ITEM
1. BUSINESS.
Company
History and General Information
NEXT-ChemX
Corporation (the “Company”), originally known as WeWin Group Corp before becoming, from December 2018, AllyMe Group,
Inc., was originally organized on August 13, 2014 as a Nevada corporation under Chapter 78 of the Nevada Revised Statutes and listed
under the trading symbol (“WWIN”).
On
April 26, 2021, the Company underwent a change of control in which the previous majority shareholder of the Company, sold 8,618,000 shares
of Common Stock of the Company to Arastou Mahjoory and Kenneth Mollicone, each an accredited investor, in equal parts. Immediately upon
such acquisition and the APA Issuance, Messrs. Mahjoory and Mollicone agreed to cancel an aggregate of 5,418,000 shares of common stock
of the company.
On
April 27, 2021, the Company entered into that certain Asset Purchase Agreement (the “Asset Purchase Agreement”) with
NEXT-ChemX Corporation (“NEXT-ChemX”), pursuant to the Company acquired certain intellectual property assets of
NEXT-ChemX, specifically certain patents and patent applications, in exchange for the issuance of an aggregate of 23,844,448 shares
of common stock of the Company (the “APA Issuance”). As a result of the acquisition of assets, the business of the
Company was changed to commercialization of a certain novel innovative Ion-Targeting Continuous-Flow Direct Extraction Technology
(“iTDE Technology”). Since the iTDE Technology is to be embodied in a definite system that will process and extract
target chemicals, the current business is best defined under SIC Code: 3559 - Chemical Machinery and Equipment.
To
accommodate the change of ownership and business, the Company’s Board of Directors and management were also changed, and the Company’s
plans, organization, focus and long-term strategy were redefined. As a result, the projections, prospects and expectations contained
in the Company’s reporting documents issued since April 27, 2021 outline a very different future having been radically reassessed.
The
Company’s Board of Directors approved a change of name from “AllyMe Group Inc.” to “NEXT-ChemX Corporation”
on June 16, 2021, taking the name of its majority shareholder. Approval for this was granted by FINRA on July 22, 2021. The Company began
trading under the new trading symbol “CHMX” on July 30, 2021.
The
Company’s principal address is at NEXT-ChemX Corporation, 901 Mopac Expressway South, Building 1, Suite 300, Austin, TX. 78746.
The Company also operates from a laboratory in Champaign, Illinois and conducts development work in both India and Europe.
The
Company has adopted a December 31 fiscal year end.
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
iTDE
Technology: a disruptive advance in sustainable material-extraction techniques
The
iTDE Technology is the principal asset of the business. It enables the creation of a versatile ion extraction system based on a unique
chemistry that operates by passing liquids containing ions (e.g.: brines, leach liquors, oils, contaminated water) through a circuit
of very-high surface-area hollow fiber membranes (“iTDE System”). From this flow, targeted ions are attracted across a membrane
to accumulate the required, targeted materials in a process called “ion-harvesting”. The iTDE System, which mimics the chemistry
of biological processes, operates at standard temperature and pressure. The speed of the flow (and harvest rate) depends on a number
of operational factors which include the composition of the liquid.
Nature
has evolved very efficient processes to extract ions from solutions and much of higher life biology is based on these principals. By
mimicking this, our iTDE System is effective and efficient without using high pressures or high temperatures. This radical new commercial
approach to extraction technique harnesses principals as old as nature herself. The iTDE Technology has now proven its ability to extract
a large array of different ions from liquid solutions as one would expect from the natural environment, operating at ambient temperatures
and pressures and even where targeted ions exist in low concentrations.
Due
to its operational methodology, the iTDE System extracts continuously, without the need for batching, separation or evaporation stages,
targeting ions directly from the fluid flow. The system also avoids the need for sophisticated filtration techniques, electrolysis or
ion-exchange and does not operate using osmotic process. As a result, it uses significantly less energy in comparison to current deployed
market alternatives and can easily be adapted to extract a range of valuable materials from the same brines and liquors.
By
adjusting system variables, the iTDE System is able to extract ions existing in very low concentrations from liquid solutions without
the need to pre-concentrate the solution through evaporation. This is an important feature where the removal of contaminants is important
or where other environmental considerations are important. Notably, in respect of water management programs, the system can also be used
as a synergistic resource for improving water supply, for example by reducing the salinity of aquifers from which solutions are drawn
while simultaneously harvesting commercially interesting ions and salts.
The
iTDE System only extracts targeted materials and should not precipitate a contaminated residue or result in a waste that may be difficult
to deal with environmentally. The result is that the system generates much less waste than alternatives and is usefully deployed in areas
where water resources are precious.
A
critical advantage to the iTDE Process is its alignment with sustainable systems. Sustainable processes are those that do not disrupt
the natural cycles when they operate to make change and do not deplete finite resources unacceptably to drive their process; we believe
that by only removing specific ions from targeted solutions: leaving the remaining solution unchanged, we provide a truly sustainable
process, a “surgical” means of concentrating required materials from solutions. This gives the iTDE System an innate advantage
in its ability to refine and improve liquids and oils as well as cleaning or decontaminating the environment.
The
iTDE System is expected to be introduced as a modular system, completely scalable (essentially by adding more circuits), making it both
economical and flexible. Land usage is dedicated only to the system and necessary storage tanks and collection facilities, where once
the modules are redeployed there is little if any lasting damage to the environment from system operations.
The
Company plans to deliver the iTDE system to market in units based on the geometry of a 40’ sized container,
configured as part of a larger system. This gives the total plant a low maintenance downtime and allows the Company a unique ability
to service iTDE Systems by “hot swapping” the component parts for operational variation or for maintenance purposes thus
maximizing efficiency.
The
Company is unaware of any similar process and believes its iTDE System to be unique in its advantages.
The
Commercialization Process
In
general, the process of commercialization of any physically embodied novel technology from its theoretical proposal to its successful
commercialization follows a broadly similar course. This can be described as follows:
| ● | Initial
Phase: the technology must be demonstrated as novel and viable: it actually has to be
proven to work. Proving technology usually takes place in a laboratory and demonstrates its
functionality and practical application. At the end of this process, the technology can be
said to be proven, but it is not yet necessarily commercially viable; |
| ● | Pilot
Testing Phase: Once proven, the process of defining limitations, process elucidation
and scale up begins, usually with some form of small controlled pilot system.
These are developed first to ensure that the system can still operate away from the laboratory
bench and more robustly but are also required to define and measure the operational capabilities
of the technology. At this stage information is gathered to document process variations and
the effects of adjustments and modifications; different materials and operational parameters
may be tried and tested; |
| | | |
| ○ | Concurrently
with and extending beyond the initial controlled pilot system, the process control systems
should be designed and tested to ensure quality control and reliability. In this respect,
initial controls are also used as development tools for the system but must be reduced to
the minimum interference and cost for the process quality control. At this stage quality
measurement points and process control systems are mapped and defined and/or developed. With
the iTDE System, it is important to define process kinetics in depth to identify variables
in the definition of process controls and modifiers for specific customer supplied liquid
materials; |
| ○ | Operational
data from the initial controlled pilot system is additionally used to create working economic models
that define expenses and predict commercial operating and lifetime costs. This forms the
basis if product and system definition that can be used to finalize a proposed commercial
viability analysis and marketing documentation; |
| ○ | At
this stage practical testing can be done preferably with potential customer and commercial
partner inputs of materials, conditions, and requirements. This opens the first marketing
efforts. |
| ● | Operational
Pilot Deployment Phase: From the controlled pilot system, the next phase
is to move to the construction of a commercial pilot plant. This incorporates and makes use
of all the system definitions and improvements resulting from the controlled pilot system
to create a robust commercially deployable system that can operate in the field. This
is essentially a ‘prototype’ of the final product. The prototype system will
usually include many process controls necessary to monitor the operation of the system in
full deployment. At this stage, the system is usually deployed with a partner willing to
allow the operation of their plant together with the technology developer; |
| | | |
| ○ | Measuring
plant operation against real-world considerations is vital to the implementation of operating
efficiency and to the reliability of the system. Parameters are adjusted to compensate for
deployed operational conditions or to accommodate deployment and operational issues; |
| ○ | Commercial
data is collected to finalize the commercialization model; |
| ○ | Operational
manuals are designed and produced and issues of product liability are resolved eventually
with input from insurance organizations and environmental groups; |
| ○ | Product
certifications are sought where applicable; and |
| ○ | Marketing
materials are finalized. |
| | | |
| ● | Initial
Commercial Deployment Phase: Initial commercial deployment focuses on the construction
and scale up of production facilities organized, levelled and documented, suitable to meet
commercial demand. The introduction of the products and systems is carefully controlled and
priced to enable a controlled ramp up of production, while discouraging copies and patent
litigation; |
| | | |
| ○ | Options
for specially designed systems and an expansion of the defined field of usage is considered
and explored; |
| ○ | Financing
options to assist with sales is also explored at this stage; |
| | | |
| ● | Full
Commercialization: The final phase is the Full Commercialization Deployment supported
by finance and production as well as a clear marketing plan. |
These
five technology commercialization stages outlined above are broadly generic, but do apply specifically to the Company’s business.
While
at present the Company has no revenues and requires regular investments to complete the process of working towards Full Commercial
Deployment of the iTDE Technology, the plan for this is as outlined above. The goal is deployment of a viable product that embodies
the system and is commercially advantageous. Based on the current information, Management believes that the achievement of this goal
is fully possible. In order to understand this more specifically, it is important to assess where in the commercialization process
the iTDE Technology is currently to be found, as this addresses in part the business opportunity represented by the iTDE Technology,
as well as defining the work remaining along such process and points to the time necessary for its potential introduction to the
market.
The
Company’s progress towards Market Readiness
It
is always difficult to identify exactly where any technology is to be found along the path to its commercialization and how soon it
will be ready for commercial deployment. While the Company continues to advance its understanding of the iTDE Technology in the
laboratory, the current focus is working on construction of the controlled pilot system. We have proven that the process works in the
Laboratory for a variety of critical materials. We have proven the extraction rates, and we have proven the ability of the Membrane
Extraction Technology to operate effectively. This puts us well into the second phase.
At
present the Company plans to have its controlled pilot system ready for the testing of liquids submitted by certain chosen customers
during the second quarter of 2023.
The
principal focus of the commercialization effort at present is the extraction of Lithium from brines and geothermal sources as well as
liquors from leached mined ores.
In
the design of our lithium extraction process, we have developed a system for the extraction of the many valuable naturally occurring
additional ions present in lithium-containing solutions. We believe that this approach, isolating a variety of different elements during
extraction, will yield potential additional revenues or improve the environment by reducing or eliminating unwanted ions, including contamination.
The resulting process should generate better more efficient lithium extraction with the minimal disruption to the environment.
In
recent years there has developed considerable concern regarding the environmental effects of deployed methods of lithium extraction,
in particular in South America where water resources are lost to evaporation and toxic concentration lakes have a profound impact on
the environment, particularly the fauna. By using the iTDE System, we believe that most of the water resources can be either be returned
to the aquifers or lakes from which they were drawn so that the long-term disruptive footprint of the process will be minimal, or potentially
used in human activities such as farming or social or development needs.
Work
continues on the design and engineering of our own specific Hollow Fiber Membranes for use with lithium extraction as well as the manufacture
of our small controlled pilot system, expected to be ready in the second quarter of 2023.
Long
Term Prospects and Market Potential.
The
iTDE Technology has a wide field of potential future applications. In addition to lithium extraction, the system can; extract fatty acids
from vegetable oils to create a superior refining process that does not produce certain toxic waste generated by the currently deployed
process; extract radioactive ions from nuclear waste waters; extract specific metal ions from mining leach solutions and waste effluents;
in recycling; and can remove ions from seawater for desalination, among other things. The potential of these applications has not been
fully explored by the Company although some work was commenced before suspension in early 2022 to focus on lithium. The Company has adopted
the following prioritization of its product development strategy for the iTDE Technology incorporating the following order of priority
(all dates are estimates):
| ● | Current:
Lithium Extraction from Natural Brines, Geothermal Wells & Mine Leach Solutions; |
| | | |
| ● | Commencing
3rd Quarter 2023: Vegetable oil refining by direct extraction of deleterious
Fatty Acids; |
| | | |
| ● | Early
2024: Direct Extraction of Radioactive Ions from Nuclear waste water. |
Vegetable
Oil Refining.
During
the last 4 months of 2021, initial feasibility testing was carried out on the removal of fatty acids from vegetable oils. This included
the removal of various glycerides present in biodiesels which are difficult to remove. The testing showed initial promise. The Company
anticipates that its solution will be significantly less environmentally unfriendly and inefficient than current methods and expects
the iTDE System to reduce oil production costs. Much of this work was carried out in Ukraine and the program was suspended at the beginning
of 2022 due to the invasion of Ukraine by Russian forces.
Removal
of Radioactive Contamination:
In
2021 discussions were held in Ukraine to secure materials at a controlled location to test the extraction of radioactive ions stored
as liquids from nuclear plants. The plan was disrupted at the beginning of 2022 due to the invasion of Ukraine by Russian forces, however,
since the last quarter of 2022, the Company has been exploring the possibility of reopening its cooperation with key Ukrainian Institutes
that are still functioning. Management sees it as important to support its associates in these trying times. Every effort will be made
to consolidate any development results outside Ukraine to minimize further disruption.
Other
long-term Targets:
From
2021, the Company has planned to adapt the iTDE System to carry out sea water desalination. The Company believes that the iTDE Technology
is well adapted to enable a fast effective system for desalination that should be less expensive to operate than existing deployed systems
and can be tailor-sized to service small communities as well as larger cities.
Human
Resources
Essential
to the success of the commercialization process is the hiring and retention of a successful management and operations team. The core
team remains small but dedicated. However, lack of funding during 2022 has restricted the Company from hiring certain staff
necessary as full-time employees to advance its commercialization program as was planned for 2022. Throughout 2022, the existing
team has continued to make progress with a number of key consultants supplementing work in critical areas. In particular, during
2022, key team members were hired as consultants in India in order to manage the controlled pilot system design and construction. It
is expected that following completion of the initial work, these employees will be brought on full time and relocated to the head
offices and laboratories.
The
research and development laboratory in Champaign, Illinois currently has a staff of 3 one of whom is part-time. While much of the
engineering work for the new controlled pilot system has been outsourced through construction sub-contracts, the laboratory continues
to expand work on identifying and documenting the processes for the extraction of an increasing number of materials as well as on
patenting issues.
Employees
As
of December 31, 2022, the Company had 6 full time employees working in four different countries and a number of critical consultants
working part time. This staff level is expected to increase significantly in 2023 as staff currently working on a contractual basis convert
to full time employment.
Workplace
Practices and Policies – Inclusion and Diversity
The
Company is a small corporation with a small budget and a difficult path to the commercialization of a new technology that requires tight
control of recourses and a clear focus on the achievement of goals. For this reason, necessarily, the Company favors the hiring of expert
personnel to fill the small number of roles that require a particular and definite expertise. In respect of this, the Company is single-minded,
however, the Company is an equal opportunity employer and seeks a diverse corporate culture that can only be achieved by a commitment
to inclusion and diversity among employees at all levels. In addition, the Company is committed to providing a workplace free of harassment,
prejudice or discrimination. The Company will work to ensure representation of its employees at every level, fostering an inclusive culture,
supporting equitable pay and access to opportunity for all employees.
The
Company remains committed to its vision to build and sustain a more inclusive workforce that is representative of the communities it
serves. At the present time, although small, the Company retains employees of 5 different nationalities resident on 3 different continents
with a majority outside the US.
Compensation
and Benefits
The
Company believes that compensation should be competitive and equitable, and should enable employees to share in the Company’s success.
The Company recognizes its people are most likely to thrive when they have the resources to meet their needs and the time and support
to succeed in their professional and personal lives. At present the Company has accumulated a significant debt towards its senior employees
at the Director, Officer and Vice President level for salaries unpaid in an effort to build the business and in the face of the lack
of finances.
In
an effort to retain its senior staff, particularly given the need to raise financing and the possible dilution of the Company that might
result in a change of control, certain key managers with over $50,000 owing by the Company for past wages were accorded the right, in
June 2022, in the event of a change in control of the Company, to receive the amount of such unpaid wages multiplied by three and a third
(3 1/3) (“CoC Remuneration Supplement”), such amounts owing may also be converted into shares of common
stock of the Company at the price of the shares that effected the change of control. The measure is intended to aid the retention of
key staff while not over burdening the Company or preventing a change of control. It is important to note that in any case where the
employees concerned receive their past remuneration prior to any change of control, the measure would have no effect as it relates only
to past due payments (i.e.: not paid within 15 days from month end). The total amount owed by the Company at YE 2022 to employees that
might take advantage of this provision is $657,874.74. The Company anticipates the repayment of its senior personnel once the Company
has achieved a certain stability.
During
the course of the next fiscal year, the Company anticipates granting its employees around the world a wide variety of benefits in compensation
for their support. In addition, as benefits the intellectual and technological base of the business of the Company, we anticipate investing
in tools and resources that are designed to support employees’ individual growth and development.
Engagement
The
Company believes that open and honest communication among team members, managers and leaders helps create an open, collaborative work
environment where everyone can contribute, grow and succeed. Team members are encouraged to come to their managers with questions, feedback
or concerns, and the Company conducts surveys that gauge employee sentiment in areas like career development, manager performance and
inclusivity.
Health
and Safety
The
Company is committed to protecting its team members everywhere it operates. The Company identifies potential workplace and country risks
in order to develop measures to mitigate possible hazards. As a result of the recent conflict in Ukraine, the Company immediately relocated
its employees resided there into Europe. The Company supports all employees with general safety and security training as well as offering
regular advice.
Operating
Offices
The
Company rents all of its offices and currently owns no real estate.
During
most of 2022, the Company’s administrative office location in Texas was closed due to building structural issues. The Company has
continued to operate during this time from its Laboratory facility in Illinois where the iTDE Technology inventing scientist is located
as well as from locations in Europe and India. At the laboratory facility, the testing of the iTDE Technology’s ability to extract
an increasing number of ions is carried out.
Management
expects to relocate its main offices to new premises in Texas during the second quarter of 2023. These are being selected to accommodate
not only the central management but also the central marketing premises that will enable customer demonstrations of the iTDE System and
a small pilot production that will launch the Initial Commercial Deployment of the system.
Intellectual
Property Protection
The
Company is pursuing an aggressive intellectual property protection strategy. The Company continues to work with 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.
Initial
Target Markets and Planned Distribution Strategies
During
2022, the Company has focused on the market for the extraction of Lithium with particular emphasis on the Bolivian market.
In
August of 2022, the Company began discussions with interested parties regarding the potential deployment of the iTDE System in Bolivia
to provide direct Lithium extraction.
Any
initial deployment of the technology will require the Company to be ready to enter the next phase of its development, the Operational
Pilot Deployment Phase. During 2022, negotiations to secure funding to accelerate the possible cooperation were inconclusive and no final
agreement was reached on any cooperation. Notwithstanding this, the Company has agreed to test its iTDE System by processing up to six
samples of natural brines delivered from various salt-lakes in Bolivia. The first 2 near-surface samples with a grade average of 211
mg/l yielded lithium are expected to be tested on the new controlled pilot system currently under construction.
In
November 2022, the Company entered into discussion with a separate company regarding the potential testing of certain quantities of leached
liquor derived from mined lithium containing ore. At the end of 2022, this discussion is still in its earliest stage.
The
Company plans to deploy its iTDE System units with customers that have the necessary facilities to accommodate such units. The usual
manner in which the Company plans to deploy its iTDE Systems is under a tolling arrangement whereby the tolling fee will cover the ongoing
costs for maintenance of the extraction process and upside for the Company. During the life of the lithium source, the Company will maintain
and monitor the equipment ensuring any recalibrations and additions to the equipment are made to maintain efficiency and extractive power.
This is critical as the nature and composition of any particular ore may change over time, even from the same deposit, and this can potentially
affect the extraction process requiring adjustments to configuration where necessary.
The
Company plans to establish an operations subsidiary (“NCX International”) that can work with partners to construct the processing
plant that would incorporate the iTDE system processing capabilities. Initial discussions have centered around the formation of a joint
venture between the mining company and NCX International that would work to finance and construct the processing plants required to handle
extraction using the iTDE System.
Competition
There
are several Direct Lithium Extraction (DLE) technologies under development and being proposed and often associated with lithium brine
mining companies. The primary reason for this focus is the increasing environmental concerns present in the traditional evaporation ponds
being used today. The other reason is that new potential lithium brine deposits with very low concentration of lithium ions and existing
in North America and elsewhere, do not have suitable locations for feasible traditional extraction operations.
Technological
landscape.
The
primary DLE technological landscape can be summarized as a standalone or combination of the following technologies:
●
Resin based technologies: These involve selective absorption of Lithium ions on resins (specially designed for specific ions). Such
absorption may occur in either: (i) flow over the resins in columns or (ii) stirred tanks / settling processes. Once Lithium has
been exchanged, these are flushed in batches with acids to recover the absorbed Lithium.
●
Membrane based technologies: These involve Metal Organic Frameworks (MOFs) or crown ethers, which allow specific transport of ions
through them.
● Combination
of resin and membrane-based technologies: These involve resin-based absorption of Lithium from brines preceded by membrane-based
filtration and concentration from other ions (typically a Reverse Osmosis process) of the Lithium.
● Liquid-liquid
extraction technologies using chelating agents to extract Lithium from alkaline solutions.
These
technologies have their own set of advantages as well as challenges. Resin based systems suffer from specific “ion selection”
as well as being challenged by competitive ions. Membrane based technologies using sophisticated and exotic materials which have the
challenge of scalability, whereas Reverse Osmosis based systems have high operating pressures and are energy intensive. Liquid extraction
technologies have high chemical footprints and require manufacturing of chelating chemicals at large scale.
Significant
Competitors.
Specific
companies that have published information or strategic affiliations with lithium brine mining companies are as follows:
| ● | Lilac
Solutions – developed ion exchange resins and has made a pilot plant that is being
tested by Lake Resources in Argentina. |
| | | |
| ● | Sunresin
– a Chinese company has developed ion exchange resins that they claim are deployed
at a site in China. They infer that it uses other technologies in combination with the resin.
Recently, Anson Resources has announced that they intent to use the technology on a site
they are developing. |
| | | |
| ● | Standard
Lithium – affiliated with an existing bromine producer from brines in Arkansas, has
developed an absorption on sorbents technology which it uses in combination with other technologies. |
| | | |
| ● | International
Battery Metals – appears to be using an ion exchange resin process in combination with
reverse osmosis. |
| | | |
| ● | Koch
Technologies/Membranes – appears to be using a reverse osmosis plus sorption process
plus ion exchange. They have recently invested in Compass Minerals in Utah which is a traditional
producer of magnesium salts from salt lakes. |
| | | |
| ● | EnergyX
Technologies – has developed Metal Organic Framework membranes, tailored to allow selective
lithium transport. |
| | | |
| ● | University
of Texas (Austin) – is developing certain Crown Ethers selectively permeable to lithium. |
Our
iTDE technology is not related to any of the aforementioned technologies. It is radically different. We believe our system is inherently
more energy efficient and more environmentally friendly than all other currently known or proposed extraction systems.
Future
Production
Due
to the novelty of the technology and the need to finalize the exact final commercial product, the Company plans to organize
production of its extraction units in 2 principal phases: (i) initial launch production; followed by (ii) commercial production.
There are 2 primary reasons for this staged introduction: firstly it is anticipated that initial demand for deployed units will be
lower, as it requires early adopters and companies not already fully committed to other extraction methods; and second, it is
anticipated that the process of designing an efficient production, properly levelled and incorporating the best efficiency
techniques related to the specifics of the new system production, will only be finished following the introduction of any required
changes to the initial production facility. The Company anticipates organizing initial production at a 100,000 square foot
production facility
Plans
are already underway to locate the initial production facility in Texas that would deliver the iTDE units in quantities sufficient for
initial commercial deployment. The design for the initial production will likely wait until Operational Pilot Deployment Phase when the
system will be trialed in the field.
It
is anticipated that the location of the production facility will also house the main administrative offices and marketing Department
of the Company.
Company
Funding
During
the course of 2022, the Company has been operating with insufficient funding and this has affected its progress towards the commercialization
of its technology. This lack of operating capital has resulted in the management team deferring the payment of certain management salaries
and there being inadequate resources to pursue the opportunity presented by the iTDE Technology at optimal speed.
In
support of the Company’s efforts and cash requirements throughout fiscal 2022, the Company relied on advances from shareholders
in the form of debt. This reliance may continue until such time that the Company can support its operations or attain adequate financing
through sales of its equity or traditional debt financing. There is no formal written commitment for this continued support.
During
the first 3 calendar quarters of fiscal 2022 the Company raised funds through the issuance of certain non-convertible notes payable to
non-related parties in an amount of $ 456,006.86 as set out below.
During
the last quarter of fiscal 2022, the Company concluded 3 loan agreements in a total amount of $600,000 as further set out below.
Funding
has been utilized primarily to cover the general and administrative expenses of the Company (primarily for salaries and for costs associated
with being a US reporting company) and well as to provide working capital.
Finance
from Notes Payable – Non-Related Parties
During
fiscal 2022 the following loans to the Company supported by 8% interest bearing notes were issued against the following funding receipts:
On
April 1, 2022, two shareholders made loans to the Company in an aggregate amount of $150,000 witnessed by three separate notes with face
values of $50,575.34, $50,342.47 and $50,089.04. These three notes are all due on March 31, 2023.
On
April 14, 2022, a shareholder made a loan to the Company in an amount of $50,000 witnessed by a note with a face value of $50,000. The
note is due on April 13, 2023.
On
May 23, 2022, a non-related third party made a loan to the Company in an amount of $30,000 witnessed by a note with a face value of $30,000.
The note was repaid in full with interest on June 3, 2022.
On
June 1, 2022, a shareholder made a loan to the Company in an amount of $50,000 witnessed by a note with a face value of $50,000. The
note is due on May 31, 2023.
On
June 30, 2022, two shareholders made loans to the Company in an aggregate amount of $50,000 witnessed by two separate notes with face
values of $25,000 each. The notes are both due on June 29, 2023.
On
August 1, 2022, a shareholder made a loan to the Company in an amount of $50,000 witnessed by a note with a face value of $50,000. The
note is due on July 31, 2023.
On
August 4, 2022, a shareholder made a loan to the Company in an amount of $25,000 witnessed by a note with a face value of $25,000. The
note is due on August 3, 2023.
On
September 2, 2022, a shareholder made a loan to the Company in an amount of $50,000 witnessed by a note with a face value of $50,000.
The note is due on September 1, 2023.
Finance
from Notes Payable – Related Parties
As
of December 31, 2022, there were no amounts owing to related parties under notes payable.
Finance
from Loan Agreements – Non-Related Parties
On
October 11, 2022 the Company received short term bridging loan of $100,000 to cover essential intellectual property protection and operating
expenses that was repaid in full on December 14, 2022, the loan paid an interest fee of 10%.
On
November 9, 2022, the Company concluded a loan agreement with non-related third-party shareholder of the Company for $250,000. Under
the terms of the agreement, principal and interest are repayable in one year from the date of the receipt of funds and interest is charged
at 10% per annum payable in arrears with the principal repayment. The full amount of $250,000 was received on November 9, 2022 and is
repayable on November 8, 2023.
On
December 2, 2022, the Company concluded two loan agreements with non-related third-party shareholders of the Company for $50,000 and
$200,000 respectively. Under the terms of both agreements, principal and interest are repayable in one year from the date of the receipt
of funds under the respective loan agreements. Interest is charged at 10% per annum payable in arrears with the principal repayment.
The full amount of $250,000 was received on December 2, 2022 and is repayable on December 1, 2023.
Other
Receivables
As
at December 31, 2022, the Company had no receivables.
Certain
Risks and Uncertainties Facing the Company
No
Revenues:
Since
the changes to the business that resulted from the April 27, 2021 Asset Purchase Agreement, the Company has had no revenues which have
been derived from its business.
As
an early-stage company, the Company expects to experience losses in the near term. The Company needs to generate revenue or locate additional
financing in order to continue its developmental plans. There is no guarantee that the Company will be able to identify sufficient numbers
of customers to generate enough revenues to continue operations or proceed with developing its business in accordance with its business
plan.
One
of the biggest challenges facing the Company will be in securing adequate capital to fund its projects, including securing adequate capital
to pay for operations and hiring service providers. Secondarily, a major challenge will be implementing effective sales and marketing
strategies to reach the intended end customers. The Company has considered and devised its initial sales, marketing and advertising strategy;
however, the Company will need to skillfully implement this strategy in order to achieve success in its business.
Human
Capital Resources:
The
area of development of the iTDE Technology is novel and highly specialized both its process and in the construction of machinery and
equipment necessary to commercialize the technology. There are a limited number of experts that are capable of understanding or working
in the field. Many of these experts are not resident in the US and will require visas to commence working with the Company. There is
no guarantee that the Company can find adequate numbers of such personnel, attract them to work for the Company, secure their right to
work in the US at the Company’s offices or retain them. This may inhibit the growth of the Company or force it to locate principal
offices elsewhere. Moving through 2023, additional personnel will be required to complete the commercialization of the iTDE System. Even
if such personnel are more readily available, there is no guarantee that the Company will be able to secure sufficient, appropriate,
necessary expertise to pursue its goals. While the Company is too young to have seen what impact the COVID-19 pandemic could have had
on its business operations, it is increasingly anticipated that there will be other pandemics of a similar nature or with a similar disruptive
effect. The advent of one or more of such crisis and the resulting lock-downs or trade and travel restrictions may have a serious effect
on the business, more so since the Company is launching its commercialization and the path to profitability must be entirely negotiated,
with the creation of production facilities, organization of supply lines and distribution and securing of regular business. In the event
of another pandemic or similar disruption, the Company may be worse effected than established businesses.
Environmental:
The
iTDE System is considered by Management to be a clean technology that will remove a number of polluting and non-sustainable technologies
currently operating in the environment. There may be certain issues with regards to the manner in which the technology is deployed or
the disposal and recycling to the final units that is not yet known that may have an adverse impact on the environment and this may conflict
with or cause legislative changes that inhibit the manner in which the Company intends to carry out its business or to sell its products.
In addition, the units will use certain materials, including thermoplastic materials, which are currently the subject of legislative
efforts to reduce, eliminate or require recycled material use; it is unlikely that the company can use recycled materials or substitute
certain elements of its technology with alternative materials, without incurring considerable expense and time and this may have an adverse
effect on the business.
Cybersecurity:
There
is a general increase in cybersecurity incidents and data misuse, exacerbated by the political situation of Russia and the geopolitical
strategy and attitude of China as well as an increase in purely criminal behavior and activist disruption. This is augmented by the actions
on line of an increasingly disassociated, disillusioned but technologically savvy society that seeks disruption for its own sake. As
a Company with new technology, the Company may be a significant target of attack by competitors, foreign governments and other interested
and malicious parties. As the knowledge of the potential impact of Company’s iTDE Technology becomes more widely known there is
a significant risk of an attempt to gain access to the Company’s confidential information that could potentially result in a loss
of markets and control on the commercialization process. Such a loss might potentially cripple the Company’s ability to carry on
its business in the way it plans.
Material
Sources and Supply Chain Disruptions:
At
present the Company is still finalizing the development of its iTDE System and while it is difficult to assess the final supply chain
and material resourcing, the inability to source materials or to manufacture components may force the Company to design its system with
regard to supply chain issues rather than full optimization. Once supply chains are established wars, embargos, pandemics and natural
disasters may have an adverse effect on the ability of the Company to produce in adequate quantities due to disruption.
Regulatory
Issues:
The
different potential areas of application for the iTDE Technology are diverse. Some fields of application have a more controlling regulatory
environment than others. Lithium extraction is becoming more controlled in countries where it is mined due, among other factors, to the
enormous disruption of water resources and environmental hazard. Changes to regulations may make the introduction of a new technology
more difficult by creating additional barriers. The same applies in the field of the refining of oils for human consumption. The heavy
regulatory environment may delay the introduction of the iTDE System. Changes and potential changes in laws, regulations, policies and
also political leadership may result in increased difficulties in bringing the iTDE Technology to market.
COVID-19
and other future Pandemic.
In
December 2019, an outbreak of a novel strain of coronavirus (COVID-19) originated in Wuhan, China, and has since spread to a number of
other countries. On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic. Several countries around the
world, including the United States, took steps to restrict travel. These actions led to a restriction on the flow of labor and products
as well as impeding the travel of personnel. This virus is mutating and the effect of such mutation may cause further outbreaks that
may impact our ability to conduct normal business operations, which could adversely the commercialization of the System and affect our
projected future results of operations and liquidity. Disruptions to our business operations, or to our vendors’ or customers’
business operations, could include disruptions from the closure of facilities or the ability to travel. If a critical number of our employees
or consultants become too ill to work, or we are not able to access sufficient human resources due to enforced office closures, our ability
to conduct our business could be materially adversely affected in a rapid manner. Similarly, if our customers experience adverse business
consequences due to COVID-19, or any other, pandemic, demand for our services could also be materially adversely affected in a rapid
manner. Global health concerns, such as COVID-19, could also result in social, economic, and labor instability in the countries and localities
in which we or our vendors and customers operate. Any of these uncertainties could have a material adverse effect on our business, financial
condition or results of operations.
Impact
of Events in Ukraine
The
Business of the Company and its fundamental research are conducted in the United States, however, when Ukraine was invaded by Russia
in February 2022, the Company had offices in Ukraine and 3 of its 5 senior executives were resident there. The Company was implementing
programs with certain Ukrainian partners to test the iTDE Technology as a means of removing certain radioactive contaminants such as
might be found after a nuclear disaster or as a byproduct of the operations of a nuclear reactor. In addition, plans for testing the
use of the iTDE Technology to refine sunflower oil were also advanced with 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. The Company maintains a home office
in Kyiv staffed by one individual to maintain its presence and to show support for the Ukrainian people in their difficulty as well as
to support its consultant scientists. However due to the war bringing disruption, the now frequent attacks on infrastructure with the
resulting loss of power, water and supplies it is unclear if and when the work planned there can recommence. In spite of the difficulties,
the Company is committed to the support of all communities where it has a presence, including Ukraine and its people. The Company has
pledged to return to Ukraine as soon as the political and economic situation allows.
Competition
The
Company encounters substantial competition from a wide variety of entities in both of its business lines, most of which is from companies
which are better capitalized than the Company. Many of these entities will have significantly greater experience, resources and managerial
capabilities than the Company and will therefore be in a better position than the Company to obtain access to attractive business opportunities.
The actions of these companies to exclude or interfere with the Company’s Business may have an adverse effect on the Business.
Available
Information
The
Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed
pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are filed with
the U.S. Securities and Exchange Commission (the “SEC”). Such reports and other information filed by the Company with the
SEC are available on the SEC’s website associated with the Company’s trading symbol ‘CHMX’ and additionally free
of charge at www.next-chemx.com/investor-information/corporate-documents/ for reports made since April 26, 2021. The Company periodically
provides certain information for investors on its corporate website, www.next-chemx.com. This includes information regarding its technology,
press releases and other information. The information contained on the websites referenced in this Form 10-K is not incorporated by reference
into this filing. Further, the Company’s references to website URLs are intended to be inactive textual references only.