# Atlas Lithium Corp: Form 10-Q for the period ended Sep 30, 2024

- Company: [Atlas Lithium Corp](/companies/atlx.md) (CIK 1540684)
- Form: 10-Q
- Filed: 2024-11-08
- Accepted by EDGAR: Nov 8, 2024, 16:48 ET
- Period: 2024-09-30
- Accession: 0001493152-24-044315
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1540684/000149315224044315/form10-q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1540684/000149315224044315/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Cost of revenue | 3 months, 2024-07-01 to 2024-09-30 | $100.1k | us-gaap:CostOfRevenue |
| Cost of revenue | 9 months, 2024-01-01 to 2024-09-30 | $293.9k | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2024-07-01 to 2024-09-30 | $69.5k | us-gaap:GrossProfit |
| Gross profit | 9 months, 2024-01-01 to 2024-09-30 | $249.7k | us-gaap:GrossProfit |
| Operating income | 3 months, 2024-07-01 to 2024-09-30 | −$10.3m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-01-01 to 2024-09-30 | −$33.0m | us-gaap:OperatingIncomeLoss |
| Interest expense | 9 months, 2024-01-01 to 2024-09-30 | $650.8k | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-07-01 to 2024-09-30 | $4.3k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2024-01-01 to 2024-09-30 | $15.1k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-07-01 to 2024-09-30 | −$9.0m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-01-01 to 2024-09-30 | −$31.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-07-01 to 2024-09-30 | −$0.60 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-01-01 to 2024-09-30 | −$2.19 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-07-01 to 2024-09-30 | −$0.60 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-01-01 to 2024-09-30 | −$2.19 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-07-01 to 2024-09-30 | 14,964,697 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-01-01 to 2024-09-30 | 14,231,687 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-01-01 to 2024-09-30 | −$14.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-01-01 to 2024-09-30 | $19.2m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-09-30 | $22.1m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-09-30 | $22.9m | us-gaap:AssetsCurrent |
| Total assets | at 2024-09-30 | $60.5m | us-gaap:Assets |
| Current liabilities | at 2024-09-30 | $6.5m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-09-30 | $36.7m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-09-30 | $23.3m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 14,139 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 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.

Our modular plant targeted at producing up to 150,000 tons of lithium concentrate per annum (“tpa”) in what we describe as Phase I is in final phase of fabrication. 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.

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 44.74% 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 21.01% 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.

On October 31, 2024, Jupiter Gold and Apollo Resources entered into an agreement and plan of merger pursuant to which Apollo will merge with and into Jupiter, with Jupiter continuing its corporate existence as the surviving corporation. This transaction is expected to be completed by December 31, 2024.

### Operational Update

During the third quarter of 2024, we achieved several important operational developments:

In August 2024, our modular dense media separation (DMS) lithium processing plant entered its final phase of fabrication. The DMS modules of the plant successfully underwent trial assembly in South Africa. Some parts remaining in near-final stages of fabrication at that time included effluent components, recently modified to improve water efficiency, as well as conveyors. The plant’s modular design, which has never before been used for lithium processing in Brazil, represents an optimized approach featuring reduced height, weight, and physical footprint compared to traditional designs. The plant is engineered to achieve the lowest processing circuit water usage in the industry.

Also in August 2024, our spodumene concentrate plant design was selected as a finalist for a November 14, 2024 contest, organized by a non-profit civil society organization in the state of Minas Gerais, recognizing environmentally-sustainable approaches in the industry.

In early October 2024, we announced the discovery of spodumene-rich pegmatites in our Salinas Project area, located approximately 60 miles north of our flagship Neves Project. The Salinas Project spans 388 hectares (approximately 959 acres) and is situated just 5 miles east of Latin Resources’ Colina Project, a significant lithium deposit. Our technical team has completed soil geochemistry and LIDAR geological mapping with favorable results and is now pursuing further geological and geophysical studies prior to initiation of a drilling campaign.

On October 25, 2024, a voting board comprised of twelve representatives from the local civil society and government unanimously approved Atlas Lithium’s license application for its Neves Project, resulting in the formal issuance of the permit. The permit authorizes Atlas Lithium to assemble and operate its lithium processing plant, to process mined ore from one of its deposits at the facility, and to sell the lithium concentrate that it produces.

### Results of Operations

### The Nine Months Ended September 30, 2024, Compared to the Nine Months Ended September 30, 2023

Net loss for the nine months ended September 30, 2024, totaled $32,855,151, compared to net loss of $25,600,602 during the nine months ended September 30, 2023. The increase is mainly due to:

- After a trial mining period in the second half of 2023, Jupiter Gold commenced ongoing operations at its quartzite quarry in 2024. Our gross margin of $249,722 was generated from the sales of 269 m3 of unprocessed blocks of quartzite produced by Jupiter Gold. By comparison, there was no gross margin generation in the nine months ended September 30, 2023
- Higher general and administrative expenses of approximately $5.7 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 $10.4 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 $0.2 million for the period mainly due to interest expenses related to convertible notes issued in November 2023.

### Liquidity and Capital Resources

As of September 30, 2024, we had cash and cash equivalents of $22,056,560 and working capital of $16,401,099.

Net cash used by operating activities totaled $14,212,264 for the nine months ended September 30, 2024, compared to net cash provided of $2,564,979 during the nine months ended September 30, 2023, representing a variation in the cash flow from operating activities of $16,777,243. The variation in net cash used /provided by operating activities was mainly due to:

- In the nine months ended September 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; and
- Increase of approximately $5,700,000 in general and administrative expenses due to the growth of the our personnel and infrastructure as we move towards revenue-generating operations. As a result, we had more expenditures such as employee compensation and the costs of third parties service providers such as technical consultants.

27

Net cash used in investing activities totaled $23,559,858 for the nine months ended September 30, 2024, compared to net cash used of $771,977 during the nine months ended September 30, 2023, representing an increase in cash used of $22,787,881 or 2,952%. The increase reflects essentially: and capitalized exploration costs.

- The payments made in connection with the acquisition of our lithium processing plant; and
- The capitalization of exploration costs incurred since April 2024.

Net cash provided by financing activities totaled $30,291,547 for the nine months ended September 30, 2024, compared to $20,822,531 during the nine months ended September 30, 2023, representing an increase in cash provided of $9,469,016 or 45%. The increase is mainly due to the following financing activities that occurred during the nine months ended September 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 September 30, 2024, we had cash and cash equivalents of $22,056,560 and working capital of $16,401,099, 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 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.

### 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, 4,816 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 September 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 September 30, 2024 for the reasons set forth below.

As previously reported in our Amended Annual Report, we identified a material weakness in our internal control over financial reporting as of December 31, 2022 and December 31, 2023. During this period, the Company outsourced its day-to-day accounting tasks due to limited accounting and financial reporting personnel and other resources needed to ensure adherence to our internal controls and procedures. We had limited finance and accounting professionals with the requisite experience to appropriately perform the supervision and review of the information received from the Company’s third-party accounting service provider. The lack of GAAP experience from the outsourced accounting firm combined with the limited availability of an experienced team to supervise the third- party service provider resulted in the disclosed material weakness.

Our remediation efforts in response to this material weakness are ongoing and have included insourcing our accounting and finance functions and considering to hire additional professionals.. We also continues the implementation of our SAP enterprise resource planning software. Our remediation efforts will continue through the end of 2024 and beyond. While we have made substantial progress toward the remediation plan, the aforementioned material weakness cannot be considered completely remediated until the applicable controls have operated for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

### Changes in Internal Control over Financial Reporting

In May 2024, we concluded the implementation of our SAP enterprise resource planning software and insourced the accounting and finance functions.

Other than as discussed above, there were no changes to our internal control over financial reporting during the three months ended September 30, 2024 that have materially affected or are 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.

## Risk factors

As filed, 1,239 characters.

*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.*

Filed Nov 8, 2024.
Source: SEC EDGAR, the filing index for accession 0001493152-24-044315. Last ingested by Listed: Nov 4, 2026, 20:26 ET. No prices; not investment advice.