the three months ended March 31, 2023 had a total grant date fair value of $ 197,614 , as valued using the Black-Scholes option pricing model with the following assumptions: our stock price on the date of the grant which was $ 8.10 , expected dividend yield of 0.0 %, expected volatility of 205.19 % estimated based on historical share price volatility, a risk-free interest rate of 3.54 %, and an expected term of 5 years. Number of Options Outstanding and Vested Weighted Average Exercise Price Weighted Average Contractual Life (Years) Aggregated Intrinsic Value Outstanding and vested, January 1, 2022 406,270 $ 11.4750 1.97 $ - Outstanding and vested, March 31, 2022 406,270 $ 11.4750 1.80 $ - NOTE 5 – COMMITMENTS AND CONTINGENCIES Rental Commitment The Company rents office space in the U.S. for approximately $ 5,750 on a month-to-month basis. The Company also rents office space in Brazil. Such costs are immaterial to the consolidated financial statements. F- 12 Table of Contents NOTE 6 – RELATED PARTY TRANSACTIONS Jupiter Gold Corporation During the three months ended March 31, 2023, Jupiter Gold granted options to purchase an aggregate of 105,000 shares of its common stock to Marc Fogassa at prices ranging between $ 0.01 to $ 1.00 per share. The options were valued at $ 30,011 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 ($ 1.00 to $ 1.49 ), expected dividend yield of 0 %, historical volatility calculated at 224 %, risk-free interest rate between a range of 3.40 % to 4.26 %, and an expected term between 5 and 10 years. During the three months ended March 31, 2022, Jupiter Gold granted options to purchase an aggregate of 210,000 shares of its common stock to Marc Fogassa at prices ranging between $ 0.01 to $ 1.00 per share. The options were valued at $ 27,033 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 ($ 0.25 to $ 0.30 ), expected dividend yield of 0 %, historical volatility calculated at 232 %, risk-free interest rate between a range of 1.59 % to 1.79 %, and an expected term between 5 and 10 years. Apollo Resource Corporation During the three months ended March 31, 2023, Apollo Resources granted options to purchase an aggregate of 45,000 shares of its common stock to Marc Fogassa at a price of $ 0.01 per share. The options were valued at $ 55,944 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 ($ 5.00 ), expected dividend yield of 0 %, historical volatility calculated at 58 %, risk-free interest rate between a range of 3.40 % to 4.00 %, and an expected term of 10 years. During the three months ended March 31, 2022, Apollo Resources granted options to purchase an aggregate of 135,000 shares of its common stock to Marc Fogassa at a price of $ 0.01 per share. The options were valued at $ 163,990 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 ($ 0.10 to $ 5.00 ), expected dividend yield of 0 %, historical volatility calculated at 71 %, risk-free interest rate between a range of 0.68 % to 2.34 %, and an expected term between 5 and 10 years. NOTE 7 – RISKS AND UNCERTAINTIES Currency Risk We operate primarily in Brazil which exposes us to currency risks. Our 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 it receiving either more or less in local currency than the local currency equivalent at the time of the original activity. Our 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. Our 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 On July 18, 2022, the Board of Directors adopted resolutions to effect a reverse stock split of the Company’s issued and outstanding shares of Common Stock at a ratio of 1-for-750 without affecting the number of shares of authorized Common Stock (the “Originally Intended Reverse Stock Split”). The holder of the majority voting power of our voting stock (the “Majority Stockholder”) approved the Originally Intended Reverse Stock Split by written consent on July 18, 2022, in lieu of a meeting of stockholders as permitted under the Nevada Revised Statute (“NRS”) Section 78.320(2) and the company’s bylaws, as then amended (the “Bylaws”). For additional information on the Originally Intended Reverse Stock Split, refer to the Definitive Information Statement filed by the Company with the U.S. Securities and Exchange Commission (the “SEC” or the “Commission”) on July 29, 2022 (the “2022 Information Statement”) and the Form 8-K filed by the Company with the SEC on December 22, 2022, both available on EDGAR at www.sec.gov. On December 20, 2022, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of the State of Nevada (“SOS”) that was intended to effect the Originally Intended Reverse Stock Split (the “Original Articles Amendment”). In April 2023, the Board of Directors determined (i) that the Original Articles Amendment inaccurately stated that the Originally Intended Reverse Stock Split was obtained by a stockholder vote under NRS 78.390, while approval of the stockholders was required under NRS 78.2055, with the holders of common stock voting as a separate class; and (ii) that the Original Articles Amendment was a nullity in that, under Nevada law, filing an amendment to articles of incorporation is not necessary to effectuate a reverse stock split. As a result, the Board of Directors determined that it would be in the best interest of the Company to take corrective action to remedy the inaccuracy and to file the documents that would have been necessary to effectuate a 1-for-750 reverse stock split of the issued and outstanding Common Stock with a corresponding split of the authorized Common Stock (the “Rectified Reverse Stock Split”) and then immediately thereafter increase the number of shares of authorized Common Stock back to the number it was prior to the Rectified Reverse Stock Split as of December 20, 2022. Pursuant to the action of the Company’s board of directors by unanimous written consent on April 21, 2023, the board of directors authorized and approved (i) the Certificate of Correction to correct the Original Articles Amendment (the “Certificate of Correction”), and (ii) the Certificate of Change Pursuant to NRS 78.209 (the “Certificate of Change”) including the Certificate of Validation of the Certificate of Change (the “Change Validation Certificate”) in order to decrease the number of shares of the Company’s issued and outstanding shares of common stock and correspondingly decrease the number of authorized shares of common stock, each at a ratio of 1-for-750 , retroactively effective as of December 20, 2022, without a vote of the stockholders. The board of directors also directed that the Company file the Certificate of Correction with the SOS and thereafter file the Certificate of Change including the Change Validation Certificate with the SOS. Pursuant to the NRS, no stockholder approval for this action was required. The Company will file the Certificate of Correction and the Certificate of Change including the Change Validation Certificate with the SOS no earlier than May 25, 2023, which is the twenty (20) calendar days after the mailing of the Information Statement to the stockholders of record, pursuant to Rule 14c-2 under the Exchange Act. In connection with these corporate actions, the Company filed an Information Statement with the SEC on May 2, 2023. Upon the filing of the Certificate of Correction the Original Articles Amendment will be nullified and the intention to effectuate a reverse stock split of 1-for-750 will be validated retroactively as of December 20, 2022, at the original filing date and time of the Original Articles Amendment. To carry out the original intent of the Originally Intended Reverse Stock Split and in light of the correction, ratification and validation of the Rectified Reverse Stock Split as described above, the Company’s Board of Directors and the Majority Stockholder approved on April 21, 2023 the Authorized Capital Increase Amendment to increase the authorized number of shares of Common Stock from 5,333,334 shares to 4,000,000,000 shares retroactively as of December 20, 2022, in accordance with the board’s and stockholders’ original intent in effecting the Originally Intended Reverse Stock Split. Further, the Board of Directors determined that it was advisable and in the best interests of the Company to amend and restate the Company’s articles of incorporation (as amended to date, the “Current Articles”) to decrease the number of shares of authorized common stock to two hundred million ( 200,000,000 ) and to amend certain other provisions in the Company’s Current Articles (the “Amended and Restated Articles”). The Board of Directors and the Majority Stockholder determined to decrease the number of shares of our authorized common stock in order to reduce the number of shares available for issuance given that the large number of shares of common stock authorized for issuance may have a perceived negative impact on any potential future efforts to attract additional financing due to the dilutive effect of having such a large number of shares available for issuance. On April 21, 2023, the Company’s board of directors and the Majority Stockholder approved the Amended and Restated Articles. All the actions described herein will take effect upon filing with the SOS, which is not expected to take place prior to May 25 , 2023. On May 2, 2023, Atlas Lithium Corporation (the “Company”) and Atlas Litio Brasil Ltda., a Brazilian subsidiary of the Company (the “Company Subsidiary”), entered into a Royalty Purchase Agreement (the “Purchase Agreement”) with Lithium Royalty Corp., a Canadian company listed on the Toronto Stock Exchange (the “LRC”). The transaction contemplated under the Purchase Agreement closed simultaneously on May 2, 2023, whereby the Company Subsidiary sold to LRC in consideration for $ 20,000,000 in cash, a royalty interest equaling 3 % of future gross revenue (the “Royalty”) to be received by the Company Subsidiary from the sale of products from certain 19 mineral rights and properties that are located in Brazil and held by the Company Subsidiary (the “Property”). On the same day, the Company Subsidiary and LRC entered into a Gross Revenue Royalty Agreement (the “Royalty Agreement”) pursuant to which the Company Subsidiary grants LRC the Royalty and undertakes to calculate and make royalty payment on a quarterly basis commencing from the first receipt of the sales proceeds with respect to the products from the Property. The Royalty Agreement contains other customary terms, including but not limited to, the scope of the gross revenue, the Company Subsidiary’s right to determine operations, and LRC’s information and audit rights. Under the Royalty Agreement, the Company Subsidiary also grants LRC a one-year option to purchase additional royalty interest with respect to certain additional Brazilian mineral rights and properties on the same terms and conditions as the Royalty, at a total purchase price of $ 5,000,000 . F- 13 Table of Contents