Atlas Lithium Corp - Quarter Report: 2022 September (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the quarterly period ended September 30, 2022
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the transition period from ____________ to ____________
Commission File Number 000-55191
ATLAS LITHIUM CORPORATION
(Exact name of registrant as specified in its charter)
| Nevada | 39-2078861 | |
| (State or other jurisdiction of | (IRS Employer | |
| incorporation or organization) | Identification No.) |
Rua Bahia, 2463, Suite 205
Belo Horizonte, Minas Gerais 30.160-012
Brazil
(Address of principal executive offices)
(833) 661-7900
(Registrant’s telephone number, including area code)
Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or, an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company,” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Ticker symbol(s) | Name of each exchange on which registered | ||
| Common Stock | ATLX | OTCQB |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
APPLICABLE ONLY TO CORPORATE ISSUERS
As of October 31, 2022, the registrant had shares of common stock, par value $0.001 per share, issued and outstanding.
TABLE OF CONTENTS
| 2 |
PART I - FINANCIAL INFORMATION
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, $ par value. shares authorized; share issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | 1 | 1 | ||||||
| Series D preferred stock, $ par value. shares authorized; issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | 214 | 214 | ||||||
| Common stock, $ par value. and shares authorized; and 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 |
ATLAS LITHIUM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)
For the Three and Nine Months Ended September 30, 2022 and 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 |
ATLAS LITHIUM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
For the Three Months Ended September 30, 2022 and 2021
| 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 | |||||||||||||||||||||||
| 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 |
ATLAS LITHIUM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) (UNAUDITED)
For the Nine Months Ended September 30, 2022 and 2021
| 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 | |||||||||||||||||||||||
| 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 |
ATLAS LITHIUM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Nine Months Ended September 30, 2022 and 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 |
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 |
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 |
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:
| 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 shares of its common stock in exchange for 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 $ 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 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 |
ATLAS LITHIUM CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS (CONTINUED)
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 shares of common stock authorized with a par value of $ per share.
| F-9 |
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 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 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 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 shares of common stock for gross proceeds of $2,613,736 pursuant to subscription agreements with accredited investors. Additionally, the Company issued 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 shares of common stock for gross proceeds of $816,650 pursuant to subscription agreements with accredited investors. Additionally, the Company issued shares of common stock upon conversion of $1,234,906 in convertible notes payable and accrued interest. Further, the Company issued 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 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 shares of common stock to officers and non-management directors. The options were valued at $ 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 $ to $, expected dividend yield of , historical volatility calculated between and , risk-free interest rate ranging between and , and an expected term of .
As of September 30, 2022, the Company has outstanding common stock options and warrants, with an average exercise price of $, an average time to expiration of years and an aggregated intrinsic value of $.
Series D Stock Options
During the nine months ended September 30, 2022, the Company granted options to purchase an aggregate of shares of Series D stock to officers and directors. The options were valued at $ 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 $ to $, expected dividend yield of , historical volatility calculated between and , risk-free interest rate ranging between and , and an expected term of .
As of September 30, 2022, the Company has outstanding series D stock options, with an average exercise price of $, an average time to expiration of years and an aggregated intrinsic value of $.
| F-10 |
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 shares of its common stock to Marc Fogassa at prices ranging between $to $per share. The options were valued at $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 $to $expected dividend yield of , historical volatility calculated at , risk-free interest rate between a range of to , and an expected term between and .
Apollo Resource Corporation
During the nine months ended September 30, 2022, Apollo Resources granted options to purchase an aggregate of shares of its common stock to Marc Fogassa at a price of $ per share. The options were valued at $ 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 $ to $, expected dividend yield of , historical volatility calculated at , risk-free interest rate between a range of to , and an expected term between and
| F-11 |
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 |
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the notes to those financial statements appearing elsewhere in this Report.
This Quarterly Report contains forward-looking statements. Forward-looking statements for Atlas Lithium Corporation reflect current expectations, as of the date of this Quarterly Report, and involve certain risks and uncertainties. Actual results could differ materially from those anticipated in these forward- looking statements as a result of various factors. Factors that could cause future results to materially differ from the recent results or those projected in forward-looking statements include: unprofitable efforts resulting not only from the failure to discover mineral deposits but also from finding mineral deposits that, though present, are insufficient in quantity and quality to return a profit from production; market fluctuations; government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals, and environmental protection; competition; the loss of services of key personnel; unusual or infrequent weather phenomena, sabotage, government or other interference in the maintenance or provision of infrastructure as well as general economic conditions.
Description of Business
We are a U.S. mineral exploration and mining company with lithium projects and properties in other critical battery metals to power the Green Energy Revolution – nickel, rare earths, graphite, and titanium. Our current focus is on developing our hard-rock lithium project located in Minas Gerais state in Brazil at a well-known, premier pegmatitic district in Brazil. We intend to produce and sell lithium concentrate, a key ingredient for battery supply chain. Lithium is essential for batteries in electric vehicles and demand is expected to outstrip supply.
All of our mineral projects and properties are located in Brazil and, as of the date of this prospectus, our mineral rights portfolio for battery metals includes approximately 72,344 acres (293 km2) for lithium in 59 mineral rights, 54,950 acres for nickel (222 km2) in 15 mineral rights, 30,054 acres (122 km2) for rare earths in seven mineral rights, 22,050 acres (89 km2) for titanium in seven mineral rights, and 13,766 acres (56 km2) for graphite in three mineral rights. We believe that we hold the largest portfolio of lithium mineral exploration properties in Brazil, a premier and well-established jurisdiction for hard-rock lithium. We also believe that we are among the largest holders by size and breadth in exploration projects for other critical and battery metals among publicly traded companies.
We are primarily focused on advancing and developing our hard-rock lithium project located in the state of Minas Gerais, Brazil, where some of our high-potential mineral rights are adjacent to or near large lithium deposits that belong to a competitor, a Nasdaq listed company. Our Minas Gerais Lithium Project is our largest endeavor and consists of 52 mineral rights spread over 56,078 acres (227 km2) and predominantly located within the Brazilian Eastern Pegmatitic Province which has been surveyed by the Brazilian Geological Survey and is known for the presence of hard rock formations known as pegmatites which contain lithium-bearing minerals such as spodumene and petalite. Generally, lithium derived from pegmatites is less costly to purify for uses in high technology applications than lithium obtained from brine. Such applications include the battery supply chain for electric vehicles (“EVs”), an area of expected high growth for the next several decades.
We believe that we can materially increase our value by the acceleration of our exploratory work and quantification of our lithium mineralization. Our initial commercial goal is to be able to enter production of lithium-bearing concentrate, a product which is highly sought after in the battery supply chain for EVs.
According to Benchmark Mineral Intelligence, demand for lithium-ion batteries is set to grow six-fold by 2032 as global automakers scale up production of EVs. To meet the world’s lithium requirements would require 74 new lithium mines with an average size of 45,000 tonnes by 2035.
We also own 44.41% of the shares of common stock of Apollo Resources Corporation (“Apollo Resources”), a private company currently primarily focused on the development of its initial iron mine. We also own approximately 24.22% of Jupiter Gold Corporation (“Jupiter Gold”), a company focused on the development of gold projects and a quartzite mine, and whose shares of common stock are quoted on the OTCQB under the symbol “JUPGF.” The results of operations from both Apollo Resources and Jupiter Gold are consolidated in our financial statements under U.S. GAAP.
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As the self-titled “Mineral Resources Company for the Green Energy Revolution,” we are deeply committed to Environmental, Social, and Corporate Governance (“ESG”) causes. We have an ESG Chief who coordinates our efforts in these important matters. Within the last few years, we planted more than 6,000 trees of diverse types for the benefit of local populations in areas in which we operate and constructed over 1,000 small retention walls to preserve and enhance dirt access roads used by such communities. Separately, many of our work needs have been specifically delegated to firms owned or managed by women and minorities.
We are an exploration stage company and we have no “reserves” as such term is defined by Regulation S-K, Subpart 1300 (“Regulation S-K 1300”).
Operational Update
During the third quarter of 2022, our primary focus was on the continuation of drilling of our Neves Area, one of the 52 mineral rights that comprise our Minas Gerais Lithium Project. Other highlights of the period included:
| ● | We published the initial Technical Report Summary on the Neves Area authored by SLR International Corporation, a premier and independent mineral evaluation firm. This exploration report was prepared in accordance with Regulation S-K 1300. |
| ● | We were approached in an unsolicited manner by two large companies seeking to secure lithium supply and conversations are ongoing; there can be no assurance, however, that these discussions will result in any orders. |
After the end of the third quarter of 2022, the following items have taken place:
| ● | We retained MZ Global, a well-known international consultancy, to lead our investor relations and shareholder communications program. |
| ● | We launched our new website (www.atlas-lithium.com).* |
| ● | We hired a Director of Lithium Processing and have started metallurgical studies towards establishment of our processing route for production of commercial lithium concentrate. |
| ● | We hired a Director of Strategic Development to lead certain business development efforts. |
In addition, and as previously disclosed, we continue to actively work towards the uplisting of our common stock to the Nasdaq Capital Market.
*The information contained in our website is not incorporated by reference into this Quarterly Report on Form 10-Q.
Results of Operations
Three Months Ended September 30, 2022 Compared to the Three Months ended September 30, 2021
Revenue for the three months ended September 30, 2022 totaled $3,301, compared to revenue of $2,984 during the three months ended September 30, 2021 representing an increase of 10.62%. This revenue comes from sales of industrial sand during the rainy season. Industrial sand is a residual business line as we are primarily focused on our lithium exploration program.
Cost of goods sold for the three months ended September 30, 2022 totaled $27,534, as compared to cost of goods sold of $27,382 during the three months ended September 30, 2021 representing an increase of 0.55%. Cost of goods sold is primarily comprised of labor, fuel, and repairs and maintenance on our mining equipment.
Gross loss for the three months ended September 30, 2022 totaled $24,233, compared to gross loss of $24,398 during the three months ended September 30, 2021, representing a decrease of 0.68%.
Operating expenses for the three months ended September 30, 2022 totaled $1,247,694, compared to operating expenses of $707,335 during the three months ended September 30, 2021, representing an increase of 76.39%. The increase was mostly due to higher general and administrative expenses related to public company costs and higher compensation cost of officers and directors.
As a result, we incurred a net loss attributable to our stockholders of $1,028,192, or $0.00 per share, for the three months ended September 30, 2022, compared to a net loss attributable to our stockholders of $619,139, or $0.00 per share, during the three months ended September 30, 2021.
Nine Months Ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021
Revenue for the nine months ended September 30, 2022 totaled $6,145, compared to revenue of $9,088 during the nine months ended September 30, 2021, representing a decrease of 32.38%. This revenue comes from sales of industrial sand during the rainy season. Industrial sand is a residual business line as we are primarily focused on our lithium exploration program.
Cost of goods sold for the nine months ended September 30, 2022 totaled $63,732, as compared to cost of goods sold of $74,476 during the nine months ended September 30, 2021, representing a decrease of 14.43%. Cost of goods sold is primarily comprised of labor, fuel, and repairs and maintenance on our mining equipment. The decrease is explained by reduced production activities and mining costs partially attributable to our exploratory efforts.
Gross loss for the nine months ended September 30, 2022 totaled $57,587, compared to gross loss of $65,388 during the nine months ended September 30, 2021, representing an improvement of 11.93%.
Operating expenses for the nine months ended September 30, 2022 totaled $3,064,305, compared to operating expenses of $2,560,171 during the nine months ended September 30, 2021, representing an increase of 19.69%. The increase was mostly due to higher general and administrative expenses related to public company costs and higher compensation cost of officers and directors.
As a result, we incurred a net loss attributable to our stockholders of $2,430,698, or $0.00 per share, for the nine months ended September 30, 2022, compared to a net loss attributable to our stockholders of $2,161,835, or $0.00 per share, during the nine months ended September 30, 2021.
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Liquidity and Capital Resources
As of September 30, 2022, we had cash and cash equivalents of $418,263 and a working capital deficit of $2,475,660.
Net cash used by operating activities totaled $258,293 for the nine months ended September 30, 2022, compared to net cash used of $1,201,277 during the nine months ended September 30, 2021 representing an decrease in cash used of $942,984. Net cash used in investing activities totaled $2,573,86 for the nine months ended September 30, 2022, compared to net cash used of $272,153 during the nine months ended September 30, 2021, representing an increase in cash used of $2,301,673. Net cash provided by financing activities totaled $3,188,736 for the nine months ended September 30, 2022, compared to $1,237,542 during the nine months ended September 30, 2021, representing an increase in cash provided of $1,951,194.
We have limited working capital, have historically incurred net operating losses, and have not yet received material revenues from the sale of products or services. These factors create substantial doubt about our ability to continue as a going concern.
Our primary sources of liquidity have been derived through proceeds from the (i) issuance of debt and (ii) sales of our equity and the equity of one of our subsidiaries. Our ability to continue as a going concern is dependent upon our ability to generate cash flows from operations and successfully raise new capital through debt issuances and sales of our equity. We have no plans for any significant cash acquisitions in the foreseeable future.
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 us receiving either more or less in local currency than the local currency equivalent at the time of the original activity.
Our 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. 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.
Off-Balance Sheet Arrangements
We currently have no off-balance sheet arrangements.
Critical Accounting Policies and Estimates
Our financial instruments consist of cash and cash equivalents, loans to a related party, accrued expenses, and an amount due to a director. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in our financial statements. If our estimate of the fair value is incorrect at September 30, 2022, it could negatively affect our financial position and liquidity and could result in our having understated our net loss.
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Recent Accounting Pronouncements
Our consolidated financial statements are prepared in accordance with U.S. GAAP. Our significant accounting policies are described in Note 1 of the financial statements. We have reviewed all recent accounting pronouncements issued to the date of the issuance of these financial statements, and we do not believe any of these pronouncements will have a material impact on us.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), we are not required to provide the information required by this Item as we are a “smaller reporting company” as defined by Rule 229.10(f)(1).
Item 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the design, operation, and effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”) as of September 30, 2022. On the basis of that evaluation, management concluded that our disclosure controls and procedures designed to provide reasonable assurance that the information required to be disclosed in reports filed or submitted pursuant to the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “Commission”), and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure were effective.
(b) Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control system is designed to provide reasonable assurance to management and to our Board of Directors regarding the preparation and fair presentation of published financial statements. Our Chief Executive Officer and Chief Financial Officer conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on their evaluation under the framework in Internal Control—Integrated Framework (2013), they concluded that our internal control over financial reporting was effective as of September 30, 2022.
(c) Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred in the quarter ended September 30, 2022 that materially affected, or would be reasonably likely to materially affect, our internal control over financial reporting.
(d) Limitations of the Effectiveness of Internal Controls
The effectiveness of our system of disclosure controls and procedures and internal control over financial reporting is subject to certain limitations, including the exercise of judgment in designing, implementing and evaluating the control system, the assumptions used in identifying the likelihood of future events, and the inability to eliminate fraud and misconduct completely. As a result, there can be no assurance that our disclosure controls and procedures and internal control over financial reporting will detect all errors or fraud. However, our control systems have been designed to provide reasonable assurance of achieving out objectives, and our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures and internal control over financial reporting are effective at the reasonable assurance level.
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PART II OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None material.
Item 1A. RISK FACTORS
There have been no material changes in the risk factors applicable to us from those identified in the Annual Report on Form 10-K for the period ended December 31, 2021 filed with the Commission on March 29, 2022.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the nine months ended September 30, 2022, we received an aggregate of $2,613,736 in gross proceeds from the sale of shares of our unregistered common stock to 13 investors and one director.
All of the above securities were issued in accordance with an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) under Section 4(a)(2) of the Securities Act by virtue of being offered without employing any means of general solicitation and issued to purchasers which represented to us that they are accredited investors and that they were acquiring the securities for investment and could bear the economic risk of the investment.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. MINE SAFETY DISCLOSURES
None
Item 5. OTHER INFORMATION
None
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Item 6. EXHIBITS
(a) Exhibits
Exhibit Number |
Description | |
| 31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ATLAS LITHIUM CORPORATION
| Signature | Title | Date | ||
| /s/ Marc Fogassa | Chief Executive Officer (Principal Executive Officer) | November 1, 2022 | ||
| Marc Fogassa | ||||
| /s/ Gustavo Pereira de Aguiar | Chief Financial Officer (Principal Financial and | November 1, 2022 | ||
| Gustavo Pereira de Aguiar | Accounting Officer) |
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