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COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS | 9 Months Ended
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Sep. 30, 2025
Composition Of Certain Financial Statement Items |
COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS | NOTE 2 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS Inventories Inventories as of September 30, 2025, and December 31, 2024, are comprised of the following: SCHEDULE OF INVENTORIES
|  | September 30, 2025 |  |  | December 31, 2024 |
Materials and supplies |  | $ | 468,815 |  |  | $ | 321,086 |
Quartzite blocks and slabs |  |  | 51,102 |  |  |  | 171,726 |
Total |  | $ | 519,917 |  |  | $ | 492,812 |
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: SCHEDULE OF PROPERTY AND EQUIPMENT
|  | September 30, 2025 |  |  | December 31, 2024 |
|  |  |  |  | Accumulated |  |  | Net Book |  |  |  |  |  | Accumulated |  |  | Net Book |
|  | Cost |  |  | Depreciation |  |  | Value |  |  | Cost |  |  | Depreciation |  |  | Value |
Capital assets subject to depreciation: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Computers and office equipment |  | $ | 29,537 |  |  | $ | (4,298 | ) |  | $ | 25,239 |  |  | $ | 10,616 |  |  | $ | (165 | ) |  | $ | 10,451 |
Machinery and equipment |  |  | 206,387 |  |  |  | (20,092 | ) |  |  | 186,295 |  |  |  | 184,824 |  |  |  | (4,024 | ) |  |  | 180,800 |
Facilities |  |  | 16,891 |  |  |  | (1,490 | ) |  |  | 15,401 |  |  |  | 14,508 |  |  |  | (191 | ) |  |  | 14,317 |
Land |  |  | 4,345,100 |  |  |  | - |  |  |  | 4,345,100 |  |  |  | 4,144,470 |  |  |  | - |  |  |  | 4,144,470 |
Capital work in progress |  |  | 29,129,030 |  |  |  | - |  |  |  | 29,129,030 |  |  |  | 23,449,896 |  |  |  | - |  |  |  | 23,449,896 |
Mining Rights |  |  | 6,763,086 |  |  |  | - |  |  |  | 6,763,086 |  |  |  | 6,558,161 |  |  |  | - |  |  |  | 6,558,161 |
Exploration costs |  |  | 6,484,888 |  |  |  | - |  |  |  | 6,484,888 |  |  |  | 4,496,976 |  |  |  | - |  |  |  | 4,496,976 |
Total fixed assets |  | $ | 46,974,919 |  |  | $ | (25,880 | ) |  | $ | 46,949,039 |  |  | $ | 38,859,451 |  |  | $ | (4,381 | ) |  | $ | 38,855,071 |
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 SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
|  | September 30, 2025 |  |  | December 31, 2024 |
Trade payables |  | $ | 5,009,709 |  |  | $ | 4,779,903 |
Payroll and social charges |  |  | 743,031 |  |  |  | 157,191 |
Taxes payable |  |  | 176,749 |  |  |  | 64,570 |
Total |  | $ | 5,929,489 |  |  | $ | 5,001,664 |
ATLAS LITHIUM CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS (CONTINUED) Leases Finance Leases For the reporting period ended 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 2 to five 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: SCHEDULE OF OPERATING LEASE LIABILITY
Lease liabilities at December 31, 2024 |  | $ | 447,218 |
Increase/Decrease |  |  | 62,677 |
Unwinding of lease liabilities |  |  | 22,598 |
Lease payments |  |  | (139,312 | )
Foreign exchange |  |  | 70,736 |
Lease liabilities at September 30, 2025 |  |  | 463,917 |
Current portion |  |  | 163,781 |
Non-current portion |  | $ | 300,136 |
The maturity of the lease liabilities (contractual undiscounted cash flows) is presented in the table below: SCHEDULE OF CONTRACTUAL UNDISCOUNTED CASH FLOWS
Less than one year |  | $ | 188,399 |
Year 2 |  |  | 155,914 |
Year 3 |  |  | 95,971 |
Year 4 |  |  | 71,978 |
Total contractual undiscounted cash flows |  | $ | 512,262 |
ATLAS LITHIUM CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS (CONTINUED) Convertible Debt SCHEDULE OF CONVERTIBLE DEBT
|  | September 30, 2025 |  |  | December 31, 2024 |
Due to Nanyang Investment Management Pte Ltd |  | $ | 6,078,794 |  |  | $ | 5,933,866 |
Due to Nicholas James Rowley |  |  | 2,026,288 |  |  |  | 1,977,979 |
Due to Modha Reena Bhasker |  |  | 1,013,132 |  |  |  | 988,978 |
Due to Clipper Group Limited |  |  | 1,013,133 |  |  |  | 988,978 |
Total convertible debt |  | $ | 10,131,347 |  |  | $ | 9,889,801 |
Current portion |  |  | 245,754 |  |  |  | 81,918 |
Non-current portion |  | $ | 9,885,593 |  |  | $ | 9,807,883 |
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:
- | Maturity date: 36 months as from the date of issuance;
- | Principal repayment terms: due on maturity;
- | Interest rate: 6.5% per annum;
- | Interest payment terms: due semiannually in arrears until maturity, unless converted or redeemed earlier and payable at the election of the holder in cash, in shares of common stock, or in any combination thereof;
- | Conversion right: the holder retains a right to convert all or any portion of the note into shares of the Company’s common stock at the Conversion Price up until the maturity date; and
- | Conversion price: US$28.225/share
- | Redemption right: the Company shall vest a right to redeem the convertible notes if and when (i) twelve months have passed since the loan origination and (ii) the volume weighted average price exceeded 125% of the conversion price for 5 trading days within a 20-day trading period. However, if the Company notifies the holder of its election to redeem the convertible note, the holder may then convert immediately at the conversion price.
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 SCHEDULE OF DERIVATIVE LIABILITIES
|  | September 30, 2025 |  |  | December 31, 2024 |
Derivative assets |  |  |  |  |  |  |  |
Derivative assets - Non-Deliverable Forward |  | $ | 419,420 |  |  | $ | - |
Total derivative assets |  |  | 419,420 |  |  |  | - |
Derivative liabilities |  |  |  |  |  |  |  |
Derivative liability – conversion feature on the convertible debt |  |  | 10,383 |  |  |  | 66,310 |
Derivative liability – restricted stock awards |  |  | 22,199 |  |  |  | 121,512 |
Derivative liability - Non-Deliverable Forward |  |  | - |  |  |  | 274,816 |
Total derivative liabilities |  | $ | 32,582 |  |  | $ | 462,638 |
ATLAS LITHIUM CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS (CONTINUED) a) Derivative liability – embedded conversion feature on convertible debt On November 7, 2023, the Company issued convertible promissory notes to 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: SCHEDULE OF FAIR VALUE EMBEDDED CONVERSION PRICING MODEL ASSUMPTION
|  | Value cap |  |  | Value floor |
Measurement date |  | December 31, 2024 |  |  | December 31, 2024 |
Shares to be issued in case of conversion |  |  | 354,297 |  |  |  | 354,297 |
Stock price at fair value measurement date |  | $ | 6.330 |  |  | $ | 6.330 |
Conversion price |  | $ | 28.2250 |  |  | $ | 35.2813 |
Expected volatility |  |  | 115.64 | % |  |  | 115.64 | %
Risk-free interest rate |  |  | 4.25 | % |  |  | 4.25 | %
Dividend yield |  |  | 0.00 | % |  |  | 0.00 | %
Expected term (years) |  |  | 1.85 |  |  |  | 1.85 |
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:
|  | Value cap |  |  | Value floor |
Measurement date |  | September 30, 2025 |  |  | September 30, 2025 |
Shares to be issued in case of conversion |  |  | 354,297 |  |  |  | 354,297 |
Stock price at fair value measurement date |  | $ | 4.760 |  |  | $ | 4.760 |
Conversion price |  | $ | 28.225 |  |  | $ | 35.281 |
Expected volatility |  |  | 83.916 | % |  |  | 83.916 | %
Risk-free interest rate |  |  | 3.68 | % |  |  | 3.68 | %
Dividend yield |  |  | 0 | % |  |  | 0 | %
Expected term (years) |  |  | 1.10 |  |  |  | 1.10 |
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). ATLAS LITHIUM CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS (CONTINUED) b) Derivative liability – other stock incentives The employment agreement of 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:
- | Tranche 3: when the Company achieves a $400 million market capitalization
- | Tranche 4: when the Company achieves a $500 million market capitalization
- | Tranche 5: when the Company achieves a $600 million market capitalization
- | Tranche 6: when the Company achieves a $800 million market capitalization
- | Tranche 7: when the Company achieves a $1.0 billion market capitalization
In accordance with FASB ASC 815, these RSU awards were classified as a liability, measured at fair value through profit or loss, and compensation expense is recognized over the expected term. As at 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.
| ● | As of September 30, 2025, the Company had unrealized gains from NDF contracts recognized in Other Comprehensive Income (OCI): $ 413,278
| ● | For the nine-month period ended September 30,2025, the Company reclassified into Finance Costs (Revenue) a total amount of $(251,558)
ATLAS LITHIUM CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS (CONTINUED) The following table summarizes the non-deliverable forward foreign exchange contracts that remain open as of September 30, 2025: SCHEDULE OF NON DELIVERABLE FORWARD EXCHANGE CONTRACTS
|  | Dates Entered |  | Derivative Financial |  | Total Notional |  |  | FX rate |  |  | Total Notional |  |  | Settlement
Subsidiary |  | Into |  | Instrument |  | Amounts (USD) |  |  | (BRL/USD) |  |  | Amounts (BRL) |  |  | Dates (Range)
Atlas Litio Brasil Ltda |  | April, 2025 |  | Forward foreign exchange contracts (USD/BRL) |  | $ | 2,750,000 |  |  |  | 6.27 |  |  |  | 17,247,125 |  |  | 30-Sep-2025 - 15-Mar-2026

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