Atlas Lithium Corp

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 unaudited interim financial information presented in the financial statements has been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), consistent in all material respects with those applied in our 2024 Form 10-K, and are expressed in United States dollars. The information included in this Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our 2024 Form 10-K. For the period ended September 30, 2025 the condensed consolidated financial statements include the accounts of the Company; (i) its 100% owned subsidiary Atlas Lithium Limited and its subsidiary Atlas Litio Brasil Ltda (“Atlas Brazil”); (ii) its 100% owned subsidiary Athena Mineral Resources Corporation and its subsidiary Athena Litio Ltda; (iii) its 100% owned subsidiary Brazil Mineral Resources Corporation and its subsidiary Atlas Recursos Minerais; (iv) its 28.15% equity interest in Atlas Critical Minerals Corporation (“Atlas Critical Minerals”) and its subsidiaries Mineração Apollo Ltda., Mineração Duas Barras Ltda. (“MDB”), RST Recursos Minerais Ltda. (“RST”) and Mineração Jupiter Ltda. We have concluded that Atlas Critical Minerals and its subsidiaries are variable interest entities (“VIE”) in accordance with applicable accounting standards and guidance. As such, the accounts and results of Atlas Critical Minerals and their subsidiaries have been included in our condensed consolidated financial statements.

All material intercompany accounts and transactions have been eliminated in consolidation.

Business Segment

The Company has one reportable segment: mining. The mining segment is composed of several mining projects, being all of them located in Brazil. Currently the Company has projects in development phase, with special focus on our project in the vicinity of Araçuaí, Minas Gerais, Brazil (the “Neves Project”). No revenues were generated in the three months ended September 30, 2025. For the nine-month period ended September 30, 2025, revenues were exclusively generated by the Company’s Quartzite project. The other mining projects are in exploration phase.

The accounting policies of the mining segment are the same as those described in the summary of significant accounting policies.

The chief operating decision maker (CODM) of the mining segment is the Company’s chief executive officer. The CODM regularly reviews the revenue, significant expenses categories – including exploration and evaluation costs and capitalized expenses – and general and administrative expenses. The significant expenses (including capitalized expenses) on which the CODM relies are those that are reported on the condensed consolidated balance sheet and statements of operations and comprehensive loss. Total segment assets as of September 30, 2025, were $72,169,028, primarily consisting of cash and cash equivalents, mineral rights, capitalized exploration and evaluation costs and equipment acquisitions for the Neves Project.

All of the long-lived assets are located in Brazil and no revenues were generated in the three months ended September 30, 2025. For the nine-month period ended September 30, 2025, revenues were exclusively generated by the Company’s Quartzite project. For the nine-month period ended September 30, 2025, the Company had four customers accounting for more than 10% of the Company’s revenue each (such customers collectively represented 95% of the Company’s revenue).

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 materially 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 other than those described in our 2024 Form 10-K that have been issued that might have a material impact on its financial position or results of operations.

NOTE 2 –COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

Inventories

Inventories as of September 30, 2025, and December 31, 2024, are comprised of the following:

Materials and supplies consist primarily of feedstock intended for use in the Company’s production processes related to lithium operations.

As of September 30, 2025, Quartzite inventories only contain slabs produced through the cutting and polishing of natural quartzite. Slabs are actively sold in the market and classified as finished goods.

Property and Equipment

The following table sets forth the components of the Company’s property and equipment as of September 30, 2025 and December 31, 2024:

Exploration costs such 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. Whether to capitalize an exploration cost or incur an expense also depends on whether the drilling or development costs relate to an ore body that has been determined to be commercially mineable and whether the expenditure relates to a probable future benefit to be generated 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 the cost of software (implementation of SAP enterprise resource planning software, as well as other software). The carrying value of these intangible assets as of September 30, 2025 and December 31, 2024 were $331,887 and $399,773, respectively.

Accounts Payable and Accrued Expenses

Leases

Finance Leases

For the reporting period ended September 30, 2025, 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 assets and lease liabilities are primarily related to the Company’s offices in Belo Horizonte and Araçuaí and Geology sheds leased from third parties.

The lease agreements have terms between two tofive years and the liability was measured at the present value of the lease payments discounted using interest rates with a rate of 6.5%, which was determined to be the Company’s incremental borrowing rate. The continuity of the lease liabilities is presented in the table below:

The maturity of the lease liabilities (contractual undiscounted cash flows) is presented in the table below:

Convertible Debt

On November 7, 2023, the Company entered into a convertible note purchase agreement (the “Convertible Note Purchase Agreement”) with an entity controlled by Mr. Martin Rowley, and other investors to raise up to $20,000,000 in proceeds through the issuance of convertible promissory notes with the following key terms:

On November 7, 2023, we issued $10,000,000 in convertible promissory notes under the terms of Convertible Note Purchase Agreement, and there were no other purchases and sales of the convertible promissory notes pursuant to the Convertible Note Purchase Agreement. On the date of issuance, we received $10,000,000 in cash proceeds and recorded (i) a $9,688,305 convertible debt liability and (ii) a $311,695 conversion feature derivative liability in our consolidated statement of financial position, as further disclosed below.

In the three and nine months ended September 30, 2025, the Company recorded $163,836 and $486,166 in interest expense and $26,188 and $77,710 in accretion expense in the condensed consolidated statement of operations and comprehensive loss ($163,836 and $487,946, in interest expenses and $26,188 and $77,995 in accretion expense in the three and nine months ended September 30, 2024).

Derivative Liabilities

a) Derivative liability – embedded conversion feature on convertible debt

On November 7, 2023, the Company issued convertible promissory notes to certain 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, 2024, the fair value of the embedded conversion feature was determined to be $66,310 using a Black-Scholes collar option pricing model with the following assumptions:

At September 30, 2025, the fair value of the embedded conversion feature was determined to be $10,383 using a Black-Scholes collar option pricing model with the following assumptions:

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 nine months ended September 30, 2025, the Company recognized a $3,313 loss and a $55,927 gain on changes in fair value of financial instruments in the condensed consolidated statement of operations and comprehensive loss ($84,934 and $396,651 gain in the three and nine months ended September 30, 2024).

b) Derivative liability – other stock incentives

The employment agreement of Igor Tkachenko, 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 September 30, 2025, 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 0.2% 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:

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 December 31, 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 $315,189, as measured using a Monte Carlo Simulation with the following ranges of assumptions: the Company’s stock price on the December 31, 2024 measurement date, expected dividend yield of 0%, expected volatility between 71.2% and 82.3%, risk-free interest rate between a range of 5.09% to 5.48%, and an expected term of 2.5 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 September 30, 2025, 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 $36,077, as measured using a Monte Carlo Simulation with the following ranges of assumptions: the Company’s stock price on the September 30, 2025 measurement date, expected dividend yield of 0%, expected volatility between 73.69% and 85.22%, risk-free interest rate between a range of 3.66%, and 4.75%, and expected term of 15 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.

c) Derivative asset - Non-Deliverable Forward

Atlas Brazil, a subsidiary of Atlas Lithium, is exposed to foreign-currency exchange-rate fluctuations in the normal course of business because a portion of its expenses are paid in Brazilian reais (BRL). To mitigate this exposure, Atlas Brazil utilizes non-deliverable forward foreign-exchange contracts (“NDFs”), which are designed to offset changes in cash flow attributable to currency exchange movements.

The Company applies hedge accounting in accordance with U.S. GAAP (ASC 815). As a result, these derivative instruments are designated and qualify as cash flow hedges, with the entire gain or loss on the derivative initially recorded in Other Comprehensive Income (OCI). These amounts remain deferred in OCI and are subsequently reclassified into earnings in the same income statement line item as the hedged item when it affects earnings.

Atlas Lithium actively monitors the derivative portfolio of its subsidiary monthly to assess financial results and cash flow implications. These contracts are used strictly for risk management purposes, and neither Atlas Brazil nor Atlas Lithium engage in speculative foreign-exchange transactions. Additionally, these contracts do not contain any credit-risk-related contingent features.

As of September 30, 2025, the fair value of outstanding NDF contracts was recorded as Derivative assets on the balance sheet.

The following table summarizes the non-deliverable forward foreign exchange contracts that remain open as of September 30, 2025:

NOTE 3 –DEFERRED OTHER INCOME

On May 2, 2023, the Company and Atlas Brazil 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 Atlas Brazil sold to LRC in consideration for $20,000,000 in cash, a royalty interest equaling 3% of the gross revenue (the “Royalty”) to be received by Atlas Brazil from the sale of products from 19 mineral rights and properties that are located in Brazil and held by Atlas Brazil. Deferred income recognized will be charged to profit and loss on a units-of-sale basis in accordance with the sales of the spodumene produced in mineral rights objective of the Purchase Agreement.

NOTE 4 –OTHER NONCURRENT LIABILITIES

Other noncurrent liabilities are comprised of tax refinancing programs at our operating subsidiaries located in Brazil and provision for contingencies. The balance of these non-current liabilities as of September 30, 2025, and December 31, 2024, amounted to $30,048 and $33,962, respectively.

NOTE 5 –STOCKHOLDERS’ EQUITY

Authorized Stock

As of December 31, 2024 and September 30, 2025, the Company had 200,000,000 authorized shares of common stock, with a par value of $0.001 per share.

On November 22, 2024, we entered into an At the Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”) with respect to an at the market offering program, under which we may, from time to time in our sole discretion, issue and sell shares of our common stock through Wainwright, acting as agent. The issuance and sale of our common stock under the ATM Agreement were made pursuant to a prospectus supplement, dated November 22, 2024, to our registration statement on Form S-3, filed with the SEC on August 25, 2023, which was declared effective on September 18, 2023 (the “2023 Form S-3”). Sales under the ATM Agreement and the 2023 Form S-3 were completed in September 2025 upon the sale of an aggregate of $25.0 million of our common stock, representing the maximum amount permitted under the 2023 Form S-3.

During the three and nine months ended September 30, 2025, we sold 2,128,714 and 4,597,216 shares of our common stock, respectively, under the ATM Agreement and the 2023 Form S-3, generating net proceeds of $11.3 million and $23.6 million, respectively, before deducting commissions and fees.

On August 22, 2025, we filed a registration statement on Form S-3 with the SEC on August 22, 2025, which was declared effective on August 28, 2025 (the “2025 Form S-3”). Following the effectiveness of the 2025 Form S-3, the issuance and sale of additional shares of our common stock pursuant to the ATM Agreement have and will be made under the 2025 Form S-3, including the base prospectus and the sales agreement prospectus contained therein (as each may be supplemented or amended), for so long as the 2025 Form S-3 remains effective. The 2025 Form S-3 permits the sale of up to $75 million of our common stock, preferred stock, or warrants, of which $25 million may be sold under the ATM Agreement pursuant to the sales agreement prospectus contained in the 2025 Form S-3.

During the three months ended September, 2025, we sold 787,652 shares of our common stock pursuant to the ATM Agreement and the 2025 Form S-3, generating net proceeds of $3.8 million before deducting commissions and fees.

Series A Preferred Stock

On December 18, 2012, we filed with the Nevada Secretary of State a Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock (the “Series A Preferred 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 Preferred Stock is issued and outstanding, the holders of Series A Preferred Stock shall vote together as a single class with the holders of our common stock, withthe holders of Series A Preferred Stock being entitled to 51% of the total votes on all such matters regardless of the actual number of shares of Series A Preferred Stock then outstanding, and the holders of common stock are entitled to their proportional share of the remaining 49% of the total votes based on their respective voting power. The one outstanding share of our Series A Preferred Stock has been held by our Chief Executive Officer and Chairman, Mr. Fogassa since December 18, 2012.

Nine Months Ended September 30, 2024 Transactions

During the nine months ended September 30, 2024, the Company issued 2,494,211 new shares of common stock, including (i)1,871,250 shares issued to an accredited investor for gross proceeds of $30,000,000 pursuant to a March 28, 2024 subscription agreement with Mitsui & Co., Ltd. (“Mitsui”), and (ii)622,961 shares issued to consultants, officers and directors upon vesting of restricted stock units.

Nine Months Ended September 30, 2025 Transactions

During the nine months ended September 30, 2025, the Company issued an aggregate of 5,781,636 shares of its common stock, as follows:

Common Stock Options

During the nine months ended September 30, 2025 and 2024, the Company granted options to purchase common stock to officers and directors. The options were valued using the Black-Scholes option pricing model with the following ranges of assumptions:

Changes in common stock options for the nine months ended September 30, 2025 and 2024 were as follows:

During three and nine months ended September 30, 2025, the Company recorded $766,693 and $2,337,433 in stock-based compensation expense from common stock options in the condensed consolidated statements of operations and comprehensive loss ($3,389,507 and $10,094,837, during the three and nine months ended September 30, 2024).

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 nine months ended September 30, 2025, the Company issued common stock purchase warrants to certain investors in connection with the Company’s equity financings. The common stock purchase warrants were valued using the Black-Scholes option pricing model with the following ranges of assumptions:

Changes in common stock purchase warrants for the nine months ended September 30, 2025 were as follows:

During the nine months ended September 30, 2024, the Company did not issue any common stock purchase warrants.

During the three and nine months ended September 30, 2025, the Company recorded the following as a result of the common stock purchase warrant activity: $200,981 and $nil in stock-based compensation expense in the condensed consolidated statements of operations and comprehensive loss ($nil and $nil, during the three and nine months ended September 30, 2024)

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.

Changes in RSUs for the nine months ended September 30, 2025 and September 30, 2024 were as follows:

During the three and nine months ended September 30, 2025, the Company recorded $376,320 and $3,765,853 in stock-based compensation expense from the Company’s RSU activity in the period ($1,609,665 and $6,728,827 during the three and nine months ended September 30, 2024).

Other stock incentives measured at fair value through profit or loss

As of September 30, 2025, the Company had certain other outstanding obligations to issue shares of the Company’s common stock in the event certain market 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 September 30, 2025, the Company recognized a $22,199 derivative liability and would have been obligated to issue 214,870 shares of common stock pursuant to these other stock incentives had the conditions of such stock incentives been met. As of December 31, 2024, we recognized a $121,512 derivative liability and would have been obligated to issue 160,145 shares of common stock pursuant to these other stock incentives had the conditions of such stock incentives been met).

NOTE 6 –COMMITMENTS AND CONTINGENCIES

Commitments

The following table summarizes certain of Atlas Lithium’s contractual obligations at September 30, 2025:

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:

Technical Services Agreement

In July 2023, we entered into a technical service agreement (the “Technical Services Agreement”) with RTEK pursuant to which RTEK agreed to provide us certain mining engineering, planning and business development services. Messrs. Nicholas Rowley and Brian Talbot are the founders and principals of RTEK. The Technical Services Agreement was amended and restated on March 31, 2024 to modify the compensation terms thereunder, and again amended and restated on August 16, 2024 (as further amended and restated, the “Second A&R RTEK Agreement”) in order to, among other things, revise certain budget and service terms and issue additional RSUs to RTEK, subject to achievement of certain milestones and performance criteria.

On March 12, 2025, RTEK delivered a letter to the Company purporting to terminate the Second A&R RTEK Agreement due to the Company’s alleged repudiation of its obligations thereunder. The Company firmly disagrees with such allegation and at that time regarded the agreement as in effect.

On March 20, 2025, the Company notified RTEK that it was terminating the agreement due to RTEK’s failure and inability to perform several of the services required under the agreement and several breaches to the other terms of the Second A&R RTEK Agreement.

The Company does not believe that it will incur any early termination penalties as a result of its termination of the Second A&R RTEK Agreement.

NOTE 7 – RELATED PARTY TRANSACTIONS (CONTINUED)

The related parties outstanding amounts and expenses as of September 30, 2025 and December 31, 2024 are shown below:

In the course of preparing condensed consolidated financial statements, we eliminate the effects of various transactions conducted between Atlas Lithium and its subsidiaries and among the subsidiaries.

Atlas Critical Minerals Corporation

During the nine months ended September 30, 2025, Atlas Critical Minerals was party to the following stock-based compensation transactions with related parties of the Company:

Pursuant to the amended and restated employment agreement between Atlas Critical Minerals and Mr. Fogassa, dated June 26, 2024, Atlas Critical Minerals issued 1,365,387 shares of its common stock to Mr. Fogassa during the nine months ended September 30, 2025 of Atlas Critical Mineral’s total outstanding common stock as of January 1, 2025.

Atlas Critical Minerals issued 515,416 restricted stock units of Atlas Critical Minerals to officers and directors of the Company at a weighted average price of $0.83 per share in settlement of $427,832 in salaries and fees owed to such officers and directors due to their services provided to Atlas Critical Minerals.

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 condensed consolidated financial statements are denominated in U.S. dollars. Accordingly, changes in exchange rates between the applicable foreign currency and the U.S. dollar affect the translation of each foreign subsidiary’s financial results into U.S. dollars for purposes of reporting in the condensed consolidated financial statements. The Company’s foreign subsidiaries translate their financial results from the local currency into U.S. dollars in the following manner: (a) income statement accounts are translated at average exchange rates for the period; (b) balance sheet asset and liability accounts are translated at end of period exchange rates; and (c) equity accounts are translated at historical exchange rates. Translation in this manner affects the shareholders’ equity account referred to as the foreign currency translation adjustment account. This account exists only in the foreign subsidiaries’ U.S. dollar balance sheets and is necessary to keep the foreign subsidiaries’ balance sheets in agreement.

NOTE 9 –SUBSEQUENT EVENTS

In accordance with FASB ASC 855-10 Subsequent Events, we have analyzed our operations subsequent to September 30, 2025 to the date these condensed consolidated financial statements were issued, and we have determined that there are no material subsequent events to disclose in these condensed consolidated financial statements.