# Atlas Lithium Corp: Form 10-Q/A for the period ended Mar 31, 2024 - Company: [Atlas Lithium Corp](/companies/atlx.md) (CIK 1540684) - Form: 10-Q/A - Filed: 2024-11-08 - Accepted by EDGAR: Nov 8, 2024, 21:38 ET - Period: 2024-03-31 - Accession: 0001493152-24-044304 - Inline XBRL: yes - Main document: https://www.sec.gov/Archives/edgar/data/1540684/000149315224044304/form10-qa.htm - All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1540684/000149315224044304/ ## Figures reported in this filing Standardized XBRL line items for the period ended 2024-03-31. | Line item | Period | Value | XBRL concept | | --- | --- | ---: | --- | | Cost of revenue | 3 months, 2024-01-01 to 2024-03-31 | $102.1k | us-gaap:CostOfRevenue | | Gross profit | 3 months, 2024-01-01 to 2024-03-31 | $84.6k | us-gaap:GrossProfit | | Operating income | 3 months, 2024-01-01 to 2024-03-31 | −$13.2m | us-gaap:OperatingIncomeLoss | | Interest expense | 3 months, 2024-01-01 to 2024-03-31 | $202.7k | us-gaap:InterestExpense | | Net income | 3 months, 2024-01-01 to 2024-03-31 | −$13.0m | us-gaap:NetIncomeLoss | | Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | −$1.02 | us-gaap:EarningsPerShareDiluted | | Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | −$1.02 | us-gaap:EarningsPerShareBasic | | Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 12,769,383 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding | | Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | −$6.1m | us-gaap:NetCashProvidedByUsedInOperatingActivities | | Capital expenditure | 3 months, 2024-01-01 to 2024-03-31 | $5.9m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment | | Cash and equivalents | at 2024-03-31 | $17.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue | | Current assets | at 2024-03-31 | $17.7m | us-gaap:AssetsCurrent | | Total assets | at 2024-03-31 | $37.6m | us-gaap:Assets | | Current liabilities | at 2024-03-31 | $6.7m | us-gaap:LiabilitiesCurrent | | Total liabilities | at 2024-03-31 | $36.6m | us-gaap:Liabilities | | Shareholders' equity | at 2024-03-31 | $561.9k | us-gaap:StockholdersEquity | ## Management's discussion and analysis As filed, 25,903 characters. 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 lithium projects 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 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 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 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 mineral rights include approximately: - 53,942 hectares (539 km2) for lithium in 95 mineral rights (2 in pre-mining concession stage, 85 in exploration stage, and 8 in pre-exploration stage); - 44,913 hectares (449 km2) for nickel in 29 mineral rights (23 in exploration stage, and 6 in pre-exploration stage); - 25,050 hectares (251 km2) for copper in 13 mineral rights (12 in exploration stage, and 1 in pre-exploration stage); - 12,144 hectares (121 km2) for rare earths in 7 mineral rights, all in exploration stage; - 6,927 hectares (69 km2) for titanium in 5 mineral rights, all in exploration stage; - 3,910 hectares (39 km2) for graphite in 2 mineral rights, all in exploration stage; - 1,030 hectares (10 km2) for gold mineral rights, all in exploration stage. In addition, we also have a few additional mineral rights in the process of being acquired and not yet titled in our name. We believe that we hold the largest portfolio of exploration properties for lithium and other battery minerals in Brazil. 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”) is our largest project and 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. We believe that we can increase our value by continuing of our exploratory work and quantification of our lithium mineralization as well as by expanding our exploration campaign to new, high-potential areas within our portfolio of mineral rights. Our initial commercial goal is to be able to enter production of lithium concentrate, a product which is highly sought after in the battery supply chain for electric vehicles. We also have 100%-ownership of early-stage projects and properties in other minerals that are needed in the battery supply chain and high technology applications such as nickel, copper, rare earths, graphite, and titanium. We believe that the shift from fossil fuels to battery power may yield long-term opportunities for us not only in lithium but also in such other minerals. In addition to these projects, we own 58.71% 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 27.42% of the shares of common stock of Jupiter Gold, a company focused on the exploration of two gold projects and a quartzite mine, the common stock of which is quoted on the OTCQB marketplace under the symbol “JUPGF.” The quartzite mine started preliminary operations in June 2023. The results of operations from both Apollo Resources and Jupiter Gold are consolidated in our financial statements under U.S. GAAP. ### Operational Update ### Lithium Exploration Campaign Our ongoing drilling campaign is delineating the lithium resources of our 100%-owned Neves Project, a cluster of four lithium mineral rights within MGLP. Our current geological team is comprised of 15 geologists, all of whom are full-time employees. To support the work of our geologists we have 13 full-time field and support technicians and machinery operators, as well as 3 trainee technicians and over 19 field assistants. Our geological team and our exploration campaign is supervised by James Abson, a Qualified Person for lithium as such term is defined in Subpart 1300 of Regulation S-K promulgated by the SEC (“Regulation S-K 1300”). Mr. Abson was appointed as our Chief Geology Officer in October 2023 and has over 29 years of diverse experience in mining and mineral exploration. Under Mr. Abson’s leadership, our technical team adopted a systematic approach to exploration of additional potential target areas within the Neves Project. These efforts involve geological mapping, sampling of historical artisanal mining sites and exposed pegmatites to analyze potassium-rubidium ratios, as well as soil sampling using both XRF and ICP testing for both LCT pathfinders and Li. Geophysical surveys, including magnetics, are used when warranted to pinpoint additional pegmatite deposits and related structures. Deep trenching of anomalous areas is used to identify and confirm lithium-cesium-tantalum (LCT) pegmatites and estimate width, strike, dip and mineralization prior to drilling. Finally, scout drilling is aimed at testing the highest priority pegmatite targets that appear widest and most mineralized. Within Neves Project area, four confirmed pegmatite bodies with spodumene mineralization were identified (designated as Anitta 1 through 4). Expanding beyond the Neves Project area, our regional exploration is now centered on the other mineral rights for lithium within the broader Minas Gerais Lithium Project (“MGLP”), a large footprint of 468 km2 of lithium mineral claims, many of which are located in Brazil’s Lithium Valley, a well-known hard-rock lithium district. A specialized exploration geology team has been assembled to initiate reconnaissance work across this wider land package. Initial efforts involve LiDAR and geological mapping with a specific focus on historical artisanal mining sites, sampling of known and previously identified pegmatites, as well as first-pass soil sampling lines and geophysics to identify anomalies. This phased approach has systematically advanced regional prospecting across our mineral rights in MGLP with a number of targets generated for further exploration by our exploration team. We have engaged SGS Canada Inc. (“SGS”), and, in particular, their geologist Marc-Antoine Laporte, a Qualified Person for lithium under Regulation S-K 1300, to produce a mineral resource estimate report (the “Maiden Resource Report”) for our Neves Project in accordance with Regulation S-K 1300. Mr. Laporte is the author of mineral resource reports for two other companies which have hard-rock lithium projects in Lithium Valley, the general area where our Neves Project is located, and has worked on lithium properties in Lithium Valley since 2017. Mr. Laporte visited our Neves Project between May 4 and May 6, 2023. On March 19, 2024, our Board appointed Brian Talbot to serve as director on the Board, effective as of April 1, 2024. In addition to joining the Board, Mr. Talbot was also appointed by the Board as our Chief Operating Officer (“COO”), effective as of April 1, 2024. In his capacity as COO, Mr. Talbot will be responsible for both the Company’s development of its lithium mine and processing plant as well as all of its lithium exploration geology program. Mr. Talbot is a qualified person for lithium as such a term is defined in Item 1300 of Regulation S-K. Mr. Talbot has an extensive track record as a technical and operational leader throughout his career with over 30 years of experience in mining operations. In particular, he has extensive experience in DMS (dense media separation) plant development and operation. Most recently, Mr. Talbot was employed by RTEK International DMCC (“RTEK”), a consulting firm that advises lithium developers and producers. From July 2022 to September 2023, Mr. Talbot was the Chief Operating Officer at Sigma Lithium Corporation (“Sigma Lithium”), a Canadian lithium producer with operations in Brazil. At Sigma Lithium, he oversaw the development of that company’s flagship Grota do Cirilo project from construction through commissioning and operations. From 2017 to 2022, Mr. Talbot held positions as General Manager and Head of Australian Operations at Galaxy Resources, now part of Arcadium Lithium PLC, one of the world’s largest fully integrated lithium companies. While at Galaxy Resources, Mr. Talbot was instrumental in increasing the production at Mt. Cattlin (a hard-rock lithium mine in Ravensthorpe, Western Australia) which resulted in record production. From 2015 to 2017, Mr. Talbot was at Bikita Minerals in Zimbabwe, which owns and operates the longest running hard-rock lithium mine in the world. Mr. Talbot holds a bachelor’s degree in chemical engineering with Honors from the University of Witwatersrand, South Africa. Please refer to Part III, Item 10, for further information on Mr. Talbot. ### Neves Project The Company’s geological team continues to explore the Neves Project area to expand its already known mineralized pegmatite tonnage. Previously discovered mineralized pegmatites in the Neves Project were initially located with the help of historic artisanal mines, outcroppings of pegmatite, or shallow sub-crop unearthed by trenching Li in soil anomalies. To date, Atlas has mapped and sampled over 84 pegmatite outcrops within the Neves permit, and ranked them based on their K/Rb ratios. The more evolved pegmatites have a higher possibility of hosting lithium minerals. In an effort to expedite the exploration of the substantial surface area of the Neves project, in late 2023, Atlas Lithium embarked on a systematic exploration campaign designed by James Abson, the Company’s Chief Geology Officer. The Project Area has now been covered by: - Detailed hyperspectral satellite and drone LiDAR mapping to aid in faster pegmatite discovery; - Geological mapping and rock sampling, including K/Rb ratio analysis, to improve target prioritization; - Closely spaced soil sampling - grids, with 4,599 samples taken to date, to highlight Li (\>100ppm threshold) and LCT pegmatite pathfinder anomalies for drill testing; - High-resolution drone geophysics surveys, including magnetics and radiometrics, to assist with mapping and drill targeting. The comprehensive data sets have generated several highly promising coincident and parallel targets (Figure 1). One notable example is a linear lithium anomaly with a strike length of 1.2km, which coincides with the Anitta 2 mineralized pegmatite. While some of these targets may represent extensions of the known mineralized Anitta trends, others could potentially indicate entirely new, untested pegmatite discoveries, particularly in the southern region of Neves. The practical application of this new lithium soil anomaly information is exemplified at Anitta 1. Previously, an unexplained anomaly existed to the east of the drilled orebody. Guided by this anomaly, additional drilling has now uncovered the up-dip extension of Anitta 1 and a parallel orebody immediately to the east. These discoveries are expected to contribute significantly to the project’s mineralized pegmatite tonnage, demonstrating the effectiveness of the exploration approach in identifying and delineating high-quality lithium mineralization. Figure 1: Soil sampling lithium anomaly map in relation to mapped pegmatites (pink), the mineralized Anitta pegmatites, topography, and structural geophysics data. Drilled lithium-mineralized sections of pegmatites can extend up to 150m along strike beyond the termination of the surface lithium anomaly, as observed in the case of Anitta 2. In certain areas, it is probable that these pegmatites continue undetected from the surface along the same strike direction, particularly beneath higher hills where the cover and weathering profiles may be thicker. The Company’s exploration team is currently evaluating the potential use of other less mobile LCT pathfinders, such as Cs, Sn, and Ta, to identify new anomalous trends or extensions that warrant further investigation. Furthermore, the majority of the Anitta pegmatites exhibit a close association with magnetic lows and NNE-SSW structural lineaments. This valuable information will enable the Atlas team to refine its approach to future exploration targeting activities. These activities will include more detailed follow-up work, such as infill soil grids, trenching, and drilling, to better delineate and characterize the identified targets. ### Early-Revenue Strategy On December 4, 2023, we announced implementing an early-revenue strategy. With the well-delineated initial Anitta pegmatites, positive metallurgical test work and well-advanced mining and environmental permits Atlas Lithium’s technical team opted to expedite the production timeline for its 100%-owned Neves Project. This early-revenue strategy targets initial “Phase I” production of spodumene concentrate by the fourth quarter of 2024, ramping up to “Phase II” production in mid-2025. The early-revenue Phase I plant is expected to have a maximum capacity of 150,000 tons per annum of spodumene concentrate. We intend to deploy compacted modular dense media separation (DMS) technology together with contracting the crushing and mining operations. The total capital expenditures, including the initial production and ramp-up is estimated at $49.5 million, which includes the modular DMS plants, tailings management module for dry stacked tailings; engineering, procurement, construction management costs; earthworks and civils; site access upgrade, mining preparation and pre-strip, commissioning and ramp-up. The fabrication of the DMS modules, tailing management module, and associated materials handling equipment is nearing completion and trial assembly is currently underway at the South African manufacturing facility as a quality assurance measure prior to shipment to Brazil. On February 26, 2024, we announced that the fabrication of the DMS modules, tailing management module, and associated materials handling equipment is progressing on schedule, and first commissioning and initial production anticipated for the fourth quarter of 2024. The manufacturing orders were placed by us in December 2023. By condensing components into modules with significantly reduced footprint and weight versus recent DMS plants, Atlas Lithium plans to streamline installation and commissioning. For example, whereas fully assembled traditional DMS facilities commonly weigh 250-300 tons, the Company’s modular plant is predicted to weigh only approximately 41 tonnes. Modular DMS trial assembly on the primary 100 tons per hour (tph) module and the secondary 50 tph module. We engaged CDM Group as engineering contractor and construction coordinator and ADP Marine & Modular for plant manufacturing, with both of these firms located in South Africa. The manufacturing facility located in South Africa has recently been visited by our technical team and photographs of parts completed and in progress of our modular DMS lithium processing plant under construction can be seen in Figures 2-4 below. Figures 5-7 depict 3-D model views of our planned modular DMS lithium processing plant. ### Figure 2: Our modular DMS lithium processing plant under construction. ### Figure 3: View of part of our DMS lithium processing plant under construction. **Figure 4: View of part of our modular DMS lithium processing plant under construction.** ### Figure 5: View of 3-D model of our planned DMS lithium processing plant. **Figure 6: Additional view of 3-D model of our planned DMS lithium processing plant.** **Figure 7: Additional view of 3-D Model of our planned DMS lithium processing plant.** ### Business Development Update ### Mitsui & Co., Ltd. On January 18, 2023, we announced that we had signed a non-binding, non-exclusive Memorandum of Understanding (“MOU”) with Mitsui & Co., Ltd. (“Mitsui”) with respect to Mitsui’s potential interest in acquiring the right to purchase our future lithium concentrate production. In November 2023, we ceased discussions with Mitsui regarding a potential offtake arrangement as contemplated by the MOU, but continued discussions with Mitsui regarding other possible strategic opportunities. On March 28, 2024, the Company and Mitsui entered into an agreement pursuant to which the Company agreed to sell to Mitsui 1,871,250 shares of our common stock for a purchase price of $30,000,000, representing a 10% premium to the 5-day VWAP . The closing of the sale of the shares occurred on April 4, 2024. In connection with the sale of the shares, on April 4, 2024, parties entered into an Offtake and Sales Agreement (the “Offtake”) for the future purchase of 15,000 tons of lithium concentrate from Phase 1 and 60,000 tons per year for five years from Phase 2 of Atlas Lithium’s soon to be producing Neves Project in Brazil’s Lithium Valley. The investment provided Atlas Lithium with funds to continue its development towards revenue generation ### Results of Operations ### The Three Months Ended March 31, 2024, Compared to the Three Months ended March 31, 2023 Net loss for the three months ended March 31, 2024, totaled $13,184,196, compared to net loss of $4,465,353 during the three months ended March 31, 2023. The increase is mainly due to: - Higher general and administrative expenses of approximately $0.9 million in the period primarily due to increased costs of consultants related to technical services, increased legal fees relating to transactions consummated during the quarter and other third-party costs; - An increase of approximately $5 million in stock-based compensation expense compared to the prior period, reflecting new members of the management team eligible for the stock-based compensation program; and - Higher exploration expenses of approximately $2 million for the period due the execution of the drilling program on our 100% owned Minas Gerais Lithium Project. ### Liquidity and Capital Resources As of March 31, 2024, we had cash and cash equivalents of $17,529,465 and working capital of $11,044,828. Net cash used by operating activities totaled $6,103,264 for the three months ended March 31, 2024, compared to net cash used of $3,663,428 during the three months ended March 31, 2023, representing a decrease in cash available of $2,439,836 or 67%. The increase in net cash used by operating activities was mainly due to: - Increase in expenses related to the third companies as consultants and others; - Increase in exploration expenses due to the increase of drilling program and exploration teams. 15 Net cash used in investing activities totaled $6,055,535 for the three months ended March 31, 2024, compared to net cash used of $1,275,972 during the three months ended March 31, 2023, representing an increase in cash used of $4,779,563 or 375%. The increase reflects the payments made in connection with the construction of our Lithium processing plant. Net cash provided by financing activities totaled $0 for the three months ended March 31, 2024, compared to $9,564,335 during the three months ended March 31, 2023, representing a decrease in cash provided of $9,564,335 or 100%. The decrease is mainly due to the following financing activities that occurred during the three months ended March 31, 2023: - Our underwritten public offering which closed on January 12, 2023, with aggregate gross proceeds of $4,657,500. - Securities Purchase Agreement with two investors, pursuant to which we agreed to issue and sell to the Investors in a Regulation S private placement an aggregate of 640,000 restricted shares of our common stock, at a purchase price of $6.25 per share, for total gross proceeds of $4,000,000. - The sale of an aggregate of 91,500 shares of our common stock to Triton Funds, L.P for total gross proceeds of $831,834 pursuant to a Common Stock Purchase Agreement. For further information on three transactions mentioned above, please refer to note 4 – stockholders´ equity. 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 March 31, 2024, we had cash and cash equivalents of $17,529,465 and working capital of $11,044,828, 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 on hand will be sufficient to meet our working capital and capital expenditure requirements for a period of at least twelve months. 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 types of processing facilities we would need to install to obtain commercial-ready products, 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. ### 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. ## Controls and procedures As filed, 3,090 characters. ### 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 March 31, 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 March 31, 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 March 31, 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 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 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. ## Risk factors As filed, 4,564 characters. The following risk factor disclosures should be read in conjunction with the risk factors described in our 2023 Form 10-K and subsequent periodic filings with the Securities and Exchange Commission (the “SEC” or the “Commission”). We are supplementing the risk factors previously disclosed in such filings to include the following updated risk factors: *Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, as well as the other 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, 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 summarized and set forth in detail below and elsewhere in this Annual Report before you decide to invest in our common stock.* ***You are unlikely to be able to exercise effective remedies or collect judgments against BF Borgers relating to their work as our independent registered public accounting firm.*** BF Borgers (as defined herein) served as our independent registered public accounting firm from 2015 to 2024 and audited the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2023. On May 3, 2024, the SEC entered an order instituting settled administrative and cease-and-desist proceedings against BF Borgers, permanently barring BF Borgers from appearing or practicing before the Commission as an accountant (the “Order”). In light of the Order, the Audit Committee dismissed BF Borgers as our independent registered public accounting firm on May 6, 2024. We have no ability to ascertain whether BF Borgers will survive or that adequate assets will be available to satisfy any claims against it. As a result, you may not be able to exercise effective remedies or collection judgements against BF Borgers. You may also be unable to seek remedies against BF Borgers under applicable securities laws for any untrue statement of a material fact contained in our past financial statements audited by BF Borgers or any omission of a material fact required to be stated in those financial statements. Also, it is unknown if any assets would be available from BF Borgers to satisfy any claims. ***We may incur material expenses or delays in financings or SEC filings due to the dismissal of BF Borgers and our stock price and access to the capital markets may be affected.*** As a public company, we are required to file with the SEC financial statements that are audited or reviewed, as applicable, by an independent registered public accountant. Our access to the capital markets and our ability to make timely filings with the SEC will depend on having financial statements audited or reviewed again by a new independent registered public accounting firm. In addition, because the SEC found that BF Borgers deliberately failed to conduct audits and quarterly reviews in accordance with applicable PCAOB standards and fraudulently issued audit reports, we will not be able to rely on BF Borgers to provide other information or documents that would customarily be received by us or underwriters in connection with financings or other transactions, including consents and “comfort” letters. As a result, we may encounter delays, additional expense and other difficulties in future financings. Any resulting delay in accessing or inability to access the public capital markets could be disruptive to our operations and could affect the price and liquidity of our securities. Any negative news about the proceedings against BF Borgers may also adversely affect investor confidence in companies that were previous clients of BF Borgers. All of these factors could materially and adversely affect the market price of our common stock and our ability to access the capital markets. Filed Nov 8, 2024. Source: SEC EDGAR, the filing index for accession 0001493152-24-044304. Last ingested by Listed: Oct 24, 2026, 15:13 ET. No prices; not investment advice.