Atlas Lithium Corp 10-Q

Item 1. FINANCIAL STATEMENTS ATLAS LITHIUM CORPORATION CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, 2023 and December 31, 2022 September 30, December 31, 2023 2022 ASSETS Current assets: Cash and cash equivalents $ 22,857,357 $ 280,525 Accounts receivable - 91 Taxes recoverable 2,355 17,705 Deposits and advances 68,746 47,093 Total current assets 22,928,458 345,414 Property and equipment, net 285,475 217,550 Intangible assets, net 5,911,516 4,971,267 Equity investments - 150,000 Total assets $ 29,125,449 $ 5,684,231 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses $ 2,647,549 $ 2,776,474 Related party notes and other payables - 21,493 Total current liabilities 2,647,549 2,797,967 Deferred consideration from royalties sold 20,000,000 - Other noncurrent liabilities 56,630 78,964 Total liabilities 22,704,179 2,876,931 Stockholders’ Equity: Series A preferred stock, $ 0.001 par value. 1 shares authorized; 1 share issued and outstanding as of September 30, 2023 and December 31, 2022 1 1 Series D preferred stock, $ 0.001 par value. 1,000,000 shares authorized; 0 and 214,006 issued and outstanding as of September 30, 2023 and December 31, 2022, respectively - 214 Preferred stock, value Common stock, $ 0.001 par value. 200,000,000 and 4,000,000,000 shares authorized as of September 30, 2023 and December 31, 2022, respectively and 10,688,727 and 5,110,014 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively 10,689 5,111 Additional paid-in capital 91,608,657 62,258,116 Accumulated other comprehensive loss ( 1,115,798 ) ( 981,040 ) Accumulated deficit ( 83,958,011 ) ( 59,585,949 ) Total Atlas Lithium Co. stockholders’ equity 6,545,538 1,696,453 Non-controlling interest ( 124,268 ) 1,110,847 Total stockholders’ equity 6,421,270 2,807,300 Total liabilities and stockholders’ equity $ 29,125,449 $ 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 and Nine Months Ended September 30, 2023 and 2022 2023 2022 2023 2022 Three months ended September 30 Nine months ended September 30 2023 2022 2023 2022 Revenue - 3,301 - 6,145 Cost of revenue - 27,534 - 63,732 Gross loss - ( 24,233 ) - ( 57,587 ) Operating expenses Professional fees 212,579 45,978 403,179 189,999 General and administrative 1,058,808 478,899 3,672,552 1,101,290 Compensation and related costs 530,538 172,730 2,055,875 559,319 Stock based compensation 3,699,588 386,287 7,680,742 1,029,476 Exploration 5,941,109 163,800 11,633,434 184,221 Total operating expenses 11,442,622 1,247,694 25,445,782 3,064,305 Loss from operations ( 11,442,622 ) ( 1,271,927 ) ( 25,445,782 ) ( 3,121,892 ) Other expense (income) Other expense (income) 295,731 ( 1,917 ) 154,820 ( 3,883 ) Total other expense 295,731 ( 1,917 ) 154,820 ( 3,883 ) Loss before provision for income taxes ( 11,738,353 ) ( 1,270,010 ) ( 25,600,602 ) ( 3,118,009 ) Provision for income taxes - Net loss ( 11,738,353 ) ( 1,270,010 ) ( 25,600,602 ) ( 3,118,009 ) Loss attributable to non-controlling interest ( 458,878 ) ( 241,818 ) ( 1,228,540 ) ( 687,311 ) Net loss attributable to Atlas Lithium Corporation stockholders $ ( 11,279,475 ) $ ( 1,028,192 ) ( 24,372,062 ) $ ( 2,430,698 ) Basic and diluted loss per share Net loss per share attributable to Atlas Lithium Corporation common stockholders $ ( 1.09 ) $ ( 0.22 ) ( 2.76 ) $ ( 0.53 ) Weighted-average number of common shares outstanding: Basic and diluted 10,363,991 4,579,688 8,818,972 4,579,688 Comprehensive loss: Net loss $ ( 11,738,353 ) $ ( 1,270,010 ) ( 25,600,602 ) $ ( 3,118,009 ) Foreign currency translation adjustment ( 247,224 ) ( 267,594 ) ( 141,333 ) 38,870 Comprehensive loss ( 11,985,577 ) ( 1,537,604 ) ( 25,741,935 ) ( 3,079,139 ) Comprehensive loss attributable to noncontrolling interests ( 466,622 ) ( 472,483 ) ( 1,235,115 ) ( 673,300 ) Comprehensive loss attributable to Atlas Lithium Corporation stockholders $ ( 11,518,955 ) $ ( 1,065,121 ) ( 24,506,820 ) $ ( 2,405,839 ) 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’ EQUITY (UNAUDITED) For the Nine Months Ended September 30, 2023 and 2022 Shares Value Shares Value Shares Value Capital Loss Deficit Interests (Deficit) Series A Preferred Stock Series D Preferred Stock Common Stock Additional Paid-in Accumulated Other Comprehensive Accumulated Noncontrolling Total Stockholders’ Shares Value Shares Value Shares Value Capital Loss Deficit Interests Equity 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 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 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 - - - - 2,371,509 2,372 20,522,744 - - - 20,525,116 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 - - - - 96,327 96 2,017,827 - - - 2,017,923 Conversion of convertible preferred D stock into common stock - - ( 214,006 ) ( 214 ) 2,853,413 2,853 - - - - 2,639 Exercise of warrants - - - - 121,014 121 360,361 - - - 360,482 Stock based compensation - - - - 59,210 59 5,399,686 - - - 5,399,745 Change in foreign currency translation - - - - - - - ( 134,758 ) - ( 6,575 ) ( 141,333 ) Sale of Jupiter Gold common stock in connection with equity offerings - - - - - - 300,000 - - - 300,000 Net loss - - - - - - - - ( 24,372,062 ) ( 1,228,540 ) ( 25,600,602 ) Balance, September 30, 2023 1 $ 1 - $ - 10,688,727 $ 10,689 $ 91,608,657 $ ( 1,115,798 ) $ ( 83,958,011 ) $ ( 124,268 ) $ 6,421,270 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 Nine Months Ended September 30, 2023 and 2022 2023 2022 Nine months ended September 30 2023 2022 Cash flows from operating activities of continuing operations: Net loss $ ( 25,600,602 ) ( 3,118,009 ) Adjustments to reconcile net loss to cash used in operating activities: Stock based compensation and services 7,680,742 1,029,476 Issuance of common stock in connection with purchase of mining rights 750,000 - Depreciation and amortization 30,116 ( 16,717 ) Other non cash expenses 159,991 - Changes in operating assets and liabilities: Accounts receivable - 1,154 Taxes recoverable 5,450 ( 579 ) Deposits and advances ( 21,653 ) ( 8,722 ) Accounts payable and accrued expenses 333,269 1,938,819 Deferred consideration from royalties sold 20,000,000 - Other noncurrent liabilities ( 22,334 ) ( 83,715 ) Net cash used in operating activities 3,314,979 ( 258,293 ) Cash flows from investing activities: Acquisition of capital assets ( 98,041 ) ( 46,990 ) Increase in intangible assets ( 1,423,936 ) ( 2,526,836 ) Net cash used in investing activities ( 1,521,977 ) ( 2,573,826 ) Cash flows from financing activities: Net proceeds from sale of common stock 20,522,531 2,613,736 Proceeds from sale of subsidiary common stock to noncontrolling interests 300,000 575,000 Net cash provided by financing activities 20,822,531 3,188,736 Effect of exchange rates on cash and cash equivalents ( 38,701 ) 38,870 Net increase (decrease) in cash and cash equivalents 22,576,832 395,487 Cash and cash equivalents at beginning of period 280,525 22,776 Cash and cash equivalents at end of period $ 22,857,357 $ 418,263 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 (together with its subsidiaries “Atlas Lithium.” the “Company”, “the Registrant”, “we”, “us”, or “our”) 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 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 subsidiaries Mineração Apollo, Ltda., Mineração Duas Barras Ltda. (“MDB”) and RST Recursos Minerais Ltda. (“RST”); and its 27.42 % 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. 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- 5 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 as of September 30, 2023 and December 31, 2022: SCHEDULE OF PROPERTY AND EQUIPMENT September 30, 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 $ 595 $ ( 595 ) $ - $ 571 $ ( 571 ) $ - Machinery and equipment 435,141 ( 387,691 ) 47,450 419,498 ( 362,140 ) 57,358 Vehicles 84,439 ( 83,562 ) 877 80,139 ( 79,021 ) 1,118 Land 237,149 - 237,149 159,074 - 159,074 Total fixed assets $ 757,323 $ ( 471,848 ) $ 285,475 $ 659,282 $ ( 441,732 ) $ 217,550 For the three and nine months ended September 30, 2023, the Company recorded depreciation expense of $ 22,008 and $ 30,116 , respectively, and for the three and nine months ended September 30, 2022, the Company recorded depreciation expense of $ 1,086 and $ 16,717 , 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 as of September 30, 2023 and at December 31, 2022 was $ 5,911,516 and $ 4,971,267 , respectively. The Company previously reported it was acquiring five mineral rights totaling 1,090.88 hectares pursuant to a mineral rights purchase agreement entered into on January 19, 2023 (the “Acquisition Agreement”). After a period of preliminary assessment, the Company and the counterparty to the agreement agreed to revise the terms of the acquisition, following which the Company ultimately consummated the acquisition of only one mineral right totaling 45.77 hectares. The mineral right is 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’s obligations under the Acquisition Agreement as revised are: ● 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; As of September 30 th , 2023, there are no outstanding commitments related to this transaction. F- 6 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, 2023 December 31, 2022 Accounts payable and other accruals $ 2,163,863 $ 408,874 Mineral rights payable 483,687 2,367,600 Total $ 2,647,549 $ 2,776,474 NOTE 3 – DEFERRED CONSIDERATION FROM ROYALTIES SOLD On May 2, 2023, the Company and Atlas Litio Brasil Ltda. (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 (“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 the 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. 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 granted LRC the Royalty and undertook 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 granted LRC an 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 . NOTE 4 – 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 September 30, 2023, and December 31, 2022, amounted to $ 56,630 and $ 78,964 , respectively. NOTE 5 – STOCKHOLDERS’ EQUITY Authorized Stock and Amendments On July 18, 2022, the board of directors of the Company (the “Board of Directors” or “Board”) 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 Commission 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. On May 25, 2023, the Company filed the Certificate of Correction and Certificate of Change including the Change Validation Certificate with the SOS, as also reported in Exhibits 3.2 and 3.1, respectively, to the Form 8-K filed by the Company with the Commission on May 25, 2023. 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. Following the effectiveness of the Certificate of Correction and the Certificate of Change including the Change Validation Certificate filed with the SOS, on May 25, 2023, the Company filed the Amended and Restated Articles, as also reported in Exhibit 3.3 of the Form 8-K filed by the Company with the Commission on May 26, 2023. F- 7 Table of Contents ATLAS LITHIUM CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 5 – STOCKHOLDERS’ EQUITY (CONTINUED) The foregoing corporate actions were disclosed in the Definitive Information Statement on Schedule 14C (the “Information Statement”) filed by the Company with the Commission on May 2, 2023. As also contemplated in the Information Statement, on May 25, 2023, the Company also filed with the SOS a Certificate of Withdrawal of Designation of the Series B Convertible Preferred Stock and the Certificate of Withdrawal of Designation of the Series C Convertible Preferred (collectively, the “Certificates of Withdrawal”). The filings of the Certificates of Withdrawals were effective as of May 25, 2023. As of December 31, 2022, the Company had 4,000,000,000 common shares authorized with a par value of $ 0.001 per share. Pursuant to the vote by a written consent dated April 21, 2023, of the Company’s Majority Stockholder, entitled to 51% of the voting power of the Company’s issued and outstanding voting stock , the number of shares of the Company’s authorized common stock was decreased to 200,000,000 shares. As of September 30, 2023, the Company had 200,000,000 authorized shares of common stock, with a par value of $ 0.001 per share. Reverse Stock Split In connection with the Originally Intended Reverse Stock Split, as corrected by the Rectified Reverse Stock Split, the Company effectuated as of December 20, 2022 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. As rectified, the Reverse Stock Split did not affect the number of shares of authorized stock. 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. Series D Preferred Stock On September 16, 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. Giving effect to the Reverse Stock Split discussed above, each share of Series D Stock is effectively convertible into 13 and 1/3 shares of common stock. 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. Nine Months Ended September 30, 2022, Transactions During the nine months ended September 30, 2022, the Company issued 610,168 shares of common stock for gross proceeds of $ 2,613,736 pursuant to subscription agreements with accredited investors. Additionally, the Company issued 116,959 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, 2023, Transactions On January 9, 2023, the Company, entered into an underwriting agreement (the “Underwriting Agreement”) with 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, 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 Commission and declared effective on January 9, 2023 (the “Registration Statement”). The consummation of the Offering took place on January 12, 2023 (the “Closing”). F- 8 Table of Contents ATLAS LITHIUM CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 5 – STOCKHOLDERS’ EQUITY (CONTINUED) 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 Company previously reported it was acquiring five mineral rights totaling 1,090.88 hectares pursuant to a mineral rights purchase agreement entered into on January 19, 2023 (the “Acquisition Agreement”). After a period of preliminary assessment, the Company and the counterparty to the agreement agreed to revise the terms of the acquisition, following which the Company ultimately consummated the acquisition of only one mineral right totaling 45.77 hectares. The mineral right is 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’s obligations under the Acquisition Agreement as revised are: ● 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; 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”). 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 nine months ended September 30, 2023, the Company sold an aggregate of 192,817 shares of our common stock to Triton Funds, LP for total gross proceeds of $ 1,675,797 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. On May 26, 2023, our CEO and Chairman, Mr. Marc Fogassa, elected to convert 214,006 shares of Series D Stock, representing all of his outstanding shares of Series D Stock at that time, into shares of common stock. As a result, of such conversion, the Company issued Mr. Fogassa 2,853,413 new shares of common stock. Private Placement On July 18, 2023, the Company consummated a transaction with four investors, pursuant to which the Company agreed to issue and sell to the Investors in a Regulation S private placement an aggregate of 526,317 restricted shares of the Company’s common stock, par value $ 0.001 per share. The purchase price for the Shares was $ 19.00 per share, for total gross proceeds of $ 10,000,023 . The Company currently intends to use the proceeds from the Private Placement for general working capital purposes. The Investors each made customary representations, warranties and covenants, including, among other things, that each of the Investors is a “non-U.S. Person” as defined in Regulation S, and that they were not solicited by means of generation solicitation. No broker-dealer or private placement agent was involved in the Private Placement. The Company entered into a certain technical services agreement with one of the Investors with experience in the lithium industry. 2023 Stock Incentive Plan On May 25, 2023, the Board approved the 2023 Stock Incentive Plan (the “Plan”) which enables the grant of stock options, stock appreciation rights, restricted stock, performance shares, stock unit awards, other stock-based awards, and performance-based cash awards, each of which may be granted separately or in tandem with other awards. The number of shares of Company’s common stock issuable pursuant to Plan will be equal to 2,000,000 shares. For a description of the 2023 Stock Incentive Plan, please refer to the Company’s Revised Definitive Information Statement on Schedule 14C filed with the Commission on June 5, 2023. F- 9 Table of Contents ATLAS LITHIUM CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 5 – STOCKHOLDERS’ EQUITY (CONTINUED) Common Stock Options Changes in common stock options for the nine months ended September 30, 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 Exercised ( 16,000 ) 0.75 Outstanding and vested, September 30, 2023 162,672 $ 0.0601 0.57 $ 4,969,608 During the nine months ended September 30, 2023, option holders exercised a total 16,000 options with a $ 0.75 exercise price. These exercises were paid for with 542 options conceded in cashless exercises. As a result of the options exercised, the Company issued 15,458 shares of the Company’s common stock. 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 Issued 174,697 0.1063 Expired ( 2,571 ) 19.75 Outstanding and vested, September 30, 2022 178,672 $ 0.1219 1.80 $ 1,559,465 The common stock options issued in the nine months ended September 30, 2022 were issued with a grant date fair value of $ 58,685 . Series D preferred stock options Options During the nine months ended September 30, 2023 and 2022, the Company granted options to purchase series D stock to directors. The options were valued using the Black-Scholes option pricing model with the following ranges of assumptions: SCHEDULE OF OPTIONS FAIR VALUE ASSUMPTIONS September 30 2023 September 30 2022 Expected volatility 200.03 % – 280.94 % 79.00 % – 206.00 % Risk-free interest rate 3.42 % – 4.19 % 1.51 % – 3.19 % Stock price on date of grant $ 7.0000 - $ 38.8900 $ 1.20 - $ 7.50 Dividend yield 0.00 % 0.00 % Expected term 5 years 5 years Changes in Series D preferred stock options for the nine months ended September 30, 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 $ 0.10 8.94 $ 6,712,912 Issued 27,000 0.10 Outstanding and vested, September 30, 2023 99,000 $ 0.10 8.57 $ 40,395,300 Number of Options Outstanding and Vested Weighted Average Exercise Price(1) Remaining Contractual Life (Years) Aggregated Intrinsic Value Outstanding, January 1, 2022 36,000 $ 0.10 9.44 $ 2,732,400 Issued 27,000 0.10 Outstanding and vested, September 30, 2022 63,000 $ 0.10 9.07 $ 7,427,700 (1) Represents 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- 10 Table of Contents ATLAS LITHIUM CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 5 – STOCKHOLDERS’ EQUITY (CONTINUED) 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 nine months ended September 30, 2023 were issued with a total grant date fair value of $ 1,736,227 , compared to total grant date fair value of $ 570,670 for the Series D preferred stock options issued in the nine months ended September 30, 2022. 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 nine months ended September 30, 2023 and 2022, the Company issued common stock purchase warrants to brokers in connection with the private placement financing. All warrants vest 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 nine months ended September 30, 2023 and 2022 were as follows: SCHEDULE OF WARRANT ACTIVITY Number of Warrants 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) 234,735 8.1336 Warrants exercised(2) ( 439,104 ) 7.6609 Outstanding and vested, September 30, 2023 117,390 $ 10.9570 0.73 $ 2,307,065 (1) The warrants issued in the nine months ended September 30, 2023 had a total grant date fair value of $ 2,156,793 , valued using the Black-Scholes option pricing model with the following assumptions: our stock price on the date of the grant which ranged from $ 8.10 to $ 18.00 , expected dividend yield of 0.0 %, expected volatility of 196.40 % estimated based on historical share price volatility, a risk-free interest rate between 3.43 % and 3.54 %, and an expected term of 5 years. (2) During the nine months ended September 30, 2023, warrant holders exercised a total 439,104 warrants to purchase 380,314 shares of the Company’s common stock. The warrant exercises were executed with exercise prices ranging between $ 5.1085 and $ 8.3325 per share and were paid for with (i) $ 981,541 in cash proceeds to the Company and (ii) 58,790 warrants conceded in cashless exercises. As a result of the warrants exercised, the Company issued 380,314 shares of the Company’s common stock. Number of Warrants 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 $ - Warrants issued(1) 96,397 6.7639 Warrants exercised(2) ( 146,113 ) 8.0767 Outstanding and vested, September 30, 2022 321,770 $ 11.5939 1.79 $ 372,990 F- 11 Table of Contents NOTE 5 – STOCKHOLDERS’ EQUITY (CONTINUED) Common Stock Awards During the nine months ended September 30, 2023, the Company granted 385,626 common stock awards to officers and consultants of the Company, as follows: i. 204,262 restricted shares of common stock issued in compensation for services rendered, signing bonuses and retention incentives, which vested immediately ii. 63,764 restricted shares of common stock which vest in equal annual installments over three years  iii. 97,600 restricted shares of common stock which vest in equal annual installments over four years iv. 20,000 restricted shares of common stock which vest two years after the award date. These restricted shares become unrestricted immediately upon vesting and were issued with a total grant date fair value of $ 6,922,121 , as measured using the Company’s 20-day volume weighted average price trailing to the date of issuance. During the nine months ended September 30, 2023, the Company recognized $ 1,338,015 in stock-based compensation expense in the condensed consolidated statements of operations and comprehensive loss ($ nil , for the nine months ended September 30, 2022). As of September 30, 2023, the Company had 181,364 unvested common stock awards outstanding with vesting dates ranging from November 2023 to September 2027. NOTE 6 – COMMITMENTS AND CONTINGENCIES Rental Commitment The Company rents office space in the U.S. for approximately $ 4,598 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 ATLAS LITHIUM CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 7 – RELATED PARTY TRANSACTIONS Jupiter Gold Corporation During the nine months ended September 30, 2023, Jupiter Gold granted options to purchase an aggregate of 315,000 shares of its common stock to Marc Fogassa at prices ranging between $ 0.01 to $ 1.00 per share. The options were valued at $ 96,097 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 $ 0.85 to $ 2.10 , an illiquidity discount of 75 % , expected dividend yield of 0 %, historical volatility calculated ranging from 298 % to 371 %, risk-free interest rate between a range of 3.42 % to 4.19 %, and an expected term between five and ten years . During the nine months ended September 30, 2023, Marc Fogassa exercised a total 1,115,000 options at a $ 0.98 weighted average exercise price. These exercises were paid for with 386,420 options conceded in cashless exercises. As a result of the options exercised, the Company issued 728,580 shares of the Jupiter Gold’s common stock to Marc Fogassa. On June 13, 2023, the Company purchased 320,700 shares of Jupiter Gold common stock at $ 1.00 per share. 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 Resources Corporation During the nine months ended September 30, 2023, 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 $ 167,822 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 was $ 5.00 , an illiquidity discount of 75 %, expected dividend yield of 0 %, historical volatility calculated ranging from 44.0 % to 58.0 %, risk-free interest rate between a range of 3.42 % to 4.19 %, and an expected term of ten years . 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- 13 Table of Contents ATLAS LITHIUM CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 8 – 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 9 – SUBSEQUENT EVENTS None. F- 14 Table of Contents