NEXT-ChemX Corporation (CHMX), a maker of technology that extracts ions from liquids, waited to disclose years of accounting trouble until after it was forced to dismiss its auditor BF Borgers, which was charged in a massive fraud scheme impacting more than 1,500 SEC filings.

The disclosure— reiterated in a belatedly filed quarterly report— revealed NEXT-ChemX has overstated earnings by more than $1 million since September 2021.

The misstatement is approximately 18% of NEXT-ChemX’s accumulated net loss the past three fiscal years.

It means the company understated its net loss by approximately 13%, 17%, and 20% between fiscal 2022-24.

NEXT-ChemX— which has not generated a single dollar of revenue in five years— routinely files its quarterly and annual reports late.

With an Enterprise Value (EV) of approximately $162 million, NEXT-ChemX is priced as if it will grow annual sales to more than $2.5 billion, after not generating any revenue in the last five years. To justify its current share price of $5.58 our Reverse DCF— which quantifies investor expectations embedded in the current share price— indicates NEXT-ChemX must:

—Grow sales 55% annually for the next decade, after not generating a dollar of revenue in the last five years
—Increase NOPAT margin to 7.5%, after never generating a dollar of NOPAT since coming public a decade ago
—Increase Invested Capital (IC) Turns to 1.5 after never profitably turning over its Invested Capital

Notably, the current share price also implies NEXT-ChemX increases Return on Invested Capital (ROIC) to 11.25% from our 2024 estimate of (7.93%) and three-year average estimate of (10.36%):