UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended: September 30, 2022

For the transition period from ____________ to _____________

Commission File Number: 000-56379

NEXT-ChemX Corporation

(Exact Name of Registrant as Specified in Its Charter)

1111 W 12th St, # 113

Austin, Texas 78703

(Address of principal executive offices, Zip Code)

(512) 663-2690

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes☐ No ☒

The number of shares outstanding of each of the issuer’s classes of common stock, as of November 18, 2022 is as follows:

NEXT-ChemX Corporation

Quarterly Report on Form 10-Q

For the Quarter Ended September 30, 2022

TABLE OF CONTENTS

NEXT-CHEMX CORPORATION

INTERIM FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

NEXT-ChemX Corporation

Condensed Balance Sheets

(Unaudited)

The accompanying notes are an integral part of these unaudited condensed financial statements.

NEXT-ChemX Corporation

Condensed Statements of Operations

(Unaudited)

The accompanying notes are an integral part of these unaudited condensed financial statements.

NEXT-ChemX Corporation

Condensed Statement of Stockholders’ Equity (Deficit)

(Unaudited)

For the Nine Months Ended September 30, 2022

For the Nine Months Ended September 30, 2021

The accompanying notes are an integral part of these consolidated financial statements

NEXT-ChemX Corporation

Condensed Statement of Cash Flows

(Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

NEXT-ChemX Corporation

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

September 30, 2022

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Caution Regarding Forward-Looking Information

This Quarterly Report on Form 10-Q, including, without limitation, statements containing the words “believes”, “anticipates”, “expects” and words of similar import, constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Such factors include, among others, the following: international, national and local general economic and market conditions: demographic changes; the ability of the Company to sustain, manage or forecast its growth; the ability of the Company to successfully make and integrate acquisitions; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; and other factors referenced in this and previous filings.

Given these uncertainties, readers of this Form 10-Q and investors are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.

Overview

The Company was organized on August 13, 2014 as a Nevada corporation under Chapter 78 of the Nevada Revised Statutes. The Company’s registered address is 3773 Howard Hughes Pkwy STE 500S, Las Vegas, NV, 89169, USA, and its principal office is located at 1111 W 12th St, # 113, Austin, Texas 78703.

The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups 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.

Overview of the Business

Since April 27, 2021, the Company has completely changed its business model following the acquisition of intellectual property assets related to a novel membrane-based ion extraction process (“Membrane Technology”) The Membrane Technology enables the extraction of ions existing in low concentrations from liquid solutions. The Membrane Technology is now being used in Laboratory pilot testing and it is anticipated will result in the production of the Company’s first commercial prototypes using the novel extraction method. Our Membrane Technology allows for the removal of ions from solution in a continuous process without either preliminary concentration by evaporation, or the use of pressure or additional heating. This renders the process inherently more efficient and significantly preserves water resources and reduces energy costs. During the extraction process, the Membrane Technology targets specific ions for extraction, bringing them off in succession. This process we believe is unique and reduces the need for further operations to concentrate and purify the target materials while providing alternative potentially lucrative revenue sources from the sale of other ions in the solution. The Company expects that the reduced interference with the environment, the lower energy costs and the lack of a need for large evaporation ponds, will make its technology potentially very attractive to companies dealing with the environmental difficulties resulting from current deployed extraction options. We consider the Membrane Technology to be environmentally friendly and sustainable when compared to alternatives.

The Company has targeted the following applications for the deployment of its Membrane Technology: (i) the extraction of lithium from brine solutions or mine leach solutions; (ii) the extraction of fatty acids from vegetable oils and the extraction of glycerols from biodiesel, both being a superior purification and refining process to existing methods; (iii) the extraction of radioactive ions from nuclear waste waters in particular for environmental protection and cleanup; (iv) the extraction of specific metal ions from mine leach solutions and waste effluents; and (v) the removal of ions from seawater providing a more efficient and scalable desalination process. Other extraction possibilities will be targeted in the longer term.

During the first nine months of 2022, the Company has focused efforts on the extraction of targeted components from various brine solutions containing lithium. These sample brines contain a variety of different ions that make the extraction of the lithium difficult; certain ions, such as magnesium, should be removed first to enable the process to be deployed commercially. During the 2^nd Quarter, the Membrane Technology demonstrated its ability to remove the specific ion components of the brines tested in a manner that can be used to design a continuous process. The continuing path of the development will be to design and build both scaled up laboratory and commercial pilots that will enable the testing of commercial quantities of material to identify the efficiency cost of the deployment of the process as well as eventual test deployment in the field.

During the remainder of 2022, it is expected that the primary focus of management will be the continued development and configuration of the most efficient commercial pilot plant for lithium extraction; the organization and the hiring of targeted expertise; the protection of the Company’s intellectual property assets; and the organization of the Company’s business with the creation of an initial manufacturing facility. Success in the lithium deployment will be followed by the expansion of the process to target the extraction of radioactive ions from nuclear waste waters, the refining of vegetable oils by the removal of fatty acids; and the removal of glycerols for purification of biodiesel.

Impact of Events in Ukraine

The Business of the Company and its fundamental research are conducted in the United States, however, the Company maintained offices in Ukraine and was implementing programs with certain Ukrainian partners to test the Membrane Technology as a means of extracting certain radioactive contaminants such as might be found after a nuclear disaster or as a byproduct of the operations of a nuclear reactor. Plans for testing the use of the Membrane Technology to refine sunflower oil were also projected with raw oil producers in Ukraine. As a result of the current conflict in Ukraine these programs have been suspended and the Company is now focusing on the extraction of lithium from brines in North and South America. It is not certain if or when the Company may be able to recommence its work in Ukraine with the reopening of its offices and the recommencement of work there, however, the Company is committed to the support of Ukraine and its people and it follows that the Company will return to Ukraine as soon as the political situation allows.

Results of Operations

The following table summarizes the results of our operations during the nine months ended September 30, 2022 and 2021, respectively:

Net loss for the nine months ended September 30, 2022 was derived primarily from operating expenses.

On April 27, 2021, during the second quarter of 2021, the Company radically changed its business making a comparison between the first nine months of 2021 and the same period in 2022 unedifying. During 2021 and up until April 27, 2021 the business of the Company was the provision of management services and revenues were derived from assisting companies, notably to open accounts and prepare for listing in the United States. Revenues were small and the business model ultimately unsustainable. The first quarter of 2021 the Company recorded a small loss of $16,650, however, more importantly the Company showed no promising business prospects.

Since the radical changes in the business occurred towards the beginning of the second quarter, the following table is included to summarize the results of our operations during the three months ended September 30, 2022 and 2021, respectively:

The period of the second quarter covering April 1^st until September 30, 2021 was characterized by an initial period before April 27^th where the company was preparing itself for a complete change of control and a transformation of its business. The former sole director and officer forgave $150,560 of debt and various reconciliations were made to ensure that the Company could be transferred to the new owners without significant outstanding liabilities. Following the change of control, new funds were invested in the Company to finance operations. A total of $325,000 was received against the issuance of six 1-year convertible notes paying 8% interest. These notes were all converted into equity in the same period 2022.

The funding was used to finance operations and the costs relating to the acquisition of the Membrane Technology, including fees to lawyers and accountants as well as to the transfer agent and to other consultants. Importantly, the Company’s laboratory was opened and intellectual property lawyers were retained to identify, consolidate and protect the Company’s principal asset. Salary payments were increased over the same period of 2021 due to the need to employ the principal scientist responsible for the Company’s new technology as well as other officers and employees.

The acquisition resulted in much higher expenses when compared to the same period of 2021, given the start-up nature of the business following the change of business and control, there were no revenues nor prospect of any revenues until such time as the technology is ready for market.

The nature of the new business managed by the Company in 2022 and in particular its cycle of return and potential upside when compared to that prior to April 27, 2021 is fundamentally different. Consulting services are usually paid at a fixed rate (sometimes on commission) and payment is mostly rapid. The cycle of the business of a startup new technology company is longer and less certain, however, it potentially may offer better long-term gains.

During the first nine months of 2022, the Company has continued to develop the method and potential of its technology as well as completing its move away from the Ukrainian market and a shift to focus on the extraction of lithium rather than generally concentrating on extraction techniques for a range of different options. The Company has made advances in its ability to remove certain series of materials that are commonly found in with lithium in solution and that present fundamental difficulties to the continuous extraction of lithium. These advances have been made in laboratory pilot and are now ready for inclusion in a commercial pilot system that will define the market introduction of the system. The new business and the change in focus of the Company has resulted in a significant increase in the expenses of the Company when compared to the same period of 2021.

Adding to these increased costs, during the third quarter of 2022, the Company began directly exploring market possibilities for its system with lithium producers operating in both South and North America resulting in further increases in costs over the previous period. These initial contacts are ongoing discussions with regards to the possibility of commercial testing of the system once continuous direct lithium extraction is demonstrated in the commercial pilot plant.

The associated costs resulting from the development of the Company’s technology following the change in the business undertaken in late April 2021 necessitated the raising of additional funding that was done through the issue of successive convertible debt financing paying 8% interest annually in arrears. Interest expenses further increased the operating expense when compared with the same period for 2021.

Liquidity and Capital Resources

As of September 30, 2022 and 2021, we had total current assets of $2,994 and $12,029, respectively and an accumulated deficit of $3,192,798.

Our operating activities used $488,865 in cash for the nine months ended September 30, 2022, while our operations used $502,429 cash in the nine months ended September 30, 2021. We had no revenues in the nine months ended September 30, 2022 and 2021. During the nine months ended September 30, 2022, the Company received net cash flows from financing activities of $480,107.

Our cash requirements are primarily for the continued development of the commercial pilot plant with the purchase of equipment and materials as well as the operating expenses for the development of pilot plant systems and its demonstration to potential customers, as well as our payroll expense. During the next 6 months, it is planned that the Company open new corporate offices and commence the organization of its initial production facility.

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 Company has reached the stage in its development when it requires significant additional finance to be able to bring the first of its extraction processes to a marketable form. Management estimates that the minimum finance necessary to be able to achieve this is $1.5 million. The Company has already signed a non-binding term sheet that will, when implemented, provide the $1.5 million.

In addition, the Company has received a firm pledge of an additional $400,000 in the form of a long-term loan with a low interest rate. It is anticipated that this loan will be concluded as soon as the Company receives binding commitments that will enable it to meet its minimum funding target. Historically, we have depended on loans from our principal shareholders and their affiliated companies to provide us with working capital as required and this has continued through the 3^rd Quarter of 2022. There is no guarantee that such funding will be available when required and there can be no assurance that our stockholders, 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

The Company has relied on funding from debt (both convertible to equity and non-convertible) as its primary source of funding. In the event of a high inflationary environment, this method of funding may become more expensive and may be less readily available.

Our core business and operating results are not anticipated to be affected in any material way by inflation, however, world economies are moving into increasing uncertainty regarding the pricing of commodities and other raw materials. Due in a large part to increasing political uncertainties, the effects of war and the increasing use of embargo underlined by the deepening crisis in relations opposing the United States and its traditional allies and economic partners with the former communist countries of Russia and China and their allies and partners, we can expect greater uncertainty with potentially raw material price increases that may not be uniform. It is probably that certain goods will increase considerably more than others creating product pricing distortion with some items increasing at a greater rate than others. Some of these distorted increases may be items required for the Company’s extraction systems thus creating an increase that cannot be covered by general inflation and market adjustment, leading to possible decreases in anticipated results or a reduction in competitivity. Higher levels of inflation may also dampen demand in some cases leading to lower than anticipated results. The Company is aware of these possibilities and believes that, due to the nature and market for its system, inflationary pressures of this kind are manageable, that alternative supply sources and greater self-sufficiency can be arranged, however there is no guarantee that any measures taken can offset the effects of possible disruption to markets or that funding will be available to weather these difficulties. It is unclear, therefore, if as instability deepens to what extent the Company will be affected in a material way by excessive inflation of the kind now generally anticipated.

Critical Accounting Policies

Our financial statements and accompanying notes have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates, judgments, and assumptions that affect reported amounts of assets, liabilities, revenues and expenses. We continually evaluate the accounting policies and estimates used to prepare the financial statements. The estimates are based on historical experience and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates made by management. Certain accounting policies that require significant management estimates and are deemed critical to our results of operations or financial position. Our critical accounting estimates are more fully discussed in Note 2 to our unaudited financial statements contained herein.

Item 3 - Quantitative and Qualitative Disclosures About Market Risk

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

Item 4 - Controls and Procedures

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including both the Company’s Chief Executive Officer (who is the Company’s principal executive officer) and the Company’s President and Financial Officer (who is the Company’s principal financial officer) to allow for timely decisions regarding required disclosure. In designing and evaluating the Company’s disclosure controls and procedures, the Company’s management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and the Company’s management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The ineffectiveness of the Company’s disclosure controls and procedures was due to material weaknesses identified in the Company’s internal control over financial reporting, described below.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over the Company’s financial reporting. In order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002, our management, under the supervision of the Company’s principal executive officer and principal financial officer have conducted an assessment, including testing, using the criteria in Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) (2013).

Our system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. This third quarter assessment, completed in October 2022, included a review of the documentation of controls, an evaluation of the design effectiveness of controls and testing of the operating effectiveness of controls.

The current Board structure does not provide for an independent Board since all Board members are members of senior management, however, below this level the small size of the Company and the commitment, integrity and ethical values of the managers and staff provides a good structure for management even if this is not always fully documented. The management of risk to the intangible assets of the Company, were delegated to professionals and experts in the field of business and intellectual property protection, and management believes that this important risk area, fundamental to the future of the Company, is well handled. In other areas of the business there is work to be done, however, since the business is not so well advanced at the present time management priority is focused on establishing good control activities, reporting lines and communications. Due to the small number of staff and the start-up nature of the business since April 2021, there is a lack of good documentation of procedures, job responsibilities and generally of decisions made. There is much work to do in this area and it is expected that this will benefit from the relocation of certain corporate activities of the Company from Kyiv to the United States. There is currently little segregation of duties due to the limited staff however, the small nature of the team means that control is exercised constantly and consistently. The Company is committed to regular and constant monitoring of its business and control environment to improve and ensure good standards operate within the Company.

Based on its 3^rd Quarter evaluation, the Company’s management concluded its internal control over financial reporting, while again improved, could not be considered as effective as at September 30, 2022.

Changes in Internal Control Over Financial Reporting

The Company continues to improve its financial and reporting controls, During the 3^rd Quarter, good control over and accountability for expenses was demonstrated for the reporting of the quarter ended September 30, 2022. A new full time controller commenced work at quarter end. While we believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within any Company have been detected, the Company continues to improve its control environment with a view to establishing an effective control environment and to satisfying the Company auditors of the same.

PART II

OTHER INFORMATION

Item 1 - Legal Proceedings

On 05/16/2022, the Company received formal notice of a wage claim from the Illinois Department of Labor filed by a former consultant (1099) who resigned from the Company with an effective date of March 18, 2022. The consultant is claiming $7,291.66 as a final payment for the period from February 9 to March 15, 2022. The complaint was filed on March 16, 2022 without any notice being given to the Company. On March 18, 2022, the date the resignation was due to take effect, the Company paid the consultant $5,833.33 as the final remuneration covering the days worked during the period. On July 27, 2022, the consultant sent notice to the Company maintaining that the full amount of $7,291.66 was still due. The matter is before the Illinois Department of Labor.

Item 1A – Risk Factors

Not applicable.

Item 2 - Sales of Unregistered Equity Securities and Use of Proceeds

None.

Item 3 - Defaults upon Senior Securities

None

Item 4 - Mine Safety Disclosures

Not applicable.

Item 5 - Other Information

None

ITEM 6. EXHIBITS.

The following exhibits are filed as part of this report or incorporated by reference:

* Filed herewith

** Furnished herewith

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.