OVERVIEW
The Company was organized on August 13, 2014 as a Nevada corporation under
Chapter 78 of the Nevada Revised Statutes as 'WeWin Group Corp'. With FINRA
approval on December 20, 2018 the Company's name changed to AllyMe Group, Inc.
During this period the Company's trading symbol remained "WWIN". On June 16,
2021, the Company's Board of Directors approved the new name "NEXT-ChemX
Corporation", and approval of this change was granted by FINRA on July 22, 2021.
The Company's new trading symbol "CHMX" was granted on July 30, 2021. The
Company's principal office is located at NEXT-ChemX Corporation, 901 Mopac
Expressway South, Building 1, Suite 300, Austin, TX. 78746. The change of
address was required since during fiscal 2022 the previous offices were under
renovation and the Company's principal officers were located in Europe. It is
anticipated that during the course of 2023 the Company will relocate to new head
offices and consolidate its team at that location. The Company's principal
laboratories continue to operate from premises leased in Champaign, Illinois.
The Company qualifies as an "emerging growth company" as defined in the
Jumpstart Our Business Startups Act or JOBS Act which became law in April 2012.
The definition of an "emerging growth company" is a company with an initial
public offering of common equity securities which occurred after December 8,
2011, and has less than $1 billion of total annual gross revenues during last
completed fiscal year. An emerging growth company may take advantage of reduced
reporting requirements that are otherwise applicable generally to public
companies. These provisions include, but are not limited to:
? not being required to comply with the auditor attestation requirements of
Section 404 of the Sarbanes-Oxley Act of 2002, as amended, or the
Sarbanes-Oxley Act;
? reduced obligations with respect to financial data, including presenting only
two years of audited financial statements and only two years of selected
financial data;
? reduced disclosure obligations regarding executive compensation in our periodic
reports, proxy statements, and registration statements;
? exemptions from the requirements of holding a nonbinding advisory vote on
executive compensation and any golden parachute payments not previously
approved; and
? an exemption from compliance with the requirement of the Public Company
Accounting Oversight Board regarding the communication of critical audit
matters in the auditor's report on the financial statements.
We have elected to take advantage of certain reduced reporting requirements. As
a result, the information that we provide to our stockholders may be different
than you might receive from other public reporting companies in which you hold
equity interests.
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In addition, the JOBS Act provides that an "emerging growth company" can take
advantage of an extended transition period for complying with new or revised
accounting standards. This provision allows an emerging growth company to delay
the adoption of some accounting standards until those standards would otherwise
apply to private companies. We have elected to use this extended transition
period to enable us to comply with certain new or revised accounting standards
that have different effective dates for public and private companies until the
earlier of the date we (i) are no longer an emerging growth company or (ii)
affirmatively and irrevocably opt out of the extended transition period provided
in the JOBS Act. As a result, our financial statements may not be comparable to
companies that comply with new or revised accounting pronouncements as of public
company effective dates.
Overview of the Business
Since April 27, 2021, the goal of the Company is to commercialize its novel
proprietary ion targeting direct membrane extraction technology ("iTDE
Technology") that is the principal asset of the business. The iTDE Technology is
based upon unique chemistry: by using the very high surface area of special
"Hollow Fiber Membranes" whereby ions may be extracted from liquid solutions.
Our Membrane Extraction Technology mimics nature's biophysical processes
enabling the technology to extract ions from a liquid solution at ambient
temperatures and pressures even where ions exist in low concentrations.
The primary focus of the Company at present is the extraction of lithium from
naturally occurring brines and geothermal sources. The Company has developed a
system for extracting naturally occurring ions in the lithium brine solutions
such as magnesium and calcium that is a key to an efficient process. Preliminary
testing to date has furnished evidence that the iTDE System provides an
efficient extraction solution with minimal disruption to the environment. Using
the iTDE System, for example, water resources will not be depleted by
evaporation on an industrial scale nor is environmentally damaging contamination
released into the environment from the process. The desired ions are harvested
and the solutions can be returned to the aquifers or further purified as
required.
The Membrane Extraction Technology has many areas of application, however during
the course of 2022 and for the planned duration of 2023, the Company will
concentrate on the extraction of Lithium from natural brines, geothermal wells,
and mine leach solutions. Already from late 2021 and throughout fiscal 2022 due
to a lack of funding, work was suspended on all other directions to concentrate
only on the commercialization of the iTDE Process for lithium extraction. In
addition, the Company's plans to work on Fatty Acids extraction from vegetable
oils as well as the extraction of radioactive ions from contaminated water has
been delayed due to the geopolitical situation in Ukraine. Since April 27, 2021,
the Company has been actively involved with scientific research in Ukraine. This
was disrupted in February 2022 due to the Russian invasion. It is not clear when
or indeed if work can be effectively resumed.
In mid-June of 2021, the Company opened its development facility in Illinois
under the direction of the inventing scientist of our Membrane Extraction
Technology. This laboratory facility is equipped with certain equipment
necessary to undertake the tasks required, however, due to the lack of certain
analytical equipment it is necessary to transfer the samples outside for testing
and this slows the process of research. It will be necessary to purchase certain
inhouse equipment to run the testing more efficiently and this is planned in the
2023 budget. The 2022 testing has allowed us to determine the preliminary
dynamics of extraction that was necessary first to support the preparation of
additional intellectual property protection and secondly to enable the design of
a controlled pilot system that is needed for the commercial marketing of the
system as well as for further experimentation and refinement of the iTDE system.
The Company has two primary immediate goals or principal directions of work:
First, the laboratory in Champaign Illinois continues to carry out work defining
the exact process for the extraction of a variety of elements which may be
required when deploying the technology in commercial use. The work is
anticipated to result in a library of different extraction techniques that will
give the Company the ability to manage any situation encountered in the field.
Lithium is found in nature mixed with other elements and their compounds either
in brines or in ore. For the iTDE Technology to be effective, it is necessary to
feed the various mixed components through the iTDE System in solution. This is
simpler in the case of brines where the elements are already dissolved or
suspended in the brine but must be put into solution in the case of ores
containing lithium. In the latter case, the ore must first be crushed and turned
into a solution or 'liquor' using a process of leaching.
Second, the Company began work in 2022 with a leading membrane specialist to
design and construct a controlled pilot system using specially designed
membranes and units. As at the end of 2022 the Company was prepared to go out to
tender with a number of required packages of work required to complete the
construction of the plant. It is currently anticipated that the final plant will
be assembled in the United States and deployed to new offices at the beginning
of the second quarter 2023.
Once the iTDE System has been sufficiently optimized, the Company plans to
design and introduce modularized extraction units based on the geometry of 40'
shipping containers for ease of deployment, servicing and refurbishment of the
units ("iTDE Units"). These units will be the basic 'product' of the Company and
will be designed specifically for the extraction of particular targeted ions.
The iTDE Units will be deployed on site with customers and it is anticipated
that revenues will be earned either from a tolling fee or as a net extraction
royalty (being a fixed % fee calculated on the quantity of useable material
extracted against the market price for the extracted material or as a fixed fee
per measured quantity).
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We plan to supply scalable Extraction Plants based on the geometry of 40'
containers. Each would have an optimal number of modules for each process and
may be designed for the particular extraction of a targeted chemical ion. These
container systems will be located at the customer extraction sites during the
commercial testing phase and for full deployment. Particular units will be
monitored and can he "hot swappable" for maintenance or replacement so as to
enable continuous production with low-cost isolated process specific monitoring
and control.
The Company is pursuing an aggressive intellectual property protection strategy.
The Company has engaged the Navitas Intellectual Property Group LLC of Denver,
Colorado for its international intellectual property requirements. This group is
headed by Michael D. McIntosh and David F. Dockery, both highly specialized
chemical processing and material science patent attorneys. Navitas is working
closely with the Company's research and development team to identify processing,
materials and markets to pursue patent protection. In turn, Navitas works with
the Company's management to identify regions of the world to pursue desired
protection. In 2021 the Company filed for patent protection for novel aspects of
its Lithium recovery developments. Additional patent applications are currently
in progress dealing with oil purification, further aspects of Lithium processing
and recovery, metals recycling and other developments. Company is also focusing
on novel membrane characteristics, production and uses. Details of these
applications are confidential until published pursuant to international patent
publication requirements.
The Company currently lacks a central management office and at present all the
members of management are located in different regions. Throughout 2022,
meetings were held online and managers were living in 3 different countries with
some in Europe and other in the US or Canada. The Company's premises in Austin,
Texas were uninhabitable during much of 2022 due to an infestation of termites
and structural issues. In addition, in January 2022, the Company was forced to
close its offices in Kyiv, Ukraine where 3 members of senior management were
deployed, due to the invasion. While all of the staff were able to escape
unharmed, administrative documentation and certain office equipment and supplies
were abandoned. All-important intellectual property information was removed in
the first week of the war on electronic storage media allowing nothing to fall
to invasion. It is not anticipated that the abandonment of the Ukrainian Office
will have an impact on the Company's lithium extraction program, however certain
other directions of work already been delayed due to being suspended due to the
war. Moreover, certain key scientists have remained in Ukraine and are no longer
able to assist the Company with its work in the sectors of radioactive material
removal. It is not clear if, at the end of the war, the teams will be able to be
reconstituted, however, the Company is seeking work permits for its key
scientific personnel and is planning to transition the technology development in
these areas outside Ukraine. It is planned that during the course of 2023 the
Company will open new head offices in Texas that will centralize the Company's
management and competence, in particular its marketing ability. The facility
will also house a small controlled pilot system for demonstrating the iTDE
Technology and be the foundation for the initial production of iTDE Units.
Results of Operations
Year Ended December 31, 2022 compared to December 31, 2021
The following table summarizes the results of our operations during the fiscal
years ended December 31, 2022 and 2021, respectively, and provides information
regarding the dollar and percentage increase or (decrease) from the current
12-month period to the prior 12-month period:
Percentage
Increase Increase
Line Item 12/31/22 12/31/21 (Decrease) (Decrease)
Revenues $ - $ - $ - inf.
Operating expenses 1,673,284 1,766,956 (93,672 ) (5 )%
Net loss (1,743,799 ) (1,784,370 ) 40,571 ) (2 )%
Net loss per share (0.06 ) (0.08 ) (0.02 ) 25 %
We recorded a net loss of $1,743,799 for the year ended December 31, 2022,
compared to a net loss of $1,784,370 for the fiscal year ended December 31,
2021. While the bottom-line operating expenses of the Company incurred during
Fiscal 2022 (and that are driving the net losses) are broadly similar to those
of fiscal 2021, in reality there has been an increase in overall monthly
operating expense. In 2021, the Company did not begin to incur serious expenses
until the after the Reorganization Date (April 27, 2021, well into the second
quarter. The increase is explained in part by the addition of new employees and
in part by the extension of the Company's focus towards the engineering
requirements of the construction of the controlled pilot system.
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Liquidity and Capital Resources
As of December 31, 2022, we had total current assets of $ 50,524, a working
capital deficit of $2,436,203 and an accumulated stockholders' equity of $
731,868. Cash used in operating activities for the fiscal year ended December
31, 2022 was $ 935,085, compared to $ 703,540 in cash used in operations during
the year ended December 31, 2021. Our revenues were $0 in both fiscal year 2022
and 2021. These factors raised substantial doubts about the Company's ability to
continue as a going concern and the Company remains chronically short of cash
for operations.
During the course of 2021 the Company was financed mainly by the issuance of
one-year 8% interest bearing promissory notes convertible into shares of common
stock. A total of $747,500 was raised in 2 series of notes with conversion rates
of $0.75 increasing in November 2021 to $1.00. These notes all became due during
the course of fiscal 2022. Of the twenty notes issued, the principal and
interest of nineteen notes were converted into shares of common stock resulting
in the issuance of 961,397 shares of common stock including 76,676 shares to
related parties. One note with a face value of $37,500 was repaid in cash
together with interest of $3,950.
Commencing fiscal year 2022, the Company began raising finance for operations by
issuing a series of non-convertible one-year 8% interest bearing promissory
notes to certain shareholders each holding more than 5% of the Company's shares
of issued common stock. During fiscal 2022 a total of eleven such notes were
issued with a total face value of $455,000. One of these notes in an amount of
$30,000 was repaid on June 3, 2022.
On October 11, 2022, the Company concluded a short-term bridging loan in the
amount of $100,000. This loan was repaid on December 14, 2022 together with a
10% bridging loan fee on December 15, 2022.
During the fourth quarter 2022, the Company concluded three loan agreements with
two shareholders each owning more than 5% of the Company's issued common stock
providing an aggregate total of $550,000 towards operating expenses. Each loan
agreement pays 10% interest annually in arrears from the date of the receipt of
funds and is repayable 1-year from that date.
There were no convertible promissory notes issued by the Company in fiscal year
2022.
Due to the manner in which funding was raised during 2022, the Company will be
required to repay the various loans during the course of 2023. The first
payments are due on the last day of the first Quarter and amount to $162,047.45.
Average monthly payments during the first second and third quarters amounts to
approximately $50,000 per month. During the final quarter of 2023, the average
monthly payment will be $166,667.
In addition to these repayments, the Company will be required to fund its
operations with an increased funding to cover the controlled pilot system
construction, installation and operation..
It is anticipated that the monthly operating budget going into 2023 will amount
to approximately $152,000 per month for the second quarter, rising to $180,000
during the remaining months of 2023.
Management believes that the Company's cash on hand will not be sufficient to
fund all Company obligations and commitments for the next twelve months. The
combination of the manner in which the shareholders have funded the Company
during 2022 with the urgent need to finance the commercial pilot system, to open
operating facilities and to increase staff will place a significantly increased
burden on cash flow during 2023.
Management estimates that the minimum fund necessary to carry the Company
through 2023 towards completion of its pilot testing system and initial
commercial deployment is $1.9 million after covering the outstanding current
liabilities of $1 million composed of loans by shareholders of the Company to
cover operating expenses during fiscal year 2022 and an additional $600,000 to
cover debts owing to employees and consultants for past remuneration and
expenses. While shareholders have indicated their willingness to either extend
the deadlines for repayment of their Notes and loans all of which will fall due
during fiscal year 2023 or to arrange conversion of the outstanding debt into
equity, there is no guarantee that this will be forthcoming. If such debt is not
deferred or converted, the Company will be required to raise an additional $1.1
million to cover the debt and interest. Certain senior employees have indicated
their willingness to convert all or part of their unpaid salary and expenses to
shares of the Company's common stock, however, there is no guarantee that this
will be arranged. In the event that such employees and consultants insist on
payment of amounts owing, the Company will be required to pay the $1.2 million
owing.
In 2022, the Company signed a non-binding term sheet that would have provided
$1.5 million in a drawdown linked to certain milestone investments. While this
financing was delayed throughout fiscal 2022, the Company has received a renewed
interest in reviving the deal in a different format.
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The Company has also received a firm pledge of an additional $400,000 in the
form of a long-term loan with a low interest rate, provided, however, any
significant investments made into the Company will clear its shareholder debt
and ensure the ability of the Company to complete its plan. It is anticipated
that this loan will be concluded as soon as the Company reduces its debt and is
successfully financed through equity.
Historically, we have depended on loans from our principal shareholders and
their affiliated companies to provide us with working capital as required and it
is anticipated that existing loans will be extended and new debt financing
provided throughout fiscal 2023. There is no guarantee, however, that such
funding will be available when required and there can be no assurance that our
major shareholders, or any of them, will continue making loans or advances to us
in the future.
Off Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity or
capital expenditures or capital resources that is material to an investor in our
securities.
Seasonality
Our operating results are not affected by seasonality.
Inflation
Our business and operating results are not affected in any material way by
inflation.
Critical Accounting Policies
The Securities and Exchange Commission issued Financial Reporting Release No.
60, "Cautionary Advice Regarding Disclosure About Critical Accounting Policies"
suggesting that companies provide additional disclosure and commentary on their
most critical accounting policies. In Financial Reporting Release No. 60, the
Securities and Exchange Commission has defined the most critical accounting
policies as the ones that are most important to the portrayal of a company's
financial condition and operating results and require management to make its
most difficult and subjective judgments, often as a result of the need to make
estimates of matters that are inherently uncertain.
The nature of our business generally does not call for the preparation or use of
estimates. Due to the fact that the Company does not have any operating
business, we do not believe that we do not have any such critical accounting
policies.
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NEXT-CHEMX CORPORATION 
