UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
Amendment No. 1
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For
the quarterly period ended
| 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
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (IRS Employer | |
| incorporation or organization) | Identification No.) |
(Address of principal executive offices, including zip code)
(Former name, former address and former fiscal year, if changed since last report)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The
|
Securities registered pursuant to Section 12(g) of the Act: None
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.
Indicate
by check mark whether the registrant has submitted every Interactive Data File required to be submitted 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).
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 | ☐ | |
| ☒ | 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. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
As of August 9, 2024, there were outstanding shares of the registrant’s common stock.
DOCUMENTS INCORPORATED BY REFERENCE: None.
EXPLANATORY NOTE
This Amendment also changes the Original Form 10-Q to (i) update the address of our principal executive offices; and (ii) amend Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation, to reflect the restated numbers derived from the Restated Financial Statements and corresponding descriptions of our accounting policies.
TABLE OF CONTENTS
| 2 |
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
This Quarterly Report contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact contained in this Quarterly Report are forward-looking statements, including without limitation, statements regarding current expectations, as of the date of this Quarterly Report, our future results of operations and financial position, our ability to effectively process our minerals and achieve commercial grade at scale; risks and hazards inherent in the mining business (including risks inherent in exploring, developing, constructing and operating mining projects, environmental hazards, industrial accidents, weather or geologically related conditions); uncertainty about our ability to obtain required capital to execute our business plan; our ability to hire and retain required personnel; changes in the market prices of lithium and lithium products and demand for such products; the uncertainties inherent in exploratory, developmental and production activities, including risks relating to permitting, zoning and regulatory delays related to our projects; uncertainties inherent in the estimation of lithium resources. These statements involve known and unknown risks, uncertainties and other important factors that may cause actual results, performance, or achievements to differ materially from any future results, performance or achievement expressed or implied by these forward-looking statements.
In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other similar expressions Factors that could cause future results to materially differ from the recent results or those projected in forward-looking statements include, but are not limited to: 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 permitting, royalties, allowable production, importing and exporting of minerals, and environmental protection; competition; the loss of services of key personnel; unusual or infrequent weather phenomena, litigation, sabotage, government or other interference in the maintenance or provision of infrastructure as well as general economic conditions.
The forward-looking statements in this Quarterly Report are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including the factors described under the sections in this Quarterly Report titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other of our filings made with the Securities and Exchange Commission (the “SEC”). Additional information regarding risk factors that may affect us is included in our Annual Report on Form 10-K for fiscal year ended December 31, 2023 (the “2023 Annual Report”) filed with the SEC on March 27, 2024. The risk factors contained in our 2023 Annual Report are updated by us from time to time in Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings that we make with the SEC.
You should read this Quarterly Report and the documents that we reference in this Quarterly Report completely and with the understanding that our actual future results may be materially different from what we expect. Given these uncertainties, we caution you not to place undue reliance on these forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.
| 3 |
PART I - FINANCIAL INFORMATION
Item 1 FINANCIAL STATEMENTS
ATLAS LITHIUM CORPORATION
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 30, 2024 and December 31, 2023
| June 30, 2024 | December 31, 2023 | |||||||
| As restated | As restated | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Inventories | ||||||||
| Taxes recoverable | ||||||||
| Prepaid and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Right of use assets - operating leases, net | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Derivative liabilities | ||||||||
| Convertible Debt | ||||||||
| Operating lease liabilities | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Convertible Debt | ||||||||
| Operating lease liabilities | ||||||||
| Deferred other income | ||||||||
| Other noncurrent liabilities | ||||||||
| Total liabilities | ||||||||
| Stockholders’ Equity: | ||||||||
| Series A preferred stock, $ par value. share authorized; share issued and outstanding as of June 30, 2024 and December 31, 2023 | ||||||||
| Common stock, $ par value. and shares authorized as of June 30, 2024 and December 31, 2023, respectively; and shares issued and outstanding as of June, 2024 and December 31, 2023, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive Profit/(loss) | ( | ) | ||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Atlas Lithium Co. stockholders’ equity | ||||||||
| Non-controlling interest | ||||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
| 4 |
ATLAS LITHIUM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)
For the Three and Six Months Ended June 30, 2024 and 2023
| Three months ended June 30 | Six months ended June 30 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| As restated | As restated | As restated | As restated | |||||||||||||
| Revenue | ||||||||||||||||
| Cost of revenue | ||||||||||||||||
| Gross margin | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Stock-based compensation | ||||||||||||||||
| Exploration | ||||||||||||||||
| Other operating expenses | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other expenses (income) | ||||||||||||||||
| Other expenses (income) | ( | ) | ( | ) | ||||||||||||
| Fair value adjustments, net | ( | ) | ( | ) | ||||||||||||
| Finance costs (income) | ||||||||||||||||
| Total other expenses (income) | ( | ) | ( | ) | ||||||||||||
| Gain / (Loss) before provision for income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | ||||||||||||||||
| Net gain / (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain / (Loss) attributable to non-controlling interest | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net gain / (loss) attributable to Atlas Lithium Corporation stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and diluted gain / (loss) per share | ||||||||||||||||
| Basic and diluted net gain / (loss) per share attributable to Atlas Lithium Corporation common stockholders | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted-average number of common shares outstanding: | 13,721,860 | 9,068,801 | 13,721,662 | 8,966,065 | ||||||||||||
| Comprehensive loss: | ||||||||||||||||
| Net gain / (loss) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Foreign currency translation adjustment | ||||||||||||||||
| Comprehensive gain / (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Comprehensive loss attributable to noncontrolling interests | ( | ( | ) | ( | ) | ( | ) | |||||||||
| Comprehensive gain / (loss) attributable to Atlas Lithium Corporation stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The accompanying notes are an integral part of the consolidated financial statements.
| 5 |
ATLAS LITHIUM CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
For the three Months Ended June 30, 2024 and 2023
| Series A Preferred Stock | Series D Preferred Stock | Common Stock | Additional Paid-in | Accumulated Other Comprehensive | Accumulated | Noncontrolling | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||
| Shares | Value | Shares | Value | Shares | Value | Capital | Loss | Deficit | Interests | (Deficit) | ||||||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||
| Issuance of common stock in connection with sales made | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Conversion of Convertible Preferred D stock into Common Stock | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Stock based compensation | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Change in foreign currency translation | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Balance, June, 2023 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||
| 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, March 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||||||||
| Issuance of common stock in connection with sales made | ||||||||||||||||||||||||||||||||||||||||||||
| under private offerings | - | - | | |||||||||||||||||||||||||||||||||||||||||
| Stock based compensation | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Change in foreign currency translation | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||||||||||
| 6 |
For the Six Months Ended June 30, 2024 and 2023
| 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 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||||
| Issuance of common stock in connection with sales made under private offerings | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock in connection with purchase of mining rights | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Conversion of Convertible Preferred D stock into Common Stock | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Stock based compensation | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Change in foreign currency translation | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2023 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||
| 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, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||||||||
| Issuance of common stock in connection with sales made under private offerings | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock in exchange for consulting, professional and other services | ||||||||||||||||||||||||||||||||||||||||||||
| Stock based compensation | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Change in foreign currency translation | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
| 7 |
ATLAS LITHIUM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months Ended June 30, 2024 and 2023
| Six months ended June 30 | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities of continuing operations: | ||||||||
| Net loss | $ | ( | ) | ( | ) | |||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
| Stock based compensation and services | ||||||||
| Depreciation and amortization | ||||||||
| Interest expense | ||||||||
| Fair value adjustments | ( | ) | ||||||
| Other non cash expenses | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventories | ( | ) | ||||||
| Taxes recoverable | ( | ) | ||||||
| Deposits and advances | ( | ) | ( | ) | ||||
| Other assets | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Consideration from royalty sold | ||||||||
| Other noncurrent liabilities | ( | ) | ( | ) | ||||
| Net cash provided (used) by operating activities | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||
| Acquisition of capital assets | ( | ) | ( | ) | ||||
| Capitalized exploration costs | ( | ) | ||||||
| Increase in intangible assets | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Net proceeds from sale of common stock | ||||||||
| Proceeds from sale of subsidiary common stock to noncontrolling interests | ||||||||
| Cash used in payment of debt | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rates on cash and cash equivalents | ||||||||
| Net increase (decrease) in cash and cash equivalents | ||||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | ||||||||
The accompanying notes are an integral part of the consolidated financial statements.
| 8 |
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 period ended June 30, 2024, the
consolidated financial statements include the accounts of the Company; its
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.
| 9 |
ATLAS
LITHIUM CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION, BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Restatement of Previously Issued Condensed Consolidated Balance Sheets as of June 30, 2024 and Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2024
Subsequent to the issuance of our Original Form 10-Q, management became aware of adjustments to be recorded to our condensed consolidated financial statements as of June 30, 2024. Accordingly, our condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023, and condensed consolidated statements of operations for the three and six months ended June 30, 2024 have been restated as further described below.
The following is a summarized description of the areas in which the errors were identified and for which we made correcting disclosures, reclassification and adjustments to our condensed consolidated financial statements.
(1) Reclassification of mining rights from Intangible assets to PPE in accordance with ASC 930-805, which provides that mining rights should be classified as tangible assets. The Company also reassessed the amounts comprising consolidated Property and equipment and excluded amounts owned by two entities controlled by the same controlling shareholder of the Company from the consolidation as they do not qualify as entities controlled by the Company.
(2) Identified and adjusted errors in the right of use assets - operating leases related to the extension of existing operating lease contract.
(3) Identified bonuses payable to senior executives that were incurred, however not accounted for in the correct year.
(4) Reclassified Tax refinancing from Accounts payable to Other current liabilities to adequate the presentation of each nature of liability which are tax installments agreed to be paid to the government generally in 48 months.
(5) Identified and corrected an amount previously considered as a commission to be paid arising from the Royalty Agreement. The Royalty Agreement was not subject to any commissions payable.
(6) Derecognition of cumulative translation adjustment of Atlas Litio. Its functional currency is US$, and impacts arising from the translation of foreign exchange transactions should not be allocated to OCI.
(7) Reassessed the Company’s interest in each subsidiary’s net assets and concluded that amounts recorded as Non-controlling interest were not reflecting non-controlling shareholders’ interests in the subsidiaries’ net assets.
(8) Identified exploration costs that should be capitalized as disclosed in accounting policies.
| 10 |
ATLAS LITHIUM CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION, BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The following tables present the effect of the aforementioned adjustments on our condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023, and indicate the category of the adjustments by reference to the line item descriptions set forth above:
CONSOLIDATED BALANCE SHEETS
| June 30, 2024 | ||||||||||||||
| As Previously Reported | Adjustments | Description of Adjustments | As restated | |||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
| Accounts receivable | ||||||||||||||
| Inventories | ||||||||||||||
| Taxes recoverable | ||||||||||||||
| Prepaid and other current assets | ||||||||||||||
| Total current assets | ||||||||||||||
| Property and equipment, net | (8) | |||||||||||||
| Intangible assets, net | ||||||||||||||
| Right of use assets - operating leases, net | ( | ) | (2) | |||||||||||
| Other Assets | ||||||||||||||
| Total assets | $ | |||||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Accounts payable and accrued expenses | $ | (3) | ||||||||||||
| Derivative liabilities | ||||||||||||||
| Convertible Debt - short-term | ||||||||||||||
| Other current liabilities | (4) | |||||||||||||
| Operating lease liabilities - current | (2) | |||||||||||||
| Total current liabilities | ||||||||||||||
| Convertible Debt - long-term | ||||||||||||||
| Operating lease liabilities - long-term | ( | ) | (2) | |||||||||||
| Deferred other income | (5) | |||||||||||||
| Other noncurrent liabilities | ||||||||||||||
| Total liabilities | ||||||||||||||
| Stockholders’ Equity: | ||||||||||||||
| Common stock | ||||||||||||||
| Additional paid-in capital | ( | ) | (5) | |||||||||||
| Accumulated other comprehensive loss | ( | ) | (6) | |||||||||||
| Accumulated deficit | ( | ) | (2)(3)(5)(6) | ( | ) | |||||||||
| Total Atlas Lithium Co, stockholders’ equity | ||||||||||||||
| Non-controlling interest | (7) | |||||||||||||
| Total stockholders’ equity | ||||||||||||||
| Total liabilities and stockholders’ equity | $ | |||||||||||||
CONSOLIDATED BALANCE SHEETS
| December 31, 2023 | ||||||||||||||
| As Previously Reported | Adjustments | Description of Adjustments | As Restated | |||||||||||
| ASSETS | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | $ | $ | |||||||||||
| Taxes recoverable | ||||||||||||||
| Prepaid and other current assets | ||||||||||||||
| Total current assets | ||||||||||||||
| Property and equipment, net | (1) | |||||||||||||
| Intangible assets, net | ( | ) | (1) | |||||||||||
| Right of use assets - operating leases, net | ( | ) | (2) | |||||||||||
| Investments | ||||||||||||||
| Total assets | ( | ) | ||||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Accounts payable and accrued expenses | (3) | |||||||||||||
| Derivative liabilities | ||||||||||||||
| Convertible Debt | ||||||||||||||
| Related party notes and other payables | ||||||||||||||
| Operating lease liabilities | (2) | |||||||||||||
| Other current liabilities | (4) | |||||||||||||
| Total current liabilities | ||||||||||||||
| Convertible Debt | ||||||||||||||
| Operating lease liabilities | ( | ) | (2) | |||||||||||
| Deferred other income | (5) | |||||||||||||
| Other noncurrent liabilities | ||||||||||||||
| Total liabilities | ||||||||||||||
| Stockholders’ Equity: | ||||||||||||||
| Common stock | ||||||||||||||
| Additional paid-in capital | ( | ) | (5) | |||||||||||
| Accumulated other comprehensive loss | ( | ) | (6) | ( | ) | |||||||||
| Accumulated deficit | ( | ) | ( | ) | (2)(3)(5)(6) | ( | ) | |||||||
| Total Atlas Lithium Co. stockholders’ equity | ( | ) | ||||||||||||
| Non-controlling interest | (7) | |||||||||||||
| Total stockholders’ equity | ( | ) | ||||||||||||
| Total liabilities and stockholders’ equity | ( | ) | ||||||||||||
| 11 |
ATLAS LITHIUM CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION, BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The following table presents the effect of the aforementioned adjustments on our Consolidated Statements of Operation for the three months ended June 30, 2024 and indicates the category of the adjustments by reference to the above descriptions of the reclassifications or errors for which we made corrections:
| Three months ended June 30, 2024 | ||||||||||||||
| As Previously Reported | Adjustments | Description of Adjustments | As restated | |||||||||||
| Revenue | $ | $ | $ | |||||||||||
| Cost of revenue | ||||||||||||||
| Gross loss | ( | ) | ||||||||||||
| Operating expenses | - | |||||||||||||
| General and administrative expenses | ||||||||||||||
| Stock-based compensation | ||||||||||||||
| Exploration | ( | ) | (8) | |||||||||||
| Other operating expenses | ||||||||||||||
| Total operating expenses | ( | ) | ||||||||||||
| Loss from operations | ( | ) | ( | ) | ||||||||||
| Other expense (income) | ||||||||||||||
| Other expense (income) | ||||||||||||||
| Fair value adjustments, net | ( | ) | ( | ) | ||||||||||
| Finance costs (revenue) | ( | ) | ||||||||||||
| Total other expense | ( | ) | ||||||||||||
| Loss before provision for income taxes | ( | ) | ( | ) | ||||||||||
| Provision for income taxes | ||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||
| Loss attributable to non-controlling interest | ( | ) | ( | ) | ||||||||||
| Net loss attributable to Atlas Lithium Corporation stockholders | ( | ) | $ | ( | ) | |||||||||
| 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 | ||||||||||||||
| Comprehensive loss: | ||||||||||||||
| Net loss | ( | ) | $ | ( | ) | |||||||||
| Foreign currency translation adjustment | ||||||||||||||
| Comprehensive loss | ( | ) | ( | ) | ||||||||||
| Comprehensive loss attributable to NCI | ( | ) | ( | ) | ||||||||||
| Comprehensive loss attributable to Atlas stockholders | ( | ) | $ | ( | ) | |||||||||
| 12 |
The following table presents the effect of the aforementioned adjustments on our condensed consolidated statements of operation for the three and six months ended June 30, 2024 and indicates the category of the adjustments by reference to the line item descriptions set forth above:
| Six months ended June 30, 2024 | ||||||||||||||
| As Previously Reported | Adjustments | Description of Adjustments | As restated | |||||||||||
| Revenue | $ | $ | $ | |||||||||||
| Cost of revenue | ||||||||||||||
| Gross loss | ||||||||||||||
| Operating expenses | - | |||||||||||||
| General and administrative expenses | ||||||||||||||
| Stock-based compensation | ||||||||||||||
| Exploration | ( | ) | (8) | |||||||||||
| Other operating expenses | ||||||||||||||
| Total operating expenses | ( | ) | ||||||||||||
| Loss from operations | ( | ) | ( | ) | ||||||||||
| Other expense (income) | ||||||||||||||
| Other expense (income) | ||||||||||||||
| Fair value adjustments, net | ( | ) | ( | ) | ||||||||||
| Finance costs (revenue) | ||||||||||||||
| Total other expense | ||||||||||||||
| Loss before provision for income taxes | ( | ) | ( | ) | ||||||||||
| Provision for income taxes | ||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||
| Loss attributable to non-controlling interest | ( | ) | ( | ) | ||||||||||
| Net loss attributable to Atlas Lithium Corporation stockholders | ( | ) | $ | ( | ) | |||||||||
| 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 | ||||||||||||||
| Comprehensive loss: | ||||||||||||||
| Net loss | ( | ) | $ | ( | ) | |||||||||
| Foreign currency translation adjustment | ||||||||||||||
| Comprehensive loss | ( | ) | ( | ) | ||||||||||
| Comprehensive loss attributable to NCI | ( | ) | ( | ) | ||||||||||
| Comprehensive loss attributable to Atlas stockholders | ( | ) | $ | ( | ) | |||||||||
| 13 |
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 June 30, 2024 and December 31, 2023:
| June 30, 2024 | December 31, 2023 – as restated | |||||||||||||||||||||||
| Accumulated | Net Book | Accumulated | Net Book | |||||||||||||||||||||
| Cost | Depreciation | Value | Cost | Depreciation | Value | |||||||||||||||||||
| Capital assets subject to depreciation: | ||||||||||||||||||||||||
| Machinery and equipment | ( | ) | ||||||||||||||||||||||
| Land | ||||||||||||||||||||||||
| Prepaid Assets (CIP) | ||||||||||||||||||||||||
| Mining rights | ||||||||||||||||||||||||
| Exploration costs | - | - | - | - | ||||||||||||||||||||
| Total fixed assets | $ | $ | ( | ) | $ | $ | $ | $ | ||||||||||||||||
Exploration costs as drilling, development and related costs are either classified as exploration and charged to operations as incurred, or capitalized, such as to assist with mine planning within a reserve area and whether the drilling or development costs relate to an ore body that has been determined to be commercially mineable and the expenditure embodies a probable future benefit that involves a capacity, singly or in combination with other assets. The basis of the mineral interest is amortized on a units-of-production basis.
Intangible Assets
Intangible
assets consist of cost of software under development (SAP implementation).
The carrying value of these intangible assets as of June 30, 2024 and at December 31, 2023 was $
Accounts Payable and Accrued Liabilities– As Restated
| June 30, 2024 | December 31, 2023 | |||||||
| Accounts payable and other accruals | $ | $ | ||||||
| Mineral rights payable | ||||||||
| Total | $ | $ | ||||||
| 14 |
ATLAS LITHIUM CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS (CONTINUED)
Leases
Finance Leases
For the reporting period ended June 30, 2024, no financial leases meeting the criteria outlined in ASC 842 have been identified.
Operating Leases
Right of use (“ROU”) assets and lease liabilities are recognized at the lease commencement date based on the present value of the future lease payments over the lease term. When the rate implicit to the lease cannot be readily determined, we utilize our incremental borrowing rate in determining the present value of the future lease payments. The ROU asset includes any lease payments made and lease incentives received prior to the commencement date. Operating lease ROU assets also include any cumulative prepaid or accrued rent when the lease payments are uneven throughout the lease term. The ROU assets and lease liabilities may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. The ROU and lease liabilities are primarily related to commercial offices with third parties.
The
lease agreements have terms between
| Lease liabilities at December 31, 2023– as restated | $ | |||
| Additions | $ | |||
| Interest expense | $ | |||
| Lease payments | $ | ( | ) | |
| Foreign exchange | ( | ) | ||
| Lease liabilities at June 30, 2024– as restated | $ | |||
| Current portion | $ | |||
| Non-current portion | $ |
The maturity of the lease liabilities (contractual undiscounted cash flows) is presented in the table below:
| Less than one year | $ | |||
| Year 2 | $ | |||
| Year 3 | $ | |||
| Year 4 | $ | |||
| Total contractual undiscounted cash flows– as restated | $ |
| 15 |
ATLAS LITHIUM CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS (CONTINUED)
Convertible Debt
| June
30, 2024 | December
31, 2023 | |||||||
| Due to Nanyang Investment Management Pte Ltd | ||||||||
| Due to Jaeger Investments Pty Ltd | ||||||||
| Due to Modha Reena Bhasker | ||||||||
| Due to Clipper Group Limited | ||||||||
| Total convertible debt | $ | $ | ||||||
| Current portion | $ | $ | ||||||
| Non-current portion | $ | $ | ||||||
On
November 7, 2023, the Company entered into a convertible note purchase agreement (the “Convertible Note”) with Mr.
Martin Rowley (“Mr. Rowley”) and other investors to raise up to $
| - | Maturity
date: |
| - | Principal repayment terms: due on maturity; |
| - | Interest
rate: |
| - | Interest payment terms: due semiannually in arrears until maturity, unless converted or redeemed earlier and payable at the election of the holder in cash, in shares of common stock, or in any combination thereof; |
| - | Conversion right: the holder retains a right to convert all or any portion of the note into shares of the Company’s common stock at the Conversion Price up until the maturity date; and |
| - | Conversion
price: US$ |
| - | Redemption
right: the Company shall vest a right to redeem the convertible notes if and when |
On
November 7, 2023, the Company issued $
In
the three and six months ended June 30, 2024, the Company recorded the following in the consolidated statement of operations and
comprehensive loss: (i) $
Derivative Liabilities
| June
30, 2024 | December
31, 2023 | |||||||
| Derivative liability – conversion feature on the convertible debt | ||||||||
| Derivative liability – other stock incentives | ||||||||
| Total derivative liabilities | $ | $ | ||||||
| 16 |
ATLAS LITHIUM CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS (CONTINUED)
a) Derivative liability – embedded conversion feature on convertible debt
On November 7, 2023, the Company issued convertible promissory notes to Mr. Rowley (a senior adviser to the Company and the father of Nicholas Rowley, the Company’s Vice President of Business Development), and other investors. In accordance with FASB ASC 815, the conversion feature of the convertible debt was determined to be an embedded derivative. As such, it was bifurcated from the host debt liability and was recognized as a derivative liability in the consolidated balance sheets. The derivative liability is measured at fair value through profit or loss.
At
December 31, 2023, the fair value of the embedded conversion feature was determined to be $
| Value cap | Value floor | |||||||
| Measurement date | December
31, 2023 | December
31, 2023 | ||||||
| Number of options | ||||||||
| Stock price at fair value measurement date | $ | $ | ||||||
| Exercise price | $ | $ | ||||||
| Expected volatility | % | % | ||||||
| Risk-free interest rate | % | % | ||||||
| Dividend yield | % | % | ||||||
| Expected term (years) | ||||||||
At
June 30, 2024, the fair value of the embedded conversion feature was determined to be $
| Value cap | Value floor | |||||||
| Measurement date | June
30, 2024 | June
30, 2024 | ||||||
| Number of options | ||||||||
| Stock price at fair value measurement date | $ | $ | ||||||
| Exercise price | $ | $ | ||||||
| Expected volatility | % | % | ||||||
| Risk-free interest rate | % | % | ||||||
| Dividend yield | % | % | ||||||
| Expected term (years) | ||||||||
In the Black-Scholes collar option pricing models, the expected volatilities were based on historical volatilities of the securities of the Company and its trading peers, and the risk-free interest rates were determined based on the prevailing rates at the grant date for U.S. Treasury Bonds with a term equal to the expected term of the instrument being valued.
In
the three and six months ended June 30, 2024, the Company recognized a $
| 17 |
ATLAS LITHIUM CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS (CONTINUED)
b) Derivative liability – other stock incentives
The employment agreement of a Vice President of the Company, dated September 30, 2023, provides for the issuance of shares of the Company’s common stock based on us achieving certain market capitalization milestones. As of June 30, 2024, the Company’s obligations under this employment agreement contemplates the issuance of additional shares of the Company’s common stock in five tranches, each representing of the Company’s common stock outstanding at the time of vesting, with an expiry date of December 31, 2026 and market vesting conditions as follows:
| - | Tranche 3: when the Company achieves a $ million market capitalization |
| - | Tranche 4: when the Company achieves a $ million market capitalization |
| - | Tranche 5: when the Company achieves a $ million market capitalization |
| - | Tranche 6: when the Company achieves a $ million market capitalization |
| - | Tranche 7: when the Company achieves a $billion market capitalization |
In accordance with FASB ASC 815, these RSU awards were classified as a liability, measured at fair value through profit or loss, and compensation expense is recognized over the expected term.
As at June 30, 2024, Tranche 3, Tranche 4, Tranche 5, Tranche 6 and Tranche 7 remain outstanding and unvested, and the total fair value of these outstanding rights to receive restricted stock was $, as measured using a Monte Carlo Simulation with the following ranges of assumptions: the Company’s stock price on the June 30, 2024 measurement date, expected dividend yield of , expected volatility between and , risk-free interest rate between a range of to , and an expected term of years. The expected volatilities were based on historical volatilities of the securities of the Company and its trading peers, and the risk-free interest rates were determined based on the prevailing rates at the grant date for U.S. Treasury Bonds with a term equal to the expected term of the award being valued.
As at December 31, 2023, Tranche 3, Tranche 4, Tranche 5, Tranche 6 and Tranche 7 remain outstanding and unvested, and the total fair value of these outstanding rights to received restricted stock was $, as measured using a Monte Carlo Simulation with the following ranges of assumptions: the Company’s stock price on the December 31, 2023 measurement date, expected dividend yield of , expected volatility between and , risk-free interest rate between a range of to , and an expected term between months and months. The expected volatilities were based on historical volatilities of the securities of the Company and its trading peers, and the risk-free interest rates were determined based on the prevailing rates at the grant date for U.S. Treasury Bonds with a term equal to the expected term of the award being valued.
NOTE 3 – DEFERRED OTHER INCOME
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 $
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 payments 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 interests 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 $
NOTE 4 – OTHER NONCURRENT LIABILITIES
Other noncurrent liabilities are comprised solely of tax refinancing programs at our operating subsidiaries located in Brazil. The balance of these
tax liabilities as of June 30, 2024, and December 31, 2023, amounted to $
| 18 |
ATLAS LITHIUM CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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”) approved a reverse
stock split of the Company’s issued and outstanding shares of common stock at a ratio of
On
December 20, 2022, the Company made the appropriate filings with the Secretary of State of the State of Nevada (“SOS”) that
were intended to effect the Originally Intended Reverse Stock Split (the “Original Articles Amendment”). In April 2023, the
Board determined that due to an error, the Original Articles Amendment was a nullity and 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
On
April 21, 2023, the Board authorized and approved the necessary documents and filings with the SOS to decrease the number 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
| 19 |
ATLAS LITHIUM CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 – STOCKHOLDERS’ EQUITY (CONTINUED)
Further, the Board determined that it was advisable and in the best interests of the Company to amend and restate the Company’s articles of incorporation to decrease the number of shares of authorized common stock to two hundred million () and to amend certain other provisions in the Company’s articles (the “Amended and Restated Articles”). The Board and the Majority Stockholder determined to decrease the number of shares of authorized common stock to reduce the number of shares available for issuance given the negative perception the dilutive effect of having such a large number of shares available for issuance may have on any potential future efforts to attract additional financing. On April 21, 2023, the Board and the Majority Stockholder approved the Amended and Restated Articles. On May 25, 2023, the Company made the appropriate filings with the SOS to effect the changes as described above.
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 a Certificate of Withdrawal of Designation of the Series C Convertible Preferred which were effective as of May 25, 2023.
As of December 31, 2023 and June 30, 2024, the Company had authorized shares of common stock, with a par value of $ per share.
Series A Preferred Stock
On
December 18, 2012, the Company filed with the SOS 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 D Preferred Stock
On
September 16, 2021, the Company filed with the SOS 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 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 shares of common stock
and may be converted at any time at the election of the holder.
| 20 |
ATLAS LITHIUM CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 – STOCKHOLDERS’ EQUITY (CONTINUED)
Six Months Ended June 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 shares of the Company’s common stock, to the Representative, at a public offering price of $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 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 SEC and declared effective on January 9, 2023 (the “Registration Statement”). The consummation of the Offering took place on January 12, 2023 (the “Closing”).
In
connection with the Closing, the Company issued to the Representative, and/or its permitted designees, as a portion of the
underwriting compensation payable to the Representative, warrants to purchase an aggregate of
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
restricted shares of the Company’s common stock (the “Shares”). The purchase price for the Shares was $
per share, for total gross proceeds of $
On February 1, 2023, the Company acquired one mineral right totaling
On May 26, 2023, our CEO elected to convert 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 to our CEO new shares of common stock.
Additionally,
during the six months ended June 30, 2023, the Company sold an aggregate of
shares of our common stock to Triton Funds, LP for total gross proceeds of $
Lastly, during the six months ended June 30, 2023, the Company issued shares of common stock to officers and consultants in compensation for services rendered.
Six Months Ended June 30, 2024 Transactions
During
the six months ended June 30, 2024, the Company issued new shares of Common Stock, including (i) shares issued to an accredited investor for gross proceeds of $
| 21 |
ATLAS LITHIUM CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 – STOCKHOLDERS’ EQUITY (CONTINUED)
Common Stock Options
During the six months ended June 30, 2024 and 2023, the Company granted options to purchase common stock to officers, consultants and non-management directors. The options were valued using the Black-Scholes option pricing model with the following ranges of assumptions:
| June 30, 2024 | June 30, 2023 | |||||||
| Expected volatility | – | % | – | % | ||||
| Risk-free interest rate | – | % | – | % | ||||
| Stock price on date of grant | $ –$ | $ – $ | ||||||
| Dividend yield | % | % | ||||||
| Illiquidity discount | % | % | ||||||
| Expected term | to years | years | ||||||
Changes in common stock options for the six months ended June 30, 2024 and 2023 were as follows:
| Number of Options Outstanding and Vested | Weighted Average Exercise Price | Remaining Contractual Life (Years) | Aggregated Intrinsic Value | |||||||||||||
| Outstanding and vested, January 1, 2024 | $ | $ | ||||||||||||||
| Issued (1) | ||||||||||||||||
| Exercised | ||||||||||||||||
| Outstanding and vested, June 30, 2024 | $ | $ | ||||||||||||||
| Number of Options Outstanding and Vested | Weighted Average Exercise Price | Remaining Contractual Life (Years) | Aggregated Intrinsic Value | |||||||||||||
| Outstanding and vested, January 1, 2023 | $ | $ | ||||||||||||||
| Issued (2) | ||||||||||||||||
| Exercised (3) | ( | ) | ||||||||||||||
| Outstanding and vested, June 30, 2023 | $ | $ | ||||||||||||||
| 1) | In the six months ended June 30, 2024, common stock options were issued with a grant date fair value of $. |
| 2) | In the six months ended June 30, 2023, common stock options were issued with a grant date fair value of $. |
| 3) | In the six months ended June 30, 2023, common stock option holders exercised a total options at a weighted average exercise price of $ to purchase 15,458 shares of the Company’s common stock. The 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 common stock. |
During three and six months ended June 30, 2024, the Company recorded $ and $ in stock-based compensation expense from common stock options in the consolidated statements of operations and comprehensive loss ($ and $, during the three and six months ended June 30, 2023).
| 22 |
ATLAS LITHIUM CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 – STOCKHOLDERS’ EQUITY (CONTINUED)
Series D Preferred Stock Options
As of and for the six months ended June 30, 2024, the Company had no Series D preferred stock options outstanding and no shares of Series D Stock outstanding. During the six months ended June 30, 2023, the Company granted options to purchase series D stock to two of the Company’s directors. All Series D preferred stock options vested immediately at the grant date and were exercisable for a period of ten years from the date of issuance. The options were valued using the Black-Scholes option pricing model with the following ranges of assumptions:
| June 30, 2023 | ||||
| Expected volatility | – | % | ||
| Risk-free interest rate | - | % | ||
| Stock price on date of grant | $ - $ | |||
| Dividend yield | % | |||
| Illiquidity discount | % | |||
| Expected term | years | |||
Changes in Series D preferred stock options for the six months ended June 30, 2023 were as follows:
| Number of Options Outstanding and Vested | Weighted Average Exercise Price (1) | Remaining Contractual Life (Years) | Aggregated Intrinsic Value | |||||||||||||
| Outstanding and vested, January 1, 2023 | $ | $ | ||||||||||||||
| Issued (2) | ||||||||||||||||
| Outstanding and vested, June 30, 2023 | $ | $ | ||||||||||||||
| (1) |
| (2) |
During the three and six months ended June 30, 2024, the Company recorded $ and $, respectively, in stock-based compensation expense from Series D preferred stock options in the consolidated statements of operations and comprehensive loss ($ and $, respectively, during the three and six months ended June 30, 2023).
| 23 |
ATLAS LITHIUM CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 – STOCKHOLDERS’ EQUITY (CONTINUED)
Common Stock Purchase Warrants
Common 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 six months ended June 30, 2024, the Company did not issue any common stock purchase warrants. During the six months ended June 30, 2023, the Company issued common stock purchase warrants to investors, finders and brokers in connection with the Company’s equity financings. All warrants vest within 180 days from issuance and are exercisable for a period of one to five years from the date of issuance. The common stock purchase warrants were valued using the Black-Scholes option pricing model with the following ranges of assumptions:
| June 30, 2023 | ||||
| Expected volatility | % | |||
| Risk-free interest rate | - | % | ||
| Stock price on date of grant | $ | - $ | ||
| Dividend yield | % | |||
| Expected term | s years | |||
Changes in common stock purchase warrants for the six months ended June 30, 2024 and June 30, 2023 were as follows:
| Number of Warrants Outstanding and Vested | Weighted Average Exercise Price | Weighted Average Contractual Life (Years) | Aggregated Intrinsic Value | |||||||||||||
| Outstanding and vested, January 1, 2024 | $ | $ | ||||||||||||||
| Outstanding and vested, June 30, 2024 | $ | $ | ||||||||||||||
| Number of Warrants Outstanding and Vested | Weighted Average Exercise Price | Weighted Average Contractual Life (Years) | Aggregated Intrinsic Value | |||||||||||||
| Outstanding and vested, January 1, 2023 | $ | $ | ||||||||||||||
| Warrants issued (1) | $ | |||||||||||||||
| Warrants exercised (2) | ( | ) | $ | |||||||||||||
| Outstanding and vested, June 30, 2023 | $ | $ | ||||||||||||||
| 1) | |
| 2) |
During the three and six months ended June 30, 2024, the Company recorded the following as a result of the common
stock purchase warrant activity: (i) $ and $, respectively, in stock-based compensation expense in the consolidated statements of
operations and comprehensive loss ($ and $, respectively, during the three and six months ended June 30, 2023), and
(ii) $ and $, respectively, in share issuance costs in the consolidated statement of changes in equity ($ and $
| 24 |
ATLAS LITHIUM CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 – STOCKHOLDERS’ EQUITY (CONTINUED)
Restricted Stock Units (“RSUs”)
Restricted stock units (“RSUs”) are granted by the Company to its officers, consultants and directors of the Company as a form of stock-based compensation. The RSUs are granted with varying immediate-vesting, time-vesting, performance-vesting, and market-vesting conditions as tailored to each recipient. Each RSU represents the right to receive one share of the Company’s common stock immediately upon vesting.
| Number
of RSUs Outstanding | ||||
| Outstanding at January 1, 2024 | ||||
| Granted (1) | ||||
| Vested (2) | ( | ) | ||
| Expired (3) | ( | ) | ||
| Outstanding at June 30, 2024 | ||||
| Number
of RSUs Outstanding | ||||
| Outstanding at January 1, 2023 | ||||
| Granted (4) | ||||
| Vested (5) | ( | ) | ||
| Outstanding at June 30, 2023 | ||||
| 1) | ||
| 2) | ||
| 3) | ||
| 4) | ||
| 5) |
During the three and six months ended June 30, 2024, the Company recorded $ and $ in stock-based compensation expense from the Company’s RSU activity in the period ($ and $, respectively, during the three and six months ended June 30, 2023). As of June 30, 2024, there were RSUs outstanding and rights to receive shares of common stock as a result of RSU vesting (December 31, 2023: RSUs outstanding and rights to receive shares of common stock as a result of RSU vesting).
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ATLAS LITHIUM CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 – STOCKHOLDERS’ EQUITY (CONTINUED)
Other stock incentives measured at fair value through profit or loss
As
of June 30, 2024, the Company had certain other outstanding obligations to issue shares of the Company’s common stock in case
some markets conditions are met pursuant to an officer’s employment agreement, as further disclosed in the ‘Derivative
liabilities’ section above. These were designated as liability-classified awards and are measured at fair value through profit
or loss. As of June 30, 2024, the company recognized a $
NOTE 6 – COMMITMENTS AND CONTINGENCIES
Commitments
The following table summarizes certain of Atlas’s contractual obligations at June 30, 2024 (in thousands):
| Total | Less than 1 Year | 1-3 Years | 3-5 Years | More than 5 Years | ||||||||||||||||
| Lithium processing plant construction (1) | $ | $ | $ | $ | $ | |||||||||||||||
| Total | ||||||||||||||||||||
| (1) |
Please see commitments related to Leases in Note 2.
NOTE 7 – RELATED PARTY TRANSACTIONS
Related party transactions are recorded at the exchange amount transacted as agreed between the Company and the related party. All the related party transactions have been reviewed and approved by the Board.
The Company’s related parties include:
| Martin Rowley | ||
| Jaeger Investments Pty Ltd (“Jaeger”) | ||
| RTEK International DMCC (“RTEK”) | ||
| Shenzhen Chengxin Lithium Group Co., Ltd | ||
| Sichuan Yahua Industrial Group Co., Ltd |
Technical Services Agreement:
In July 2023, the Company entered into a technical service agreement (“Technical Services Agreement”) with RTEK pursuant to which RTEK agreed to provide the Company certain mining engineering, planning and business development services. Messrs. Nick Rowley and Brian Talbot are the founders and principals of RTEK. On March 31, 2024, the Technical Services Agreement was amended and restated (the “Amended and Restated RTEK Agreement”) to reflect that part of the compensation originally scheduled to be paid to RTEK was allocated as compensation for Mr. Talbot in connection with his appointment as the Company’s director and Chief Operating Officer. Any unvested RSUs shall immediately vest in the event of a Change in Control (as defined in the Company’s 2023 Equity Incentive Plan).
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ATLAS LITHIUM CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 – RELATED PARTY TRANSACTIONS (CONTINUED)
Convertible Note Purchase Agreement:
In November 2023, the Company entered into a Convertible Note Purchase Agreement with Mr. Rowley relating
to the issuance to Mr. Rowley along with other experienced lithium investors, of convertible promissory notes with an aggregate total
principal amount of $
Offtake and Sales Agreements:
In December 2023, the Company entered into Offtake and Sales Agreements with each of Sichuan Yahua Industrial Group
Co., Ltd. and Sheng Wei Zhi Yuan International Limited, a subsidiary of Shenzhen Chengxin Lithium Group Co., Ltd., pursuant to which
the Company agreed, for a period of five (
On March 28, 2024, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Mitsui through which it sold and issued an aggregate of shares of its Common Stock in a registered direct offering (the “Registered Offering”) at a purchase price of $per share. The Purchase Agreement contains customary representations and warranties, covenants and indemnification rights and obligations of the Company and the Investor. The closing occurred on April 4, 2024.
The
gross proceeds from the Registered Offering were $
In
connection with the closing of the Registered Offering, our subsidiary Atlas Brasil and the Investor entered into an Offtake and Sales
Agreement, pursuant to which Atlas Brazil agreed to sell and deliver to the Investor, and the Investor agreed to purchase and take delivery
of, (
The related parties outstanding amounts and expenses as of June 30, 2024 and December 31, 2023 are shown below:
| June 30, 2024 | December 31, 2023 | |||||||||||||||
| Accounts Payable / Debt | Expenses / Payments | Accounts Payable / Debt | Expenses / Payments | |||||||||||||
| RTEK International | $ | $ | $ | $ | ||||||||||||
| Jaeger Investments Pty Ltd. | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
In the course of preparing consolidated financial statements, we eliminate the effects of various transactions conducted between Atlas and its subsidiaries and among the subsidiaries.
Jupiter Gold Corporation
During the six months ended June 30, 2024, Jupiter Gold settled a $ remaining balance due of compensation owed to Marc Fogassa in his role as Jupiter Gold’s CEO, as of June 30, 2024 through the issuance of shares of common stock of Jupiter Gold at a price of $ per share.
Also
during the six months ended June 30, 2024, Jupiter Gold granted its CEO options to purchase an aggregate of
shares of its common stock 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 Jupiter Gold’s stock price on the date of the grant ($
to $),
an illiquidity discount of %,
expected dividend yield of %,
historical volatility calculated between %
and %,
risk-free interest rate between a range of %
to %,
and an expected term between
and
years. During the six months ended June 30, 2024, Jupiter Gold’s CEO exercised a total options at a $ weighted average exercise price. These exercises were paid for with $
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ATLAS LITHIUM CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 – RELATED PARTY TRANSACTIONS (CONTINUED)
During
the six months ended June 30, 2023, Jupiter Gold granted options to purchase an aggregate of
shares of its common stock to its CEO 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 Jupiter Gold’s stock price on the date of the grant which ranged from $
to $,
expected dividend yield of %,
historical volatility calculated ranging from % to %, risk-free interest rate between a range of %
to %,
and an expected term between
and . During the six months ended June 30, 2023, Jupiter Gold’s CEO exercised a total
options at a $
weighted average exercise price. These exercises were paid for with
On June 13, 2023, the Company purchased shares of Jupiter Gold common stock at $ per share.
Apollo Resources Corporation
During the six months ended June 30, 2024, Apollo Resources settled a $ remaining balance due of compensation owed to Mr. Fogassa in his role as Apollo Resources’ CEO, as of June 30, 2024 through the issuance of shares of common stock of Apollo Resources at a price of $ per share.
Also
during the six months ended June 30, 2024, Apollo Resources granted options to purchase an aggregate of shares
of its common stock to its CEO at a price of $per
share. The options were valued at $and
recorded to stock-based compensation. The options were valued using the Black-Scholes option pricing model with the following
average assumptions: the Apollo Resources’ stock price on the date of the grant ($),
an illiquidity discount of %,
expected dividend yield of %,
historical volatility calculated between %
and %,
risk-free interest rate between a range of %
to %,
and an expected term of years.
During the six months ended June 30, 2024, Apollo Resources’ CEO exercised a total options at a $ weighted average exercise price. These exercises were paid
for with $
During the six months ended June 30, 2023, Apollo Resources granted its CEO options to purchase an aggregate of shares of its common stock 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 Apollo Resources’ stock price on the date of the grant which was $, an illiquidity discount of %, expected dividend yield of %, historical volatility calculated ranging from % to %, risk-free interest rate between a range of % to %, and an expected term of . As of June 30, 2023, options to purchase an aggregate shares of common stock of Apollo Resources were outstanding with a weighted average life of years at a weighted average exercise price of $ and an aggregated intrinsic value of $.
NOTE 8 – 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 Company. 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 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.
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ATLAS LITHIUM CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 – SUBSEQUENT EVENTS
Contract termination agreement
On
July 1, 2024, the Company entered into a contract termination agreement with a private advisory firm pursuant to which the Company
agreed to pay the following consideration immediately on execution of the agreement:
Resignation of Chief Financial Officer
On July 17, 2024, Gustavo P. Aguiar resigned as the Company’s Chief Financial Officer (serving as the principal financial and accounting officer) and Treasurer of the Company. Mr. Aguiar’s resignation was not due to any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.
Appointment of New Chief Financial Officer
On
July 23, 2024, the Company’s Board appointed Tiago Moreira de Miranda, age 40, as the Company’s new Chief Financial
Officer, Principal Accounting Officer, and Treasurer, effective immediately. From February 2024 until July 2024, Mr. Miranda was the
Chief Financial Officer of Apollo Resources. In consideration for his services as an officer of the Company, Mr. Miranda will: (i)
receive cash compensation of US$per
month; (ii) have the opportunity, based on achieving certain specific performance metrics, to earn additional annual compensation of
up to US$
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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 included in Item 1 of this Quarterly Report on Form 10-Q (this “Quarterly Report”) and our consolidated financial statements and notes thereto and related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023
This Quarterly Report includes forward-looking statements that are subject to risks, uncertainties and other factors described in the section entitled “Risk Factors” in Item 1.A. of Part II of this Report that could cause actual results could differ materially from those anticipated in these forward-looking statements. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future.
Overview
Atlas Lithium Corporation (“Atlas Lithium”, the “Company”, “we”, “us”, or “our” refer to Atlas Lithium Corporation and its consolidated subsidiaries) is a mineral exploration and development company with a developing lithium project and multiple lithium exploration properties. In addition, we own exploration properties in other battery minerals, including nickel, copper, rare earths, graphite, and titanium. Our current focus is the development from exploration to future active mining of our hard-rock lithium project located in the state of Minas Gerais in Brazil at a well-known pegmatitic district in Brazil, which has been denominated by the government of Minas Gerais as “Lithium Valley.” We intend to mine and then process our lithium-containing ore to produce lithium concentrate (also known as spodumene concentrate), a key ingredient for the battery supply chain.
We are building a modular plant targeted at producing up to 150,000 tons of lithium concentrate per annum (“tpa”) in what we describe as Phase I. We plan on adding additional modules to the plant with the intent of doubling its production capacity to up to 300,000 tpa in Phase II. However, there can be no assurance that we will have the necessary capital resources to develop such facility or, if developed, that we will reach the production capacity necessary to commercialize our products and with the quality needed to meet market demand.
All our mineral projects and properties are located in Brazil, a well-established mining jurisdiction. Our lithium properties include approximately 53,942 hectares (539 km2) divided in 95 mineral rights (2 in pre-mining concession stage, 85 in exploration stage, and 8 in pre-exploration stage).
In addition, we also have a few additional lithium mineral rights that are in the process of being acquired and not yet titled in our name.
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We are primarily focused on advancing and developing our hard-rock lithium project located in the state of Minas Gerais, Brazil. Our Minas Gerais Lithium Project (“MGLP”) consists of 85 mineral rights spread over approximately 468 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. Our primary area of focus is the Neves Project, which is part of MGLP. The Neves Project has been drilled extensively and presents spodumene-bearing deposits amenable to open pit mining, with generation of ore material that can be processed by dense media separation technique to yield lithium concentrate, a commercial product within the battery supply chain.
We own approximately 47.58% of the shares of common stock of Apollo Resources, a private company primarily focused on the development of its initial iron mine.
We also own approximately 22.30% of the shares of common stock of Jupiter Gold, a company with an operating quartzite quarry and gold projects in exploration phase, the common stock of which is quoted on the OTCQB marketplace 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.
Operational Update
During the second quarter of 2024, Atlas Lithium achieved important milestones across several key operational areas including:
| Ø | Geotechnical drilling program in the Neves Project advanced to approximately 80% completion as of June 30, 2024, with full completion expected by end of August 2024. This program provides crucial data for mine planning and design. |
| Ø | Metallurgical studies for both Anitta 2 and Anitta 3 deposits within the Neves Project were successfully completed. |
| Ø | The core components of the modular dense media separation (DMS) lithium processing plant underwent trial assembly and are in the process of being packaged for shipment. Atlas Lithium has designed its processing plant as a series of compact, preassembled modules, an approach that appears to have never before been used for lithium processing in Brazil. This modular configuration reduces the plant’s physical footprint compared to traditional designs. It will also enable more efficient transportation, installation, and commissioning. |
| Ø | SAP enterprise software was successfully installed.
In June 2024, Apollo Resources received from the state regulatory authority a 10-year license to mine its iron ore property in the Iron Quadrangle region of Minas Gerais, Brazil.
In July 2024, a U.S. company ordered polished quartzite slabs from Jupiter Gold’s quartzite production. Such slabs are expected to be shipped in August 2024, marking the first sale of polished quartzite slabs from Jupiter Gold as an exporter. |
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Results of Operations
The Six Months Ended June 30, 2024, compared to the Six Months ended June 30, 2023
Net loss for the six months ended June 30, 2024, totaled $23,137,504, compared to net loss of $13,862,249 during the six months ended June 30, 2023. The increase is mainly due to:
| ● | After a trial mining period in the second half of 2023, Jupiter Gold started its continuing operations at its quartzite quarry in 2024. The gross margin of $180,256 was generated from the sales of 269 m3 of unprocessed blocks of quartzite from its own production. Considering the start of operations in 2024, there was no gross margin generation in the six months ended June 30, 2023. | |
| ● | Higher general and administrative expenses of approximately $3.4 million in the period primarily due to increased costs of labor and consultants related to technical services, increased legal fees relating to transactions consummated during the quarter and other third-party costs; | |
| ● | An increase of approximately $7.8 million in stock-based compensation expense compared to the prior period, reflecting bonus for the members of the management team eligible for stock-based compensation; and | |
| ● | Higher finance costs of approximately $0.7 million for the period mainly due to interest expenses related to convertible notes issued in November 2023. | |
| ● |
Liquidity and Capital Resources
As of June 30, 2024, we had cash and cash equivalents of $32,267,730 and working capital of $27,067,961.
Net cash used by operating activities totaled $11,292,221 for the six months ended June 30, 2024, compared to net cash provided of $11,033,491 during the six months ended June 30, 2023, representing a variation in the cash flow from operating activities of $22,325,715. The variation in net cash used /provided by operating activities was mainly due to:
| ● | In the six months ended June 30, 2023, the Company received $20,000,000 arising from the one-time royalty sale with no matchable transaction in 2024 as explained in Note 3. | |
| ● | Increase of approximately $3,500,000 in general and administrative expenses due to the increase in the Company’s structure as it moves towards operations. As a result of that the Company had more expenditures with employees’ compensation and costs with third parties service providers such as technical consultants; |
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Net cash used in investing activities totaled $16,777,111 for the six months ended June 30, 2024, compared to net cash used of $1,929,812 during the six months ended June 30, 2023, representing an increase in cash used of $14,847,299 or 769%. The increase reflects the payments made in connection with the acquisition of the components of our lithium processing plant and capitalized exploration costs.
Net cash provided by financing activities totaled $30,140,298 for the six months ended June 30, 2024, compared to $10,675,118 during the six months ended June 30, 2023, representing an increase in cash provided of $19,465,180 or 182%. The increase is mainly due to the following financing activities that occurred during the six months ended June 30, 2023:
| ● | The sale of an aggregate of 1,871,250 shares of our common stock to Mitsui in a private placement (the “Private Placement”). The gross proceeds from the Private Placement were $30.0 million. |
For further information on the transaction mentioned above, please refer to note 7 – related parties transactions.
We have historically incurred net operating losses and have not yet generated material revenues from the sale of products or services. As a result, our primary sources of liquidity have been derived through proceeds from the (i) sales of our equity and the equity of one of our subsidiaries, and (ii) issuance of convertible debt. As of June 30, 2024, we had cash and cash equivalents of $32,267,730 and working capital of $27,067,091, compared to cash and cash equivalents $29,549,927 and a working capital of $23,809,637 as of December 31, 2023. We believe our cash and cash and equivalents will be sufficient to meet our working capital and capital expenditure requirements for a period of at least twelve months from the date of these financial statements. However, our future short- and long-term capital requirements will depend on several factors, including but not limited to, the rate of our growth, our ability to identify areas for mineral exploration and the economic potential of such areas, the exploration and other drilling campaigns needed to verify and expand our mineral resources, the successful installation of our lithium processing facilities, and the ability to attract talent to manage our different areas of endeavor. To the extent that our current resources are insufficient to satisfy our cash requirements, we may need to seek additional equity or debt financing. If the needed financing is not available, or if the terms of financing are less desirable than we expect, we may be forced to scale back our existing operations and growth plans, which could have an adverse impact on our business and financial prospects and could raise substantial doubt about our ability to continue as a going concern.
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.
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Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of American (“U.S. GAAP”). Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financial statements.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information to be reported under this Item is not required of smaller reporting companies.
Item 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, has evaluated the design, operation, and effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of June 30, 2024. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance 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 Commission, and that such information is accumulated and communicated to management, including its Principal Executive Officer and Principal Financial Officer as appropriate, to allow timely decisions regarding required disclosure. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. On the basis of that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that as a result of the material weakness in internal controls over financial reporting, described in our Amendment No. 1 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed on Form 10-K/A with the SEC on November 8, 2024 (the “Form 10-K/A”), our disclosure controls and procedures were not effective as of June 30, 2024.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred in the quarter ended June 30, 2024, that materially affected, or would be reasonably likely to materially affect, our internal control over financial reporting.
Limitations of the Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only 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 SEC, and that such information is accumulated and communicated to management, including its Principal Executive Officer and Principal Financial Officer as appropriate, to allow timely decisions regarding required disclosure. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constrains and that management is required to apply judgement in evaluating the benefits of possible controls and procedures relative to their costs.
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PART II OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None material.
Item 1A. RISK FACTORS
Investing in our common stock involves a high degree of risk. You should carefully consider the information in this Quarterly Report, including our financial statements and the related notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as any additional risk factors that may be described in our other filings with the SEC from time to time, including our Annual Report on Form 10-K for fiscal year ended December 31, 2023, and our quarterly report on Form 10-Q for the period ended March 31, 2024, before deciding whether to invest in our securities. The occurrence of any of the risks, the events or developments described below could harm our business, financial condition, operating results, and growth prospects. In such an event, the market price of our common stock could decline, and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. You should consider carefully the risks and uncertainties included in this Quarterly Report and elsewhere in our Annual Report and other SEC filings before you decide to invest in our common stock.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On April 4, 2024, the Company issued 1,871,250 shares of the Company’s common stock in a private placement to Mitsui for total gross proceeds of $30,000,000 pursuant to a March 28, 2024 subscription agreement.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. MINE SAFETY DISCLOSURES
None
Item 5. OTHER INFORMATION
On May 23, 2024, Marc Fogassa, the Company’s Chief Executive Officer and Chairman, entered into a written plan with Goldman Sachs & Co. LLC for the potential future sale of up to 300,000 shares our common stock that is intended to satisfy the conditions of Rule 10b5-1(c) under the Exchange Act; such plan expires on March 14, 2025.
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Item 6. EXHIBITS
(a) Exhibits
* Filed herewith.
** Furnished herewith.
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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) and | November 8, 2024 | ||
| Marc Fogassa | Chairman of the Board | |||
| /s/ Tiago Miranda | Chief Financial Officer (Principal Financial and | November 8, 2024 | ||
| Tiago Miranda | Accounting Officer) |
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