4/A: NEXT-ChemX CFO Amends Ownership, Reveals Litigation

NEXT-ChemX Corporation's President and CFO, John Michael Johnson, filed an amended statement detailing his beneficial ownership, including preferred stock acquisitions and disclosing ongoing litigation over share ownership.

Summary

• John Michael Johnson, President, CFO, Director, and 10% Owner of NEXT-ChemX Corporation (CHMX), filed an amended Statement of Changes in Beneficial Ownership (Form 4/A).
• The filing amends an original filing dated October 2, 2024, with the earliest transaction date being September 23, 2024.
• Johnson indirectly beneficially owns 1,311,445 shares of common stock through a 5.5% interest in a private corporation, which is the controlling shareholder of CHMX and owns 23,844,448 shares.
• He directly acquired 41,256 shares of common stock on June 17, 2022, at $1 per share, and 16,217 shares on November 12, 2022, at $1 per share.
• On May 29, 2024, he acquired 10,000 shares of Series A Preferred Stock for $0.001 per share (total $10.00). Each Series A share carries 500 votes and is convertible into 250 shares of common stock. Automatic conversion occurs by January 1, 2026, if not converted earlier.
• On September 23, 2024, he acquired 10,000 shares of Series F Preferred Stock for $0.001 per share (total $10.00). Each Series F share carries 1,000 votes and is not convertible into common stock.
• An ongoing litigation in the Texas Court of Appeals involves Sparkie Properties LLC, which claims beneficial ownership of 15,866,096 shares of CHMX, a representation currently being disputed.

Sentiment

Score: 5

Explanation: The filing indicates increased insider ownership and control through preferred stock acquisitions, which can be seen as a positive sign of commitment. However, the disclosure of ongoing litigation regarding a significant block of shares introduces substantial uncertainty and risk, offsetting potential positives.

Positives

• An insider (President, CFO, Director) increased direct beneficial ownership of common stock through acquisitions in 2022.
• The acquisition of Series A Preferred Stock provides significant voting power (500 votes per share) and future conversion potential into common stock (250 common shares per preferred share).
• The acquisition of Series F Preferred Stock further consolidates voting control (1,000 votes per share) for the reporting person.

Negatives

• The ongoing litigation regarding Sparkie Properties LLC's claimed ownership of 15,866,096 shares introduces significant uncertainty and potential for adverse outcomes.
• The Series F Preferred Stock, while granting substantial voting power, is explicitly non-convertible, limiting potential upside from common stock appreciation for those specific shares.
• The low acquisition price for preferred shares ($0.001 per share) suggests these might be part of a compensation or strategic control arrangement rather than a significant capital infusion based on market value.

Risks

• Litigation Risk: An ongoing lawsuit in the Texas Court of Appeals disputes the beneficial ownership of 15,866,096 shares of CHMX claimed by Sparkie Properties LLC. The outcome could significantly impact the company's ownership structure and control.
• Control Concentration Risk: The acquisition of Series A and Series F Preferred Stock by a single insider (John Michael Johnson) significantly concentrates voting power, potentially impacting minority shareholder influence.
• Share Dilution Risk (Future): The Series A Preferred Stock is convertible into 250 shares of common stock per preferred share, which could lead to future dilution of common shareholders if converted.

Future Outlook

The filing does not provide forward-looking statements or guidance regarding the company's operational or financial performance. It primarily details beneficial ownership changes and an ongoing legal dispute.

Management Comments

• The indirect beneficial ownership reflects an ownership interest of 5.5% of the share capital of a private corporation that is the controlling shareholder of NEXT-ChemX Corporation ('CHMX'), Nevada, the reporting issuer.
• The controlling shareholder owns a total of 23,844,448 shares in the reporting issuer.
• On September 5, 2024, Sparkie Properties LLC, a Delaware LLC ('Sparkie'), filed a Form 3 submittal. This filing alleged that Sparkie owned 15,866,096 shares of CHMX as beneficial owner. This representation is currently being litigated in the Texas Court of Appeals in Eastland, Texas. There is no final order adjudicating the ownership of the claimed securities.

Industry Context

This filing is an insider ownership disclosure and does not contain information related to broader industry trends or competitive landscape.

Corporate Governance

Legal Proceedings

• An ongoing litigation in the Texas Court of Appeals in Eastland, Texas, disputes the beneficial ownership of 15,866,096 shares of CHMX. This litigation stems from a Form 3 submittal by Sparkie Properties LLC on September 5, 2024, claiming this ownership. There is currently no final order adjudicating the ownership of these claimed securities.

Related Party Transactions

• John Michael Johnson's indirect beneficial ownership of 1,311,445 common shares is through a 5.5% interest in a private corporation that is the controlling shareholder of CHMX. Johnson is also an Officer and Director of this controlling shareholder.

Stakeholder Impact

• Shareholders: The ongoing litigation creates uncertainty regarding the true ownership structure and potential control of the company, which could impact share price and investor confidence. The concentration of voting power through preferred stock acquisitions by an insider may dilute the influence of common shareholders.
• Management/Board: The litigation could divert management attention and resources. The increased voting power of the President/CFO could streamline decision-making but also raise concerns about checks and balances.

Next Steps

• Resolution of the litigation in the Texas Court of Appeals concerning Sparkie Properties LLC's claimed ownership of 15,866,096 shares of CHMX.
• Potential conversion of Series A Preferred Stock into common stock by January 1, 2026.

Key Dates

Recommendation

The filing reveals significant insider commitment through preferred stock acquisitions, which could be a positive signal. However, the ongoing litigation over a substantial block of shares (15,866,096 shares) introduces considerable uncertainty and risk regarding the company's ownership and control. Until the litigation is resolved, the stock carries an elevated level of risk, making a 'hold' recommendation appropriate for existing investors, while new investors might want to wait for more clarity.

Keywords

NEXT-ChemX Corporation, CHMX, Beneficial Ownership, Form 4/A, Insider Trading, Preferred Stock, Series A Preferred, Series F Preferred, Voting Rights, Corporate Governance, Litigation, Sparkie Properties LLC, Share Ownership Dispute, John Michael Johnson, CFO, Director