Atlas Lithium : Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

About this update from Atlas Lithium Corporation

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed 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, 2025 (the "2025 Form 10-K"). 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 is a mineral exploration and development company with lithium projects and multiple lithium exploration properties. In addition, we own exploration properties in other battery minerals, including nickel, copper, rare earths, graphite, and titanium. Our current focus is the continued advancement of our hard-rock lithium project in Minas Gerais, Brazil toward active mining. The project is located within a well-known lithium-bearing pegmatitic district designated by the state government 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. In 2025, we received our dense media separation lithium processing plant (the "DMS Plant"), which was designed to produce approximately 150,000 tons of lithium concentrate per annum ("tpa"). Our DMS Plant represents a cornerstone of our Neves Project, designed to deliver high-quality lithium concentrate to the global market for electric vehicles (EVs) and renewable energy storage systems. With worldwide lithium demand growing, we are positioned to emerge as a key contributor to the sustainable energy transition. We believe that we hold the largest portfolio of exploration properties for lithium in Brazil among publicly listed companies. Operational Update During the first quarter of 2026, we continued to advance our flagship Neves Project toward production while achieving several important strategic and corporate milestones. Work items related to project implementation continued to progress, with particular emphasis on finalizing the project management framework that the Company will utilize to oversee construction execution and the coordination of third party service providers. On April 27, 2026, we announced that four key operational partners had been selected for the implementation of the Neves Project after a process that lasted several months in which multiple qualified firms participated in a competitive selection process led by our technical team. Contracts were awarded based on a comprehensive evaluation of relevant criteria, including technical experience, proven performance, quality, and cost efficiency. Each awarded contract was finalized at or below the budget projections outlined in our Definitive Feasibility Study (DFS). Each of these four companies brings a strong track record of performance and deep experience in Brazil's mining sector. ● Promon Engenharia - Responsible for completing multiple detailed engineering components for the Neves Project. Founded in 1960, Promon has delivered more than 2,700 projects and has notable experience in lithium project development in Brazil. ● TSX Engineering - Appointed to oversee and manage project implementation for the Neves Project. Founded in 2019, TSX Engineering brings extensive expertise in the mining sector, including capital expenditure and cost management, project planning & controls, and risk management. ● Cerne Construções - Engaged under an Engineering, Procurement, and Construction (EPC) contract for the design and construction of the Neves Project's administrative and operational facilities. Founded in 1989, Cerne offers modular construction solutions and broad experience in mining infrastructure. ● RETC Infraestrutura - Responsible for earthworks and civil construction activities for the Neves Project. The RETC team brings over 40 years of combined experience delivering complex industrial projects across Brazil. In addition to the key firms mentioned above, our technical team is rapidly advancing the selection of additional operational partners during the second quarter of 2026 for remaining scopes of the Neves Project implementation, as detailed in the DFS. On January 9, 2026, the common stock of our subsidiary Atlas Critical Minerals Corporation ("Atlas Critical Minerals") commenced trading on the Nasdaq Capital Market under the ticker symbol "ATCX," which we announced by press release on January 14, 2026. Atlas Critical Minerals controls more than 218,000 hectares of mineral rights in Brazil, with projects in rare earths, titanium, graphite, uranium, including a revenue-generating iron ore operation that commenced shipments in late 2025. Atlas Lithium Corporation currently holds an approximate 20% ownership stake in Atlas Critical Minerals, which we believe provides our shareholders with diversified exposure to a broader portfolio of critical minerals while allowing our management team to maintain its focus on advancing the Neves Project. More details about Atlas Critical Minerals are available on its website at www.atlascriticalminerals.com and in its filings with the Securities and Exchange Commission. On April 2, 2026, we announced that our 100%-owned Neves Project had been named in the Joint Fact Sheet for Japan-U.S. Critical Minerals Project Cooperation (the "Joint Fact Sheet"), released on March 20, 2026 by Japan's Ministry of Economy, Trade, and Industry ("METI") together with the Ministry of Foreign Affairs of Japan ("MOFA"). The Neves Project is the only Brazil-based lithium project named in the Joint Fact Sheet, which states that the Government of Japan and the Government of the United States are considering financial support for the purpose of development of the Neves Project. The Joint Fact Sheet followed the U.S.-Japan Critical Minerals Investment Ministerial held on March 14, 2026 in Tokyo, as well as the summit held between Japan's Prime Minister, Sanae Takaichi, and U.S. President, Donald Trump, on March 19, 2026. This recognition builds upon our existing strategic partnership with Mitsui & Co., Ltd., which made a US$30 million strategic investment in Atlas Lithium common shares in March 2024 and entered into an offtake agreement for the purchase of lithium concentrate from the Neves Project. On April 7, 2026, we announced the appointment of Admiral Flávio Augusto Viana Rocha, a former Cabinet member of the Brazilian Government, to our board of directors as an independent director. Admiral Rocha is a distinguished Brazilian leader with over 43 years of experience in strategy, governance, logistics, and international relations, including official government missions to more than 50 countries. From 2020 to 2022, he held the Minister-level position of Chief of the Secretariat for Strategic Affairs of the Presidency of Brazil, where he led the development of Brazil's National Long-Term Policy and National Strategic Agenda, including the National Energy Policy. We believe Admiral Rocha's experience will be valuable as we continue to advance the Neves Project and strengthen our position within the global critical minerals landscape. Market Update Lithium market conditions continued to improve during the first quarter of 2026, supported by accelerating growth in the energy storage systems ("ESS") segment - particularly for grid-scale applications and power for data centers - alongside continued robust demand for electric vehicles worldwide. These demand drivers were reinforced by ongoing supply disruptions, including production constraints impacting Chinese lepidolite operations and export restrictions affecting Zimbabwean spodumene producers, which together tightened global supply availability. These dynamics created a favorable backdrop for the continued improvement in lithium prices observed during the quarter. Consistent with this environment, we have received written indications of interest from several parties seeking to secure long-term supply arrangements for our future lithium concentrate production. Results of Operations The Three Months Ended March 31, 2026, compared to the Three Months Ended March 31, 2025 Net loss for the three months ended March 31, 2026 totaled $16.5 million, compared to net loss of $10.2 million during the three months ended March 31, 2025. The increase in net loss is mainly due to: ● An increase in General and administrative expenses of approximately $5.9 million compared to the three months ended March 31, 2025, primarily due to: (i) $2.0 million increase in payroll expenses driven by an increase in the contractual bonus paid to our chief executive officer in 2026 compared to 2025 due to the achievement of certain milestones and by the increase of operational activities related to the preparation for the project implementation; and (ii) $3.5 million due to the higher third-party contractor costs as the Company's activities expanded as a result of the preparation for the project implementation; ● An increase of approximately $1.2 million in stock-based compensation expenses compared to the three months ended March 31, 2025, resulting primarily from Atlas Critical Minerals incurring $2.1 million in stock-based compensation expenses in 2026 compared to $1.0 million in 2025, a $1.1 million increase. The increase is due to the fact that Atlas Critical Minerals issued 263,480 shares in 2026 compared to 142,033 shares issued in 2025, as well as the increase of Atlas Critical Minerals' stock price increase during the period ($12.36 as of January 1, 2026, compared to $8.40 as of January 1, 2025), which is the basis for the instruments' fair value calculation. ● Those effects are partially offset by an improvement in finance costs (revenues) of $0.7 million compared to the three months ended March 31, 2025, mainly due to: ■ Higher proceeds generated from hedge contracts (NDFs) settled during the period due the appreciation of Brazilian Reais against U.S. dollars ($0.3 million in 2026 compared to nil in 2025); ■ Higher proceeds from short-term investments due to the higher cash position in 2026 ($0.2 million in 2026 compared to $0.1 million in 2025); and ■ Lower foreign exchanges expenses arising from accounts payable and receivables in currencies other than U.S. dollars ($0.1 million in 2026 compared to $0.2 million in 2025). Liquidity and Capital Resources As of March 31, 2026, we had cash and cash equivalents of $34.4 million and working capital of $21.9 million. Net cash used by operating activities totaled $10.6 million for the three months ended March 31, 2026, compared to net cash used of $4.4 million during the three months ended March 31, 2025, representing an increase of $6.2 million. The increase in net cash used by operating activities was mainly due to higher general and administrative expenses. See the section entitled " Results of Operations" above . Net cash used by investing activities totaled $1.3 million for the three months ended March 31, 2026, compared to net cash used of $4.2 million during the three months ended March 31, 2025, representing a decrease in cash used of $2.9 million. The increase is essentially driven by: ● A decrease of $1.9 million in the acquisition of capital assets ($1.2 million in 2026, compared to $3.1 million in 2025). The decrease is mainly explained by the payments made in connection with the logistics to bring our lithium processing plant from South Africa to Brazil in 2025, a one-time event; ● The reduction of our exploration activities incurred during the three months ended March 31, 2026, since our current focus is on preparation for the implementation of the Neves Project and its revenue generation, consisting of $0.1 million of expenditures compared to $1.0 million for the three months ended March 31, 2025. Net cash provided by financing activities totaled $10.4 million for the three months ended March 31, 2026, compared to $7.1 million during the three months ended March 31, 2025, representing an increase in cash provided of $3.3 million. The increase is due to the following: ● Net proceeds of $9.6 million arising from the sale of shares of Atlas Critical Minerals, a consolidated subsidiary of the Company, as a result of such company's capital raise in connection with the listing of its common stock in the Nasdaq Capital Market ($0.5 million for the three months ended March 31, 2025); ● Partially offset by lower sales of our common stock pursuant to the ATM Agreement for proceeds of $0.9 million, net of commissions and fees ($6.7 million for the three months ended March 31, 2025). 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 sales of our equity and the equity of one of our subsidiaries. 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 our ability to attract talent. 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 condensed consolidated financial statements are denominated in U.S. dollars. 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. Foreign Currency Until December 31, 2025, with the exception of Atlas Brazil, our foreign subsidiaries (all based in Brazil) used a local currency (Brazilian Reais) as the functional currency. Resulting translation gains or losses were recognized as a component of accumulated other comprehensive income. The Company determined that, as of January 1, 2026, the U.S. dollar is the currency of the primary economic environment in which the Brazilian subsidiaries operate. Effective January 1, 2026, the Company's foreign subsidiaries changed their functional currency from Brazilian Reais to U.S. Dollars due to a shift in the underlying economic facts and circumstances affecting the subsidiaries' operations and financing activities. In particular, our subsidiary Atlas Critical Minerals listed on the Nasdaq Capital Market and commenced trading on the Nasdaq on January 9, 2026. As a result of such listing and the attendant access to U.S. capital markets, the U.S. Dollar is the primary currency through which we and our Brazilian subsidiaries expect to raise any additional capital. In accordance with ASC 830, the change in functional currency was accounted for prospectively from the date of change. As a result: ● assets and liabilities were translated into the new functional currency using exchange rates as of the date of change; ● nonmonetary assets and liabilities were translated at historical exchange rates (the effective date of the change is considered for the translation of existing nonmonetary assets and liabilities); and ● cumulative translation adjustments previously recorded in accumulated other comprehensive income were not reversed.

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