The
accompanying notes are an integral part of these consolidated financial statements.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
March
31, 2023
NOTE
1 - ORGANIZATION AND BUSINESS OPERATIONS
Organization
and Description of Business
NEXT-ChemX
Corporation, formerly known as AllyMe Group Inc. (“Company”, “we” or “us”) was incorporated under
the laws of the State of Nevada on August 13, 2014 and has adopted a December 31 fiscal year end. The Company trades on the OTC market
(Pink Sheet) under the symbol “CHMX”. Since December 23, 2021 the Company has voluntarily complied with the reporting requirements
of the Securities Exchange Commission as a reporting issuer.
The
business of the Company is the commercialization of a novel innovative Ion-Targeting Continuous-Flow Direct Extraction Technology (“iTDE
Technology”) as further described in Note 5 below). The iTDE Technology is embodied in certain patents and patent applications
as well as proprietary know-how. Potential applications for the iTDE Technology include:
| |
● |
Extraction
of Lithium from Natural Brines, Geothermal Wells, or Leach Solutions; |
| |
● |
Extracting
Fatty Acids from Vegetable Oils for More Economical Refining; |
| |
● |
Extracting
of Radioactive Ions from Nuclear Plant Stored Water; |
| |
● |
Extracting
of Metal Ions from Mine Leach Solutions, Effluent, or Tailings; and |
| |
● |
Desalination
of Sea Water, by Extracting Ions for Water Purification |
The
principal focus of the commercialization of the iTDE Technology continues to be the extraction of lithium from brines and geothermal
sources as well as liquors from leached mined ores.
During
the first quarter of 2023, the Company completed the design of a controlled pilot plant system and began the process of ordering components
and construction of the system. It is anticipated that the pilot plant system will enable the Company to further its research into the
extraction of particular elements, improve the modelling of the process for commercial implementation, better to calculate the economics
of the process and to test the process on samples supplied by potential customers in order to market the system commercially. Construction
of the system is expected to be completed in the early part of the third quarter 2023.
In
addition, the Company has been working on predictive modeling of the iTDE Technology processes that it is anticipated will assist in
the improvement of designs and the prediction of its commercial capabilities.
The
Company began preliminary marketing of its technology in the latter part of 2022. On March 28, 2023, the Company announced the signature
of an agreement with Clontarf Resources plc, a UK AIM listed company, that will provide the first commercial testing of the iTDE Technology
as soon as the controlled pilot plant system is completed (“Clontarf Agreement”). The Company anticipates first running extraction
tests on brine solutions mixed with controlled defined quantities of elements that approximate the naturally occurring brines to be the
subject of the commercial testing under the Clontarf Agreement and for other potential customers. This initial calibration of the system
should provide a better baseline for the testing before proceeding to operate with actual brines supplied from Bolivian sources. If testing
is successful, the Clontarf Agreement is expected to lead to the creation of a corporation organized in Bolivia between the Company,
Clontarf and, possibly with the participation of the “Pública Nacional Estratégica Yacimientos de Litio Bolivianos”
(the ‘National Strategic Public Company of Bolivian Lithium Deposits’) that is tasked with the management of Bolivia’s
lithium exploitation. The new corporation will enjoy and manage the exclusive right to deploy iTDE Technology for lithium extraction
in Bolivia.
The
Company continues to pursue its intellectual property protection strategy with testing and development to support a strong protection
profile.
NOTE
2 – GOING CONCERN
The
Company has incurred losses since inception (August 13, 2014) resulting in an accumulated deficit of $ 4,150,705 as of March 31, 2023.
The Clontarf Agreement provides for the receipt of the first revenues from the commercialization of the iTDE Technology, however, these
anticipated revenues are expected to impact the financial statements only during the second quarter, and further losses are anticipated
before the exploitation of the system can be expected to break-even or to turn a profit. For the period ended March 31, 2023, the Company
showed a net loss of $457,973, as compared with the loss of $387,890 for the first quarter of 2022. The net cash used in operating activities
of during the first quarter was $310,145 and $110,661 for 2023 and 2022 respectively. Accordingly, there remains a substantial doubt
regarding the Company’s ability to continue as a going concern. Management believes that the Company’s capital requirements
will depend on many factors including the continuing and expanding success of the Company’s development efforts, however, it is
anticipated that the Company will require additional capital.
In
the first quarter of 2023, the Company launched a private placement offering (“March PPO”). The March PPO targets
qualified investors and is anticipated to raise up to $2.5 million
to cover development plans to enable the Company to demonstrate the iTDE Technology’s commercial viability and to showcase its
advantages. From the anticipated receipts of this financing, the Company must discharge outstanding payables of $171,477 together
with a total of $308,161 in
payables for salary, remuneration and expenses. In addition, the Company should pay $161,702 in salary, remuneration and expenses
that is deferred and due only on or before December 8, 2023, with a remaining 1 million due after August 15, 2024. The Company will
also be required to repay $297,000 in promissory notes falling due during the second and third quarters of 2023. Covering the
payables of $776,638 due on or before September 2023 will leave a significant amount of operating capital available for
ongoing operations, completion the pilot plant and the commencement of the marketing of the iTDE System during the third and fourth
quarters of 2023. The Company anticipates that with the completion of its pilot plant during the second quarter it will be able to generate further revenues to support the business.
In
March 2023, the Company closed on the first $500,000 under its March PPO and is in advanced discussions with various investors to complete
the Offering. At March, 31 2023, the Company expects to receive an additional $500,000 in revenues from the Clontarf Agreement. The Company believes that the anticipated success of its March PPO and
receipt of the Clontarf revenues will be enough to enable it to launch its iTDE System and begin to generate revenue. There
is no assurance, however, that the March PPO financing will close or that other financing will be available in the future. The possible
inability to raise the financing necessary and the general business uncertainties and particular conditions and situation described above
raise substantial doubt about our ability to continue as a going concern. The financial statements of the Company do not include any
adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that
might be necessary should the Company be unable to continue as a going concern.
Ultimately,
the ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and, or, obtaining
the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.
Management intends to finance operating costs over the next twelve months with existing cash on hand, loans from directors and, or, the
private placement of common stock. However, there can be no assurances that management’s plans will be successful.
NOTE
3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim
Financial Statements
The
accompanying unaudited condensed interim financial statements and related notes have been prepared in accordance with accounting principles
generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and in accordance with
the rules and regulations of the United States Securities and Exchange Commission with respect to Form 10-Q and Article 8 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The
unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring adjustments) that are, in the
opinion of management, necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily
indicative of the results for the full year. These unaudited interim financial statements should be read in conjunction with the audited
financial statements of the Company for the year ended December 31, 2022.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the U.S. GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Intangible
asset
The
iTDE Technology is classified as an indefinite intangible asset by the Company on the basis of it being a fundamental stem technology
that has applications in numerous fields and that is anticipated to give rise to other applications and techniques. As a result, no amortization
has been recorded against the asset which remains at its October 1, 2021 value of $3,150,114. The Company carries out regular assessments
of the iTDE Technology to identify if its value is impaired in any way, (i) on an annual basis and (ii) in the event that, in the opinion
of Management, there exists any reason external or internal why the asset might be impaired. In the opinion of management, as at the
date of this report, there exists no reason external or internal why the asset might be impaired.
Recently
Adopted Accounting Guidance
In
August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 “Debt—Debt with “Conversion and Other Options”
and ASC subtopic 815-40 “Hedging—Contracts in Entity’s Own Equity”. The standard reduced the number of accounting
models for convertible debt instruments and convertible preferred stock. Convertible instruments that continue to be subject to separation
models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition
of a derivative, and that do not qualify for a scope exception from derivative accounting; and, (2) convertible debt instruments issued
with substantial premiums for which the premiums are recorded as paid-in capital. The amendments in this update are effective for fiscal
years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier
than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company has adopted this
standard on January 1, 2021.
The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements
will have a material impact on its financial statements.
NOTE
4 – PREPAID EXPENSE AND OTHER CURRENT ASSETS
Prepaid
expense and other current assets amounted to $13,330
as at March 31, 2023 reduced from the $22,169 reported as at December 31, 2022. This represents a reduction of $8,839 during the
first quarter. Prepaid expenses comprises a $1,600 deposit on the rental of laboratory facilities and a $600 deposit under a consultancy agreement, both unchanged. The remainder comprises advance payments for the
purpose of filing for intellectual property protection. Payments are made in trust to our IP attorneys through whom amounts are disbursed
when required. The trust account is replenished when needed.
NOTE
5 – PRINCIPAL ASSET (iTDE TECHNOLOGY)
The
Company’s principal asset is the certain indefinite intangible intellectual property, specifically certain patents and patent applications
along with the existing and developing knowhow, relating to a novel extraction process proven capable of removing ions from solution
using hollow fiber membranes (the “Extraction Technology”). The technology represents, in the opinion of management, an entirely
novel approach to the process of extraction of ions that is anticipated to be cheaper, more efficient and less damaging to the environmental.
Following an assessment of the Extraction Technology carried out at the end of Q3, 2021, it was determined that the Extraction Technology
had an indefinite useful life. The said indefinite, intangible asset will not be amortized; however, the value of the Asset will be examined
for impairment periodically in accordance with ASC 350. At March 31, 2023, the Extraction Technology is valued on the balance sheet at
$3,150,114.
NOTE
6 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
As
of March 31, 2023 and December 31, 2022, accounts payable and accrued liabilities consisted of as follows,
SCHEDULE
OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
| | |
March 31, | | |
December 31 | |
| | |
2023 | | |
2022 | |
| Accounts payable | |
$ | 529,580 | | |
$ | 471,567 | |
| Accrued payroll | |
| 1,114,402 | | |
| 1,051,192 | |
| Accrued interest | |
| 35,221 | | |
| 25,981 | |
| Accrued interest- related party | |
| - | | |
| - | |
| Accounts payable and
accrued liabilities | |
$ | 1,679,203 | | |
$ | 1,548,740 | |
NOTE
7 – CONVERTIBLE NOTES, PROMISSARY NOTES AND LOANS
During
the three months ended March 31, 2023, the Company did not issue any new convertible notes and there are no convertible notes outstanding.
As
of December 31, 2022, the Company had outstanding a total of ten promissory notes, all issued during the course of 2022 and having an
aggregate value of $426,006.86. Each of these promissory notes was issued with a term of one year term and pays 8% interest annually
in arrears. During the quarter ending March 31, 2023, the Company repaid the principal and interest of three promissory notes having
an aggregated value of $151,007 as they became due. As at March 31, 2023, a total of 7 promissory notes remained outstanding
with a total face value of $275,000. The Company did not issue any new promissory notes during the quarter ending March
31, 2023.
As
of December 31, 2022, the Company had three outstanding loans with an aggregate value of $500,000. Each of these loans is repayable in
one year and pays 10% interest annually in arrears. The Company contracted a further two loans during quarter ending March 31, 2023 with
an aggregate value of $75,000. Each of these loans is repayable in one year and pays 10% interest annually in arears.
During
the three months ended March 31, 2023, the Company recognized interest expense on its loans and promissory notes of $21,320.
NOTE
8 – RELATED PARTY TRANSACTIONS
The
Company continues to rely on advances from related parties in support of its operations and cash requirements and this is expected to
continue until such time as the Company can support itself or attain adequate financing through sales of equity or debt financing. The
majority of this support took the form of the nonpayment of all or a portion of salary payments to senior Directors, Officers, consultants
and employees, effectively constituting a deferred debt payment to such persons.
As
at March 31, 2023, directors, officers and employees, including full time consultants, were owed a total of $1,472,506 for salaries,
remuneration and expenses. Of this $1,164,342 is owed to five senior officers and employees (“Senior Managers”).
Four
Senior Managers of the Company have agreed not to receive payment for the majority of the outstanding indebtedness due to them at
March 31, 2023. Only $162,000
of their current indebtedness will be payable on or before Friday, December 8, 2023, the remainder being deferred until the Company
is in a better financial condition but not before the earlier of August 15, 2024 or the date on which the Board of Directors shall
decide to make payment prior to that date. Interest will begin to accrue on outstanding unpaid indebtedness that is past due for ninety days July 1, 2023 at
a rate of 8% per annum.
NOTE
9 - STOCKHOLDERS’ EQUITY (DEFICIT)
The
Company is authorized to issue 100,000,000 shares of common stock with a par value of $0.001 and 5,000,000 shares of preferred stock
with a par value of $0.001. There is no preferred stock issued and outstanding as of March 31, 2023.
On
March 31, 2023, there were 28,446,834 shares of common stock outstanding.
During
the three months ended March 31, 2023, the Company issued 100,000 shares of common stock to two existing shareholders as part of an exempt
private placement of the Company’s shares. The private placement offering is ongoing and is scheduled to close on June 16, 2023
at which time it will be expected to have raised a full 2.5 million at $5 per share.
During
the three months ended March 31, 2023, the Company issued no options under the Company’s 2021 Stock Incentive Plan (the “Plan”).
During
the three months ended March 31, 2023, the Company issued no convertible debt exchangeable into shares of common stock.