COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

9 Months Ended

Sep. 30, 2022

Composition Of Certain Financial Statement Items

COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

NOTE 2 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

Property and Equipment

The following table sets forth the components of the Company’s property and equipment at September 30, 2022 and December 31, 2021:

	September 30, 2022							December 31, 2021
	Cost		Accumulated Depreciation			Net Book Value		Cost		Accumulated Depreciation			Net Book Value
Computers and office equipment	$	3,880	$	(3,380	)	$	-	$	3,880	$	(2,778	)	$	1,063
Machinery and equipment		407,534		(351,036	)		56,498		334,253		(281,489	)		52,764
Vehicles		76,230		(76,230	)		-		118,653		(118,653	)		-
Land		61,037		-			61,037
Total fixed assets	$	548,680	$	(431,146	)	$	117,534	$	456,747	$	(402,920	)	$	53,827

For the three and nine months ended September 30, 2022, the Company recorded depreciation expense of $1,086 and $16,717, respectively, and for the three and nine months ended September 30, 2021, the Company recorded depreciation expense of $4,518 and $28,128, respectively.

Intangible Assets

Intangible assets consisting of mining rights are not amortized as the mining rights are perpetual. The carrying value was $4,829,276 and $1,302,440 at September 30, 2022 and December 31, 2021, respectively.

Equity Investments without Readily Determinable Fair Values

On October 2, 2017, the Company entered into an exchange agreement whereby it issued 25,000,000 shares of its common stock in exchange for 500,000 shares of Ares Resources Corporation. The Company’s chief executive officer also serves as an officer of Ares Resources Corporation, thus making it a related party under common ownership and control. The shares were recorded at $150,000, or $0.006 per share. The shares were valued based upon the lowest market price of the Company’s common stock on the date of the agreement.

On March 11, 2020, the Company issued 53,947,368 shares of common stock to Lancaster Brazil Fund pursuant to an addendum to a share exchange agreement dated September 28, 2018. The Company recorded a loss on exchange of equity with a related party of $76,926 representing the fair value of the additional shares of common stock issued.

Under ASC 321-10, the Company elected to use a measurement alternative for its equity investment that does not have a readily determinable fair value. As such, the Company measured its investment at cost, less any impairment, plus or minus any changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. The Company owns less than 5% of the total shares outstanding of Ares Resources Corporation.

ATLAS LITHIUM CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS (CONTINUED)

Accounts Payable and Accrued Liabilities

	September 30, 2022		December 31, 2021
Accounts payable and other accruals	$	441,714	$	310,047
Mineral rights payable		2,480,725		672,601
Accrued interest		-		5,590
Total	$	2,922,439	$	988,238