Atlas Lithium (ATLX) - 2025 Q1 - Quarterly Report

Cautionary Note Regarding Forward-Looking Statements This section outlines forward-looking statements, cautioning that actual results may differ materially due to various risks - The report contains forward-looking statements covered by safe harbor provisions, subject to known and unknown risks and uncertainties that may cause actual results to differ materially[11] - Factors that could cause future results to differ include unprofitable exploration efforts, market fluctuations, government regulations, competition, loss of key personnel, weather phenomena, litigation, and general economic conditions[12] - Forward-looking statements are based on current expectations and projections and speak only as of the report date; the company does not plan to publicly update or revise them unless required by law[13][14] PART I - FINANCIAL INFORMATION Part I presents unaudited condensed consolidated financial statements, management's discussion, market risk, and controls and procedures Item 1. Financial Statements This section provides unaudited condensed consolidated financial statements and comprehensive notes on accounting policies Condensed Consolidated Balance Sheets Balance sheets show increased total assets and equity from December 2024 to March 2025, driven by property and capital | Metric | March 31, 2025 (Unaudited) (USD) | December 31, 2024 (USD) | | :--------------------------------- | :------------------------- | :------------------ | | Cash and cash equivalents | $14,000,031 | $15,537,476 | | Total current assets | $14,677,236 | $16,242,384 | | Property and equipment, net | $43,170,531 | $38,855,071 | | Total assets | $60,799,545 | $57,854,608 | | Total current liabilities | $6,299,473 | $5,688,604 | | Total liabilities | $36,509,843 | $35,843,367 | | Total stockholders' equity | $24,289,702 | $22,011,241 | - Total assets increased by approximately $2.9 million, from $57.85 million at December 31, 2024, to $60.80 million at March 31, 2025[17] - Total stockholders' equity increased by approximately $2.28 million, from $22.01 million at December 31, 2024, to $24.29 million at March 31, 2025[17] Condensed Consolidated Statements of Operations and Comprehensive Loss Net loss decreased to $10.2 million in Q1 2025, primarily due to lower stock-based compensation and capitalized exploration costs | Metric | Three Months Ended March 31, 2025 (USD) | Three Months Ended March 31, 2024 (USD) | | :------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net revenue | $25,175 | $186,707 | | Gross profit / (loss) | $(62,675) | $84,640 | | Total operating expenses | $9,760,882 | $13,266,460 | | Loss from operations | $(9,823,557) | $(13,181,820) | | Net loss | $(10,213,587) | $(13,184,196) | | Net loss attributable to Atlas Lithium Corporation | $(9,016,957) | $(12,963,467) | | Basic and diluted loss per share | $(0.55) | $(1.02) | - Net loss decreased by approximately $2.97 million (22.6%) from $13.18 million in Q1 2024 to $10.21 million in Q1 2025[19] - Basic and diluted loss per share improved from $(1.02) in Q1 2024 to $(0.55) in Q1 2025[19] Condensed Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity increased from $22.01 million to $24.29 million, driven by common stock issuance and stock-based compensation | Metric | December 31, 2024 (USD) | March 31, 2025 (USD) | | :--------------------------------- | :------------------ | :------------------------- | | Common Stock Value | $16,015 | $17,499 | | Additional Paid-in Capital | $166,110,916 | $176,665,848 | | Accumulated Deficit | $(144,410,340) | $(152,953,340) | | Total Stockholders' Equity | $22,011,241 | $24,289,702 | - Issuance of common stock in connection with private offerings contributed $7,118,449 to equity[23] - Stock-based compensation added $4,911,330 to equity[23] - Net loss for the period reduced equity by $10,213,587[23] Condensed Consolidated Statements of Cash Flows Net cash used in operating and investing activities decreased, while financing activities provided significant cash, leading to a $1.54 million net cash decrease | Cash Flow Activity | Three Months Ended March 31, 2025 (USD) | Three Months Ended March 31, 2024 (USD) | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used by operating activities | $(4,403,577) | $(6,103,264) | | Net cash used in investing activities | $(4,212,590) | $(6,055,535) | | Net cash provided by financing activities| $7,078,012 | $0 | | Net decrease in cash and cash equivalents| $(1,537,445) | $(12,020,462) | | Cash and cash equivalents at period end | $14,000,031 | $17,529,465 | - Net cash used in operating activities decreased by $1.7 million, mainly due to the capitalization of exploration expenses[26][120] - Net cash provided by financing activities increased significantly to $7.08 million in Q1 2025, primarily from the sale of common stock ($6.65 million) and subsidiary common stock to noncontrolling interests ($0.46 million)[26][125] Notes to the Condensed Consolidated Financial Statements These notes detail the company's organization, accounting policies, and composition of financial statement items NOTE 1 – Organization, Business and Summary of Significant Accounting Policies Atlas Lithium, incorporated in Nevada, focuses on mineral exploration in Brazil, with consolidated financial statements under U.S. GAAP - Atlas Lithium Corporation was incorporated on December 15, 2011, and shifted its focus to mineral exploration in Brazil on December 18, 2012[29] - The company's condensed consolidated financial statements include its 100% owned subsidiaries (Atlas Lithium Limited, Athena Mineral Resources Corporation, Brazil Mineral Resources Corporation) and its 30.51% equity interest in Atlas Critical Minerals Corporation, which is consolidated as a variable interest entity (VIE)[30] NOTE 2 – Composition of Certain Financial Statement Items This note details the composition and changes in key financial statement items, including inventories, property, leases, and derivatives Inventories Inventories decreased to $417,776 at March 31, 2025, primarily due to a $65,556 write-down of quartzite blocks | Inventory Component | March 31, 2025 (USD) | December 31, 2024 (USD) | | :------------------ | :------------- | :---------------- | | Inventory in transit| $321,085 | $321,085 | | Quartzite blocks and slabs | $162,247 | $171,727 | | Loss on inventories revaluation | $(65,556) | $- | | Total | $417,776 | $492,812 | - An inventory write-down of $65,556 was recorded as of March 31, 2025, to adjust quartzite blocks to their estimated net realizable value, impacting cost of revenue[38] Property and Equipment Net property and equipment increased to $43.17 million at March 31, 2025, due to Prepaid Assets (CIP) and capitalized exploration costs | Component | March 31, 2025 Net Book Value (USD) | December 31, 2024 Net Book Value (USD) | | :-------------------- | :------------------------------ | :------------------------------- | | Prepaid Assets (CIP) | $26,542,827 | $23,449,896 | | Mining rights | $6,655,771 | $6,558,161 | | Exploration costs | $5,532,338 | $4,496,976 | | Total fixed assets | $43,170,531 | $38,855,071 | - Exploration costs are capitalized if they relate to a commercially mineable ore body and provide a probable future benefit[39] Intangible Assets Intangible assets, primarily software costs, decreased slightly to $377,145 at March 31, 2025 | Metric | March 31, 2025 (USD) | December 31, 2024 (USD) | | :--------------- | :------------- | :---------------- | | Intangible assets, net | $377,145 | $399,773 | Accounts Payable and Accrued Expenses Accounts payable and accrued expenses increased to $5.83 million at March 31, 2025, due to higher trade payables and payroll charges | Component | March 31, 2025 (USD) | December 31, 2024 (USD) | | :---------------------- | :------------- | :---------------- | | Trade payables | $5,560,549 | $4,779,903 | | Payroll and social charges | $209,224 | $157,191 | | Taxes payable | $59,867 | $64,571 | | Total | $5,829,640 | $5,001,664 | Leases Operating lease liabilities increased to $481,367 at March 31, 2025, with a current portion of $153,649 | Metric | Amount (USD) | | :--------------------------------- | :----- | | Lease liabilities at Dec 31, 2024 | $447,218 | | Increase/Decrease | $32,150 | | Unwinding of lease liabilities | $7,571 | | Lease payments | $(40,438) | | Foreign exchange | $34,866 | | Lease liabilities at Mar 31, 2025 | $481,367 | | Current portion | $153,649 | | Non-current portion | $327,718 | - The lease liabilities are discounted using an incremental borrowing rate of 6.5%[45] Convertible Debt Total convertible debt increased to $10.08 million at March 31, 2025, with a 6.5% annual interest rate and $28.225/share conversion price | Lender | March 31, 2025 (USD) | December 31, 2024 (USD) | | :-------------------------- | :------------- | :---------------- | | Due to Nanyang Investment Management Pte Ltd | $6,045,402 | $5,933,866 | | Due to Jaeger Investments Pty Ltd | $2,015,158 | $1,977,979 | | Due to Modha Reena Bhasker | $1,007,567 | $988,978 | | Due to Clipper Group Limited| $1,007,566 | $988,978 | | Total convertible debt | $10,075,693 | $9,889,801 | | Current portion | $242,192 | $81,918 | | Non-current portion | $9,833,501 | $9,807,883 | - The convertible notes were issued on November 7, 2023, for $10 million, with a 6.5% annual interest rate and a conversion price of $28.225 per share[48][50] - The company recorded $160,274 in interest expense and $25,619 in accretion expense for the three months ended March 31, 2025[48] Derivative Liabilities Derivative liabilities significantly decreased to $65,030 at March 31, 2025, due to fair value changes and NDF reclassification | Derivative Type | March 31, 2025 (USD) | December 31, 2024 (USD) | | :------------------------------------------ | :------------- | :---------------- | | Derivative assets - Non-Deliverable Forward | $66,785 | $- | | Derivative liability – conversion feature | $24,677 | $66,310 | | Derivative liability – restricted stock awards | $40,353 | $121,512 | | Derivative liability - Non-Deliverable Forward | $- | $274,816 | | Total derivative liabilities | $65,030 | $462,638 | - The fair value of the embedded conversion feature on convertible debt decreased from $66,310 to $24,677, resulting in a $41,633 gain recognized in Q1 2025[53][54] - The company uses Non-Deliverable Forward (NDF) contracts to mitigate foreign currency exchange-rate fluctuations, with unrealized gains of $76,395 recognized in Other Comprehensive Income (OCI) for the period ended March 31, 2025[59][60][66] NOTE 3 – Deferred Other Income Atlas Brazil sold a 3% gross revenue royalty interest for $20 million, with an option for an additional $5 million royalty purchase - On May 2, 2023, Atlas Brazil sold a 3% gross revenue royalty interest from 19 mineral rights in Brazil to Lithium Royalty Corp. for $20,000,000 in cash[64] - The Royalty Agreement includes an option for LRC to purchase additional royalty interests for $5,000,000[67] NOTE 4 – Other Noncurrent Liabilities Other noncurrent liabilities, including tax programs and contingencies, increased to $49,151 at March 31, 2025 | Metric | March 31, 2025 (USD) | December 31, 2024 (USD) | | :------------------------ | :------------- | :---------------- | | Other noncurrent liabilities | $49,151 | $33,962 | NOTE 5 – Stockholders' Equity This note details stockholders' equity components, including authorized stock, preferred stock, common stock transactions, options, and RSUs Authorized Stock The company had 200,000,000 authorized common shares; 1,169,751 shares were sold via ATM in Q1 2025 for $6.6 million net - The company has 200,000,000 authorized shares of common stock ($0.001 par value)[70] - During the three months ended March 31, 2025, 1,169,751 shares were sold under the ATM Agreement for $6.6 million, net of commissions and fees[72] Series A Preferred Stock One Series A Preferred Stock share, held by the CEO, grants 51% of total votes, voting with common stockholders - One share of Series A Preferred Stock is outstanding, held by the CEO and Chairman, Mr. Fogassa[73] - The Series A Preferred Stock grants its holder 51% of the total votes on all matters, voting as a single class with common stockholders[73] Common Stock Options In Q1 2025, 439,996 common stock options were issued, resulting in $804,047 stock-based compensation expense | Metric | March 31, 2025 | March 31, 2024 | | :------------------------------------ | :------------- | :------------- | | Options Issued | 439,996 | 429,996 | | Grant Date Fair Value of Issued Options (USD) | $3,066,772 | $13,447,502 | | Stock-based compensation expense (USD) | $804,047 | $3,315,822 | - The weighted-average exercise price for outstanding and vested options at March 31, 2025, was $0.0243, significantly lower than $1.6879 at March 31, 2024[79] Common Stock Purchase Warrants In Q1 2025, 75,000 common stock purchase warrants were issued, resulting in $200,981 stock-based compensation expense | Metric | March 31, 2025 | | :------------------------------------ | :------------- | | Warrants Issued | 75,000 | | Total Grant Date Fair Value of Warrants (USD) | $200,981 | | Stock-based compensation expense (USD) | $200,981 | - No common stock purchase warrants were issued during the three months ended March 31, 2024[83] Restricted Stock Units ("RSUs") In Q1 2025, 310,911 RSUs were granted, 319,911 vested, and 5,000 forfeited, with $2,896,938 in stock-based compensation expense | RSU Activity | Number of RSUs (Q1 2025) | | :----------------------- | :----------------------- | | Outstanding at Jan 1, 2025 | 572,476 | | Granted | 310,911 | | Vested | (319,911) | | Forfeited | (5,000) | | Outstanding at Mar 31, 2025 | 558,476 | - Stock-based compensation expense from RSU activity for Q1 2025 was $2,896,938, compared to $2,891,703 in Q1 2024[88] Other stock incentives measured at fair value through profit or loss As of March 31, 2025, a $40,353 derivative liability existed for stock incentives tied to market capitalization milestones - Outstanding obligations to issue common stock based on market capitalization milestones are classified as liability-classified awards and measured at fair value through profit or loss[89] | Metric | March 31, 2025 (USD) | December 31, 2024 (USD) | | :------------------------------------ | :------------- | :---------------- | | Derivative liability | $40,353 | $513,757 | | Shares obligated if conditions met | 160,145 | 127,535 | NOTE 6 – Commitments and Contingencies As of March 31, 2025, Atlas Lithium had $1,138,911 in contractual obligations for lithium plant construction, due within one year | Obligation | Total (USD in thousands) | Less than 1 Year (USD in thousands) | | :-------------------------------- | :------------------- | :------------------------------ | | Lithium processing plant construction | $1,138,911 | $1,138,911 | | Total | $1,138,911 | $1,138,911 | - The majority of payments for lithium processing plant construction obligations are due upon delivery[92] NOTE 7 – Related Party Transactions This note details related party transactions, including a convertible note with Jaeger Investments and a terminated technical services agreement - The company terminated its Technical Services Agreement with RTEK International DMCC on March 20, 2025, due to alleged non-performance and breach of exclusivity, disagreeing with RTEK's prior termination notice[98][99] - Jaeger Investments Pty Ltd., a related party, holds $2,015,158 in convertible debt as of March 31, 2025[102][103] - Atlas Critical Minerals issued 1,333,469 shares of its common stock to Mr. Fogassa and 144,125 shares to other officers/directors in Q1 2025 as stock-based compensation[104][105] NOTE 8 – Risks and Uncertainties The company faces currency risk from its Brazil operations, affecting intercompany transactions and foreign subsidiary financial results - Operating primarily in Brazil exposes the company to currency risks from intercompany receivables/payables and the translation of foreign subsidiary financial results into U.S. dollars[108][109] - Changes in exchange rates affect the foreign currency translation adjustment account in shareholders' equity[109] NOTE 9 – Subsequent Events No material subsequent events were identified between March 31, 2025, and the issuance date of these financial statements - No material subsequent events were identified between March 31, 2025, and the issuance date of the condensed consolidated financial statements[110] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides an overview of Atlas Lithium's business, operational progress, Q1 2025 financial results, liquidity, and currency risks Overview Atlas Lithium is a mineral exploration and development company focused on hard-rock lithium projects in Brazil - Atlas Lithium is a mineral exploration and development company focused on hard-rock lithium projects in Minas Gerais, Brazil, aiming to produce spodumene concentrate[113] - The company holds 53,942 hectares for lithium across 95 mineral rights in Brazil, claiming the largest portfolio among publicly listed companies[114] - Atlas Lithium owns approximately 30.51% of Atlas Critical Minerals Corporation, an exploration stage company focused on other critical minerals, whose results are consolidated[115] Operational Update In Q1 2025, Atlas Lithium made significant operational progress, including hiring a Project Manager, shipping its DMS plant, and advancing its DFS - In January 2025, a Project Manager Officer and VP of Engineering with extensive mining industry experience was hired[116] - The modular DMS lithium processing plant, designed to produce up to 150,000 tons of lithium concentrate per annum, was shipped from South Africa and arrived in Brazil in early March 2025[117] - Significant progress was made on the Definitive Feasibility Study (DFS) in partnership with SGS Canada Inc. and on permitting additional mining pit areas. All permits for the Neves Project's DMS plant assembly, mining, processing, and sales are secured[118] Results of Operations Net loss decreased to $10.2 million in Q1 2025, primarily due to lower stock-based compensation and capitalized exploration costs | Metric | Three Months Ended March 31, 2025 (USD) | Three Months Ended March 31, 2024 (USD) | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss | $(10.2) million | $(13.2) million | | General and administrative expenses | Increased by $1.7 million | | | Stock-based compensation expense | Decreased by $2.0 million | | | Exploration cost expenses | $0 (capitalized) | $3.2 million | - The decrease in net loss was mainly driven by reduced stock-based compensation and the capitalization of exploration expenses, which were expensed in the prior year[119][121] - General and administrative expenses increased due to team expansion and higher marketing/investor relations service costs[121] Liquidity and Capital Resources As of March 31, 2025, Atlas Lithium had $14.0 million in cash and $8.3 million in working capital, with financing activities providing $7.1 million | Metric | March 31, 2025 (USD) | December 31, 2024 (USD) | | :--------------------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $14.0 million | $15.5 million | | Working capital | $8.3 million | $10.6 million | - Net cash used in operating activities decreased by $1.7 million to $4.4 million in Q1 2025, mainly due to capitalizing exploration expenses[120] - Net cash provided by financing activities was $7.1 million in Q1 2025, primarily from $6.6 million in common stock sales via the ATM Agreement and $464,000 from subsidiary common stock sales[122][125] Currency Risk The company's Brazil operations expose it to currency risks, affecting intercompany transactions and foreign subsidiary financial results - Operations primarily in Brazil expose the company to currency risks from intercompany receivables/payables and the translation of foreign subsidiary financial results into U.S. dollars[123][124] - Changes in exchange rates affect the foreign currency translation adjustment account in shareholders' equity[124] Critical Accounting Policies and Estimates Financial statements are prepared under U.S. GAAP, requiring management to make estimates and assumptions affecting reported financial figures - Financial statements are prepared in accordance with U.S. GAAP, requiring management to make estimates and assumptions that impact reported financial figures[126] Item 3. Quantitative and Qualitative Disclosures About Market Risk This item is not required for smaller reporting companies, so no specific disclosures are provided - The information for this item is not required for smaller reporting companies[127] Item 4. Controls and Procedures Management evaluated disclosure controls and procedures as effective, with no material changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures Management concluded that disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2025 - Disclosure controls and procedures were evaluated and deemed effective at a reasonable assurance level as of March 31, 2025[128] Changes in Internal Control over Financial Reporting No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2025 - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2025[129] Limitations of the Effectiveness of Controls and Procedures Controls and procedures provide reasonable assurance due to inherent resource constraints and management judgment - Controls and procedures, no matter how well designed, can only provide reasonable assurance due to resource constraints and the application of management judgment[130] PART II - OTHER INFORMATION Part II covers legal proceedings, risk factors, unregistered equity sales, defaults, mine safety, and exhibits Item 1. Legal Proceedings The company reported no material legal proceedings - There are no material legal proceedings to report[133] Item 1A. Risk Factors Investing in the company's common stock involves high risk, including potential adverse effects from tariffs and trade policy changes - Investing in the company's common stock involves a high degree of risk, and investors should carefully consider all risk factors[134] - Tariffs, trade restrictions, and changes in international trade policy, such as those potentially arising from Section 232 analysis on critical mineral imports, could adversely affect the company's business, financial condition, and results of operations[135] - An escalating global trade war or retaliatory trade measures could decrease demand for the company's minerals and impact the markets in which it operates[135] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds In Q1 2025, the company issued 40,000 common stock options and 75,000 common stock purchase warrants, exempt from registration - On January 1, 2025, 40,000 common stock options were issued to directors as compensation[139] - On January 29, 2025, 75,000 common stock purchase warrants were issued to certain investors in connection with equity financing activities[139] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - There were no defaults upon senior securities[136] Item 4. Mine Safety Disclosures The company reported no mine safety disclosures - There were no mine safety disclosures[137] Item 5. Other Information The company reported no other information - There is no other information to report[138] Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report, including CEO and CFO certifications and Inline XBRL documents | Exhibit Number | Description | | :------------- | :-------------------------------------------------------------------------------- | | 31.1* | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 31.2* | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 32.1** | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | | 101.INS* | Inline XBRL Instance Document | | 104* | Cover Page Interactive Data File (embedded within the Inline XBRL document) | Signatures The report was signed by Marc Fogassa, CEO and Chairman, and Tiago Miranda, CFO, on May 9, 2025 - The report was signed by Marc Fogassa, Chief Executive Officer and Chairman of the Board, and Tiago Miranda, Chief Financial Officer, on May 9, 2025[145]